Category Archives: Planning for Your Financial Future & Retirement

6 Tips to Financially Plan for a Career Change

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Embarking on a new career path is both exhilarating and daunting, requiring not just a leap of faith – but also financial preparation. Whether you’re venturing into entrepreneurship or transitioning to a field you’ve always been passionate about, the journey ahead demands strategic planning. First Financial is here with several pivotal tips to ensure your financial health remains strong as you pursue your career dreams.

1. Evaluate Your Emergency Fund

An adequate emergency fund is your financial safety net during a career transition. A good rule of thumb is to build your emergency fund to cover 6 to 12 months of living expenses. This fund can provide relief in case the transition takes longer than expected or if unforeseen expenses arise. Review and bolster your savings as soon as possible before your transition, as peace of mind is invaluable when stepping into the unknown. First Financial offers a variety of Savings Account options to help you reach your emergency fund goals and start your next chapter confidently.*

2. Budget for Health Insurance Costs

Health insurance is a critical consideration when leaving an employer-sponsored plan and can become a hefty expense if not planned for properly. Before accepting a new job, be sure to ask about a probationary period. Often new employees will not be able to receive some or all of their benefits until they have been employed for a certain amount of time, commonly 90 days. If this is the case, assess all your available options – including COBRA for temporary continuation of your current plan and options through the Health Insurance Marketplace. Also ensure the pricing can fit into your budget.

3. Life and Disability Insurance Coverage

Don’t overlook life and disability insurance, as losing these benefits can leave you vulnerable. Determine if your current plan allows for portability or if you’ll need to secure alternative coverage to protect against unexpected events. Ensuring continuous coverage is key to safeguarding your family’s financial future during and after your career change. If you find you’ll be left without coverage, First Financial offers options through our TruStage Insurance Program – with competitive rates and your protection in mind.

4. Retirement Savings Considerations

A career change can impact your retirement planning, especially if you’re leaving behind employer-matched contributions. Before making a move, check up on your retirement savings. Options for your existing retirement accounts include leaving the funds with your former employer or rolling them over into a new employer’s plan or an IRA. The First Financial Investment & Retirement Center can help you navigate your transition assistance options.**

5. Conduct a Financial Reality Check

Now is the time to scrutinize your spending, especially on hidden or unnecessary fees that can drain your resources. Regularly review your statements to identify and eliminate these financial leaks. Simplifying your financial obligations by consolidating debt can also free up more funds for your career transition, making it smoother and more manageable.

Small daily expenses often go unnoticed, but can cumulatively have a significant impact on your budget. Keeping a close eye on these can help identify opportunities to save, such as opting for home-cooked meals over dining out. Every dollar saved is one more dollar toward supporting your career change and maintaining financial stability. With First Financial online and mobile banking you can easily access your cards and statements to take a closer look at daily, weekly, and monthly charges easily eliminating unnecessary fees and expenses.

6. Create a Job Transition Budget

Planning for a career change involves more than just anticipating loss of income, it’s about adjusting to a new financial norm. A detailed transition budget will help you navigate this change, ensuring that you can account for all possible expenses and income changes. This foresight will allow you to adjust your lifestyle as needed, minimizing financial stress as you move toward your new career. Easily create a budget for your transition with our home budget calculator. Simply plug in your income, withholding amounts and expenses – and the tool will generate a detailed budget customized to your situation.

Embarking on a career change is a journey that involves financial preparation that can be overwhelming when navigated alone. At First Financial, we offer products and services designed to support you through every stage of your career transition. For more personalized assistance, call 732.312.1500 to schedule an appointment at your local branch today.

*A $5 deposit in a base savings account is required for credit union membership prior to opening any other account. All personal memberships are part of the Rewards First program and a $5 per month non-participation fee is charged to the base savings account for memberships not meeting the minimum requirements of the program. Click here to view full Rewards First program details. Some restrictions apply, contact the Credit Union for more information.

**Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker/dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. First Financial Federal Credit Union (FFFCU) and First Financial Investment & Retirement Center are not registered as a broker/dealer or investment advisor. Registered representatives of LPL offer products and services using First Financial Investment & Retirement Center, and may also be employees of FFFCU. These products and services are being offered through LPL or its affiliates, which are separate entities from and not affiliates of FFFCU or First Financial Investment & Retirement Center.

Securities and insurance offered through LPL or its affiliates are:

Begin Investing While Young

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You’re never too young to begin building an investment portfolio. In fact, investing when you’re young can have the potential to produce impactful earnings gains. And that’s because of a simple concept: compounding.

Like a snowball that grows as it rolls down a hill, compounding gives your money the opportunity to grow, continually reinvesting your investment earnings. With compounding, the more you invest – the greater opportunity you have to create long-term value. We’re going to give you some hypothetical examples to illustrate the power of compounding.

  • Let’s say that you invest $1,000 at age 20 and don’t add anything to the principal. You just compound earnings for 50 years until you turn 70. If you take a 7.2% annual rate of return, by age 70, your $1,000 would have grown to $32,000. Not bad.
  • Now let’s say you take the same approach, but delay investing until you’re 30. So that $1,000 has 40 years to grow. And assuming the same annual rate of return of 7.2%, your $1,000 investment will have grown to $16,000. Not nearly as good. In fact, that’s a decrease of 50%.
  • Finally, if you invest $1,000 at age 20 and contribute an additional $83 a month – or $1,000 a year until you turn 70, assuming that same 7.2% annual rate of return, your total savings will reach $465,000. Wow! That’s nearly 15 times the first example, and 30 times the second example.

To be clear, these were hypothetical examples and aren’t representative of any specific situation. They’re just to illustrate the power of compounding. The hypothetical rates of return used do not reflect the deduction of fees and charges inherent to investing. So, your results will vary.

There’s a fairly accurate formula called the rule of 72 that can help you estimate how long it would take for compounding to double an investment: Just divide 72 by the annual rate of return. The answer is the approximate number of years it would take to double your investment’s value, assuming a fixed rate of return.

  • As an example, if you earn 9% annually – it would take 72 divided by 9, or 8 years to double the value of your investment. Please note that this formula does not guarantee investment results and is just to give you an approximate idea of how quickly your savings can grow when compounding is at play.

For help putting together an investment strategy that works for you, reach out to one of our financial professionals listed below.

Questions? Contact First Financial’s Investment & Retirement Center by calling 732.312.1534.  You can also email mary.laferriere@lpl.com or maureen.mcgreevy@lpl.com

Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker/dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. First Financial Federal Credit Union (FFFCU) and First Financial Investment & Retirement Center are not registered as a broker/dealer or investment advisor. Registered representatives of LPL offer products and services using First Financial Investment & Retirement Center, and may also be employees of FFFCU. These products and services are being offered through LPL or its affiliates, which are separate entities from and not affiliates of FFFCU or First Financial Investment & Retirement Center.

Securities and insurance offered through LPL or its affiliates are:

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal.

The rule of 72 is a mathematical concept and does not guarantee investment results nor functions as a predictor of how an investment will perform. It is an approximation of the impact of a targeted rate of return. Investments are subject to fluctuating returns and there is no assurance that any investment will double in value.

This material was prepared by LPL Financial, LLC

Tracking #1-05363539

Financial Planning and Money Management for Seniors

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Navigating the financial landscape in retirement can be challenging. In the transition to living on a fixed income, understanding how to manage money becomes crucial for maintaining a comfortable lifestyle. First Financial is dedicated to helping those approaching or in retirement, gain the financial literacy and planning needed to fully enjoy it. Here are some key areas of focus for managing finances as a senior.

Creating and Managing a Budget

A budget is essential for anyone looking to manage their finances wisely, especially for seniors. It’s all about understanding where your money is going each month – and First Financial’s online budgeting resources can help. By tracking your spending, you can identify areas where adjustments can be made. This could mean finding more cost-effective insurance options or reducing utility bills. It’s also wise to allocate a portion of your income to savings, preparing you for unexpected expenses without worrying about where you’ll need to take that money from.

Digital Finance Management

The digital era offers convenient solutions for managing money and paying bills. Electronic banking tools such as the First Financial Mobile App and online bill payments can help avoid late fees and reduce the need for physical trips to a branch or the post office.

However, it’s crucial to stay vigilant by regularly checking bill accuracy and keeping online security measures up to date. It’s also important to watch out for digital banking scams, which often target seniors. If you’re unsure about a message you’ve received that appears to be from your bank or something isn’t sitting quite right – trust your instincts, don’t give out any personal information, and call your financial institution directly using the number on the back of your card or from their website.

Earning Additional Income

Retirement doesn’t mean the end of earning potential. Many seniors find joy and additional income in turning hobbies into part-time jobs or consulting in their prior field of expertise. It’s important to consider how this extra income might affect your overall financial plan, including taxes and healthcare costs. Consulting a tax professional can help you navigate these considerations.

Document Organization and Protection

Keeping financial records and personal documents secure yet accessible is important for seniors. It’s advisable to store essential documents in a safe place at home and consider a safe deposit box for irreplaceable items. Digital copies of important documents can also provide an additional layer of security and accessibility.

Enhancing Financial Literacy

The journey to financial literacy involves continuous learning and adaptation. Seniors can benefit from resources provided by federal agencies and consumer protection groups, which offer valuable information on managing finances, understanding banking products, and safeguarding against fraud.

Financial literacy is a vital tool for seniors aiming to live their retirement years to the fullest. By understanding how to budget, manage digital finances, and make informed decisions – senior adults can enjoy peace of mind and financial stability. First Financial is here to support you every step of the way with resources and guidance tailored to your unique needs. For more tips on managing your finances and preventing fraud all year long – subscribe to our blog. If you’d like to speak with a financial advisor in the First Financial Investment & Retirement Center, call 732-312-1534 or visit a branch near you.

Caring for Aging Parents

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The cost of care for the elderly continues to rise. If you have aging parents who need assistance, there are important considerations and resources that can help them grow older gracefully.

First, let’s consider the various living options. Depending on their independence, your parents may be able to continue living in their current home. However, you may need to make safety modifications, which can get expensive. For instance, a first-floor bathroom, grab bars in hallways in bathrooms, and an emergency response system may be necessary.

If they need assistance with meals, Meals on Wheels is free for anyone over 60 years of age.

You might also consider an in-home aide if your parent needs additional personal assistance.

Some families choose to move an aging parent into their own home. If your parent has dementia or other health issues, adult day care can be helpful, as it allows them to socialize with other adults.

If your parents are independent and can care for themselves, they may be eligible to enter a continuing-care retirement community, where they can become eligible for future nursing care, if it becomes necessary. Consider purchasing long-term care insurance, which can help pay for nursing home costs or the cost of an in-home aide.

If your parents need the more comprehensive care provided by a nursing home, research the options extensively. You may need to reserve a space far in advance, as waiting lists are often long at popular facilities.

Just as you consider the various living options for your parents, so too, should you research the financing options for long-term care, which can be a tremendous burden for many adults.

Medicare will only pay the full cost of professional help if a physician certifies that your parent requires nursing care and if the services are provided by a Medicare-certified home health care agency. Even in such a case, Medicare will pay for nursing home care for the short-term only, with benefits restricted to low-income individuals with limited assets.

Tax considerations can help offset some of these costs, as you can claim a federal tax credit up to $3,000 off the cost of in-home care or day care.

No matter your current situation, developing a financial plan can be an important step in providing adequate support for your parents’ future well-being. Consult with a financial professional if you need help reviewing your plan or options.

Questions? Contact First Financial’s Investment & Retirement Center by calling 732.312.1534.  You can also email mary.laferriere@lpl.com or maureen.mcgreevy@lpl.com

Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker/dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. First Financial Federal Credit Union (FFFCU) and First Financial Investment & Retirement Center are not registered as a broker/dealer or investment advisor. Registered representatives of LPL offer products and services using First Financial Investment & Retirement Center, and may also be employees of FFFCU. These products and services are being offered through LPL or its affiliates, which are separate entities from and not affiliates of FFFCU or First Financial Investment & Retirement Center.

Securities and insurance offered through LPL or its affiliates are:

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal.

This material was prepared by LPL Financial, LLC

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Common Retirement Investment Mistakes

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Having enough money after you retire is a big concern today for Americans. In fact, only roughly one-in-four Americans feel very confident that they will have enough money to live comfortably when they retire, according to a recent survey.

The concern is certainly justified. After all, Americans are living longer lives than ever before, and the uncertainty of being able to maintain a lifestyle for 20, 30, or 40 years after you retire is understandable.

While there’s no single action that can increase your confidence if you’re nearing retirement age, there are several key investment mistakes that, if you avoid them, can help you maximize your retirement savings and perhaps give you the confidence to help you retire with less financial stress. These are the things you’ll want to avoid.

Mistake number one: Failing to maximize your contribution. If you can afford to do so, contributing the maximum amount to your employer-sponsored retirement plan will increase the chance that you’ll reach your investment goal. The earlier you start, the better. It will allow your investments the opportunity, along with any potential earnings to grow on a tax-deferred basis.

Mistake number two: Failing to develop a plan. Without a plan, it’s difficult to understand whether your savings will help support your living standard. As such, establish a plan early, laying out clear goals that incorporate the number of years until your planned retirement. This will help you create a practical investment plan for your goal. Without such a plan, it will be difficult to understand whether your savings will provide you with the living standard to which you’ve grown accustomed and for each year of your retirement.

Mistake number three: Adopting a short-term investment mindset. The stock market fluctuates a lot and in the short term, there’s a decent chance of price volatility. Therefore, selling off your holdings whenever the market drops is a sure way to incur losses that impact your long-term goals.

Mistake number four: Trying to be perfect. Trying to time your investment decisions on when the market will be at its lowest or highest is risky business, and it can lead to missed opportunities. Invest your money with an eye toward the long term.

Mistake number five: Putting all of your financial eggs in one basket. Some investors make the mistake of investing in just one fund or asset type. This is risky business if the market swings and impacts that one holding. On the other hand, if you diversify your risk over a mix of assets, this can help control any potential losses during sharp market swings.

By avoiding these common mistakes, you increase the potential for investment success and reaching your retirement savings goal.

Questions? Contact First Financial’s Investment & Retirement Center by calling 732.312.1534.  You can also email mary.laferriere@lpl.com or maureen.mcgreevy@lpl.com

Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker/dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. First Financial Federal Credit Union (FFFCU) and First Financial Investment & Retirement Center are not registered as a broker/dealer or investment advisor. Registered representatives of LPL offer products and services using First Financial Investment & Retirement Center, and may also be employees of FFFCU. These products and services are being offered through LPL or its affiliates, which are separate entities from and not affiliates of FFFCU or First Financial Investment & Retirement Center.

Securities and insurance offered through LPL or its affiliates are:

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

This material was prepared by LPL Financial, LLC

Tracking #1-05363542

Source: 2020 Retirement Confidence Survey Summary Report

 

Financial Planning for Major Life Events

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In the journey of life, certain events stand out as significant milestones. These major life events, from starting a new educational path to retirement – shape our future in profound ways. First Financial can help you understand the financial implications of these events while maintaining sound financial health. Let’s delve into the intricacies of financial planning for these pivotal moments.

Continuing Education

The cost of education, be it college or post-graduate studies, is a significant investment. Exploring options like custodial accounts and 529 plans can ease the burden of saving for your or your child’s education. Considering the return on investment (ROI) is crucial, not just for traditional university programs but also for additional training that could lead to lucrative careers.

Getting Married

Getting married is more than a romantic commitment, it involves serious financial planning too. Budgeting for the big day is just the start. Discussing financial management with your partner, considering pre-nuptial agreements for asset protection, and updating insurance are vital steps in this journey. This is a time to re-title assets, revise estate plans, and align investment strategies with your shared goals.

Parenthood

Planning for a new addition to your family means preparing for pregnancy expenses and ensuring adequate health coverage. It’s also crucial to understand the financial aspects of fertility treatments or adoption if applicable, ensuring you’re ready for this life-altering event.

Navigating Divorce

If facing a divorce, it’s essential to prepare for its legal and financial implications. Maintaining financial independence and planning for life post-divorce are critical steps in this challenging phase.

Unforeseen Health Events

Illness or personal injury can strike unannounced, making health insurance and understanding workplace coverage indispensable. Similarly, the death or severe illness of a loved one necessitates having life insurance and an estate plan in place.

Buying or Moving Homes

Buying or moving homes involves more than just finding the right place to live and being able to afford your new monthly mortgage payments. It requires financial planning for insurance, property titling, home furnishings or renovations, and potential relocation costs too.

Career Shifts

Whether it’s about changing jobs or starting your own business, these decisions demand careful financial planning. Consider the costs of job training, the importance of emergency savings, and the need to protect personal assets. Developing an exit strategy, especially for business owners – is a prudent step. If you have questions about starting your own business, reach out to our Business Development Team today.

When planning for retirement, it’s all about ensuring a financially secure and fulfilling post-work life. Shifting investment strategies and planning for higher healthcare costs are also part of this stage, as is considering where you might want to settle down during your golden years.

Handling Windfalls

Receiving a large sum of money, be it from an inheritance, settlement, or a business sale, requires strategic planning. Consulting with advisors and tax attorneys is crucial to make the most of this financial bonus.

Economic Hardship

In times of economic hardship, like job loss or inflation – being prepared is key. This involves maintaining an emergency fund, avoiding debt, and making informed decisions.

Financial planning for major life events is not just about securing your immediate future, it’s about ensuring long-term happiness and security, regardless of life’s unpredictable nature. By preparing for both the expected and the unexpected, you can set the stage for your overall financial well-being. And if you need a little helping hand, check out our Financial Helper Loans – designed to help you manage life’s unexpected or necessary expenses.*

First Financial is your financial partner, no matter what happens in your life. To talk to a representative, call us at 732-312-1500, or visit a branch today.

*APR = Annual Percentage Rate. Rates are subject to change. Not all applicants qualify, subject to credit approval. A First Financial membership is required to obtain a Personal Loan, and is open to anyone who lives, works, worships, volunteers or attends school in Monmouth or Ocean Counties. A $5 deposit in a base savings account is required for credit union membership prior to opening any other account/loan. See credit union for details.