Category: Personal Finances

How to Save $1,000,000 for Retirement

Retirement

Retirement, 401(k), stocks and bonds, the subject matter of saving for the long term isn’t often as appealing as saving for the short term. Perhaps that’s why nearly three-quarters of Americans are underestimating how much they’ll need for retirement. The United States is on the brink, if not already in, a retirement crisis. However, at Peoples Bank & Trust we believe retirement saving can still be easily accomplished, there are just a few steps to get started:

 

  1. The first thing you’ll need to do is determine when and how you want to retire. There are an endless variety of retirement lifestyles, each of which entails a different budget and distribution structures. Some popular options include traveling by RV, retiring in a new location, downsizing your home in the same area, pursuing a new business or passion,  and of course maintaining your current lifestyle without the need for work. By choosing your lifestyle goal we can begin to structure your savings plan around what you hope to achieve.
  2. Once you know what you want, start saving ASAP. As the old adage goes, “Slow and steady wins the race.” This is phrase is the epitome of retirement. If you save less but start earlier you will consistently save more than if you deposited higher amounts later in life. We recommend utilizing any 401(k) or retirement savings plans your employer offers. If you are self-employed or don’t have access to retirement benefits, an IRA is a great self-funded option to help you save and take advantage of valuable tax incentives.
  3. Create a goal for how much you need to save. Financial Mentor offers great calculators to help you plan your path to retirement.  They can help you determine your strategy to become a millionaire or show you how much you may need beyond $1,000,000. Saving more than one million could be more pertinent than you think. Today’s research indicates that millennials may need to save more than their baby boomer or gen x counterparts.
  4. Add any available surplus funds to your retirement savings. Simple adjustments like changing grocery stores, carpooling, and bringing your lunch to work can save more than you think! If you are able to find some additional ways to save, put those funds to work by contributing to your retirement accounts.
  5. Diversify your retirement savings. Instead of putting all your funds in company stock, corporate shares, or your 401(k), we suggest diversifying your savings options to ensure your risk isn’t higher than you need. Speaking with a professional adviser could help you determine what type of risk you’re comfortable with, and how you would like to your contributions to grow over time.

 

By continuing to save each and every month you can beat the odds and have a fulfilling and successful retirement. The most important thing to do is to start. If you’d like to open a dedicated savings account, IRA, or CD, our dedicated team is here to help. Stop by or drop us a line today to get started today.

Who Says You Can’t Make a Snowball in the Spring

Debt Elimination

While the weather can be as predictable as the Powerball, one thing that you can always count on through the seasons is your ability to snowball anytime you want. However, before you start creating snowmen out of ice shavings, let’s first cover what a snowball is. Typically in financial terms, snowballing is an action in which you structure your debt payment to decrease the overall time and cost associated with any accounts payable you have.

Here’s how it works: To begin a snowball, you first need to know what debt(s) you have on the table. By creating a list of your known debts, and also checking your credit report for any unknown ones as well, you can ensure you have all your bases covered. Then, using that information, prioritize your debts by amount from smallest to largest. Once you have them organized you can begin to set-up or continue minimum payments across all installments.

For the next step, you’ll want to look through your current spending and earning to see if there are ways you can allocate additional funds each month to pay off your debt. Whether it’s an extra $50 or an extra $500, every penny matters!

These additional funds can then be assigned to the debt you indicated at the lowest amount. Each month you’ll have a little extra money to help pay off that expense even sooner. Once the balance reaches zero, the snowball officially begins! Now that you have eliminated one payment, you can utilize all the funds that were going towards that expenditure and push them towards the debt with the next lowest amount.

Continue to do this process until each unwanted debt is paid off. Debts such as your mortgage are a great thing to pay off early, but may not be necessary to include in your debt snowball. Our helpful mortgage lenders can always assist in restructuring your payments if you are truly passionate about eliminating all debt.

If you’re ready to get started, we have some great money savings tips to help you find those extra dollars!

  • Switch to a Discount Grocer: You could reduce your monthly grocery bill by up to half when you shop at a bulk or discount grocer instead of a brand-oriented chain.
  • Bring Your Coffee and Lunch: Both of these items could be costing you more than you think! The typical American lunch runs approximately $12.00 and an average latte could cost you $3.50 a day. By bringing both food and beverages from home you can drastically decrease your monthly expenditure for dining.
  • Take Advantage of Apps: New technology based tools like Mint, Honey, and RetailMeNot, offer continuous and unique ways to save and manage your personal finances. By taking advantage you can not only save on unexpected items but better visualize your budget through tracked spending categories.

At Peoples Bank & Trust we are excited to help you succeed on your journey toward financial success. If you’d like to set-up automatic payments, or monthly transfers, our Online Banking can help! Visit our website to get started today.

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

The Latte Factor 101

Money Management

Making your way through the drive thru every morning before 7:30 may give you a refreshing start to your day, but at what cost? The ideology that coffee shops and other retailers capitalize on is the notion that these small expenditures add a little excitement to your day without a hefty bill. However, when you enjoy perks like these on a daily basis, they add up, and quick!

Financial author, David Bach, is the mastermind behind the Latte Factor. This helpful calculator enables shoppers to see not only the cost of an individual purchase but the lost value it could cause for further investment as well.

For example:

If you purchase a $4.45 grande latte from Starbucks every weekday for the next thirty years, the total cost of your daily coffee is $34,786.29. However, if you had put that weekly $22.25 expenditure into an investment with an average earnings rate of eight percent or more, you could have made $109,225.02 in earned interest during that time. This showcases the true cost of a daily latte as the overall product expense ($34,786.29) + the lost interest ($109,225.02) = ($144,011.30)

While less than $5.00 a day may seem like chump change, compounding these expenses on a long-term level can showcase helpful savings opportunities to maximize your retirement savings efforts and limit unnecessary spending.

This equation doesn’t work just for coffee either! If you find yourself splurging for a fast-food lunch break, buying extra sodas at work, or even paying for a magazine you hardly read, you’ll soon find that all of those little expenses can make a big impact.

To help break some common splurging habits Peoples Bank & Trust recommends the following:

  • Before making a purchase, ask yourself, “Should I spend these funds or should I invest them?”
  • Use free services like our Online Banking to visualize your spending and see areas where you can cut excess.
  • Remember the rule of 7. On average, invested funds will double every seven years, without any added contributions.
  • Utilize accounts like IRA, HSA, and 401(k) to maximize the dollars you invest and save.

If you have any questions on how to get started, or want to learn more about how to make your money work for you, we’re are here to help. Just stop by or drop us a line.

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

Why Checking Your Credit Score Matters

Personal Finance

Across television ads, online banners, and even chit-chat among relatives, the phrase, “Check your credit score,” seems to be popping up everywhere. If something so important needs constant reminders, why does it have such a key importance in your personal finances? Well, the truth is that it doesn’t, your financial actions do.

A credit score is comprised of five different components which indicate how you as an individual are perceived in terms of repayment and risk. Individuals who pay their bills on time, have been responsibly utilizing loans and credit cards, and who don’t maintain too much debt typically have a higher score. While the score itself is seen by potential lenders as a positive or a negative, the true meaning it portrays is to showcase whether you as an individual are a promising person to repay any funds you are lent. This score can be changed for the better or the worse depending on the actions you take.

This is why checking the report itself can be beneficial for your personal financial reputation. By reviewing your history on a recurring basis you can quickly identify any mistakes or missed payments that need correcting and do so in a timely manner.

For those who do not check their score scenarios like the following could occur:

Say you accept a job in another town, and after moving, you realize you still need to forward your mail. After a week or two in the new place, you go online and make the switch. However, unbeknownst to you, there was one last utility bill that was mailed to your prior address after you moved away. Weeks go by, even months, only now you’re connected with a new utility company, and you have new bills to pay. Behind the scenes, however, your credit score could be declining, because that one last bill has now been reported to collections. Your credit history will now note that a payment has been missed, and the longer it is missed the more it could damage your credit score.

Situations like this happen to many Americans, and while sometimes they can’t be prevented, the damage they cause can be minimized by checking your credit score on a monthly basis. Instead of allowing a payment like this to retain a balance for over 120 days, you can catch it under 90 and minimize any potential negative effect on your score.

This is just one example in how checking your credit score can impact your financial health for the better. Other benefits include fraud prevention, better financial negotiation, and more accurate personal financial records.

Our team at Peoples Bank & Trust would be happy to walk you through the information from this service and is always available to answer any questions you may have.

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

6 Traits of People with Excellent Credit

Credit Score

Did you know that your credit score is considered when you purchase a car, apply for an apartment, or buy home insurance? To increase your potential for prosperity in these future endeavors, Peoples Bank & Trust would like to share the top traits of consumers with excellent credit, to help inspire you towards success. See if you can work towards these benchmark goals, and push your credit score to the next level:

  1. They are organized. Unlike most Americans, people with excellent credit utilize a monthly budget to help them track and plan their spending for both long-term and short-term goals. Whether it’s a household budget, vacation budget, or wedding budget, keeping your money organized can make a big difference in how you visualize your spending strategies.
  2. They are patient. Instead of purchasing something that catches their eye at the store, those with excellent credit have mastered the skill of waiting. By sleeping on the idea of the purchase, and talking about it with a significant other or friend, they can ensure their money is not wasted on unneeded expenditures. Not only does this help to reduce spending overall, but also ensures that alternative options can be weighed before they reach a decision.
  3. They are efficient. Technology offers a wide array of tools to help users make the most of their finances; our favorite example of this is automation. Those with excellent credit are great utilizers of financial automation to help pay recurring bills, create monthly savings deposits, and assign allowances for their kids. By putting their money on a consistent timeline, they can ensure that all of their financial obligations are completed on-time each and every month.
  4. They are timely. Outside of their scheduled payments, people with excellent credit tend to regularly pay their miscellaneous bills early or on-time. This allows them to be certain their monthly debts are paid before they look to complete any additional transactions. To further ensure they have not missed a payment, these individuals tend to also check their credit score on a monthly basis. Typically, if a payment is missed or there are too many inquiries in too short of a time, this will raise a flag for credit reporting bureaus, causing them to lower the associated credit score. This can serve as the clue for the consumer to see an issue and resolve it before any further damage is done.
  5. They are forward-thinking. People with excellent credit aren’t thinking about the next day, or the next week, they’re thinking about the next 5, 10, or 20 years. Their goal is to have a continuous history of fiscal success, while also building savings for retirement, education, and other milestones throughout life. By preparing for these achievements ahead of time, they can create a fund that covers the entirety of their needs instead of only a portion.
  6. They are goal-oriented. No one ever said money management was fun, but those with outstanding credit know it’s worth it. Whether it’s creating a better life for their kids, reaching their personal dream, or obtaining the capabilities to create a new one, these people create a well-rounded vision of where they want to be, and how long it will take them to arrive.

With these traits, you too can accomplish your financial dreams! Peoples Bank & Trust would love to help you along your fiscal journey. Check our blog throughout the month for helpful and informative tips and tricks to help you continue to succeed in your money management.

 

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

Where Will You Be in 5 Years?

Financial Goals

Establishing your personal finances isn’t an overnight process, but deciding to start can be! Whether you want to save $1,000,000 for retirement, pay your child’s education, or become debt-free, choosing your next fiscal goal is the first step. At Peoples Bank & Trust we want to help you not only achieve your next financial aspiration but each and every one that follows! To help you start planning for the future we’ve compiled this strategic list to ensure you start your journey on the right foot. Here’s where to begin:

The first 2 Years:

  • Establish Financial Goals
  • Pay Yourself First
  • Create an Emergency Fund

During these years your primary priority is creating a solid foundation for your personal finances.  By deciding which goals mean the most to you, establishing monthly savings, and working those initiatives into a well-rounded emergency fund, you can be certain that whatever life throws at you, you and your finances will find a way to get through it.

Years 3 and 4:

  • Begin Your Debt Snowball
  • Build Your Credit History
  • Start Your Retirement Savings

The following two years will be creating the framework of your ongoing financial aspirations. These components will help ensure that your continued savings efforts are brought to fruition through retirement planning and debt elimination. Once you become debt free, the world is your oyster! Your final step to financial freedom is choosing where you want your journey to take you next.

The 5th Year:

  • Choose a Giving Strategy
  • Begin Investing
  • Determine Your Next Goal

Throughout the final year of this financial compilation, you should become focused on the future. Now that your debts are erased, your savings have been started, and you have put your money to work, it’s time to decide what you want to do with those funds. This is an extremely personal choice and should be made with the best intentions and available information. However, should you need assistance or further insight into possibilities, our dedicated team is here to help.

 
Over the next five years, we believe you can accomplish all of these endeavors and more. If you’re ready to begin your financial journey, stop by your nearest Peoples Bank & Trust branch today and speak with one of our personal bankers to get started. We’d love to help you achieve your personal and financial goals, one year at a time!

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

21 Thoughts You Have Before Retirement

Thoughts Before You Retire

The journey to retirement is an ongoing process, filled with a marathon of decisions. We at Peoples Bank and Trust Co. understand that each phase of your life holds different questions and concerns along with new and exciting adventures. If you’re curious what your path to retirement may look like, take a glance at these common retirement thoughts throughout each decade of savings:

Age 20-30

  1. Should I pay off student loans or save for retirement?
  2. My 401(k) should be plenty for now.
  3. How much money do I really need to retire?
  4. If I can save something toward retirement, I feel like I’m doing good.
  5. What are the differences between a Roth 401(k) and a Traditional 401(k)?

During this time the most important part of your retirement savings is getting started. Whether this is through your company’s 401(k) or an independent IRA, the sooner you save, the more funds you can accumulate through interest. While paying down your student loans are equally important, the one commodity they could limit for your retirement is time. Even by saving a small amount early, you can have the potential to save more in the long run.

Age 30-40

  1. Kids, cars, and a home – where do I find extra income to save for retirement?
  2. I got a bonus! Should I save it or spend it?
  3. Save it! My future self will thank me.
  4. When do I really want to retire?
  5. I can’t wait until I don’t have to work for a living anymore.

Throughout this decade you may see a lot of exciting milestones. Whether these come in the form of promotions, expanding families, or other new personal opportunities, they each will add to the tasks you’re currently juggling while saving for retirement. To help manage your life and your money, we recommend automating your savings to ensure that no matter what life has in store, your retirement savings remains consistent.

Age 40-50

  1. I’d love to still have money to spoil any future grandkids!
  2. I’ll open an IRA to supplement my 401(k).
  3. I’m going to see what I need to save to still reach my savings goal.
  4. My savings should have a great future if I stay on track!
  5. I don’t want to have to work unless I want to.

Now is when you want to begin fine-tuning your retirement to the specific details. If you would like to retire in a certain location, you’ll need to budget the anticipated cost of living in addition to any other annual spending. This is also the perfect time to determine the age you would like to retire. The average age for Americans to retire is 67, however, this can be lower than 50, or higher than 75, it all depends on your preferences and planning.

Age 50-60

  1. I can’t retire yet, I’d just be bored!
  2. I’ll retire after 60; I can still work part-time if I want to.
  3. Thanks younger me!
  4. I can do all the things I love during retirement! Gotta love that compound interest.
  5. I’m so glad I started saving when I did.

After you decide when and where you want to retire, the final specifications begin to unroll. When you start taking distributions, and how much you take, is completely up to your discretion, depending on the retirement account. Many Americans continue working part-time, in order to bring in additional income and give their savings several more years of compounding interest. This can be a valuable option, but it’s not for everyone.

6 Ways to Win with Your Budget

Savings Tips

Do your savings goals make you feel frozen? Get back on the ice this season, and let Peoples Bank & Trust help you win your personal financial game. We’ll show you how to keep pushing forward with these strategic hockey tactics:

Find the 5-hole.

One of the first and most important ways to save is to keep your eyes open! Whether it’s taking advantage of grocery store specials, buying household items in bulk, or cutting spending from your monthly budget, the biggest opportunity you have while saving money is continually searching for new ways to save.

Complete the hat-trick.

Before you start saving for the short-term items, be sure you have the long-term set in place. Just as in hockey, there are three things you need, to make the best play of the game. Start by setting up an emergency savings account, to help guard your savings. Follow up by opening a personal retirement account such as IRA, to continually grow your savings. For the last trick of the play, we suggest creating a 529 or Coverdell account to help save for your child’s future education. These three accounts will help not only you score your savings goals but will assist you in winning your entire financial game as well.

Put your debt against the boards.

Show your debt whose boss, and push them against the glass. By aggressively paying off your outstanding debt, you make additional funds available to further your monthly savings. We recommend paying the minimum payment on each debt, and then using any surplus funds to add extra payments to help pay it off sooner. Once you have paid off a debt, use the funds from that allocation to help erase the next obstacle, one payment at a time.

Place your spending in the penalty box.

While working on your savings goals, look into your monthly spending to see where you can cut costs. Consider reducing your funds for eating out and entertainment. The extra money can go towards your debt, or once paid off, can help you achieve your savings goal sooner!

To help, there are some innovative apps available that can you visualize your various expenses.

Beat the buzzer.

Saving for retirement is a marathon, not a sprint. Like hockey, if you don’t play until the end, you may lose the game in the last five minutes. To help prevent this, we recommend working with a personal financial adviser, ensuring your funds are in the right place at the right time. If you make a pass and transfer them to stocks too late, you could lose money and valuable time. We suggest creating a strategic and well-coordinated retirement plan to make certain all your savings get time on the ice, and your key players continue to stay in the game.

Drop your gloves for additional fees.

Whether it’s big banks searching for unnecessary add-ons, or potential financial advisers looking for a percentage of earnings, don’t be afraid to negotiate fees you deem excessive. The business is certain to have referees to let you know if you’re asking too much. However, it never hurts to ask!

 
With our affordable deposit accounts and expert financial coaching, we look forward to helping you sink your upcoming goal in the back of the net! Stop by and meet our dedicated team today!

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

5 Financially Savvy Ways to Use Your Tax Refund

Personal Finances

Getting your taxes done early not only takes one more thing off your to-do list but further allows you to start planning for the future. Working with your tax professional, determine how much your family may receive this year from a tax refund. No matter the amount, we recommend putting it towards your financial goals for the year. Here are some great strategies we’ve tried to get the best bang for our buck:

  1. Max out your 401(k) or Traditional IRA contributions. If you aren’t taking advantage of one of these two accounts, we highly suggest opening one soon! These tax-beneficial accounts help holders accumulate and grow their funds without the burden of tax at the time of deposit. Each account, however, is limited by how much you can contribute. By allocating funds into these account types it may not only help you save for retirement but also allow your money mature throughout the years, with no additional effort.
  2. Make an extra payment on your mortgage or student loan. Paying down your loan is always a great option when selecting financial goals. In the case of a mortgage, you earn more equity as you pay, while with student loans, you gain more momentum towards financial freedom. Instead of adding money to each monthly installment, we recommend creating one lump payment. By doing this you can you create a single but large decrease in your principal amount owed, drastically reducing your associated interest as well.
  3. Save for the 2017 holiday season. While holiday events, family gatherings, and memories are held dear, the burden of the season can pose potential problems for your personal finances. If you struggled saving last year, now is the perfect time to set aside funds for the holidays. Determine how much you need to pay for each aspect of your seasonal activities, and save as much as possible in a separate account from your tax refund. If additional funds are needed, automate your savings to transfer a specific dollar amount to this account each month.
  4. Pay off outstanding credit card debt. With one of the highest interest rates, credit cards are notorious for taking years to pay off. If you want to make a dent in your debt, we recommend tackling one card at a time.  Using your tax refund, see if you can eliminate smaller debts first. Then with the remaining funds, begin paying down each additional credit card. By paying off the card with the least amount of debt first, you can begin to snowball your way to financial freedom!
  5. Start saving for a vacation. Whether it’s a spring break, a summer adventure, or a fall festival, it’s never too early to start saving. Once you have determined a destination, then create a rough budget of the expected expense. Depending on your refund you may be able to pay for the whole trip outright, or you may need to couple the funds with some additional monthly savings. No matter how you choose to save, we recommend keeping your vacation funds in a separate deposit account so you’re not tempted to use them throughout the year.

If you still have questions on how to best use your tax refund, our personal bankers would love to help. At Peoples Bank & Trust, we can assist you in using all your savings options to help make the most of your money. Stop in and see us today!

 

Peoples Bank & Trust Co.

Member FDIC

Equal Housing Lender

How to Save for Retirement at Every Age

Retirement Savings

How much do you need to retire? Will you continue working after age 65? Do you want to travel during your retirement? These are just a handful of questions that are important for retirement preparation. Unlike saving for a home or new vehicle, saving for retirement requires long-term commitment and goal oriented benchmarks. At Peoples Bank & Trust we want to help you succeed as you save, and offer these milestone marks:

Age 18-25: During this point in your life, you are discovering what you want to do, and how to get there. Focus on creating a solid foundation through a monthly budget, and designated emergency fund. If your employer offers a 401(k) option we highly recommend utilizing its potential by contributing the maximum amount your budget will allow. Always be sure to take advantage of a company matching policy if available.

Age 25-35: In addition to your 401(k), we also suggest opening an IRA. This enables you to continue to save without having your funds tied to an employer. Now is a great time to take advantage of other tax beneficial accounts, such as an H.S.A., 529, or Coverdell account. Both the 529 and Coverdell accounts aide you in saving for your child’s education without the burden taxes.

Age 35-45: One of the key aspects of retirement is making sure your money is where you need it when you need it. An experienced financial adviser can help you invest in appropriate stocks, bonds, and other financial strategies. Together you can construct a plan to ensure your risk decreases as you age, and be certain the funds you need are available upon retirement.

Age 45-55: Now is the time to examine your current career path, and determine the year at which you would like to retire. Although the average age of retirement is 66, this may not hold true for you. Whether you decide to retire later at 72, or earlier at 57, you’ll need to have this number available to help continue the development of your savings. To easily calculate your current savings projection, this tool can provide the most accurate information to help you make the most informed decision for your specific goal.

Age 55-66: During this time you may begin to qualify for distributions from your 401(k) and IRA. By postponing these distributions, you can continue to save, and work to build your retirement nest egg before you need it. Additionally, look into various employment options upon retirement. If you decide to work part-time for enjoyment, it could mean added savings to help you afford extra splurges in the future.

Age 66 and up: Once you have officially retired, you will begin to take distributions from your 401(k) and IRA. While both a 401(k) and Traditional IRA require you to accept funds after age 70 ½, a Roth IRA can remain untouched until you decide to use the money. For this reason, we recommend using a Roth IRA when your income levels allow.

We look forward to joining you on your journey to retirement. Whether it’s in 10 years or 50, it’s never too early to start saving!

Peoples Bank & Trust Co.