As a parent, you may have lofty goals to save early and often for your child’s college education while also saving for your retirement. But as life unfolds your plans may take a detour, especially in the aftermath of stock market volatility and a tough economy. Perhaps your retirement accounts have taken a hit and you’re looking for ways to build them up. At the same time, kids may need help paying for rising college costs.

Many parents wonder:

• Should I focus on saving for retirement or college?
• Should I save for both goals equally?
• Should I save more for the goal that comes first chronologically?

The answers depend on your unique situation, but in general, it makes sense to put your retirement savings first. Students have numerous opportunities to manage college costs, from taking out low-interest student loans to choosing a less-expensive school or working through college. They have decades to pay off the debt, whereas your retirement horizon may be approaching quickly.

Before the College Years

Maximize retirement savings first. If your employer matches your contributions up to a certain amount, make sure to contribute enough to receive this benefit. Try to increase your contributions each year, or whenever you get a raise. Keep in mind that retirement assets are sheltered from the aid formulas used to calculate student aid, so it can be beneficial to build up funds in your retirement accounts vs. other taxable accounts.

Save for college next. Consider directing additional savings to a 529 college savings plan. Contributions compound on a tax-deferred basis and are tax-exempt when the money is used for qualified higher education expenses. Family members can contribute as well, so you may encourage grandparents and other relatives to contribute to your child’s 529 plan instead of giving cash gifts.

While the Kids Are in College

Leave retirement assets alone. You may decide to reduce retirement contributions in order to help with tuition payments. However, you should avoid withdrawing money from retirement accounts to pay for college. Doing so may shortchange your retirement future and reduce next year’s financial aid eligibility, since retirement distributions are considered taxable income.

Consider other sources of funding. Financial aid, student loans, scholarships and grants may help fund higher education if your child qualifies.

After Graduation

Refocus on retirement savings. With college bills out of the way, make it your mission to ramp up contributions to your retirement plan. If your finances are in great shape, you may have the flexibility to help your child pay off student loan debt in the future, should you choose to be so generous!

Ask a financial advisor for help setting your savings strategies for retirement and college education. Contact Jeffrey Hamm at Navigator Financial Planning Services at 228-474-3427 to review your options.

Representative is not a tax advisor or legal expert. For information regarding specific tax situations, please contact a tax professional. For legal advice, consult an attorney.

Representatives are registered, securities are sold and investment advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor, 2000 Heritage Way, Waverly, Iowa 50677, toll-free (866) 512-6109. Nondeposit investment and insurance products are not federally insured, involve investment risk, may lose value and are not obligations of or guaranteed by the financial institution. CBSI is under contract with the financial institution, through the financial services program, to make securities available to members.

Saving money is most people’s mantra in this economy. While prices of necessities like gas and groceries continue to rise, most of us are looking for ways to save money in other areas.

By taking care of things you’ve already spent money on – especially big-ticket items – you can delay the need to replace them, perhaps for years. Take a look around and evaluate where you could extend the life of your stuff.

Maximize the Life of a Product

The kitchen: Ranges and refrigerators can have long lives if treated right. Burners on gas model ranges should be inspected regularly and the burner ports cleaned carefully. Refrigerator door gaskets should be cleaned with water and mild detergent. The condenser coil should be dusted or vacuumed at least once a year too. The filters on dishwashers should also be checked regularly for debris.

The living room: Your living or family room can easily be the most used room of the house. Carpets and rugs tend to be abused the most, so think about having them cleaned professionally every year or so. Use pads under smaller rugs and rotate them often. Regularly clean TV screens and make sure the air vents are not blocked so the TV doesn’t overheat. Your computer should have up-to-date antivirus software. Always shut your computer down before moving it.

Lawn and garden: Lawn mowers should have blades sharpened at least once a mowing season and the underside cleaned of grass and debris after each use. Check the owner’s manual for battery maintenance for your mower – keep it charged year-round if needed.

The car: Tires are a necessity we often don’t think about until a problem arises. Consult your owner’s manual for information about inspecting them for wear, and always keep them properly inflated.

Washer and dryer: Take care not to overload the washer. For front-load washers, keep the door ajar after each use to allow air circulation and prevent mold. Clean the lint filter after each use of the dryer, and clean the air duct at least once a year.

Save for Your Next Big Purchase

Save as you spend with a Save’N Up account at Navigator. The Save’N Up Debit Card can help you build savings while you’re spending. When your well-cared-for items finally need to be replaced, consider using your savings to pay for them outright rather than having to take on debt. Call us today to open an account at 228-475-7300 or visit us online at www.navigatorcu.org.

With the current shaky economy, many people know that the stress of having too much debt can be a pain in the neck. But did you realize that it can also – literally – be a pain in the back, the head and the stomach? A poll conducted for the Associated Press and AOL found that people with higher levels of stress caused by debt reported more health problems than those without much stress from debt.

Americans may be just sick over the state of the economy, but there are steps you can take to keep your debt load and stress level in check. Here are some tips I’ve found to be helpful and hopefully you will too:

Create a realistic budget so you can live within your means. Write down everything you spend for a couple months, then look for places to trim expenses. You might also want to consider ways you could boost your income.

Contact your creditors if you’re having trouble making payments. It may be uncomfortable, but dealing with financial problems head on is the most effective way to keep them from escalating.

Seek expert help. A Certified Financial Counselor at Navigator Credit Union can help you analyze your situation and find a way to pay off debt. Consolidating your debt may lower your monthly payment and total interest charges.

Learn healthy ways to deal with stress. You may have other pressures in your life, too, such as work or family. Handling stress in a healthy manner – and steering clear of counterproductive strategies such as abusing alcohol, overeating or isolating yourself – can help keep stress from affecting your health..

Part of our mission is to help you achieve financial success – and we have all the right tools to do just that. Give us a call if you need help getting your debt under control. Ask how you can consolidate debt to create a little breathing room in your budget. 

Warmest regards,

Laurin F. Avara
President & CEO

If you remember the popular 1950s sitcom, “I Love Lucy,” you may recall that best friends and neighbors, Lucy and Desi Arnaz and Ethel and Fred Mertz, loved doing everything together. A group vacation, however, nearly ruined their friendship.

Lots of friends decide that taking a vacation together could be more enjoyable than traveling alone. With these common sense tips you can help ensure that you remain friends following the trip, too.

1. Share the planning. Selecting a destination and what activities you’ll be doing can be great fun when it’s a group decision. Perhaps you share a common interest or hobby, such as touring museums or playing golf. Consider planning your trip around what you have in common.

2. Make advance arrangements. Booking travel, accommodations and some activity reservations ahead of time can reduce decision making and stress during the trip itself.

3. Respect each other’s budgets. If one friend has a stricter travel budget than the others, consider making choices that stay within monetary guidelines for all parties.

4. Look out for each other. A major benefit of traveling in a group is greater safety. You can also help each other if anyone needs assistance.

5. Be willing to compromise. Unplanned opportunities may pop up during your travels. Don’t be afraid to stray from your itinerary to stroll through a street bazaar or stop for photo opportunities. Try to be flexible so that everyone gets to do something that interests them.

6. Remember you are friends. Most trips come with minor setbacks. Going with the flow and respecting each other’s feelings goes a long way toward remaining friends once back home.

Your Financial Travel Companion

Your Navigator debit card or credit card makes managing vacation finances convenient and secure. Your card makes it easy to book flights and accommodations in advance and pay for purchases during your travels.

How do you hope to spend your retirement … traveling the world? Hitting the links? Playing with grandkids? Now, keeping that image firmly in mind, think about this: How are you going to pay for it?

Today’s workers will have to rely more heavily on their own savings and investments than previous generations did. Many previous retirees depended on traditional pension (defined benefit) plans. But private sector pension plans are disappearing. Among private sector workers who have a retirement plan at work, the percentage with pension plans dropped from 84% in 1979 to 33% in 2008.*

If you think Social Security will support you, think again. In 2009, Social Security benefits made up an average of 38% of the total income of people age 65 and older in the U.S. The average benefit in 2011 was a little more than $14,000 a year** – hardly enough to fund your retirement dreams!

An IRA Can Help You Meet Your Goals

Choosing to save for your retirement by opening and contributing to an individual retirement account (IRA) at Navigator is a smart move. It can help you work toward making your retirement all you want it to be.

IRAs offer tax benefits that help you reach your goals. There are two main types of IRAs – traditional and Roth – and each comes with a different set of tax advantages. Our experienced professionals can help you decide which is better for you.

Traditional IRAs come with the potential for your contributions to be tax-deductible (see your tax advisor for deductibility in your situation). They also grow tax-deferred, so you won’t owe tax on the earnings in the account until you make withdrawals in retirement.*** The tax deferral allows your money to grow faster than it would in an equivalent taxable account earning the same return. Plus, when you reach retirement, you may be in a lower tax bracket.

Anyone who’s younger than age 70½ and has earned income – or their spouse – can contribute to a traditional IRA. After age 70½, you are required to begin making withdrawals from a traditional IRA.^†

Roth IRAs offer the potential for tax-free withdrawals in retirement. You must have reached age 59½ and held the account at least five years.^†† The trade-off is that contributions to a Roth IRA are never tax-deductible.

There is no age limit to contribute to a Roth IRA, nor are you required to begin taking distributions at age 70½. But you or your spouse must have earned income to contribute.

Open or Contribute Today!

The annual contribution limit for IRAs, which increases with inflation, is currently $5,000; $6,000 for those 50 and older (assuming your earned income is greater than that amount). You can contribute to an IRA for the 2012 tax year until April 15, 2013. Get started on your dreams today. Contact a member service representative at Navigator for help.

*

Source: Employee Benefit Research Institute, www.ebri.org

**

Source: Social Security Administration, www.ssa.gov.

***

Withdrawals prior to age 59½ may be subject to ordinary income tax and a 10% tax penalty.

†

Required minimum distributions must begin after age 70½. Otherwise a penalty of 50% of the amount that should have been withdrawn, but wasn’t, may be imposed.

††

Premature withdrawals are subject to ordinary income tax and a 10% tax penalty.

Please note that neither this financial institution nor any of its affiliates give tax or legal advice. Consult your tax advisor regarding your individual circumstances.

Investment products:
Not federally insured
Not a deposit of this institution
May lose value