Sunday, December 11, 2011

How Much Retirement do You Really Need?

What is enough? What is not enough? If you’re considering retiring in the near future, you’ve probably heard or read that you need about 70% of your end salary to live comfortably in retirement. This estimate is frequently repeated … but that doesn’t mean it is true for everyone. It may not be true for you.

You won’t learn how much retirement income you’ll need by reading this article. You’ll want to meet with a qualified retirement planner who can help you plan to estimate your lifestyle needs and short-term and long-term expenses.
That said, there are some factors which affect retirement income needs – and too often, they go unconsidered.
Health: Most of us will face a major health problem at some point in our lives – perhaps even multiple or chronic health problems. We don’t want to think about that reality. But if you’re a new retiree, think for a moment about the costs of prescription medicines, and recurring treatment for chronic ailments. These minor and major costs can really take a bite out of retirement income, even with a great health care plan. While generics have slowed the advance of prescription drug costs to about 1-2% a year recently,1 one estimate found that a 65-year-old who retired in 2007 would need $215,000 to pay for overall retirement health care costs – up about 7.5% from 2006.2
Heredity: If you come from a family where people frequently live into their 80s and 90s, you may live as long or longer. Imagine retiring at 55 and living to 95 or 100. You would need 40-45 years of steady retirement income.
Portfolio: Many people retire with investment portfolios they haven’t reviewed in years, with asset allocations that may no longer be appropriate. New retirees sometimes carry too much risk in their portfolios, with the result being that the retirement income from their investments fluctuates wildly with the vagaries of the market.  Guaranteeing an income by the use of an income rider on an annuity can help provide safety and reduce personal stress.
Spending Habits: Do you only spend 70% of your salary? Probably not. If you’re like many Americans, you probably spend 90% or 95% of it. Will your spending habits change drastically once you retire? Again, probably not. Most people only change spending habits in response to economic necessity or in pursuit of new financial goals. People don’t want to “live on less” once they have had “more”.
Social Security (or lack thereof): In 2005, SSI represented 39% of a typical 65-year-old retiree’s income. But by 2030, Social Security may only replace 29% of that income, after deductions for Medicare premiums and income taxes. Since 1983, retirees earning more than $25,000 in SSI have had to pay income tax on a portion of their benefits.3 Of course, this is presuming Social Security is still around in 2030.
So will you have enough? When it comes to retirement income, a casual assumption may prove to be woefully inaccurate. Meet with a qualified retirement planner while you are still working to discuss these factors and estimate how much you will really need.
These are the views of Peter Montoya Inc., not the named Representative or Broker/Dealer, and should not be construed as investment advice. Neither the named Representative nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your Financial Advisor for further information.

Citations.
 1 nytimes.com/2007/09/21/business/21generic.html?_r=1&oref=slogin
2 marketwatch.com/news/story/health-care-costs-retirement-rise/story.aspx?guid=%7bEF2B6CDA-E176-4747-B528-76AC814051C5%7d&print=true&dist=printTop
3 money.cnn.com/2007/05/14/pf/retirement/nasi__report/index.htm

Friday, December 2, 2011

HISTORY OF THE UNITED STATES OF AMERICA THE ROAD TO INDEPENDENCE


The principles of liberalism and democracy — the political foundation of the United States — sprang naturally from the process of building a new society on virgin land. Just as naturally, the new nation would see itself as different and exceptional. Europe would view it with apprehension, or hope.


Britain's 13 North American colonies matured during the 1700s. They grew in population, economic strength, and cultural attainment. They were experienced in self-government. Yet it was not until 170 years after the founding of the first permanent settlement at Jamestown, Virginia, that the new United States of America emerged as a nation.
War between Britain and France in the 1750s was fought partly in North America. Britain was victorious and soon initiated policies designed to control and fund its vast empire. These measures imposed greater restraints on the American colonists' way of life.
The Royal Proclamation of 1763 restricted the opening of new lands for settlement. The Sugar Act of 1764 placed taxes on luxury goods, including coffee, silk, and wine, and made it illegal to import rum. The Currency Act of 1764 prohibited the printing of paper money in the colonies. The Quartering Act of 1765 forced colonists to provide food and housing for royal troops. And the Stamp Act of 1765 required the purchase of royal stamps for all legal documents, newspapers, licenses, and leases.
Colonists objected to all these measures, but the Stamp Act sparked the greatest organized resistance. The main issue, in the eyes of a growing number of colonists, was that they were being taxed by a distant legislature in which they could not participate. In October 1765, 27 delegates from nine colonies met in New York to coordinate efforts to get the Stamp Act repealed. They passed resolutions asserting the individual colonies' right to impose their own taxes.
Self-government produced local political leaders, and these were the men who worked together to defeat what they considered to be oppressive acts of Parliament. After they succeeded, their coordinated campaign against Britain ended. During the next several years, however, a small number of radicals tried to keep the controversy alive. Their goal was not accommodation, but independence.
Samuel Adams of Massachusetts was the most effective. He wrote newspaper articles and made speeches appealing to the colonists' democratic instincts. He helped organize committees throughout the colonies that became the basis of a revolutionary movement. By 1773, the movement had attracted colonial traders who were angry with British attempts to regulate the tea trade. In December, a group of men sneaked on to three British ships in Boston harbor and dumped their cargo of tea overboard. This incident, which took place on December 16, 1773, has been seen as helping to spark the American Revolution and is now referred to as The Boston Tea Party
To punish Massachusetts for the vandalism, the British Parliament closed the port of Boston and restricted local authority. The new measures, dubbed the Intolerable Acts, backfired. Rather than isolate one colony, they rallied the others. All the colonies except Georgia sent representatives to Philadelphia in September 1774 to discuss their "present unhappy state." It was the first Continental Congress.
Colonists felt a growing sense of frustration and anger over British encroachment on their rights. Yet by no means was there unanimity of thought on what should be done. Loyalists wanted to remain subjects of the king. Moderates favored compromise to produce a more acceptable relationship with the British government. And revolutionaries wanted complete independence. They began stockpiling weapons and mobilizing forces — waiting for the day when they would have to fight for it.
THE AMERICAN REVOLUTION
The American Revolution — its war for independence from Britain — began as a small skirmish between British troops and armed colonists on April 19, 1775.   


The British had set out from Boston, Massachusetts, to seize weapons and ammunition that revolutionary colonists had collected in nearby villages. At Lexington, they met a group of Minutemen, who got that name because they were said to be ready to fight in a minute. The Minutemen intended only a silent protest, and their leader told them not to shoot unless fired on first. The British ordered the Minutemen to disperse, and they complied. As they were withdrawing, someone fired a shot. The British troops attacked the Minutemen with guns and bayonets.
Fighting broke out at other places along the road as the British soldiers in their bright red uniforms made their way back to Boston. More than 250 "redcoats" were killed or wounded. The Americans lost 93 men.
Deadly clashes continued around Boston as colonial representatives hurried to Philadelphia to discuss the situation. A majority voted to go to war against Britain. They agreed to combine colonial militias into a continental army, and they appointed George Washington of Virginia as commander-in-chief. At the same time, however, this Second Continental Congress adopted a peace resolution urging King George III to prevent further hostilities. The king rejected it and on August 23 declared that the American colonies were in rebellion.
Calls for independence intensified in the coming months. Radical political theorist Thomas Paine helped crystallize the argument for separation. In a pamphlet called Common Sense, which sold 100,000 copies, he attacked the idea of a hereditary monarchy. Paine presented two alternatives for America: continued submission under a tyrannical king and outworn system of government, or liberty and happiness as a self-sufficient, independent republic.
The Second Continental Congress appointed a committee, headed by Thomas Jefferson of Virginia, to prepare a document outlining the colonies' grievances against the king and explaining their decision to break away. This Declaration of Independence was adopted on July 4, 1776. The 4th of July has since been celebrated as America's Independence Day.
Liberty Bell, in Philadelphia, Pennsylvania, an enduring symbol of American freedom. It was first rung on July 8, 1776, to celebrate the adoption of the Declaration of Independence. (Interior Department/National Park Service) 
The Declaration of Independence not only announced the birth of a new nation. It also set forth a philosophy of human freedom that would become a dynamic force throughout the world. It drew upon French and British political ideas, especially those of John Locke in his Second Treatise on Government, reaffirming the belief that political rights are basic human rights and are thus universal.
Declaring independence did not make Americans free.
British forces routed continental troops in New York, from Long Island to New York City. They defeated the Americans at Brandywine, Pennsylvania, and occupied Philadelphia, forcing the Continental Congress to flee. American forces were victorious at Saratoga, New York, and at Trenton and Princeton in New Jersey. Yet George Washington continually struggled to get the men and materials he desperately needed.
Decisive help came in 1778 when France recognized the United States and signed a bilateral defense treaty.  Without the French, the Colonies would not have won their independence.  Support from the French government, however, was based on geopolitical, not ideological, reasons. France wanted to weaken the power of Britain, its long-time adversary.
The fighting that began at Lexington, Massachusetts, continued for eight years across a large portion of the continent. Battles were fought from Montreal, Canada, in the north to Savannah, Georgia, in the south. A huge British army surrendered at Yorktown, Virginia, in 1781, yet the war dragged on with inconclusive results for another two years. 
A peace treaty was finally signed in Paris on April 15, 1783. Our true independence!
The Revolution had a significance far beyond North America. It attracted the attention of Europe's political theorists and strengthened the concept of natural rights throughout the Western world. It attracted notables such as Thaddeus Kosciusko, Friedrich von Steuben, and the Marquis de Lafayette, who joined the revolution and hoped to transfer its liberal ideas to their own countries.
The Treaty of Paris acknowledged the independence, freedom, and sovereignty of the 13 former American colonies, now states. The task of knitting them together into a new nation lay ahead. 
Have you ever wondered what happened to the 56 men who signed the Declaration of Independence?
Ø  Five were captured by the British as traitors; tortured before they died.
Ø  Twelve had their homes ransacked and burned.
Ø  Two lost their sons serving in the Revolutionary Army; another had two sons captured.
Ø  Nine of the 56 fought and died from wounds or hardships of the Revolutionary War.

They signed and they pledged their lives, their fortunes, and their sacred honor.
Ø  What kind of men were they?
Ø  Twenty-four were lawyers and jurists.
Ø  Eleven were merchants,
Ø  Nine were farmers and large plantation owners
Ø  Men of means, well educated, but they signed the Declaration of Independence knowing
full well that the penalty would be death if they were captured.
Ø  Carter Braxton of Virginia, a wealthy planter and trader, saw his ships swept from the seas by the British Navy. He sold his home and properties to pay his debts, and died in rags.
Ø  Thomas McKeam was so hounded by the British that he was forced to move his family almost constantly.  He served in the Congress without pay, and his family was kept in hiding. His possessions were taken from him, and poverty was his reward.
Ø  Vandals or soldiers looted the properties of Dillery,  Hall, Clymer, Walton, Gwinnett, Heyward, Rutt ledge, and Middleton.
Ø  At the battle of Yorktown, Thomas Nelson Jr., noted that the British General Cornwallis had taken over the Nelson home for his headquarters. He quietly urged General George Washington to open fire. The home was destroyed, and Nelson died bankrupt.
Ø  Francis Lewis had his home and properties destroyed. The enemy jailed his wife, and she died within a few months.
Ø  John Hart was driven from his wife's bedside as she was dying. Their 13 children fled for their lives. His fields and his gristmill were laid to waste. For more than a year he lived in forests and caves, returning home to find his wife dead and his children vanished.

Some of us take these liberties so much for granted, but we shouldn't.

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