Financial Planning

financial planning is essential when you need to save over an extended period to meet a major financial goal, such as paying for college or funding your retirement

Setting up a college savings plan

• Estimating how much money you will need in today's dollars

• Estimating the dollar amount you will need when your son or daughter actually starts college

• Determining the amount you will have to save to meet this goal

• College cost
• College saving

Setting up a retirement savings plan

• In the About You section, enter information about your age, desired retirement age, and years of retirement

• You also enter your desired income at retirement, in current dollars. If you want to include your Social Security retirement benefits in the calculations .If you will receive a defined benefit pension, enter it, too

• enter your guesses at the level of inflation and the annual return you will earn on your investments.

• Draw-down Rate- This is the percentage you withdraw from your account each year as income.use a figure of 3.5%?4.5%, and never any more than 5%.withdrawing from the account at a rate lower than the projected investment gain, the principal amount will grow over the years and provide an increase that protects you, at least partially, against larger-than-expected inflation.

• Retirement Savings section contains fields for the current balance in your retirement accounts and the monthly contributions made by you and by your employer

• Retirement planner

Rent vs buy

Expenses:
Closing costs:
- legal transaction that actually transfers ownership of the house to you
- Attorney's fees
- Appraisal fee
- House inspection fee
- Deed registration fee
- Prorated property taxes

Ownership costs:
- property taxes and hazard insurance.
payments for these are rolled into your monthly payment and go into your escrow account. In other words, your monthly payment goes partly for paying back the mortgage and partly for escrow. Escrow can make up 20%?30% of your monthly payment