Life Planning Guide

Q 01Mutual fund fees quietly add up. The

difference of half a percentage point – afund that charges 0.75 percent vs. a fundthat charges 0.25 percent – costs aninvestor with $100,000 invested inmutual funds in a 401(k) account howmuch more per year?

a. $50 c. $250b. $100 d. $500

Q 02What percentage of middle class

Americans have no written financialplan?

a. 19 c. 59b. 39 d. 69

Q 03What’s the best strategy for paying off

debts:a. Pay off smallest debts with a low APR

first, in order to reduce your overall numberof loans

b. Concentrate on paying off the biggestdebt with the highest APR first

Q 04The graduates of 2011 are the most

indebted class in history, with anaverage student loan debt load of:

a. 7,300 c. $27,300b. 17,300 d. $37,300

Q 05Are the following statements about

credit unions True or False?a. Credit unions are nonprofit financial

institutions.b. Credit unions are owned and

controlled by members, not profit-seekingshareholders

c. Credit unions offer fewer services thanregular banks

d. Credit unions are restricted toemployees of certain companies ororganizations

e. Profits at a credit union go backto members in the form of lower fees

Q 06Postponing retirement until

age 70, rather than claiming SocialSecurity at age 62, results in a benefitthat is:

a. 75 percent higherb. 55 percent higherc. 35 percent higherd. 15 percent higher

Q 07Average life expectancy of a U.S.

citizen:a. 68 c. 88b. 78 d. 90

Q 08In the wake of the great recession,

what proportion of parents providegrown children financial assistance?

a. 25 percent c. 50 percentb. 33 percent d. 66 percent

Q 09What’s the average wage for U.S.

workers?a. $33,000 c. $53,000b. $43,000 d. $57,000

Q 10What is the annual percentage rate on

a new credit card?a. 12.99 percent c. 14.99 percentb. 13.99 percent d. 15.99 percent

Page 22 Friday, March 9, 2012 The Southern Illinoisan · Life Planning Guide

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•• BBoobb WWiilllliiaammss,, [email protected]

•• TToo ssuubbssccrriibbee:: Call 618-351-5000 from Carbondale, Murphysboro and DeSoto;618-997-3356, option 2 from WilliamsonCounty; or 800-228-0429, option 2, between6 a.m. and 5 p.m. weekdays, 7 a.m. to 11 a.m. Saturday and Sunday.

•• TToo ppllaaccee aa ddiissppllaayy aadd:: Call 8 a.m. to 5 p.m. weekdays, 618-529-5454,option 6; from Williamson County, 618-997-3356; or toll free: 800-228-0429,option 6.

•• EEddiittoorriiaall mmaatteerriiaallss:: Les O’Delland Content That Works

special.thesouthern.com

& SPOUSE& SPOUSE

Pop quiz:Don’t tell us you’re no good at math. Or, youforgot your calculator. Or, you have to getback to Angry Birds. Increasing your financialsecurity calls for clear thinking and focus.Take a minute and test your savvy.Time to run the numbers

10 correct:Warren Buffet wants to friend you!9 correct:Close… less Angry Birds, more Suze

Orman!8 or less correct:It’s time to do some homework!

1. d: $500 per year2. d: 69 percent3. b: Although many people choose

to eliminate small debts first, whichmakes them feel they are makingprogress, they’d save more moneylong-term if they paid off larger,higher-interest debt first

4. c: $27,300 5. a: T b: T

c: F d: F e: T

6. a: 75 percent higher7. b: 78 years8. d: More than two-thirds, or 66

percent, double the rate of 20 yearsago

9. b: $43,00010. c: 14.99 percent as of Nov. 2011

How do you rate?

Life Planning Guide · The Southern Illinoisan Friday, March 9, 2012 Page 33

BY LES O’DELLFOR THE SOUTHERN

Most of us have thingswe know we need to do,but for one reason oranother do not do. We“forget” to exercise,perform routine carmaintenance, floss ourteeth and flip ourmattresses.

Unfortunately, the listof things we should bedoing but somehowignore too often includesplanning for retirement,financial advisers say.

“Day-to-day, mostpeople are thinking abouttaking the kids to school,projects at work and otherthings they have to do,”says Joel Sambursky,financial adviser at ForbesFinancial Group inCarbondale. “Sadly, it’s avery short-term focus.”

Instead, Samburskysays, people of all agesneed to be doing somethinking about theirretirement and settingfinancial goals for theremainder of their lives.

“The way that financialadvisers help people is toget them to focus onthose goals and begin towork toward those goals,”he explained. “Thinkabout what you would likeyour lifestyle to be whenyou’re retired and think alittle bit more longterm.”

According to theEmployee BenefitResearch Institute, 68percent of Americanworkers have some moneyset aside for retirement,often in work-related

retirement plans or otherinvestments. Theproblem, Sambursky says,is that people don’t knowhow much they moneythey will need to retirewith the lifestyle theydesire. In fact, the EBRIreports that 42 percent ofworkers simply guess howmuch money they willneed.

Sambursky suggestsindividuals try todetermine their ownfinancial needs forretirement and then workto reach those goals. Hesays it is important thatpeople determine howthey define successfulretirement, calculate theirretirement income needs,as well as goals andobjectives.

20s and 30sFor those who have

recently entered theworkforce, retirementrarely comes to mind.

“Generally speaking,research shows that forpeople in their 20s and30s, retirement is anafterthought; it’s theninth thing on the to-dolist,” Sambursky says.“Yet, the reality is thatthose are the people in thebest positions to ensure asuccessful retirement.”

Kevin Frost, financialrepresentative withNorthwestern Mutual inHerrin, says youngadulthood is a great timefor people to have asignificant impact ontheir futures.

“I generally suggest that

those in their 20s and 30sbegin by laying thefoundation of their overallfinancial plan,” he says.“A very important part ofthat plan is the defensivecomponent. I encourageyounger clients to protecttheir income throughdisability incomeinsurance and protecttheir families through lifeinsurance. Then, oncethey have establishedadequate emergencyfunds, we can beginfocusing more heavily onlong term investing andretirement programs.”

Frost says regardless ofage, it is never too early tobegin planning forretirement.

“Albert Einstein calledthe power of compoundinterest the mostpowerful force on earth,”he explains. “When youare young, it is a powerfulforce on your side. Due tothe power of compoundinterest, the dollars youset aside today are worthsignificantly more atretirement than thedollars you set asidelater.”

Sambursky agrees.“Most financial

advisers when they’reworking with someonewho is retired probablydon’t hear them say, ‘Youknow, I just saved toomuch money the last 35years; I’ve got too muchmoney now.’ Most peoplesay ‘I wish I would havedone more in my 20s, Iwish I would have done alittle bit more in my 30s,’he explains.

Sambursky encouragesyoung people to takeadvantage of retirementplans offered throughtheir employment,especially those withmatching contributionsfrom employers, such as401k plans.

Frost urges those intheir 20s and 30s to atleast begin saving.

“Every little bit helps.Just saving somethingsmall on some basis andadding a little to it everyyear will yield results laterin life. You can’t undo thepast but that doesn’tmean you shouldcompound the problemby ignoring it further,” hesays.

40s and 50sEven if savings up to

this point have beenminimal or non-existent,a successful retirement isstill within reach, says JimShull, financial servicesrepresentative withRaymond James Financialin Marion.

“You still have awindow of opportunity tobuild your golden nestegg. Renewed focus willhelp you buckle down andwork toward the goals youhave set for yourretirement years. It’s nottoo late, but time is of theessence. People can stillreach their retirementgoals, even starting intheir 50s. After all, theystill have 15 years or morebefore they choose toretire,” Shull explains.

He says individualsshould be maximizingcontributions in employerretirement plans andshould also look intosavings throughinvestment products suchas individual retirementaccounts.

“You would besurprised what kind ofnice nest egg a person canaccumulate in 15 years.The key is to start now,”he says.

Sambursky adds thatgetting a later start onsavings means individualswill have to save more.

“The pure math is goingto dictate that if you’reolder, you’re going to haveto save more as apercentage of yourincome to live the type ofretirement that you want.For someone who is in hisor her 40s, it’s not too lateto start, but we’re goingto have to do substantiallymore in savings in order

to make up for the lostyears of not saving,” hesays.

60s and beyondThe focus here often

shifts to managing whathas been set aside foryears or generatingadditional incomespecifically for retirementsays Andrew Darnell,financial adviser withEdward Jones in DuQuoin.

“It’s not too late tothink about how tomanage their retirementincome,” Darnell says.

Darnell says that formost people, the averageSocial Security check mayor may not be enough toprovide the desiredlifestyle.

“For folks now in their60s, Social Ssecurity maybe enough, but it dependsupon their own balancesheets and lifestyle,” hesays. “By and large manywill need to have othersources of income besidessocial security.”

The additional sourcesmay include retirementplans or delayingretirement in order tocontinue to save.

“Hopefully they willhave some nest egg,”Darnell says. “Even then,they may end up lookingat other ways togenerating additionalincome.”

The timelineLocal advisers help you think smarter, at every stage in life.

Saving for retirement:

‘Think about what youwould like your lifestyleto be when you’reretired and think a littlebit more long term.’

JOEL SAMBURSKYFORBES FINANCIAL GROUP, CARBONDALE

CTWPeople of all ages need to be doing some thinking about their retirement and setting financialgoals for the remainder of their lives.


With the economy inturmoil, there’s rarelybeen a more importanttime for families to draft adetailed financial plan.Such a plan, includingstrategies for achievingbig life milestones(education, buying ahome and retirement),saving, investing anddealing with inevitablesetbacks, can help steerfamilies throughchallenging times.

Few of us are prepared.Some 79 percent ofpeople claim to have afinancial plan, accordingto a 2011 survey by theCertified FinancialPlanner Board ofStandards, but thisnumber is misleading.Nearly half of those with aplan, 46 percent, say thatit exists only in theirheads; 11 percent say theyonly have written downsome notes or ideas, not acomplete plan.

Financial planner SimonSinger says too manyfamilies spend more timeplanning a vacation than

they do making decisionsabout their life’s finances.A financial plan, like avacation, requires settinga destination andestablishing an itinerary.“You need to know whereyou are going and howyou’re going to get there,”says Singer, founder ofAdvisor ConsultingGroup, Los Angeles.

Families need to knowwhere they standfinancially, even if theirfinances are in disarray.Doug Hendee, certifiedfinancial planner forBrighton Securities,Rochester, N.Y., seesmany families who ignorefinancial troubles inhopes they’ll simplydisappear.

“So many people areembarrassed to look attheir finances,” Hendeesays. “But ignorance inthis case is not bliss. Howwill you know what youneed to do if you don’ttake a look at yourfinancial situation tofigure out where youstand?

The good news is thatcrafting a financial plandoesn’t have to be anunpleasant chore.

The most importantpart of any financial planalso is the simplest: abudget.

A budget should takeinto account the money afamily brings into thehousehold each month. Italso should list all of afamily’s expenses. Theseshould be divided into twomain categories. Fixedexpenses are those thatdon’t change from monthto month: insurancepayments, mortgagepayments, student loans.Then there arediscretionary or chargesthat fluctuate month tomonth, including utilitybills, gas, entertainmentspending and groceries.

“Families need to knowwhere their money iscoming from and where itis going,” says NancySkeans, partner withSchneider Downs WealthManagement Advisors inPittsburgh. “If they don’t

Financial planOdds are, you say you have one, but you don’t.Why your family needs a financial plan.

On the way to a


understand that, it’salmost impossible for themto understand how muchthey can save and wherethey can cut expenses.”

Families shouldn’t focustoo much on the smalldetails of a financial plan,Hendee says. What’s mostimportant is that they startputting together a financialplan as soon as possible,even if it’s not yetcomplete.

The key to finding the right investment services provider is askingthe right questions – both of yourself and of prospective providers.Following are some questions from the Coalition for InvestorEducation, a group of state securities regulators, consumer advocatesand financial planning and investment advisers, to help you identifythe right provider for you.

Remember, there are no foolish questions. Any reputable providershould be happy to discuss these issues with you and answer anyquestions you may have.

Do you need help developing strategies to reach your financial goals ordo you simply want suggestions on appropriate investment products toimplement your goals?

Do you prefer working with someone who is primarily considered asalesperson, an adviser or a combination of the two?

Do you prefer paying for investment services through a fee,commissions, a percentage of assets in your account or a combination ofthese?

How important is it to you that your provider have a legal obligation to actin your best interests and disclose potential conflicts of interest?

How involved do you want to be in decisions about your specificinvestments?

Do you want assistance with a few targeted areas, or do you need acomprehensive plan for your finances?

Do you already have a portfolio of investments you would like helpmanaging?

In search of a financial adviser

� Investing and consumerprotection atinvestor.gov

�The basics of investingat investoreducation.org

�Effective ways to save atconsumerfed.org (click on FinancialServices)

Learn moreabout…

CTWThe good news is that crafting a financial plan doesn’t have to be anunpleasant chore. The most important part of any financial plan also is thesimplest: a budget.

designed a plan that’s tooinflexible, Sandberg says.“If they feel like they canonly spend $300 a monthon movies and theater, forexample, it makes themfeel deprived. But if theyrealize they can pullmoney from thatentertainment area for,say, new tires for the car,it makes it more flexible.”

The key to a successfulbudget is “a matter ofmanipulating it so youhave money fornecessities and thingsthat are important toyou,” Sandberg says.

Knowing how muchmoney you need and howmuch you have isparamount for successfulbudgeting. “Everyoneshould know off the topof their heads how muchthey net in a month aftertaxes. Then, think interms of 10 percent,”Sandberg says. “Let’s sayyou bring home $2,000.Everybody who is pastfifth grade math knowsthat 10 percent of that is$200 a month. Try to setthat aside. Most peoplecan do it if they try hardenough.”

Sandberg suggestspeople who have creditcard balances should tryto think of them as loansand attempt to pay themoff in six months. Takecare of the balances withthe highest interest ratesfirst, a tactic that willhelp save money in thelong run.

Budgeting can bepainful at first, butSandberg reminds peoplethat it does get easier. It’slike changing eatinghabits, she says. “At first,

you pay really closeattention to caloriecounts and statistics. Butlater, it becomes prettynatural. It’s the same witha budget. Once you getused to living within yourprescribed numbers, itbecomes a part of you.”

Here, tips forbudgeting, from bothfinance expert Sandbergand the Federal TradeCommission:� Determine how much

money you bring homeeach month. Include allincome – from your job,gifts, tax refunds,unemployment or othergovernment assistance,alimony or child support,pensions, Social Securityand profits from sales ofused goods.� Decide how to keep

track of your finances.You can choose fromphone apps, computersoftware or good old-fashioned paper andpencil. Decide what’smost comfortable.� List how much goes

into a savings accounteach month. The easiestto remember: 10 percentof your take-homeincome.� List all predictable

monthly expenses – thosethat tend not to change,

including rent ormortgage, a car payment,telephone, cable andInternet.� List monthly

expenses that can vary –utilities, personalgrooming, property taxes,insurance, gas andgroceries.� List occasional

expenses, for things likemanicures, getting youreyebrows waxed, officesupplies, holiday gifts orentertainment.� Add up fixed and

variable expenses anddivide by 12 for a monthlyestimate.� If you end up with

extra money, carry it overin a savings account forthe next month. If youhave credit card balances,pay them first instead ofbuilding a savingsaccount. Having a savingsbalance and a creditbalance can give you afalse sense of security.� Be flexible. If

something unexpectedcomes up, such as un-reimbursed medical bills,take care of them byfinding other places youcan cut.

• Realize that once youget used to budgeting, itwill become secondnature.

Erica Sandberg has thissimple advice forconsumers thinking aboutcreating a householdbudget: Don’t forget thesmall stuff. That includesthe monthly manicure,the special holiday bottleof wine, the extra $20 on abirthday lunch for yourbest friend and thatconcert you’ve been dyingto see. And don’t forget toconsider what mighthappen: a flat tire, abroken tooth or aspeeding ticket. Not

figuring in life’s manylittle – and sometimeslarge – expenses canderail a budget.

Sandberg, a personalfinance expert and authorof “Expecting Money:The Essential FinancialPlan for New and GrowingFamilies” (Kaplan, 2008),says the key to a savvybudget is accounting foreverything.

“Be extremelycomprehensive,” she says.“So many people tend totruncate their budgets.

They divide theirexpenses into house,groceries, entertainment.That’s not enoughcategories. That’s notrealistic.”

Sandberg believes manyconsumers overthink abudget. “A budget is justcash flow – moneycoming in, money goingout. If you think of it thatway, it’s not sooverwhelming.”

Consumers who believethat a household budgetboxes them in might have


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A budget is the foundation of a solid financial plan.Here’s an easy, real-world guide to setting one up.

Beginner’s guide to

�Managing your money at ftc.gov (select ConsumerProtection and look for Money Matters, under What’s New)

�Making smart money decisions atextension.org/personal_finance

�Setting up a template for your budgetoffice.microsoft.com/en-us/templates (search “homebudgets”)

�Managing money online at mint.com

Learn more about…

Building a budget

BY LES O’DELLFOR THE SOUTHERN

There are local andregional financialinstitutions that offerservices, includingsavings accounts andloans. Customers’deposits are protectedthrough a federalinsurance program, andthey have convenientlocations and hours. Inmany ways, thesefinancial intuitions servemany of the same roles asbanks, yet credit unionsare unique.

From humblebeginnings in 1908, creditunions have becomemajor players in financialservices, serving morethan 91 million membersnationally and holding$951 billion in total assets.There are more than7,000 credit unions in theU.S. and at least nine inSouthern Illinois. Some,such as the Carbondale-based SIU Credit Union,have thousands ofmembers. Others, such asJohnston City’s D-BEmployees Credit Union,have fewer than 100members. Yet, regardlessof the size, all of thecredit unions areorganized according tothe same principles andgoals.

“We are cooperatives,”explains Dennis Schaefer,president and CEO of theSIU Credit Union. “Weare not for profit, and weare owned bymembership, not bystockholders.”

Schaefer says creditunions are similar tocommunity banks insome ways but differentin other ways. One uniquecharacteristic is that usersof credit unions are theowners, each purchasing

a share in the entity aspart of their initialdeposit. Profits from thecredit unions are returnedto members in the formsof higher interest rates onsavings or other accountsand lower loan rates. Theyare long-standingconcepts: Credit unionsoriginated withmanufacturing workers inEurope who could notobtain loans.

“They couldn’t getloans at a bank, so theybanded together and usedtheir deposits to make thefirst loan,” Schaefer says.Most credit unions arechartered with a specificsponsor. Originally, SIUCredit Union was openonly to employees of theuniversity or theirimmediate families.

“Over the years, thegovernment has allowedus to become what iscalled community-chartered, meaning thatanyone who lives or worksin the 11 counties ofSouthern Illinois canbecome members,”Schaefer says.

Other credit unionsremain “closed-in,”meaning thatmembership is limited tothose in the sponsoring

group or their immediatefamilies. The D-BEmployees Credit Unionservices those who workat Diagraph MSP. Herrin’sWilliamson CountyCatholic Credit Union isopen to any member ofthe Catholic churches inWilliamson County andtheir families. There arecredit unions specificallyfor those affiliated withthe federal penitentiary inMarion and those whowork for the statehighway department.

Still, even the smallerand closed-membershipinstitutions offer manyservices. Most offersavings accounts andpersonal loans. Largercredit unions offeradditional servicesincluding mortgages andchecking accounts.

“We do everything frompassbook savingsaccounts to IRAs andCDs,” Schaefer says.“Plus, we have businessloans as well.”

Credit unionadministrators saycustomers appreciate theinstitutions because oflow or no fees and onlower loan rates.

“We’re pretty muchlow-fee, and we can offer

lower interest rates onloans, partially becausewe don’t have theoverhead that some banksdo,” says Debbie DaRosa,manager of theSoutheastern ElectricEmployees Credit Union,a 1000-member creditunion in Harrisburg.

Schaefer says depositsin credit unions areinsured by the NationalCredit UnionAdministration, an entitysimilar to the FederalDeposit Insurance Corp.,which guarantees bankdeposits.

“Originally, creditunion deposits werecalled ‘shares,’ and earlychecking accounts werecalled ‘share drafts.’ Butthat has changed over the

years,” he explains.While the SIU Credit

Union has five locations,many of the region’sother credit unions haveonly one. The NYCEmployees Credit Unionin Harrisburg has 100members and one office.Originally established foremployees of the NewYork Central Railroad(later Conrail and CSX),all credit union businessis conducted by TreasurerDonna Price in thebasement of herHarrisburg home.

“It’s all very low-key,”she says.

She says the creditunion offers savingsaccounts and signaturepersonal loans.

All of the credit unions

in the region strive toserve their member-owners with qualityfinancial products andservices and outstandingcustomer service.

“It really saves peoplemoney to investigatecredit unions,” saysRobbie Wiseman,president of theWilliamson CountyCatholic Credit Union.“Plus, people like theservice and dealing one-on-one with individualswithout being transferredfrom department todepartment.”

For SIU Credit Union’sSchaefer, credit unionsare all about service.

“We’re here to serve ourmembers and to serve ourcommunities,” he says.


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Life Planning Guide