Your employer sponsored retirement plan is the single most important investment you’ll make. Even more than your home, your 401(k), 403(b), Simple, SEP or 457 plan forms the foundation for your retirement years. But, when is the last time you took a good hard look at your account, what’s inside it and how it’s being managed? We think Money Smart Week is an excellent time to begin. You can take out a mortgage to fund your home, but you can’t take out a loan to fund your retirement. The good news is, you have more control than you think. But you have to start now. Do you know what fees you’re paying within your 401(k)? Have you analyzed your investment options within the account? Target date funds have become increasingly popular because they appear to condense all of your retirement questions into two: How old are you now and at what age do you intend to retire? The problem is, these funds aren’t right for everyone. What happens, for instance, if you’re forced to retire sooner than you had anticipated? According to a 2015 report from the Retirement Research Consortium, 41% of Americans working at age 58 wind up retiring earlier than they had planned. The top reasons for this unplanned exit from the workforce include unexpected health issues and involuntary job losses. Workers can’t control these “job shocks,” but they can control the way they prepare for them. Specifically, they can maximize the performance of their retirement accounts. At Winch Financial, we’re all about education and we’re ready to show you how to get the most out of the money you’ve already earned. We’ll help you understand the choices you have and how to make them effectively and with confidence. We’ll explain what a self-directed brokerage account is, and why the Roth option within your 401(k) can be an extremely critical tool. You can come with your questions and… | Read More »
How to manage your 401(k)
Don’t make maximizing your 401(k) a DIY project
There is something exhilarating about a challenge; something satisfying about being presented with a daunting task and working hard to complete it! A hard job done well is simply fulfilling. Over the Labor Day weekend you would have found me in a 104 degree garage re-painting 10 closet doors. It was sweaty work and I did my share of grumbling, but that made it even more sublime in its completion. However, there are some jobs that I just do not tackle. With age, comes wisdom (so they say) and I am aware that I don’t have enough time in my week, month, or year to get even marginally good enough at some skilled tasks. It is not worthwhile. For instance, I don’t do my own taxes. There are multiple rule changes and schedules and tax benefits and pitfalls that affect me. It’s better for me to admit I need help than to get halfway through and belatedly realize I need decades to become anywhere close to proficient (or passionate) enough to really excel at tax prep. For that, I take advantage of Winch Financial’s excellent tax preparation services. I feel the same way with my 401(k) investment choices. Your 401(k) is the most important piece of wealth you have, second only to owning a home. An alarming majority of 401(k) investors do not pay much attention to this hefty portion of their wealth. Many set up their account and close their eyes. That is simply short sighted. If you are not thinking about it, it is now time to begin! Six of the biggest questions to consider are: How much are you funding your account? What is your employer’s match? Are you able to fund your 401(k) to the maximum – currently $18,000 in 2015 with an additional $6,000 catch-up contribution if you are 50 or older What investment options are open to you / what investments are you actually… | Read More »
A Millennial Conundrum and the Case of the Disappearing Inheritance
The rising tides of exponentially increasing health care costs and a longer life span have led to a relatively new wrinkle in retirement planning, the disappearing inheritance. In the past few years, the primary goal of most retirees, which had centered on legacy planning, has become survival and making sure their money lasts their whole lives. Happily, their lives are growing longer; the average lifespan of an American female is now 81.2 years, and for males it’s 76.4 years, a record high according to a new report on mortality by the Centers for Disease Control and Prevention. Unhappily, the cost of care to maintain that life span is growing at an equally swift pace. Healthcare costs run higher in the United States than in any other developed country in the world, according to Consumer Reports. Add to that statistic the threat of an increasing cost of living, and elderly investors have their hands full just keeping their heads above water. For millennials, who already face a potential loss of Social Security and work related benefits (Does anyone get a pension anymore?), this is another indication that the health of their own ideal retirement rests squarely on their shoulders. Years ago, as Americans reached retirement age, many middle class Americans could count on some form of inheritance from their parents as a bonus to their own pension and life savings. Two of these three vehicles are becoming obsolete.. Fortunately, Millennials are saving earlier and more aggressively than any age group before them, according to a survey from the nonprofit Transamerica Center for Retirement Studies. Among Millennials whose companies offer an employer sponsored retirement plan like a 401(k), 71% are participating in the plan, and they’re investing a healthy median 8% of their annual salary, the survey of more than 4,000 workers found. What many 401(k) investors don’t realize is that they not only control the amount they invest in their company… | Read More »