Retirement - - Page 2 of 5 - The Finance Gourmet

Colorado Secure Savings Program

March 6, 2023November 29, 2021 by Finance Gourmet

Colorado is set to join a handful of other states in creating an automatic retirement savings program for Colorado workers. The idea is that while many Coloradoans have access to a retirement plan like a 401k or 457 plan through their employer, a lot of Coloradoans don’t. Unfortunately, those who do not have an employer sponsored retirement plan often do not start saving for retirement until much later than those who do. And, when it comes to retirement savings, time is lots of money. What Is the Colorado Secure Savings Program? The final Colorado Secure Savings Program won’t launch until at least 2023, but the rough idea is that each Coloradoan who works for an employer without a retirement plan will be automatically enrolled in the CSSP. The CSSP is actually nothing more than an IRA, or Roth IRA. What the program does differently is automatically create the retirement plan account and set the employee’s contribution to a specific minimum which will come from payroll deductions like a 401k plan. People who don’t want to participate can opt out. This plan could be a big retirement driver for Colorado workers over the long term. When I was a financial planner, …

Retirement Tax Triangle for Better Retirement Planning

November 15, 2021 by Finance Gourmet

Financial advisors make their bread and butter from retirement planning. Unless you’re wealthy (or young), chances are that most of your money is in your retirement savings and home equity. That makes your retirement accounts the main interest of most financial advisors, so it’s in their best interest to make it sound complicated. Unfortunately, they are right. There are a bunch of little tricks to good retirement planning. Fortunately, most of them are easy to straighten out, like the tax triangle. Retirement Taxes Welcome to Retirement. Oh, while you’re here, we need to tax those 401(k) withdrawals. All too many new retirees find themselves surprised that withdrawals from their 401k accounts are fully taxable. It’s an easy mistake to make. After all, when you contributed money to your 401k it was tax-free (technically, pre-tax, but same difference). And, while all of that money sat in your 401k earning interest and dividends, it was tax-free. So, why wouldn’t it keep being tax-free? Unfortunately, that’s the deal you make with the IRS. A 401k plan is actually a tax-deferred account. As the name implies, the IRS allows you to defer, or wait, to pay the taxes. It is a huge advantage and …

401(k) Plan Blackout Period

December 8, 2021September 23, 2021 by Finance Gourmet

With the meltdown of the banking industry just the latest in a long line of shenanigans that Main Street remembers happening thanks to Wall Street, it is no wonder that ordinary people are nervous about their finances. In particular, many people are worried about their 401(k) and how they will ever be able to retire if things keep happening to their hard-earned savings and investments. That is why getting an official looking letter in the mail or delivered at work informing you of your “rights” and about an upcoming blackout period can make even savvy investors nervous. Fortunately, it is usually nothing to worry about. 401K Changing Plan Administrators All 401(k) plans are administered by a third-party. This arrangement protects workers retirement savings by ensuring that the company does not have any access to the money invested by workers in their defined contribution plans like a 401k plan. The third-party is a financial company such as a mutual fund company, insurance company, bank, or brokerage, which takes on the responsibility of accepting deposits, investing money into the proper funds or other investment choices, and keeping track of those investments. And, when the time comes, this third-party is also in charge …

Should I Pay Off My Mortgage Instead of Investing

October 3, 2022July 19, 2021 by Finance Gourmet

Figuring out what the best thing to do with your money can be difficult. Many people get caught up in all the possibilities. They wonder if it is wise to pay off your house mortgage. Should they pay off credit cards or put higher down payment on a new home? Should I pay off my car loan with a home equity loan? Is it better to pay off your house or keep the money? And, most of all, should I pay my house off at retirement? We have discussed if it is smart to pay off your home early before. Unless paying off your home still leaves you with a sizable amount of cashable assets, the answer usually is not what you think. For people without substantial assets remaining after paying off the mortgage, owning your house free and clear does nothing but trap a lot of money where you can’t get it, inside your house. Financial professionals call the equity in your home that you are not going to sell “dead equity.” Here is what to do with your assets before you pay off your mortgage, and, a quick look at understanding the pros and cons of a reverse …

IRA Yearly Fee

November 2, 2021July 14, 2021 by Finance Gourmet

Update: You can easily get a free IRA account almost anywhere these days. If you are paying a custodial or maintenance fee, consider switching IRA custodians. Free IRA Companies: Fidelity Charles Schwab E-Trade SoFi Betterment Ameritrade Vanguard And tons of banks… If you do still have an annual IRA fee… Here it comes, the annual fee on your IRA account. Many brokerages charge their yearly IRA fee, or custodial fee, on their customer’s IRA account during the third quarter. If you take a positive view of the industry, they do it then because there are many other things that have to happen during the fourth quarter, tax reporting is at the top of that list, so the third quarter is less busy. If you take a less a less charitable view of the financial industry, then they do it in the third quarter because that is when financial clients are the least likely to be paying attention. It’s summer, you aren’t really thinking about rebalancing your investments, or closely reviewing your paperwork for taxes, and so on. In other words, the third quarter is the best time to slip in an annual fee unnoticed. Why Is There an Annual Fee …

Real World Retirement Planning

March 3, 2021November 3, 2020 by Finance Gourmet

If you’ve read much in the personal finance world, or even just the occasional news story from the business section of your local paper, you are probably well aware of the non-stop stream of headlines about how people are not prepared to retire. Chances are you have visions of old people shut up in their homes clustered around a single candle for light and warmth. But, is this reality, or just great financial copy? A recent Marketwatch article reports on a survey where almost 80 percent of retirees found it easier than they thought to adjust their lifestyle and spending for retirement. This matches more closely with my experience as a financial advisor than the alarmist headlines do. Some real world retirement planning is all you really need. Retirement Crisis for All? As is so often the case, the reality of finances is very individual. As a result, generalizations are often inaccurate for large swaths of people, even while being correct for many others. When I was a Certified Financial Planner, the reality is that I had a lot more clients who were planning for retirement than those who were actually retired. I never did a financial plan for someone …

How To Start Retirement Savings

January 26, 2021September 14, 2020 by Finance Gourmet

One of the things that comes up in financial planning is that getting all of the information and facts can be difficult. This, all too often, leads to financial paralysis where you don’t end up doing anything at all, because you don’t understand all the details. Ironically, a lot of the information that ends up being “too much,” is for edge cases that don’t affect the average American saving for retirement. How To Start Saving For Retirement Now Retirement savings, investing, and planning is one area where complicated topics can needlessly paralyze people from taking action. Occasionally, financial companies themselves accidentally cause this confusion. Not long ago, I was talking with someone about retirement savings. The issue, for this particular person was the commercial talking about “Your Number.” If you remember this commercial, the point was that you should know how much money you will need when you retire. The goal, was to get you to schedule an appointment with one of their financial advisors or brokers to find your number. Since the person I was talking to didn’t know his number, he was stuck on what to do for retirement. The ironic part is that you don’t need to …