Monday, February 17, 2014

Oops! Saving Is NOT the Key to Your Comfortable Retirement

Oops! Saving Is NOT the Key to Your Comfortable Retirement

Of course, it is important to save money. No question about that. Even a caveman knows that!

So I can understand if that subject line has you scratching your head a little bit. Maybe you are even thinking I’m a little nuts. But it is an accurate statement – and one you need to take serious note of and, most importantly, incorporate into your retirement preparations if you want to ensure that your years of hard work and saving will not end up in disappointment.

To be fair, though, it is not entirely your responsibility. That belongs more to your financial advisor/retirement consultant. However, the sad truth is that the overwhelming majority of financial advisors – somewhere in the neighborhood of 9 out of 10 – completely ignore this critical piece in their practice, leaving you to face the undesirable consequences.

Here’s what I’m saying: Saving for retirement, though it may be a routine exercise, cannot be an end in itself. The other equally if not more important leg of that stool is how you are actually going to turn that pot of money into income for the rest of your life. If your retirement plan only involves saving money, you may be setting yourself up for a rather nasty surprise.

I must admit, income planning is not easy. It requires a lot of heavy lifting, so to speak. Today it involves answering many tough, probing questions; making certain assumptions about the future; understanding how tax laws will impact you; incorporating social security strategies; considering health care and pensions; and a host of other things that will impact your income from day one of retirement through your very last day – and even beyond, if you have a spouse and/or dependents.

In fact, I tend to believe that the amount of detail initially involved as, well as the need for regular fine-tuning along the way, has something to do with why only a handful of retirement advisors specialize in income planning. But the thing is, it’s your retirement that’s at stake here. And you have only one shot at it. So of all things, shouldn’t you get your retirement income right from the beginning?

Many of my colleagues are probably not going to like me saying this, but if your so-called financial advisor is not actually incorporating how you will turn your pot of money into retirement income, it’s time you looked elsewhere because that’s not true and holistic retirement planning. You are saving money for your retirement, so make sure that you will have that retirement!
Want to learn how you can KEEP more of your retirement money, even if the market crashes? Call 877.656.9111 or visit to talk with an experienced retirement professional with a proven track record TODAY!

Monday, February 3, 2014

10 Things You Should Know About the New ‘myRA’ Retirement Account

10 things you should know about the new ‘myRA’ retirement account

During his State of the Union address last Tuesday, President Obama announced plans for the creation of a new type of retirement account, myRA, aimed at helping low-to-middle-income workers start saving toward retirement. On Wednesday, the President followed up by signing a memo directing the Department of Treasury to formally create the new account.

While it is still too early at this point to know all of the details and caveats about how myRA will turn out, here’s what I have gathered so far:

1.      Your employer will have to sign up in order for you to be able to contribute.
2.      To be eligible for a myRA, your yearly household income must be less than $191,000.
3.      You may open an account even if you already have a 401(k), granted that you meet the other thresholds, of course.
4.      You can only contribute through direct payroll deductions, but all your contributions must be in after-tax dollars. You can start with as little as $25 and continue with as little as $5 per paycheck. No investment fees will be deducted from your account.
5.      You can contribute to the same myRA from multiple jobs. So if you have more than one job, you can direct contributions from all your jobs into the same myRA account.
6.      myRA is a direct cousin of the Roth IRA, in the sense that the most you can contribute in any single year is currently $5,500.
7.      Once your account’s value reaches $15,000, you must roll it over to a regular Roth IRA. Regardless of how much you have in your myRA, you must roll it over to a regular IRA after 30 years, meaning the longest time you can keep your myRA account is 30 years. However, you can convert your myRA to a regular Roth IRA anytime you like.
8.      There is only one investment option. All your money will be invested in the Government Securities Investment Fund (G Fund), which is one of the account options currently offered to federal employees through their Thrift Savings Plan. Basically, your money will be invested in government bonds, so you shouldn’t expect to make a ton of money quickly, if ever. In 2012, the G Fund returned about 1.5 percent, but inflation was 1.8 percent. To be fair, the account is being marketed as a starter account, with the idea that folks will eventually move over to traditional investments. Not to mention that you’d probably end up a broke retiree if you kept your money in a myRA for 30 years.
9.      Your principal will be guaranteed and backed by the U.S. government.
10.  You can withdraw your original contributions at any time without any tax or penalty. Once you retire (after age 59½), all of your money – including your gains – will be completely tax-free. However, if you withdraw your gains before you reach age 59½, you will be taxed, in addition to incurring a 10 percent penalty.

I think this program may be a positive first step, provided that the government can actually get employers to get on board. I find it somewhat ironic, though, that the authorities are using the fact that employers will not be burdened with administrative paperwork to incentivize and recruit businesses to sign up. Perhaps all that needs to happen is to cut the burdensome administrative processes surrounding current work-related retirement plans?

Then the folks must also find the means, willingness, and discipline to sign up and, most importantly, treat myRA as a long-term account. There seem to be mixed messages here, because on the one hand, officials are trying to help alleviate the shortage of retirement savings in America. Yet in the same breath, they are positioning myRA as a convenient savings account you can dip into at will. 
Want to learn how you can KEEP more of your retirement money, even if the market crashes? Call 877.656.9111 or visit to talk with an experienced retirement professional with a proven track record TODAY!