50+ Lifestyles

Advice for the Kids or Grandkids

By Richard J. Schillig, CLU, ChFC, LUTCF
Independent Insurance and Financial Advisor

Our clients with annuities and or insurance receive a
periodic review of their accounts. At the conclusion of a review with our clients, they often ask the question “What advise can we offer our children or grandchildren about
saving and investing money?”

Wow – what a question! And how do we answer that
question. There is so much involved but at the same time – it’s simple. The simplicity is in saving money and minimizing debt. The complexity often comes with the how do we do that?

After considerable thought on the how to answer that question, we submit to our clients these 6 “tips” to pass on to the kids. We are going to list our ‘tips’ here. Please call or email us to obtain details on these tips.

First piece of advice for our children/grandchildren is this:
Number 1 (UNO) – max out on what your employer offers employees. In my experience in working with clients, I am amazed at the number of young people – the tail end of the baby boomers, generation Xers and the millennial crowd that don’t take advantage of an employer’s match in a 401K or other type of qualified plan. BUT NO MORE THAN THE EMPLOYER MATCH. Once the employer match is reached, I encourage them to NOT exceed the employer match.

If the employer does not offer retirement benefits, and many small employers do not offer retirement plans, then other plans really need to be made. Perhaps a payroll deductible IRA or another plan would be appropriate, but I am focusing now on advice for employers offering 401K or other retirement plans through their company. If the employer does NOT offer retirement plan, then its more important then ever that that child/grandchild hook up with a financial professional for appropriate planning.

Number 2 – ROTH IRAs may be a wonderful alternative. One of the concerns retirees express today is paying too much in TAXES. An alternate strategy may be with the use of the Roth IRA. But there are caveats with the Roth and that is why financial professionals are required to plan and coordinate these tips.

Number 3 – Traditional IRAs are also available and may be appropriate in some circumstances especially if you as a wage earner can deduct the whole or a portion of the IRA contribution. In 2016 – wage earners under the age of 50 may contribute up to $5,500 to traditional IRAs. Income tax deduction on that IRA contribution is available dependent on a number of other factors that includes earnings and what other retirement benefits are available from employer etc. There is a catch up provision for persons over the age of 50.

Number 4 – 401K Rollovers – For those folks in the accumulation phase that do participate in an employer’s 401K…..when you leave one employer and move to another employer….don’t leave the 401K in the employer’s plan AND don’t move the 401K from one employer plan to another 401K employer plan. Rollover to your own IRA.

Number 5 – For employers that have the old defined benefit pension plans yet in place in addition to 401Ks – boy – make sure you have life insurance in place that may allow you to maximize your pension. Have you heard that term – Pension Maximization? Boy that is a strategy that is well worth considering but it takes some planning and sometime…. So if you are under the age of 45, or even 55 look into the strategy of Pension Maximization.

Number 6th – Our 6th and final recommendation to the next generation is to look at In-Service distributions from your 401K. Call us for more details on this option assuming your plan allows this strategy.

So folks – there are 6 “tips” we at RJS and Associates Inc encourage you to pass on to your kids/grandkids to help them develop their own retirement success.

Little things done consistently over a period of time may lead to some very helpful resources for retirement.

Enjoy this beautiful summer.