A financial roadmap is one of the most important parts of a successful financial future, and retirement should be a component of this. Being deliberate about creating the right financial roadmap for your family starts with asking yourself what YOU are saving for. Your financial roadmap should be a joint conversation with your spouse if you’re married, and everyone should update their financial roadmap once a year.
“When I meet with clients, I get to know them, their needs and focus on their goals, to understand what they are really investing for and what steps are needed to get there,” said Jeff Forbes, Private Client Advisor at J.P. Morgan Wealth Management in Mattapan.
Here are some tips to help get you started.
Get talking!
According to the Institute for Women’s Policy Research, 80 percent of Black American households rely solely on a Black woman’s income. That was the statistic that drove JPMorgan Chase to launch an initiative called Currency Conversations in partnership with Essence Magazine. The program was created to inspire sisters, mothers, grandmothers, and aunts to talk about their financial goals and take action. In 2019 the partnership engaged nearly 16,000 Black women to talk about basic personal finance topics and how to get on a path to building wealth.
“It is imperative that everyone, but especially Black Americans improve their financial health and begin talking about saving, investing and resources with their children, their parents and their communities,” said Forbes.
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Understanding the Stock Market
It’s a common misconception that people need to have a lot of money to be able to invest. This isn’t true, and no amount is too little to start. It’s not a conversation of how much money you need to start, but rather how much you can afford in the beginning.
“When I sit with clients, I reiterate the importance of investing as a way to build wealth and save for retirement,” said Forbes. “A financial advisor can be particularly helpful to help determine which investment options are most appropriate depending on the client’s unique financial situation and risk tolerance. For example, how much do you want to save for your child’s college tuition, or at what age would you like to retire? An advisor can help to make sure your investment strategy aligns with your needs.”
Diversification with a balanced mix of investment products helps mitigate risk. It’s also important to invest for the long term.
Managing Retirement Savings
As soon as you start working, start thinking about retirement, especially if you have an employer sponsored plan. Making regular contributions, big or small, can help you stay on track. This will also take out the guess work of deciding when to invest.
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However, if you leave a company what should you do with your retirement account? It’s essential to consider your specific financial goals to help you determine what to do with your assets. Making the wrong decision could cost you money in the short or term and have more significant ramifications around tax time.
You might be surprised at some of the options you have, and they could end up saving you big.
• Leave It
One option to consider is leaving the plan with your old employer until you retire. Most companies allow former employees to keep retirement accounts with them, and then open another account with your new employer. Opening an account with your new company is especially important if the business will match contributions. Leaving an account open will retain a tax advantage for your money, and if you’re happy with the old portfolio there may be no reason to make a change. If your former employer does not allow you to remain with their plan, and you’ve already contributed over $5,000, they must help you roll over the funds into an IRA.
• IRA Rollover
One of the more popular choices is to have funds directly transferred into a Roth or traditional IRA, both of which give you more investment options than a standard retirement account. Which one you choose depends on your tax bracket and future financial goals. In a Roth IRA, you contribute after-tax earnings, allowing you to withdraw without taxes or penalties after a certain age. A Roth will also enable your savings to grow tax-free.
In a traditional IRA, savings become tax-deferred, and withdrawals are taxed as current income. If you’re anticipating a higher income post-retirement, a Roth IRA is your best bet if you meet eligibility requirements.
• Transferring
Transferring your funds over to your new employer is a popular choice. Transferring the total balance to a new employer’s plan can help you maintain tax-deferred status on your savings. Make sure to take the time to research and study both options in detail, including fees associated with each. If your old account has better prospects, and you can handle managing multiple accounts, consider staying with your old employer.
Planning for retirement is one of the best things you can do for your financial future — it’s worth your time and money to be familiar with your options. Make sure to review all retirement plan details thoroughly, and speak to a professional. A secure retirement can be realized when you make educated decisions with your assets.
Investment and Insurance Products are: NOT FDIC INSURED • NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY • NOT A DEPOSIT OR OTHER OBLIGATION OF, OR GUARANTEED BY, JPMORGAN CHASE BANK, N.A. OR ANY OF ITS AFFILIATES • SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED
Not all investment ideas referenced are suitable for all investors. Investing involves market risk, including the possible loss of principal. There is no guarantee that investment objectives will be reached. Diversification does not guarantee a profit or protect against a loss.
Opinions and estimates offered constitute our judgment as of the date of this material and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. We believe the information provided here is reliable, but do not warrant its accuracy or completeness. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The views and strategies described herein may not be suitable for all investors. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, accounting, legal or tax advice. References to future returns are not promises or even estimates of actual returns a client portfolio may achieve. Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation.
JPMorgan Chase & Co., its affiliates, and employees do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for tax, legal and accounting advice.
J.P. Morgan Wealth Management is a business of JPMorgan Chase & Co., which offers investment products and services through J.P. Morgan Securities LLC (JPMS), a registered broker-dealer and investment advisor, member FINRA and SIPC. Annuities are made available through Chase Insurance Agency, Inc. (CIA), a licensed insurance agency, doing business as Chase Insurance Agency Services, Inc. in Florida. Certain custody and other services are provided by JPMorgan Chase Bank, N.A. (JPMCB). JPMS, CIA and JPMCB are affiliated companies under the common control of JPMorgan Chase & Co. Products not available in all states.
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