How Saving for Your Retirement Has Changed

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Retirement isn't what it used to be, which means we need a new way to plan for it. As employer-funded investments and government plans disappear due to a changing global economy, it's crucial to personally save for retirement.

Not sure of the best way to do so? You're not alone.

Leanne Rahn of Fiduciary Financial Advisors told us more and more women are seeking to understand finances and wise investments, while Carol Dehen of Mosaic Wealth Management said it's more important than ever before to start saving now.

The best thing you can do is speak with a financial advisor who can talk through your options and help ensure you have a healthy, smart, diversified portfolio that will last long-term.

First, let's take a look at some of the top advice from experts like Dehen and Rahn.

Are there any new saving mechanisms people should be aware of?

DEHEN: Not sure how many new vehicles there are, but I would say some that have been around awhile are gaining traction. We're seeing more people add to the ROTH side of their 401ks and opening ROTH IRAs. You can do both, split your money between the two vehicles. They both grow tax-deferred, but the ROTH money goes in after tax, and is therefore generally not taxed when you withdraw it. A traditional IRA provides a tax savings now, but is taxable when you draw it upon retirement. Contributing to both can help you manage taxes now and in the future.

RAHN: This is a short-term savings mechanism, but treasury bills can be a great short-term savings mechanism, where we're seeing above-average yields right now. If people have an emergency fund just sitting there, it's more than likely losing to inflation. Most people don't think about that, because inflation doesn't get taken out of your bank account.

Is there anything you'd avoid when saving?

RAHN: Don't let emotions ruin your investment decisions, especially in times like right now, when the market is all over the place. We're seeing a lot of variations and our emotions are feeling that, too. To the unwise investor, when the market drops, it sparks the emotion of fear, which leads to selling. Then, when the market rises, they get a little greedy and buy. If you think about this, it's actually a vicious cycle of buying high and selling low.

Have you seen any unique ways to save for retirement?

RAHN: One thing that's encouraging and a good idea is, instead of contributing $50 a month to your IRA, maybe it's 3% of your pay instead. Or if it's not a percentage, at least have a plan in place to increase those monthly contributions. Maybe, every six months, challenge yourself to put an extra $20 in each month. Some system that allows your investments to grow as you grow, and as your income grows.

Can you talk a bit about "green investing?"

DEHEN: It's really a personal preference. Environmental, Social and Corporate Governance (ESG) looks to invest in companies that are screened to evaluate their behaviors with regard to the environment, how they treat employees and ethical standards in the way they conduct business, including but not limited to pollution, climate change, diversity, health, safety, tax strategy, charitable giving, etc. The world has changed a lot in the last 10 years and we're finding more and more companies in general are trying to do better in these areas.

Any final advice for our readers?

RAHN: Align your risk and time horizon. Establish a long-term portfolio and make sure it's diversified. Ride out the waves of the market. Know what you're paying in investment fees. Understand what a "fiduciary" is and how one can be vital for your long-term success. What it means to be a fiduciary is that we have a legal obligation to put our clients' best interests first, and I cannot sell investment products. I truly am recommending what's best for my client, not because I will get paid more.

DEHEN: Start as young as possible not only saving, but planning. A financial plan can help you establish a roadmap and can be updated regularly to see if you're on track to meet your retirement goals. It will change many times over the years as you marry, have children, change jobs, care for parents and all of those life events we experience. Begin with as much money as you can afford. If you get a raise or promotion at work and don't need the extra funds, sock it away in a retirement plan or a savings or investment account outside of the different retirement plans.

Written by Josh Veal for West Michigan Woman.

This article originally appeared in the Feb/Mar '23 issue of West Michigan Woman.

Fiduciary Financial Advisors, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.


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