New CA Bill Forces All Employees to Invest for Retirement

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Senate leader Kevin de León has put forth a bill that would require all California companies, that have at least five employees, to offer their own retirement investment plan or enroll workers in the new California Secure Choice Retirement Savings Program. Though employees could always invest for retirement using an IRA, while getting almost the exact same benefits of the Secure Choice program, many people haven’t taken advantage. As Time Magazine says, ” .. when it comes to putting money away, an employer nudge really matters: 90% of those with workplace plans save for retirement vs. only 20% of those without one.”

What bill does:

  • Requires that employers with more than 5 employees offer some kind of retirement investment plan to employees.
  • Offers a way for employees to invest for retirement directly from their paycheck.
  • Starts employee contributions at between 2% and 5% of their paychecks (the exact details haven’t been hammered out yet).
  • Automatically enrolls employees (about 6.8 Californians) unless the employee chooses to opt out.

What the bill doesn’t do:

  • Does not require employers to “match” contributions or provide funds for the retirement of employees.
  • Does not assume the risk of investing (investors could lose money).
  • This program does NOT provide assured payouts during retirement (it is NOT a pension plan).

San Jose’s Mercury News:

At first the money would be invested in safe, low-yield U.S. Treasury notes. After three years, the funds would likely shift to a diverse portfolio of stocks and bounds. These options would be developed by the Secure Choice Retirement Savings Investment Board. The accounts would likely be Roth IRAs, a mode that allows for tax-free withdrawals upon retirement.

The amount of money deducted from a worker’s payroll would escalate over time, up to 10 percent, but employees would be able to set the amount themselves.

Time Magazine:

All told, at least 30 states are in various stages of setting up retirement plans—some mandatory for employers and some voluntary—according to the Georgetown University Center for Retirement Initiatives.

At any rate, the Secure Choice Retirement Savings Plan is heading to an employer near you. I’m waiting to hear more about the specific details but this is coming. Do you think it will encourage more employees to invest for retirement? Head over to the Bigger Than Your Block Facebook page and give your opinion.

 

 

 

 

myRA Might Be the Solution for High School and College Students

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If you’ve read “10 Things College Students Need to Know About Money” you know that I am a HUGE advocate of young people investing from retirement as soon as they have earned income. For many people that time is while in high school or college while you’re working part-time or eeking a living out of financial aid. Often, young people don’t know how to open an Individual Retirement Account (IRA) or don’t think they have enough money to open one (get my list of investment accounts you can open for less than $100 here).

The United States government is here to help with the new myRA (my retirement account, get it?). According to the U.S. Treasury,  these accounts are:

  • Easy to set up (you can have the money deducted from your payroll check if you wish)
  • Designed to help people with little money or no access to a retirement plan from work.
  • No risk of losing money (funds are invested in a Thrift Savings Plan-like account)
  • The funds you invest are NOT tax-deductible but you also can take them out whenever you like without penalty.

The best part? There is no minimum amount required to start an account and according to Forbes, ” additional contributions only have a minimum of $5.” The goal is really to get you into the habit of investing when you are young and have few dollars. The return isn’t great (think 1% or 2% per year) compared to a regular traditional or Roth IRA or 401(k)/403(b) but starting now with a few dollars and little interest is better than not doing anything.

Fool.com also notes:

Account holders can contribute up to $5,500 per year ($6,500 if over 50) and may continue to contribute until their total account balance reaches $15,000. All funds are invested in a newly created Treasury bond

Once you’ve grown a nest egg big enough to open a traditional or Roth IRA, or you have a job that provides a 401(k) or 401(b) hopefully with matching, you can roll the money over into a new account.

Click here to find out more about myRA accounts.

 

 

Retirement Survey 2016

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Are you investing for retirement? Do you use a work-sponsored plan? An individual retirement account? Will you have enough money to retire on?

Take our anonymous 9 question survey to help us learn how to serve you better. We don’t collect any identifying information from you. We just want to know about the trends in retirement so we can plan webinars, books and speaking events to help you plan.

Thank you for taking a moment to share. Don’t forget to invite others to share as well.

 

 

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Shay Olivarria is the most dynamic financial education speaker working today. She speaks at high schools, colleges, and companies across the country. She has written three books on personal finance, including Amazon Best Seller “Money Matters: The Get It Done in 1 Minute Workbook”. Shay has been quoted on Bankrate.com, FoxBusiness.com, NBC Latino and The Credit Union Times, among others. To schedule Shay to speak at your event visit www.BiggerThanYourBlock.com.

Wanted: Single Women to Invest

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Financial Advisor Magazine just came in the mail. This month there is an article about attracting more single women as clients. There are two great quotes that I wanted to share with you:

“Women are better investors than men” – Wibberly, CIC Wealth

“80% of men will die married but 80% of women will die single” – Penta BBH, Center for Women & Wealth

If those two quotes aren’t enough to get to start investing, I don’t know what else to do. Those quotes tell us that women are AWESOME at investing and that heterosexual women are going to have a substantial amount of time not married (at least our 20s and ten, fifteen, perhaps 20 years after our partners die). What are you waiting for?

Start investing now. If your job offers you a 401k or 403b (tax benefits and usually matching) start contributing now. Call HR. Now. If you’re worried about how much money is going to start coming out of your check, start by contributing just 1% and increase your contribution percentage a bit every year.

If your job doesn’t offer you a retirement plan, open an Individual Retirement Account (IRA) as soon as possible. Depending on whether you choose traditional or Roth there are tax benefits now or tax benefits later. You won’t get the matching but you will get to take advantage of compound interest.

Not sure where to begin? Find a fee-only advisor and get hopping! If you’re 30 years old and can contribute $415 per month you can build a million dollar nest egg by the time you retire at 67 years old. Can’t contribute that much? No worries. Something is better than nothing. If your nest egg ends up smaller than you’d like, you can partner your investments with your Social Security payments and go live in one of these 8 beautiful countries.

Either way, it’s time to get hopping.

 

31% of Americans Have No Retirement Investments – Tips for Starting

Portrait of Smiling Family on Steps“Nearly a third, or 31% of U.S. adults said they had no savings or pension to help them afford retirement, according to the Federal Reserve Board.”  – CNN Money

Extended family sitting outdoors smilingI want to say that I’m surprised, but after working with students, employees and retired folks for the last seven years ….  this is what I already know. If you’re part of this group, you’re going to be in for a HORRIBLE surprise come “retirement age”. Either you won’t be able to retire at all or the money from Social Security will only be enough for you to afford a room in your kid’s house and no fun, but it’s not too late. Here are my tips for creating a retirement plan and sticking to it … at any age.

0 – 16

Think it’s too early to start thinking about your child retiring? Not so. Though you can’t take advantage of tax-deferred plans like IRAs (you’re kid probably has no earned income) you CAN put a few dollars away every month in a regular investment account, buy individual shares of stock or purchase savings bonds. Let’s assume that you contribute $50 per month (or $600 per year ….  birthday … Christmas …  ) to any one of these strategies and that the investment earns 2% per year on average (some years more, some years less). By the time that child is 67 years old, that investment would be worth $84,584.31. Imagine how much money it would be worth once your child started contributing too.

16 – 24

By this time you are probably working, but not making much money. You might think that $50 per month won’t amount to much anyway so why bother? Because that $50 per month, or more, could end up being $432,992.84! Once you’re working you have earned income and can take part in wonderful retirement investing plans like 401k/403b, if your job offers them, or Individual Retirement Accounts (IRAs), if your job doesn’t. You put in $30,600 over your working years (16 to 67) and you’ll end up with a half-million dollars … easy! Read more about this in my book 10 Things College Students Need to Know About Money.

25 – 40

Yes! Now, we are in the prime earning years! Not only do you have a job, you probably have a half-way decent job. No more ramen for you! It’s time to take it up a notch. If you have been investing (since you have that good job) increase that contribution. If you haven’t begun FamlyBlackcontributing yet, it’s time to start.

You might think that you don’t have any spare money to invest or you might not know how to invest (read Money Matters: The Get It Done in 1 Minute Workbook), but it’s easier than you think, especially if your company offers a retirement plan with a company match. On your own, the average American can find $50 worth of spare change every month. PLUS, think about the ways that you waste a few dollars here and a few dollars there every month. Assuming a monthly $50 investment, starting at 30 years old, into a tax-deferred retirement account could still net you $136,725.48. Bump that up to $75 per month and you’ll be looking at $205,088.22. Not too shabby!

40 – 67

If you’re here then you are squarely looking at retirement …. perhaps. In Money Matters: The Get It Done in 1 Minute Workbook I have a worksheet that asks you to take a look at where you are and where you’d like to be. If you’re path is not heading in the direction you’d like it’s not too late to change.

You’ll need to do a little more to catch up, but it’s not impossible. A monthly $200 investment with an 8% return could turn into $229,797.95. Use the Social Security Administration’s estimator to find out how much you’ll get per month once you’re retired. You may find out that you need to work a few extra years. You may find out that you’re fine. Ether way, knowing is better.

If you haven’t begun investing for retirement yet, don’t be downhearted. The time is now. Don’t wait another day. Contact Human Resources at your job and find out how to start investing. Find a fee-only planner and take a comprehensive look at your financial situation. Buy a book to learn the basics and get started.

Working hard won't get you what you want. Working smart will.

Working hard won’t get you what you want. Working smart will.

It begins now.

 

Shay Olivarria is the most dynamic financial education speaker working today. She speaks at high schools, colleges, and companies across the country. She has written three books on personal finance, including Amazon Best Seller “Money Matters: The Get It Done in 1 Minute Workbook”. Shay has been quoted on Bankrate.com, FoxBusiness.com, NBC Latino and The Credit Union Times, among others. To schedule Shay to speak at your event visit www.BiggerThanYourBlock.com

Carmelo Anthony Founds M7 Tech Partners

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Carmelo Anthony has decided to co-found a company, M7 Tech Partners, that will invest in technology start-ups. The NY Times says:

The idea that turned Carmelo Anthony into a venture capitalist came to him during practice with the Knicks last season.

The basketball star became interested in the sophisticated sensors that players had recently started wearing to track their performance …

The average basketball player has a career of five seasons. After playing many athletes have little money and no skill set other than playing basketball. I’m glad to see that Carmelo Anthony is building a financial foundation to make sure that he and his family will be financially secure after retirement from basketball.

Bloomberg reports that Anthony said:

“We are actively looking for ventures with strong leaders creating breakthrough products that resonate with consumers,” he said. “I particularly have my eye on companies that are involved with wearable technology and connected devices – these will be huge areas for the future.”

Investing in tech start-ups is a tough field, so I’ll be keeping a close eye on M7 Tech Partners. I wonder if M7 will actively pursue Black and/or Latino tech start-ups?