March 3, 2017: Retirement and College Savings 101

Glakas Presentation 030317.pdf

Topic

Retirement and College Savings 101

Date

03 Mar 2017

Attendees

Presenter: Sara Glakas, Black Barn Financial

Other Attendees: Kayla Ford, Courtney Sy, Tiffany Buckley, Kyle Hernandez, Myra Gibbs, Sona Shah, Tisha Monsey, Jessica Silva, Julia Chinnock, Polly Trigger, Sara Sanchez, Jessica Hughes Wagner, Tatem Oldham, Caroline Enriquez, Jen Morgan.

Discussion Notes

Investing: looking toward the future
looking to reach a long term goal: most common long term goals are retirement and child college expenses
Retirement
- Social Security: about 40% of average worker income
- TRS (defined benefit plan): # yrs of service x 2.3% x average of highest salary years
- 403b or 457 (voluntary, defined contribution plan): save money today, let it grow, use the money to the pay bills in the future
Retirement Savings Options:
- Traditional: pre-tax (don't pay tax today, but pay tax when you get the money out later)
- Roth: contributions are in post-tax (you have already paid your taxes) and all the growth comes out tax free as well
- 457: No 10% penalty if you pull the money out early (there is a 10% penalty if you pull money out of a 403b
Options for paying for College:
- Income
- Student Loans
- 529 plans or Coverdell ESA plans
College Savings
- 529: MUST be used to educational benefits better to have an account for each kid; can change the beneficiary
  - each state sponsors a 529
  - main benefit of going with the 529 in your state: tax breaks on state taxes (Texas does not have state tax, so you can go anywhere)
- Vanguard: Nevada ($3000 to start but take out least amount of fees)
How to know if you can trust a financial advisor/planner:
- Questions to ask financial advisor:
  - How are you getting paid? (if they are getting paid by the customer, that is a good sign. If they are getting paid on commission for selling financial products, they may not be giving you advice that is tailored to you/may have an alternative agenda)
- Fiduciary versus suitability: Are you a fiduciary? (essentially, are you giving me advice based on MY best interest as opposed to the best thing for someone that is in my age bracket generally)
Roth IRA: all you need is earned money and you can set up a Roth for your kid (so start saving as soon as they start earning some money, even if its mowing lawns!)
If you need the money in 5 years, do not be in stocks!

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