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Clear Thoughts
Retirement
| What does anyone and everyone want later in life? |
What each person wants from retirement is as different as our DNA. Interests vary from wanting part time work into your 90s, spending time on community service projects, traveling the world, golfing every day and quality time with the family. What we have in common is a desire to control when we retire and what our lifestyle will be throughout our retirement years.
Employee participation in 401k plans continued to decrease in 2005, to a participation rate of 70%, down 12.5% from 80% in 1999, and the percentage of salary contributed has fallen 20% in that time, from 8.6% to 6.9%, according to a study published by the Spectrem Group out of Connecticut.
Despite the weakening participation numbers, the 401k remains a great way to save painlessly for retirement as the money is taken from paychecks before it is received providing an excellent tax deferred savings vehicle. Smart investors know putting away money earmarked for retirement is more than just a good thing; it has become mandatory.
Since starting Clear Asset Management we have all been rolling our various 401ks monies into IRAs (including in some cases Roth IRAs) and having them advised, of course, by Clear Asset Management. We also understand that retirement accounts are a great vehicle to invest in the equity markets.
As people change jobs, and begin investing in new 401k plans administered by their new employers, the question arises on what to do with their old 401k investments. We at Clear Asset Management have the solution.
Issues arising from having multiple rollover IRAs in different places include controlling asset allocation, the complexity of keeping track of holdings; risk management. Investing these programs in mutual funds also creates problems because many of them hold the same stocks hindering desired investment performance.
Consolidating your equity holdings in a Clear Asset Management advised account is an ideal way of addressing these concerns. Our separate account format and active management approach keeps things simple, eliminates redundant equity investments and provides multiple portfolios to diversify.
As some investors have pointed out to us, because all of our trading fees are included in our wrap fee, the main consequence of active management is taxes. We do a pretty good job of selling our losses and holding our gains long enough to achieve our investment performance, with the losses offsetting much of the gains. Of course this issue matters just for taxable accounts; it does not matter at all for retirement accounts.
We cannot accept new accounts under $25,000, so rolling over an old 401k and adding a 2005 IRA contribution (before April 15) is a good way to get going. If you already have an account with us, we can open an IRA account that is lower than $25,000; give us a call to discuss your individual situation (toll free 1-866-641-5600).
Investing tax deferred is a great way to add to compounding. We have encountered people with as many as five 401k accounts, and have managed to facilitate the consolidation and rolled over process for them.
How are you saving and investing for retirement? What is your asset allocation and investment plan? We just might have the Clear answer to your investment concerns when you retire.
P.S. Clear will be interviewed concerning the Housing and Home Improvement Sectors on Bloomberg TV Monday at 7:50am Eastern.
Please tune in if you are available.
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