Category : financial wellness

Don’t Sit: How to Rollover Your 401k

Congrats! You’ve landed a new job (never a doubt) and didn’t even have to list us as a reference (Oh, the accolades we would’ve thrown your way). While you’re busy getting acclimated to your new work digs, if you have a 401k with your previous employer, don’t forget to bring it with you, along with your trusty stapler. Here are a couple options on how to roll it over:    

Direct rollover to new company plan

If you plan on performing a direct rollover of your old account, first check to make sure your new employer’s retirement plan will accept 401k rollovers. If so, contact the 401k administrator at your new company for a new account address [Example: ABC 401k Plan FBO (for the benefit of) YOUR NAME]. Once you fill out all required paperwork, your 401k funds will either be transferred directly from your old plan to the new plan, or mailed to you as a check made out to the new account address. Just make sure to turn it over to your new company’s 401k administrator.

Rollover to an IRA

You can also roll over your 401k to a traditional IRA, either by transferring the funds to your existing traditional IRA, or by opening a new IRA to receive the funds. No dollar limit is required for either one. You can also roll over – or convert – your non-Roth 401k money to a Roth IRA. The taxable portion of your distribution from the 401k plan will be included in your income at the time of the rollover.

Leave it where it is.

Sometimes the best move you can make with your 401k is to not make any move at all. At least for the time being. For instance, If you’re happy with the investment alternatives your former job offers, or if you need some more time deciding your next move, or if your new company requires a certain amount of time before you can participate in their 401k plan, you may be able to simply leave your 401k where it is.  

Cash out.

Please advise, we only recommend this as a “last resort” option. After you leave your previous employer, you can choose to withdraw your 401k funds in a lump sum after leaving your previous employer. To do this, request that your 401k plan administrator cut you a check. While the check amount will look great in your hands, remember that cashing out could put a dent in your retirement savings, plus you may be faced with significant taxes and penalties in the short term, too.

Of course, not all 401k plans are created equal. So before you make a final decision, we’ll help you choose the best fit for your retirement goals. Hey, it’s what we’re here for, so let’s chat.  

Read More
Pig playing soccer goalkeeper

Kick in More Now for Retirement: That’s the GOOOOOAAAALLLLL

Right now, in the thick of the FIFA World Cup, teams from across the globe are vying for the coveted gold trophy with the World Cup Final match taking place on July 15th. While these world-class soccer players aren’t likely focused on making any (ahem) BIG saves for retirement right now, they should be. According to the Telegraph, the average soccer career lasts only eight years with a standard retirement age of 35.

A More Offensive Game Plan

Considering the average World Cup player right now is in their mid-to-late 20s, according to Statista, these professional athletes need to be kicking in as much savings as they can to set themselves up for a successful financial life and a sustainable retirement. There’s only one Ronaldo, one Messi, one Beckham, so establishing the financial security needed to retire after a less-than-a-decade career can feel too far out of reach for most others.

Off the pitch, the savings a typical 35 year old should’ve netted at this point has received a lot of attention lately. A study published from Fidelity recommended having twice your annual salary saved for retirement by age 35. Considering the weight of student debt and the outsized cost of housing plaguing millennials, this number feels very out of reach for most of the population in or nearing their 30s.

While the amount you save is vital, what isn’t gameplanned enough is how you’re saving. You can argue that you can save all you want, but if you’re simply holding your savings in cash, it won’t be in the position to grow enough to enable you to retire. After you establish the habit of saving, you must maximize your ability to grow your investments.

More Coaching Required

Two big determinants of investment growth are derived from minimizing fees and maximizing returns, and Americans need help with both. Data from the Census Bureau suggests that 79 percent of Americans work for an employer that sponsors a 401k-style retirement plan, but only 27 percent know how much they’re paying in fees on their 401k accounts, according to a study by TD Ameritrade.

Fortunately, by hiring blooom as your trusted advisor, you can rest assured that we’re working on your behalf to reduce investment fees wherever we can. We make managing your 401k simple, smart and affordable by leveraging the right funds for your goals with lower fees to optimize your retirement savings, no matter what age you are. That’s our GOOOOAAAALLLLL.

Not a blooom member? Here’s your best shot … join now.

Read More

Springtime and Student Loans

Springtime also means graduation time for millions of high school students. This is often a time of mixed emotions for those students’ parents. On one hand, you celebrate the accomplishment of your child. On the other hand, you feel a bit nostalgic about how fast the time has gone. It feels like just yesterday that you tearfully walked your son or daughter into their first day of kindergarten.

Student Loans are the Norm

This can also be a time of great financial stress for parents. Especially for the those Americans who aren’t able financially to simply stroke a check for their child’s college education. For a few, there are academic, athletic, or need-based scholarships and grants. But overall, those are still few and far between. More and more, we see college graduates leave school with a load of student debt. According to debt.org, the average college graduate in 2017 had $38,000 of student loan debt.¹ The number of graduates (undergrad or post-grad) with over $100,000 of student loan debt continues to climb at an alarming rate.

The Changing Cost of College Over Time

In fact, over just the last decade we have seen the cost of college growing at a rate of almost 5%.² This is twice the rate of inflation in this country over the same period. Long gone are the days of paying for your entire college education through a summer job. The average cost of a 4-year in-state college education is $39,880 (4 years at Private college average will run you nearly $138,960)³. I certainly am not aware of any summer jobs that are paying this much! So it’s no surprise that student loan debts are approaching epidemic proportions (over $1.49 trillion in total outstanding student loan debt in the US as of December 20174).

The Impact of Student Loans on Jobs

For graduates leaving college with lots of debt, there will absolutely be unintended negative consequences. For example, we see a decline in the number of graduates going into badly needed social services like teaching, nursing, and social work. It is clear to me that a lot of this is due to the burden of debt. If you have $100,000 of student loan debt, the attraction of a higher paying job in finance or consulting can easily sway your decision away from what could be your passion—be it teaching or social work.

Additionally, we see a decline in entrepreneurship from our college graduates. Starting your own business is incredibly hard as it is. Tack on six figures of student loan debt, and the allure of a salary can be too tempting to pass up. I shudder to think of the entrepreneur that could have found the cure for cancer but ended up working on Wall Street so they could pay off their student loans.

Consider This When Your Child Applies for College

My advice to parents of high school students today: If you are unable to pay for a significant portion of the cost of college, help your son or daughter carefully weigh this decision. This is most important if they are considering a private or out-of-state college. I would not expect the majority of 18-year-olds to understand the financial implications of their college choice. I often hear stories where people carry student loan debt well into their 40s and even 50s. Therefore, if we burden generations of students with debt that might take decades to pay off, we also limit how much they can save for their retirement. We owe it to our kids to help them understand the expense of college before they take on an obligation that could affect them financially for the rest of their life.

 

Chris Costello
Chairman & Co-Founder


1 https://www.debt.org/students/
2 https://www.savingforcollege.com/tutorial101/the_real_cost_of_higher_education.php
3 https://www.collegedata.com/cs/content/content_payarticle_tmpl.jhtml?articleId=10064
4 https://www.federalreserve.gov/releases/g19/current/default.htm


Optimizing your retirement savings not only helps you, but indirectly also your child. Not a blooom member yet? Get started with a free analysis to see how we could optimize your savings.

Read More

Your 401k Workout Plan

Forget your pecs. This year, invest in something that could actually get better as you get older! Make sure your company-sponsored retirement account is in tip-top shape to conquer the new year and beyond with these easy exercises.

Exercise 1: Match it pound for pound.

Just contributing to your 401k is a HUGE step in the right direction. So, pat yourself on the back for taking that leap! If you really want to make strides, muscle up and meet your company match. (It’s basically free money.)

 

 

Exercise 2: Stretch out your dollars.

Retirement is a marathon, not a sprint. Make sure you’re invested in the right mix to meet your goals. Maximize the distance, while protecting yourself against big injury to your account as you get closer to retiring.

 

 

Exercise 3: Avoid heavy lifting.

If you’re not properly trained, attempting to overhaul your 401k could be dangerous! A wrong move could be a real toe crusher. Luckily the independent experts at blooom are here to spot you when you’re ready.

 

 

Exercise 4: Sweat the small stuff.

Hidden fees and management percentages may seem small now, but by the time retirement hits could mean the difference of hundreds of thousands of dollars. Make sure you are minimizing the fees in your 401k.

 

Does a 401k exercise still sound like too much effort? Outsource the workout with blooom.

Learn More

Read More

blooom’s Year-End Checklist

The end of the year is a great time to reflect on your financial situation and plan ahead for next year. Here are some tips from one of our advisors:

  1. Update wills/trusts and beneficiaries.
    Get married this year? Have kids? Get divorced? Big life events mean it’s time to make sure legal docs like your will or trust, powers of attorney, life insurance policies, and account beneficiaries are all up-to-date. Forgetting to make these updates can be disastrous for families at some of the worst possible moments in their lives. Get in the habit of reviewing these things annually so nothing is missed.
  2. Get a handle on your debt and plan ahead for next holiday shopping season.
    Lay it all out there to get ready to tackle debt in the new year. If you’re like most Americans, you probably racked up some credit card debt you aren’t proud of this holiday season. What can you learn from that going into next year? Figure out how much of a holiday spending budget you need to plan for, divide that by 10 or 11 months and automate your savings into a savings account dedicated to holiday spending.
  3. Use your raise (and possibly your bonus) to increase your 401k contributions.
    Starting this year, get into the habit of taking a portion of any raise you receive and dedicating it to your 401k. For example, if you get a 5% raise, consider bumping up your contributions by 1% or more. Your paycheck still goes up, but your 401k also gets a boost. This habit can help you work toward maximizing your contributions over time, while having no real impact on your cash flow or budget. Also, see if your employer will allow you to contribute all or part of any year-end bonus you may receive toward your 401k. This can help reduce your taxable income come tax season and it also means you avoid the extra tax withholding on bonuses for that money.
  4. Set aside time for a year-end financial review.
    Look back on the year and take note of what you were able to accomplish financially and what setbacks you may have had. Use this past year as an opportunity to continue making smart financial decisions in the new year and learn from any of the times you may have stumbled. If you have a family, talk about upcoming trips, savings goals, and any other things you need to focus on next year. Set goals and even plan to celebrate financial accomplishments as a family throughout the year. Make money fun and before you know it, you’ll feel the freedom that comes along with financial security and eventually, financial independence!
Read More
1 2 3 5