[Retirement] How A Few Minutes & A Few Dollars A Month Can Give You Money For Life!
[Retirement] How A Few Minutes & A Few Dollars A Month Can Give You Money For Life!
Putting Your Savings To Work So You Don’t Have To
By: Stacey Tisdale
Most of the people reading this will live to be between 90 and 100 years old. If you retire at age 70 – which most of us don’t want to do – you’ll still have about 20 or 30 years to fund your life.
Is your retirement savings on track to do this? Let’s assume, for the moment that you, like the majority of the rest of the people in the United States, would answer that question with a resounding “No!”
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Size Doesn’t Always Matter
In 2001 Kevin Coppola began to research ways to help people better manage their retirement investments. “Employers were pretty much forbidden from giving investment advice, and the responsibility was on the individual to educate themselves and make financial choices that would impact their whole life,” says Coppola.
After years of research, in 2004, Coppola created Compass Investors which provides clients with customized analysis of their investment options so that they can change the investments in their 401(k)s every five weeks in order to capitalize on market conditions.
Coppola created Compass based on his belief that the old “save and hold” model we are accustomed to when it comes to long-term investing for retirement could not possibly deliver the returns needed to meet financial needs 20, 30, or even 40 years into retirement.
“When you look at the social and economic realities of the day, particularly the fact that we are living so much longer, you could do everything ‘right’ and still not be able to save enough for retirement,” says Coppola.
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The Numbers
Let’s get back to that ‘20 to 30 years of life’ most of us will have to fund after you retire. The average balance of 401k ‘s in the Black community is about $23,000. Coppola points out that If you weren’t able to add any more money and didn’t make changes to your plan, that’s going to be about $265,000 after 30 years.
How It Works
The Compass strategy approach begins by asking people to figure out what their ideal retirement looks like and how much it will cost. The idea is to get to that “magic number” as quickly as possible. For approximately $600 a year, Compass sends investors analysis every five weeks, encouraging them to move their money between the different funds available through their 401(k)s in order to maximize returns versus traditional long-term investment strategies. When investors reach their target, Compass allows them the flexibility to suggests that they can then transfer the funds to a safe investment like bonds.
“I want to be able to provide income forever, if possible, and you can do that by growing your accounts large enough and then putting them into guaranteed vehicles that will pay you interest —everything that you would have been getting from your salary,” says Coppola.
Unlike things like education costs, you can’t borrow money for retirement. Be sure you are getting good advice information and take control of this important part of your financial life.
[Disclaimer: Compass Investors is a sponsor of Wealth Wednesdays]
