Know Your Options

We’ve had the pleasure of having a lot of conversations lately with folks that are maybe a little bit further away from retirement. Maybe they’re they’re still 15, 20 years, maybe longer away from retirement, as has a number of our clients are starting to have us have those conversations with their children and how to how to start preparing for retirement. And what we’ve sort of learned through that process is a lot of times people are unaware of all their different options. You know, people talk about, well, I know I can contribute to an IRA, and right now it’s what, $7,000 in in 2025 and then maybe an extra thousand dollars if you’re over age 50. type of thing. But they don’t really know beyond that how to approach retirement planning. And it’s very interesting out there. And I always liken it to this. I mean, everybody is kind of the expert in their own areas. And so financial planning and all the different things available to people sometimes just aren’t at the top of their mind. And that’s okay. And that’s where when we get a chance to sit down and talk to these individuals, I find it rewarding to be able to share some of these things. So hopefully you’ll take away with some of these options here and learn that whether you’re 20, 25, 30, 35 years old, you know now is a time to start to be talking about these things. If we have the opportunity and our team is the opportunity to have these conversations in advance. It can give you such a jump start on things out there. So just this weekend, I was sitting down with an individual and they had just made a career change. They had worked for a company for many years, had built up this 401(k) that there kind of was, you know, their comment was, well, it was just automatic. I really didn’t know how it worked. Money went in and I didn’t pay attention to it was his words. And he says now my new employer was a better opportunity. My salary went up. I enjoyed the work more, but they don’t offer any sort of retirement plan. No 401(k), no simple IRA, no way for that. So in his mind, he’s like, well, I just can’t do anything, you know? And again, to his credit, brilliant in his area just was unaware of those options. So it was very interesting to talk to this individual that had got a great jump start on retirement at a young age because they had a 401(k) has a strong earnings, and he’s now building up this savings account, but just doesn’t know what to do with it. And so really just unaware of what’s out there. Yeah it’s true I’ve come across a lot of folks lately where they’ve been building up this savings account, you know, at the bank or credit union or whatever it might be, and they’re really not earning a whole lot of interest. There’s other options like high yield interest, types of accounts that are available to you. But going beyond that, one of the options is just simply like a typical brokerage account is what we’ll call that, where it’s after tax money that then, you’re going to earn, you can invest however you choose to invest. There’s going to be, you know, taxation on any dividends or interest or capital gains that you might experience along the way. But again, the good news in those situations is you’re typically only paying those taxes when you’re making money. But again, it’s a way that, you know, if you’re married, you can set it up as a jointly entitled account and everything, where again, you can invest similar to if you want to, to take whatever level of risk like your retirement accounts, but you can put it in an after tax account and really start to build assets. That then gives you flexibility to not only put money in, but take money out. You don’t have some of those age restrictions that come with retirement accounts. Absolutely. I think it just like you said it and I can’t reiterate enough of this, is this flexibility? You know, I think it’s one of the most underutilized accounts out there as options are people overlook that. And again, the flexibility that it provides without those age limitations within then, you know, yes, you’re not getting, a deduction on your tax return like a traditionally in many cases, like a simple IRA or a 401(k) contribution may give you like that, but you’re getting some other benefits worth long term capital gain, taxation and stuff like that. And depending on your tax situation will determine that. But again, let’s say you’re saving to buy a house. You know, would you want to take money out of a traditional IRA to put as a down payment? Probably not be a pretty sizable tax event in many cases, but a brokerage account gives you that flexibility to dip in no matter what your age is to be able to do that. Yeah. So if you’re in a situation where you’re saying, well, I don’t know if I’m ready for full blown retirement planning necessarily, you’re not that close, but maybe you’re in your in your 30s and you’re trying to really think through some of these different ideas.