Gen Z — Start Investing Now!

Gen Z — Start Investing Now!

If you’re a member of Gen Z — those born after 1997 — now is a great time to start investing for retirement. The power of compounding returns is one of the best ways to grow wealth over time. And the earlier you start, the less you have to set aside each month to reach your goals.

Consider that a one-time $10,000 investment you make at age 20 would increase in value to more than $70,000 by age 60, assuming a 5% interest rate. Meanwhile, it would only grow to approximately $43,000 if you make it at age 30. And the same investment at age 40? That would grow to a mere $26,000. As you can see, when it comes to investing, time really is money.

Here’s how to make the most of your investment dollars.

Find a Way to Invest

Even coming up with $200 can feel like a daunting task at this point in your life. Not only is your starting salary likely to be lower today than it will be in a few years, but you might also have student loan debt and other bills to contend with.

The good news is that you don’t have to invest a lot to begin building your wealth and preparing for retirement. Start with what you can afford, even if it’s only $50 per paycheck. Look for ways to free up a small amount of money in your budget each month so that you can contribute to your 401(k) and start putting that money to work.

Have a Plan

Create a plan for increasing your contribution down the road. If your employer offers a 401(k) match, try to invest enough to get the maximum. That match represents free money — and it’s the best deal you’ll find in the world of investing. Once that money is in your account, it begins growing, and it can boost your overall portfolio down the road.

Plan to increase your retirement account contribution each time you get a raise. Depending on your company, you could even plan an incremental increase in your contribution each year. For example, you could arrange to increase your contribution by 1% each year up to a certain percentage of your income.

The important thing is to get started and then up those contributions as often as you can. Get in the habit of investing, and you’ll be more likely to reach your long-term wealth goals even if you have to start small.

Give Yourself a Cushion

No matter your situation, there’s a good chance that, at some point, you’ll end up with an emergency where you must come up with a significant sum of money all at once. This can be stressful, and you might consider tapping into your retirement savings to help cover the cost.

However, it’s better to avoid using your retirement investments for emergencies since an early withdrawal can result in hefty penalties. Even if you get a 401(k) loan and avoid the penalties and taxes, anytime your money is out of the market, it’s not working on your behalf. You might replace what you withdrew, but you can’t replace the opportunity cost of time in the market. This is why establishing an emergency fund is so important.

Don’t Go It Alone

Investing for retirement can be daunting if you’re just starting out. Contact your WellCents financial professional to help you set realistic goals to grow your nest egg over time and give you a head start on the road to retirement.


The Many Benefits of HSAs

The Many Benefits of HSAs

What if we told you that there’s a type of account that not only allowed you to put away pre-tax money toward qualified medical expenses, but could also help you bolster your retirement savings? Well, there is — the Health Savings Account (HSA). Here are some of its many benefits that you might not be aware of.


Triple Tax Savings. One of the biggest advantages of HSAs is the fact that your contributions are taken out of your paycheck before you pay taxes. Then, your money grows tax-free while it’s in your account. Finally, when you take out your money to use toward qualified expenses, you won’t pay taxes on that withdrawal either. The HSA represents the potential to use truly tax-free money.

Flexibility. Your HSA has the flexibility to help with medical expenses as well as your long-term retirement planning. In addition to using HSA funds for qualified healthcare costs now and during retirement, you can also begin withdrawing funds at age 65 for daily expenses. You do have to pay taxes on these withdrawals, but with an HSA, you have another tax-advantaged way to build wealth for the future.

Didn’t Use It? You Won’t Lose It. The HSA doesn’t require you to spend the money in the year in which you save it. While a Flexible Spending Account (FSA) is a use-it-or-lose-it proposition, the money in your HSA rolls over year to year, allowing it to grow over time without you having to sweat any deadlines.

It Travels Well. Your HSA is always yours. If you change jobs, you can take your account with you. It’s even possible to set up an HSA without involving your employer. If this benefit isn’t available at your next job, you can roll your old HSA into one you set up on your own.

Variety of Qualified Expenses. It’s possible to use your tax-advantaged dollars for a number of expenses when you have an HSA. Qualified medical expenses can include dental and vision costs, such as exams and X-rays. You can also use the money for surprising items like sunscreen. Check with your employer’s plan to see what items qualify.

Use for COBRA and Medicare Premiums. On top of paying your out-of-pocket costs, you can also use HSA dollars to cover COBRA and Medicare premiums. If you’re between jobs and using COBRA, your HSA can help make it more affordable. While you can’t keep putting money into your HSA once you enroll in Medicare, you can use your HSA to pay those premiums.

Catch-Up Capability. The HSA comes with the ability to make catch-up contributions once you reach age 55. So, if you want to put a little extra into the account, it’s possible.

Time on Your Side. There’s no deadline to reimburse yourself for qualified expenses. You can use your HSA to pay for last year’s medical bills. Or you can even let your account grow over time and reimburse yourself later. Just make sure to save all your receipts.

Cover LTC Expenses. You can also let your HSA grow and use it later for long-term care. Since Medicare won’t cover long-term care, and Medicaid only applies when you have a low income and few assets, your HSA can help fill this gap.

Others Can Contribute. Finally, others can contribute to your HSA, helping it grow. Your employer can contribute and the money is immediately vested as yours. This matching contribution is free money that grows over time. Even family members can contribute on your behalf, so long as they meet certain qualifications.

Bottom Line

Your HSA comes with a plethora of benefits. Contact your WellCents advisor to find out if an HSA might be the medical-expense and retirement-planning solution that you’re looking for.







How Much Debt Is Too Much?

How Much Debt Is Too Much?

No one plans to take on too much debt. Unfortunately, it can be easy to gradually get in over your head. One month, you fund a beach vacation on your credit card. A few months later, you purchase a laptop. Then, your car transmission goes, and before you know it, you’re in deep. But knowing how much is “too much” for your financial situation may help you avoid digging a hole that might take you years to climb out of.


How debt happens. Sometimes debt arises unexpectedly due to emergency spending, a job loss, medical expenses or unanticipated home or car repairs. But excessive debt can also result from impulse purchases or a desire to keep up with the Joneses. It’s nearly impossible to set limits on the former type of debt, but you can control the latter. Also, note that we’re mostly referring to credit card debt as opposed to mortgages, car payments or student loans.


Debt’s damage. It costs money to assume and maintain debt. You’ll likely spend a pretty penny to finance your credit card balances through the interest you pay your lender. And when you make only the monthly minimum payments, those charges, along with an occasional late fee, can add up fast. And the damage isn’t necessarily limited to financial impacts. Debt can cause stress, exacerbate marital problems and damage your credit. Ultimately, debt can even derail your retirement plans. When you take on a lot of debt, you’re likely contributing less to your retirement plan, and the money you don’t invest doesn’t have the opportunity to grow over time.


Setting limits. Every situation is different, and there are no hard-and-fast rules. But consider the 28/36 rule as a good place to start. This is a guideline many lenders use when evaluating mortgage applications. It stipulates that no more than 28% of gross monthly income should be spent on total housing expenses, and no more than 36% on all debt, including credit cards.


Monitoring debt: Once you have a sense of how much debt is too much, the challenge is trying not to cross the line. To do that, you need to monitor your debt situation on a regular basis — because it’s hard to control what you don’t track. Fortunately, numerous online and mobile tools are available to help you do just that. Some examples include Mint, Credit Report Card and Tally. These apps can help you consolidate and organize all of your debt tracking in one place. You can also use a simple spreadsheet to list all your debts according to lender, total balance and interest rate.


If you’re concerned about the impact your debt may have on your retirement readiness, talk to your WellCents financial professional to review your financial situation, including your current debt. Together, you can come up with a plan to dig out of debt once and for all.



Summer Fun on a Budget

Summer Fun on a Budget

Planning for the future is important, but so is enjoying the present. Luckily, there are many fun summer activities that don’t have to break the bank. Here are some tips to have a blast on a budget as the thermometer heats up.


Dining. Whether you enjoy freshly caught fish at an Italian trattoria or boardwalk funnel cake, waterfront restaurants are inherently appealing. But sometimes all you really need is a great view. Save money on your next trip to the beach or lake by packing a picnic meal. Bringing your own food adds a simple charm to your day, and you’ll often find that purchasing tasty treats from the grocery store saves money and leaves you with great leftovers for your next summer adventure.


Travel. Road trips are synonymous with summer travel value for good reason. Airline or cruise travel often leaves you with additional costs beyond the ticket price, such as rental cars or Wi-Fi. In contrast, a road trip lets you better control your budget by bringing more snacks, minimizing surcharges, and picking cheaper lodging through Airbnb or a discount hotel chain. If possible, plan your summer trips well away from major holidays or conventions to avoid price spikes.


Entertainment. You don’t have to leave town to see something new. Check out your city’s social media pages or good old fashioned bulletin boards for upcoming events. Even if crowded fireworks celebrations aren’t your thing, you’ll often find art shows and antique festivals that bring interesting wares — and unique food — to a cultural district near you. In addition, many libraries and parks host free movie screenings that let you experience a familiar classic at a pleasant venue.


Nature. Many people choose the place they live just for easy access to a beach or an unspoiled forest. But city folk need not despair. Use Google Maps to search for city or national parks in your area. Some may be close enough to justify a day trip. Others may be just a turn away from the main road but conceal the bustle in ways that feel like you’ve entered another world.


Activities. Learning about your parks will also show you great places to go for tennis, basketball, baseball and other sports. Certain parks may specialize in specific activities, while others go all-in on a massive multi-sports complex. Flow down the river in a kayak at a state or national park or take your kids to a public pool with slides and fountains that feel like a mini water park! There are also your local YMCAs, athletic clubs, and rec centers for air-conditioned fun, which could include slower-paced games like billiards and shuffleboard for family and friends of all ages. Checking social media may help you find amateur leagues or informal groups that connect you to other enthusiasts.


Staycation. Don’t assume you know your area inside and out. Even small towns have museums and cultural centers you may be unaware of — or offer new exhibits that reveal unknown parts of its history. Unorthodox attractions like ghost tours or escape rooms can be a fun diversion for date nights. If you enjoy camping, pack up some gear for an overnight trip or set up a tent in the backyard.


Don’t head into Labor Day with a huge credit card bill over your head. Keeping your summer activities budget-friendly will help rein in expenses so you can keep the fun going all year long.



Putting off 401(k) Enrollment Could Cost You More Than You Think

Putting off 401(k) Enrollment Could Cost You More Than You Think

You just landed a new job, and there are so many things to do. You have to set up your new workspace (even if it’s at home), become acquainted with your boss and coworkers and get up to speed on your new responsibilities. And there’s the company-sponsored 401(k) you should sign up for.

It could be tempting to put off investment- and retirement-planning decisions until you settle in. But that’s an idea that could cost you more than you might expect, especially if you have a longer time horizon to retirement.

According to The Motley Fool, a 25-year-old employee making about $47,000 who saves 15% of their income and realizes a 7% annual rate of return would have almost $100,000 more at retirement than another worker with all the same parameters — except that they waited until age 26 to begin their contributions.


So, move signing up for your 401(k) to the top of your to-do list. If the options are a little overwhelming, sit down with a financial advisor who can help you determine your personal risk tolerance and recommend investments accordingly.


Another option to consider if you’re unsure about making investment decisions is electing to contribute to a target date fund (TDF), if your plan offers one. These funds create a mix of investments according to an estimated retirement date.


The fund automatically adjusts the mix and risk of investments to become more conservative as the target date approaches. A TDF handles much of the decision making for you. However, it’s still important to monitor the fund’s performance and periodically check in with your financial advisor to ensure you remain on track to meet your retirement goals.


You generally want to contribute as much as you can to your 401(k) plan. But at minimum, try to contribute at least enough to earn the maximum company match.


Companies that offer a what’s called a 401(k) “match” will match your retirement contributions either dollar for dollar, up to a certain amount — or according to a percentage or formula. You always want to aim for contributing at least enough to receive the maximum possible employer match or you’re leaving free money on the table.


What you may intend to be a small delay in contributing to your 401(k) can lead to months or years as life gets busy. If this should happen, you can easily miss upswings in the market and opportunities for growth to compound over time.


Choose to make retirement planning a priority and put yourself first. Your employer-provided financial advisor can be a tremendous resource whether it’s the first time you enroll in a 401(k) plan or your third or fourth time around. And if this isn’t your first experience with a 401(k), be sure to discuss the options for any funds remaining in 401(k) accounts from your previous employers as well.


Don’t delay this important decision set up an appointment with your financial advisor today.




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