Retirement Planning Begins Now
Query?: If any of us ,or members of our family, needed an expensive cancer drug to support their quality of life, who would hesitate for a moment to make the expenditure? Should we be any less concerned about our own future quality of life and financial health in retirement?
This being said, why is it that the vast majority of lawyers, even with the advantages of a doctorate degree, acquired business acumen, and good old fashioned common sense, fail to take full advantage of tax deferred investments in qualified plans such as 401k’s for their future. This is one of the few areas aside from the Home Mortgage Interest Deduction where Uncle Sam is actually our partner.
The logical progression in the practice of law is from law student to experienced practitioner, to active parent and community member, to senior member of the bar, to retiree. If you were to blink you could pass quickly from one phase to the next without realizing the transition. Student loans, mortgages, car loans, credit card balances in addition to Maryland's tax rates (one of the highest in the nation) erode both the desire and ability to start investing for the future.
A little knowledge of the fundamentals of Investing and the" Power of Money invested" reinforce that time is "of the essence". Pursuant to The rule of 72's you can compute how long it will take to double your net worth. Simply divide 72 by the sustained rate of return. I know that it may be hard to believe, but this is mathematically correct based on compounding returns. When you consider your income tax bracket and realize that a qualified pension investment and the compounded growth is applied tax deferred you understand the immediacy.
Who would want to pay more taxes on their income to the government rather than build a future for their family. When put in this context the choice seems clear!
So how do you get started? First we must recognize our own limitations. Unless you are experienced in balancing a portfolio among Large, Small and the Midcap sectors and picking single issue stocks you are in need of professional help. Sadly almost anyone can declare themselves to be an investment advisor. Even an adviser who holds a Series 7 securities license may only be a salesperson touting the funds their brokerage offers for sale.
A good financial planner will research and present multiple investment options and constantly adjust, reinvest and rebalance your portfolio.
Sadly, it's not as simple as buying a few different Stock Mutual funds and waiting. An ethical and concerned financial planner will move you between different sectors in the same fund and buy "B" shares to reduce your costs and preserve your corpus even at the expense of foregoing greater commissions. Such a financial planner is in it for the long term being more concerned about positive feedback and referrals. You need to watch out for investment counselors who "churn" single issue stocks or funds earning multiple and quick commissions.
You should take the time to read as much as you can and always question investment recommendations and strategies at regular meetings to review your portfolios performance. Ready to invest in your future? If not now, then when? Don’t Blink!
No matter what your age or retirement strategy come to an informational program on September 23rd at 5:00 p.m. in the CLE classroom of the Bar Association building. This program will be presented by representatives of Tribridge. Important information will be presented without any solicitation or obligation. Even if you feel you can't afford to start investing the reality is you can't afford not to learn of the opportunities.