18 Jan

5 Financial Milestones to Hit in 2017

Financial milestones are goals we aim to achieve. Some should be stressed at certain milestones in our own life. In this vein, we picked five financial goals you may have depending on your current age.

Are you just entering workforce?

Start saving for retirement

If you can stand to, save 10% of your salary. The earlier you start doing this, the more you can take advantage of compound interest. If you’re a woman, chances are you will live longer (sorry boys), so try and factor that into your retirement savings. Although you may be receiving a pension if you joined the force, it might not be enough for you to live on entirely.

You’re in Your Mid-Twenties

Set up an emergency fund

Save to be able to cover all your expenses for 6 months if you’re single, three months if you’re married. Start by adding $100 a month to a separate account. You can set up an automatic withdrawal from your checking account to help build your emergency fund. Read More

07 Dec

Beyond the Pension: Being Honest about Retirement

If you’re reading this, chances are you’re a police officer. Your retirement options are unique and there’s no one size fits all retirement planning for police. However, there are a few harsh realities that you’ll thank yourself for facing now, and not waiting until your retirement date is fast approaching.

Harsh Reality: You MAY find it hard to plan for how to spend your post retirement days.

There are many reasons for this.

  • You have more retirement to plan for since you have option to retire after 20 years of service. Retirement planning for police needs to take this into account!
  • Your job and your fellow officers are unique and your identity is tied to being a police officer. Therefore, while other people can disassociate themselves with their job – your line of work makes that difficult.

Solution: Figure out NOW what you want to do in retirement

  • Remember that we often enjoy doing things we excel at. Meaning, if your post retirement plans include “taking up something” or “exploring xyz” it might be wise to try it out now to see if it will be a short lived experiment.
  • Research of retirees indicates those who are happiest in often answer the question, “What will you do with all that time?” with responses like “giving back” and “discovering a sense of purpose”. Volunteering also helps maintain social interactions we previously had at work.
  • Make a list of how you would fill in an entire week if you weren’t working. What new things would you like to learn about and what new places would you like to see? Where would you like to live? What experiences would you like to have?

Harsh Reality: Your ideas about how to spend time MIGHT NOT align with your spouse’s ideas.

For example, you may want to hit the road in an RV and she or he would rather stay close and spend more time with the grandkids.

Solution: Have honest conversations and find common ground now to avoid disaster later. Spend time, without distractions, to discuss what you each envision for your retirement.

If they ARE ready to hit the road, RMLEFCU offers RV loans!

Harsh reality: Unless you change as easily as a chameleon, your spending habits likely won’t look much different in retirement.

Solution:

  • If your tastes are expensive, have a plan to still bring in money if there is a gap where your savings and spending do not meet.
  • Look at downsizing or moving to a location where the cost of living is more affordable. We have some Colorado suggestions in this blog.
  • You may be able to use your home’s equity to improve your cash flow during retirement. There are a few reasons this could be a viable option for you.

Harsh reality: Not everyone reads the fine print of their pension

Solution: Now, rather than when you’re approaching retirement, is the time to familiarize yourself with the rules, timelines, and options affecting your pension plan. Do not try to read before going to bed. Read them very carefully.

RMLEFCU is Colorado’s only credit union dedicated to police officers and we understand retirement planning for police. For this reason, we have an in house financial planner, Debby Wilson, about your retirement plans. She’s been working with our members for 18 years and her expertise is invaluable.

17 Feb

When is it ok to tap into your IRA?

Ninety six percent of the time, it is wise to adopt an out of sight out of mind mindset when it comes to your retirement accounts. But this article is about the other 4%. When is it ok to withdraw money from your IRA? When does it make more sense than borrowing? How can you avoid being penalized?

First, there are two types of IRAs. The first is a traditional IRA, where you are taxed when you take out the money in retirement. The second kind, a Roth IRA, taxes you on the front end but doesn’t hit you with any taxes when you make your withdraw the money in retirement.

The good news: withdrawals are fair game and penalty free after your 59 ½ birthday, no matter which IRA you choose.

Unfortunately, if you withdraw money from a traditional IRA or Roth IRA before you turn 59 ½, you must pay a 10% tax penalty.

There are exceptions to this rule:

Higher Education: If you pay educational expenses for

  • yourself
  • your spouse; or
  • you or your spouse’s child, foster child, adopted child, or descendant of any of them.

Educational expenses include: tuition, fees, books, supplies, and equipment required for enrollment. To get into the nitty-pic for 2.17 bloggritty, see the chart at the bottom of this link.

This is not limited to a 2 or 4 year degree program but includes any college, university, vocational school, or other post-secondary educational institution eligible to participate in a student aid program, essentially all accredited public, nonprofit, and proprietary (privately owned profit-making) post-secondary institutions.

Home:

You can withdraw up to $10,000 of IRA funds toward the purchase of your first home. If you’re married, and you and your spouse are first-time buyers, you each can pull from retirement accounts, giving you $20,000 in residential cash.

Better news: You qualify as a “first-time homebuyer” as long as you (or your spouse) didn’t own a principal residence at any time during the previous 2 years.

Read More

22 Jan

Retirement: WHAT are you going to do with your time and WHERE are you going to do it?

rmlefcu blog picPerhaps you are counting down the days until your retirement with feverish excitement or you feel heart palpitations because you’re not quite sure what this period of life holds for you.

We’ll explore how retirees WANT to spend their time, how they ACTUALLY spend it and some great places in Colorado for people 65+ to make their home.

How we envision retirement: U.S. News and World Report have studied this topic extensively and in an article titled “5 Ideal Ways to Spend Your Retirement” they enumerate wish lists for retirees. Respondents included the following desires, including but not limited to: spending more time with family, pursuing a long held passion, taking more time for your personal interests (think hobbies) and doing activities you already know you enjoy.

How we actually spend retirement: Sleeping, reading, watching TV, home improvement projects, shopping, and working.

Quite the dichotomy wouldn’t you agree? Read More

20 May

Financial Advice for Younger Adults

financial advice for younger adultsRMLEFCU employees were informally surveyed and asked, “If you could go back in time and talk to yourself at 21, what kind of financial advice would you give?”

In no particular order, here are 6 top responses:

  • If your employer has a retirement plan, you had better contribute. If they don’t, open an IRA. Unless you are planning on checking out early or not having any children or loved ones you leave behind, you will want to start saving as soon as you move your belongings out of your college dorm.
  • Cash or Debit Cards Only. Speaking of college, chances are you don’t have the income to offset any high interest credit card debt you may have been enticed to rack up. I know it’s tempting, but if you can’t get by on a debit card or cash, you probably don’t need it. P.S. That’s great that they were giving out those mini footballs/Frisbees/t-shirts and you needed/wanted/had to have one, but cut that credit card up now if you can’t afford it.
  • If you already have a credit card, remember this advice, “Do not put anything on your credit card that you can’t pay off the next month.” Look at it only as a way to afford something that you’ll have the money for in 28 days. Maybe the movie “28 Days Later” will help drive this point home since having credit card debt will be worse than a zombie chasing you. Zombies can be outrun, creditors will never stop coming after you.

Read More

05 Apr

Been There. Done That. Retirement Advice from a Fellow Cop.

Retirement Planning Advice for PoliceTerry Lucas served with the Illinois State Police for 28 years rising through progressively higher ranks mostly in the investigative field. Terry then served as the Law Enforcement Coordinator for the US Attorney’s office in the Central District of Illinois for 15 years. While with DOJ he served in Iraq assisting in the prosecution of Sadaam Hussein.

He has a few nuggets of advice for fellow cops.

On retirement planning: “You have to think outside of your pension.” Terry, father to five daughters, speaks from experience, “Don’t overlook something that is staring you in the face. Contribute to some kind of deferred compensation plan. Why not have that amount taken out before taxes and put into an account? It will hurt a lot less now than it will when you’re 55 and looking at starting over in another job.”

Asked for advice to cops nearing retirement age, he says, “Think very carefully about taking a large chunk of time off right after you sign those retirement papers to travel and just relax. Chances are you’re young enough that you’ll need to keep working, and the best time to get a job is when you already have one.” Read More