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A daily latte won’t ruin your retirement

A daily latte won’t ruin your retirement
Purchasing luxury coffees is not tantamount to personal financial irresponsibility that could risk your future financial well-being once you become a retiree. The need to save for retirement is a must for everyone because relying solely on Social Security will disappoint potential retirees. This opinion article from Bloomberg discusses various issues related to creating a future nest egg, with the main problem being big fixed costs. Unfortunately, factors such as debt, income, inflation and economic mobility, inflation are factors that will affect savings of any form and we have no control over them.

Latte
An employee pours a latte art into a cup of coffee at the Roastery Lab by Coffee Academics research and development facility, operated by Coffee Academics Group Holdings Ltd., in Hong Kong, China, on Thursday, July 27, 2017. Coffee Academics operates seven coffee outlets in Hong Kong. Photographer: Anthony Kwan/Bloomberg

Which should you fund first: 401(k) or IRA?
Investment choices between 401(k)s and IRAs vary significantly but one can use both together and do not have to pick one over the other, according to this article in Forbes. Saving in one’s 401(k) enough is essential to get the employer match before diversifying the taxes through a Roth IRA. Also in 401(k) is where higher savings opportunities are offered. On the other hand, IRAs are more flexible on allowing real estate, annuities and precious metals to be held as investments, the assets which are not found in 401(k)s.

The difference between typical and expensive can be 1 percentage point, but most people have no idea what they're paying
Majority of 401(k) accounts as well as various investment accounts will have fees, but it does not mean these accounts will not be worthwhile, according to this article in Business Insider; investors just need to be aware of the fees to ensure they are minimizing costs. These 401(k)s are tax-advantaged accounts with a higher yearly contribution maximum than IRAs and employer-match offers make the accounts popular, but investors must remember that plan providers as well as ETFs and mutual funds in the account charge fees. Plan provider fees around 0.50% are reasonable, while management fees for mutual funds are usually 1%.

How to talk to yourself about retirement
Clients thinking about retirement should recognize that paying for yourself--your retirement--is just as important as paying bills, according to Nasdaq. Clients can look at employer's 401(k) program as well as online saving/retirement brokerage accounts with reasonable fees. A basic index fund is a wise investment because it will improve one's chance of getting a reasonable growth rate and it ensures one's money will not disappear when the market goes down.

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