Blog   Tagged ‘retirement’

Financial Word of the Week: Individual Retirement Accounts (IRAs)

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Financial Word of the Week

So far this month, we talked about a few savings account options, including HSAs, FSAs and 401(k) plans.  Two other common retirement savings account options are traditional IRAs and Roth IRAs.

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Traditional IRAs

A traditional IRA (Individual Retirement Account) is a savings account for retirement that gives you tax advantages. The contributions you make to your traditional IRA might be deductible from your taxes depending on a few circumstances.

The IRS sets the limit on how much you can contribute. This year the maximum amount is $5,500 or $6,500 if you are 50 or older. Even if you contribute less than this amount, your contribution is still eligible for tax deductions.

Generally, if you are contributing to a traditional IRA, you cannot access the money without a tax penalty until you are 65, have participated in the plan for at least 10 years or terminate service with your employer. You can learn more on the IRS website.

Roth IRAs

A Roth IRA is a savings account for retirement where the contributions are not tax-deductible. Roth IRAs are very flexible. You can withdraw your regular contributions without a tax penalty or fee; however, you generally cannot withdraw your earnings on the contributions without penalty until you are 59.5 or have held the account for five years.

In order to be eligible to contribute a Roth IRA, your modified adjusted gross income must be less limits established by the IRS. There are also contribution limits. It may seem like a no-brainer, but you cannot contribute more than you make in a year if your earned income is less than your contribution limit. So if you make $4,000 a year at a part-time job, you wouldn’t be allowed to contribute $5,000 to your Roth IRA using other funds like interest from another savings account.

Another advantage is if you decide to work during retirement, you can continue to contribute to the account. You can also leave money in your Roth IRA for as long as you live. Learn more on the IRS website.

While there are many savings options available, always do your research first and talk to a trusted financial advisor to ensure you are using the best account for your unique retirement goals.

 

When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.

 


UMB Financial Corporation (Nasdaq: UMBF) is a financial services holding company headquartered in Kansas City, Mo., offering complete banking, payment solutions, asset servicing and institutional investment management to customers. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska and Arizona. It also has a loan production office in Texas. Subsidiaries of the holding company include mutual fund and alternative investment services groups, single-purpose companies that deal with brokerage services and insurance, and a registered investment advisor that manages the company's proprietary mutual funds and investment advisory accounts for institutional customers.



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Financial Word of the Week: 401(k) Plan

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Financial Word of the Week

A 401(k) plan is a retirement savings account usually offered through your employer. Some employers will offer a match or non-elective contribution to your retirement account, which is a smart way to help you reach your retirement goals faster.

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It’s important to understand the plan your company offers to ensure you are getting the full employer match by contributing as much as you need to be. Remember, your employer’s contribution match is free money!

The contribution you elect to make is taken out of your salary before taxes. The IRS regulates how much you can contribute each year. For 2015, the limit is $18,000. If you are 50 or older (and therefore closer to retiring), you can contribute an additional $6,000 as a catch-up contribution. 401(k) contributions are usually invested in mutual funds, which will be covered later in our series. Generally, a 401(k) account cannot be accessed until you are 65 without early withdrawal tax penalties.

Use our calculator to obtain an estimate of where you stand with your retirement savings.

If your employer doesn’t offer a 401(k) plan, stay tuned for next week’s post when we explore other retirement savings account options.

 


UMB Financial Corporation (Nasdaq: UMBF) is a financial services holding company headquartered in Kansas City, Mo., offering complete banking, payment solutions, asset servicing and institutional investment management to customers. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska and Arizona. It also has a loan production office in Texas. Subsidiaries of the holding company include mutual fund and alternative investment services groups, single-purpose companies that deal with brokerage services and insurance, and a registered investment advisor that manages the company's proprietary mutual funds and investment advisory accounts for institutional customers.



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How to finance your dental practice: the most important questions to ask

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As a dental professional, you’ve probably spent at least eight years in school preparing for your career (12 to 14 if you are a dental surgeon). After that, your focus will be on growing your new practice by building your patient panels and providing quality dental care to the community you serve.

dental practice financing

But what’s next? There are questions you need to ask yourself as soon as you open a practice:

  • Does your practice need remodeling or construction?
  • Do you see yourself bringing on a new partner at some point?
  • And most importantly, are you adequately planning for your retirement?
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As we work with dental practitioners, we’ve noticed a trend within this profession. A lack of strategic borrowing to pay for their practice’s expenses is a leading cause that prevents dental practitioners from retiring when and how they want. Only around 8 percent of dentists are able to retire and maintain the lifestyle they had during their working days.

Dental practitioners face many challenges in today’s market. Those challenges are further motivation to properly manage your funds. An important aspect of your finances is considering the best borrowing practices for your office. Some questions to consider when thinking about a loan for your dental practice:

What are your goals for your practice?
Determine where you see your practice over time. Figure out how quickly you want to grow your practice or if you have aspirations to open multiple locations. Identify a plan and partner with industry professionals who will help you achieve your ultimate objectives. Then discuss with your banking partner what financing structure will help – not hinder – this plan.

Are you borrowing with the best interest of your practice in mind?
Ask your banking partner to explain all loan options so you can align the loan structure to the best interest of the practice.  For example, some loans have a balloon payment at the end, which could require you to pay additional interest. The money you might have to pay in additional interest could be used instead to help expand the practice or could be committed to your retirement.

What are your ramp-up and wind-down strategies?
In addition to determining the long-term growth of your practice (ramp-up), you will also need to eventually consider succession and retirement strategies (wind-down). Have you considered hiring an associate to purchase your practice as a component of your exit strategy? Have you engaged a CPA firm to complete an evaluation of your practice? These are potential issues to consider as part of a succession plan.

Every practice is unique and you might even find that long-term goals change over time. Start planning early and understand what financing options are paramount for your practice. Find a banking partner who will help you determine the best loan options for your practice and your eventual retirement and succession plans.

For more financial advice, take a look at my video on Business Banking for Dentists.

 

When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.

 


Dave Bauer is a Vice President / Region Manager for UMB Business Banking. He is responsible for leading the Business Banking teams in the St. Louis and Oklahoma City regions. He joined UMB in 2011 and has eight years of experience in the financial services industry.



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How saving money differs in your 40s, 50s and 60s

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We already told you how your financial goals and habits vary from decade to decade in your 20s and 30s. The same is true as you move into your 40s and up until retirement. Here are some pro tips on how to take full advantage of each unique decade.

generations

Things to DO in your 40s

Do meet with a financial planner to make sure you’re on the right track to retire when you want and with the right amount to continue living the lifestyle you want. Retirement may seem very far away, but you don’t want to let yourself be caught in your early 60s playing catch-up on your 401(k).

Do decide how saving for major purchases balances with your retirement saving. If you have children, are you going to pay for all or some of their college tuition? What about your children’s weddings? These are examples of things that can cause parents to be caught off guard and can put a pause on your important retirement saving. For more information on these decisions, take a look at our recent post on Kids’ college vs. retirement: where to save?

And one thing to AVOID in your 40s

Don’t miss out on the maximum match from your employer on your retirement plan. As we’ve recommended from your first job in your 20s, be sure to take full advantage of the match from your employer. Of course, going above that amount is also a great idea; just be sure you’re reaching that minimum amount to get your full match.

 

Things to DO in your 50s 

Do think of this decade as your time to save the most (less expenses with children out of the home and typically higher income than you earned earlier in your career). Consider paying off high-cost debt, such as your mortgage, if you haven’t already and then save aggressively.

Do add catch-up contributions to your retirement savings. Even if you’re tracking well toward your retirement goals, you’re allowed to save more now, so do it!

And one thing to AVOID in your 50s

Don’t wait until your 60s to purchase long-term care insurance. The average age to buy this type of insurance is 57. If you wait until a few years later, it will be much more expensive.


Things to DO in your 60s
 

Do prepare aggressively for retirement…even before your planned last day of work. It’s difficult to predict when health, layoffs or extra time needed to care for your aging parents will cause you to retire earlier. This is the case with more than 40 percent of workers.

Do think about downsizing. This isn’t something that needs to wait until you’re already retired. If you’re single or if it’s just you and your spouse in your home, consider where you want to live for the next few decades and if moving makes sense.

And one thing to AVOID in your 60s

Don’t keep the same insurance policies you had in your 30s. You might not need life insurance anymore. Check your long-term care insurance policy to see what benefits it includes.

Remember, whether you’re 21 or 68, it’s never too late to improve your financial plan.

 

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References: *2012 National Association of REALTORS® Profile of Home Buyers and Sellers

Inspired by a Daily Finance article

When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.


Ms. Ponce is a Financial Center Manager for UMB Bank. She is responsible for managing the Collinsville micro-market. She joined UMB in 1991 and has 23 years of experience in the financial services industry.



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Kids’ college vs. retirement: where to save?

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In a perfect world, you could save for your retirement AND your children’s higher education. But what if it comes down to a choice between the two…which one should be the priority? Loving parents may not love our answer.

Of course, launching your college-graduated children into the world debt-free is an admirable goal and the topic of an upcoming blog post. However, doing so at the expense of your own retirement goals is not advisable.

Parents are starting to move their focus more toward retirement savings and less toward their children’s education costs, according to a report from Fidelity Investments. The survey reported among long-term savers, 55 percent are saving for retirement while 33 percent are saving for their children’s college tuition. That split was closer to equal last year, but many parents are realizing that their children have several options to help pay for college—loans, scholarships and grants—options that simply don’t exist when saving for retirement.
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How to save for retirement

You may not realize that savings anxiety exists at several different income levels. The lack of retirement preparation in the $20,000 to $30,000 income range (with nearly nine out of 10 individuals reporting they were not prepared) was surprisingly close to those making $100,000 to $150,000 (with nearly eight out of 10 giving similar answers).*

So how do you take charge of your financial future? If you’re in your 20s or 30s, you have more time to ensure a comfortable retirement. Just make sure you start right away. If you’re older than 40, we have a blog post next month that will offer specific advice for saving in your 40s, 50s and 60s. Regardless of your income, the best way to start is by taking the simple advice: determine what you can put away starting right now and do it. The sacrifice now will be worth it later.

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*Source: American Consumer Credit Counseling survey

When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.


Mr. Bryan Joiner is a Financial Center Manager for UMB Bank, N.A in St. Charles, Missouri. He is responsible for managing a team that advises consumer and small business clients on financial decisions, such as how to lower debt and save more. He joined UMB in 2011 and has three years of experience in the financial services industry.



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UMB Insights: Funding a Trust

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We’ve already walked you through the process of estate planning. Today, we’ll explain how to fund that trust and give you an important reminder to update it as your life changes.

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Ms. Gattis joined UMB in 2009. As a Senior Financial Planner, she is responsible for working with clients to insure that they are finding a solution to reaching their unique financial goals. Ms. Gattis has 20 years of experience in the financial industry. Prior to joining UMB, she served as a Private Client Manager for US Trust. Ms. Gattis earned Bachelors in Human Resource Management and Masters in Business Administration degrees from Wichita State University.



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How saving money differs in your 20s and 30s

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Have you noticed that your eating, sleeping and entertainment habits changed after high school and again after college? The same is true of your financial situation. With a different lifestyle comes different financial needs, which is why we’re bringing you a few dos and don’ts for these crucial decades.

generations

Things to DO in your 20s…

Do contribute to a 401(k), one of the 9 financial habits we told you about earlier. How much should you save? At least as much as it takes to receive what your employer is willing to match. Beyond that, 10 to 15 percent of your pre-tax income is a great start.

Do lay a sound financial foundation by developing good habits. Contrary to what you may hear, how MUCH you save for retirement when you’re young isn’t as important as saving consistently starting as soon as possible.

Do find inspiration in growth charts / calculators like these. It’s hard to focus on something that is decades in the future, such as retirement, so calculate how dramatically your goals can be reached if you start early. For example, if you start saving $300/month in your 20s, you could have nearly $100,000 by the time you’re 50 (and that’s only factoring a less than 1 percent annual interest rate).

And one thing to avoid in your 20s…

Don’t ONLY save for your retirement. Many people in their 20s make this mistake. Since you can’t touch this money until you’re 59½  (with limited exceptions), you’ll need to make sure you have separate savings for emergencies and non-retirement goals.

 

Things to DO in your 30s…

Do ask yourself if you should buy a home. The median age of first time home buyers is 31*. While that doesn’t mean that age will be the right time for you, it does indicate that your 30s are a great time to start considering home ownership during this decade. If you’re a star student and are reading this section as a 20-something, good job. Because the money you save in your 20s will come in handy when it’s time to buy a home in your 30s. The down payment, closing costs and inevitable home repairs that pop up as soon as the home becomes yours add up quickly.

Do get life insurance if you now have dependents. It’s a bummer to dwell on, so don’t over think it. You and your family will appreciate the financial peace of mind it gives.

And one thing to avoid in your 30s…

Don’t be afraid to talk to your children about money. If you are among the 30-somethings with children, you can start teaching them as young as pre-school or early elementary school the concept of spending and saving. Playing imaginary restaurant or store with them is a great learning tool.

Update: check out how to save in your 40s, 50s and 60s!

 

 

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Reference: *2012 National Association of REALTORS® Profile of Home Buyers and Sellers

Inspiration for article from Daily Finance

When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.


Mr. Johnson is a VP/Financial Center Manager for UMB Kansas City. He is responsible for driving sales and relationship activities within the Walnut Lobby Financial Center. He joined UMB in 2007 and has 11 years of experience in the financial services industry. Mr. Johnson earned an Associate’s Degree from MCC. He is currently pursuing a Bachelor’s of Science Degree majoring in Management and Finance from Park University.



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Do you need a wealth advisor?

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Do you need a wealth advisor (also known as financial planner)? You might think that only the very wealthy need this type of expert advice. If you’re interested in investing, whether it’s for retirement, education or to leave a legacy, it is recommended that you work with a financial planning professional.

Whether it’s your first time talking to a financial planning professional or your 10th, you want to ensure your advisor is taking the time to ask the sometimes difficult questions to plan the best future for you.

Basic financial planning questions

Most customers focus on questions like:

  • Will I have enough to retire?
  • Will my children’s education be taken care of?
  • What if I get sick?

These are important topics to cover, but an in-depth financial/estate planning will include more than these basic questions.

Do I need a trust?

One question you should ask is, “Do I need a trust?” A trust is a legal agreement that allows you to transfer assets to a trustee. A trust can be used for various reasons including to:

  • manage assets
  • protect assets
  • facilitate charitable gifts
  • transfer of monetary assets or property

If the answer is yes, your advisor should assist you with making sure your assets are titled appropriately, or given the correct ownership recognition. You wouldn’t want to spend several thousand dollars for an attorney to prepare a trust document, only to find out that the assets aren’t titled appropriately. If so, the trust doesn’t get funded and your estate plan isn’t carried out to your intentions.

What about insurance?

Your advisor should also discuss the topic of insurance with you. Customers and advisors sometimes avoid this question, as it can be an uncomfortable conversation. Most insurance is used in the case of a disaster, accident, illness or death, and these are not pleasant subjects to discuss. You want an advisor who will understand the sensitivities of these topics, but will not avoid the subject. Insurance is an important part of a financial plan and it can be helpful to your family’s future.

Building relationships

You should look for an advisor who will build a relationship with you. If they work to create more than a business partnership, it’s likely there will be more open dialogue between you both. Advisors who are thorough in their work and ask the hard questions will be able to build a solid financial/estate plan for you, your family and their future generations.

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When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.

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UMB Financial Corporation (Nasdaq: UMBF) is a financial services holding company headquartered in Kansas City, Mo., offering complete banking, payment solutions, asset servicing and institutional investment management to customers. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska and Arizona. It also has a loan production office in Texas. Subsidiaries of the holding company include mutual fund and alternative investment services groups, single-purpose companies that deal with brokerage services and insurance, and a registered investment advisor that manages the company's proprietary mutual funds and investment advisory accounts for institutional customers.



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From 19 to Retirement…a look at a life-long UMB career

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A letter from Rosie, reflecting on her time at UMB:

Rosie

It’s hard to imagine how much has happened during the last 45 years of my time at UMB. I started at the age of 19, on July 17, 1968.

We now have UMB Bank branches in eight states; 112 branches total. I’ve worked for City National Bank, United Missouri Bank, United Missouri Bancshares Inc., UMB Financial Corporation, and UMB Bank, n.a—all the same organization, but with name changes over the years. With each name change, UMB has had six different logos, my favorite being the Indian Scout. What an accomplishment for me to be able to work for such a stable company.

With my first job, we didn’t have computers—a fact that is difficult for my two grown children to comprehend. I started in the Stock Transfer Department working on a posting machine. We actually had to type certificates for the new stockholders on manual typewriters! (After a few years we graduated to electric typewriters.) It’s hard to believe where we came from looking at us now, with all the modern technology UMB Bank has today.

While working at UMB Bank, I was able to meet each of the Kempers who were president or CEO. The first was Mr. R. Crosby Kemper, Sr. who officially retired shortly after I was employed by the bank. Then I met Mr. R. Crosby Kemper, Jr., Sandy Kemper, R. Crosby Kemper III and Mariner Kemper. I would encounter them on the elevators, and each one was so friendly. They thanked me for being part of the UMB family. I especially remember Mr. Kemper, Jr. buying his breakfast in the cafeteria and going to each of the tables to say good morning to everyone. I remember the famous Kemper smiles. They all seemed to have that same smile that reached out to everyone they saw or met.

Rosie and Mariner1

Mr. R. Crosby, Jr. was a big fan of the University of Missouri Tigers. I remember the day I went to the 928 Grand tellers and saw a huge, beautiful tiger in the lobby. Yes, a real tiger. Sometimes I wonder if I really saw that tiger or if it was just a dream, but some of my fellow co-workers also remember the “Tiger in the Lobby” day.

Umbert_Czar the Tiger_1973

In my time here, I witnessed the construction of the 1010 Grand UMB building in 1986 and the Technology and Operations Center in 1999. I saw old buildings being demolished, the resulting big hole in the ground, and then the new completed bank buildings that take up one square block. I loved being there for that history and now getting to tell my grandchildren about it.  Sometimes it pays to be old. You see so many things happen during your life.

As my 45 years are coming to a close, I look back upon a career that has really flown by. There have been ups and downs just like in life, and you become one big family.

I realize that soon I will not be seeing and greeting my work family. Over the years I have made a lot of friends, some gone, some still here and I get a little emotional because I will be leaving part of my family behind.

Once I retire, I will be volunteering for my church and Alexandra’s House, which provides perinatal hospice support, watching my grandchildren while they are out of school and trying to keep busy.

I am saying goodbye now and leaving you with these paraphrased words: “Live. Laugh a lot. It’s good for the soul. And last of all, love your job, because one day you too will be walking down the hallways for the last time.”

With fondest memories,
Rosie Corral

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When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.


Prior to her retirement, Ms. Corral was an operations associate for UMB. She worked in the settlement department, receiving and settling buys from brokers. She joined UMB in 1968 and has 45 years of experience in the financial services industry. As of April 30, she retired after a long career at UMB.



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