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Big Nonprofit Ideas for the Other 95%
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Mary-Jo Knight, Senior Financial Consultant, AXA Advisors talks about retirement planning for small nonprofit employees.
With or without an employer-sponsored retirement plan, Mary-Jo will take your questions and help you chart your retirement course.
Here is a link to the podcast: 006: Your Retirement Plan
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You’re on the air and on target as I delve into the big issues facing your nonprofit—and your career.
If you have big dreams but an average budget, tune in to Tony Martignetti Nonprofit Radio.
I interview the best in the business on every topic from board relations, fundraising, social media and compliance, to technology, accounting, volunteer management, finance, marketing and beyond. Always with you in mind.
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Durney arika durney hello and welcome to tony martignetti non-profit radio on your aptly named host tony martignetti and we’re talking about big non-profit ideas for the other ninety five percent. A pleasure to follow larry broom and bloom and the divorce our if you were listening. There’s big news in new york state about divorce because no fault divorce is now legal, and if you missed larry’s show right before this one, you can always listen to the archive at talking alternative dot com on talking alternative broadcasting. My guest today is going to be mary-jo knight and she’s, a senior financial consultant with access, she’ll be joining me after our first break have a couple of things want teo, proceed with our name, the number contest i had asked you to name the number the calling number, which is eight seven seven for nato forty one twenty and that went bust because there are too many zeros and ones the ones and zeros don’t have letters corresponding to them on the keypad, and that flow mixed everyone and i didn’t realize that when i announced the contest, it was spur of the moment, and i hadn’t looked at the technology or a keypad so we don’t have a winner for the name the number contest. We’ll have another contest, i’ll think of something, and i’ll give away either a free copy of my book to your favorite charity or a complimentary hour of planned e-giving consulting, so we’ll have another contest and that’ll be on the facebook page. Which brings us to the facebook page. I have a facebook page for the show it’s now facebook dot com slash tony martignetti non-profit radio, but you don’t even have to go there to find it. You can find it on the page you’re listening from right now you’re looking at the player where on the at the screen, if you just scroll down a little bit, you’ll see the facebook window you can click on it. Don’t click now because you might cut off the show. We don’t want that, but if you know that your browser will open a new window, then go ahead and click it or click after the show. I would never advocate clicking during commercials that’s not a good idea click there and join like us like us on our facebook page. That’s the way to get to the facebook page. Right below the player that you’re looking at on your screen. You don’t even have to know how to spell my last name. And as i said, my guest today is mary-jo night, and we’re talking about all things retirement were relating to your retirement. You devote so much time to the care and help and lives of others let’s devote this hour to you, your retirement plan, maybe a retirement tuneup. Mary-jo has enormous experience working with people, planning for retirement and in retirement, and after this break, she is going to join us. Stay with me. You couldn’t do anything, including getting dink dink dink. You’re listening to the talking alternate network, get in. Cubine are you stuck in your business or career trying to take your business to the next level, and it keeps hitting a wall? This is sam liebowitz, the conscious consultant. I will help you get to the root cause of your abundance issues and help move you forward in your life. Call me now and let’s. Create the future you dream of. Two, one, two, seven, two, one, eight, one, eight, three, that’s to one to seven to one, eight one eight three. The conscious consultant helping conscious people. Be better business people. I’m tony martignetti, the aptly named host of the tony martignetti show. Big non-profit ideas for the other ninety five percent. You’re non-profit is ignored because you’re smaller medium size. But you still need expertise and help with technology fund-raising compliance, finance and accounting will look at all of these areas on the tony martignetti show. Big non-profit ideas for the other ninety five percent on talking alternative dot com fridays one, too. Talking. Yeah! Back-up. Neo-sage no. Because i’m dahna can i must? I’ve always loved the monkeys. My favorite with peter tour this is tony martignetti non-profit radio big non-profit ideas for the other ninety five percent. We’re talking to small and mid sized non-profits sometimes you feel left out, maybe often, because big non-profits get attention. You have a home here at tony martignetti non-profit radio. My guest today for the whole show is mary-jo night mary-jo is a senior financial consultant and retirement planning specialist with aksa advisers. She began her career in financial services in nineteen seventy two she is one of the top women financial advisors at axa of among many, she serves on the axle women’s leadership council, is president of the arts art resource alliance and is on the oratorio society of new york’s board of directors and with oratorio society. She performs regularly in carnegie hall, a great background to be a guest because she has non-profit experience she’s working with non-profits not only in her practice, but serving on boards you may have seen mary-jo on the today show, maybe bloomberg tv, cnbc power lunch you might have heard mary-jo on bloomberg radio or the wall street journal. Report after having done those smaller media outlets she’s joining talking alternative broadcasting on the twenty martignetti non-profit radio today mary-jo welcome to the show and it’s great to be a tony. Thank you very much a pleasure to have you when we’re thinking about retirement, what are some things that people should think about? First may be with respect to their employer, but what are some awesome first thoughts people should have? I think the first thing that people all around the country are concerned about us outliving their money with medical advances being so great we are going to be living a lot longer and we have a lot less resource is unless we save them. The government is making us more responsible for our retirement. Um, our corporations or our organizations are non for profits are making us more responsible for our retirement, and unless we save that money, we’re going to be very short on dollars when we get to retirement age, i actually looked at a number social security average is about twelve hundred dollars for a working couple that’s, not five hundred dollars a month for a working couple. That’s not a lot to live on so that’s today, right? That’s today that today’s couples i have always lived by and took the word of my parents. If you’ve saved ten percent of everything you make, you’ll never be poor. So i’ve always lived that and putting ten percent away even though it’s, a major struggle today will pay off in spades down the road. Okay, there’s a valuable first very simple lesson strive to save right ten percent of your earnings. That would be my first off advice. You know, corporations, organization not-for-profits typically provide employees with a way to save its either through there for o three b, also known as a psa t d a tax sheltered annuity program. Um, people complete away or you fora one k which is also a new plan that you can put into the not for profit world. Now mary-jo before we get too far, i don’t want to put you in jargon jail, so okay, let’s let’s. First let me tell listeners that we are taking your calls. Today we are live today and the number to call is eight double seven four eight zero, forty one, twenty eight, double seven for eight o. O for one two oh, taking your calls for mary-jo night. Ah, let’s. Define a few of the things that you just mentioned. Ah, for o three b what? What is that? Ok, all of these numbers are simply sections of the irs tax code of four. Oh, one k is typically a corporate retirement plan where people can put money away every paycheck. Four o three b is the same thing on lee it’s for hospitals it’s for universities it’s for not provoc not-for-profits so essentially it’s the same exact thing. And i think people who have accounts with i’m going to name the biggest one that i know of. Tia cref that’s a four o three b is that right? Yes. Could be ok. Yeah, absolutely. Okay. I read your it’s. Just a numbers that the irs puts on a corporal or employer sponsored pension plan or retirement plan. Okay. And then you mentioned t d a. I think tanya is a tax deferred annuity, eh? So we can get into these unusual a little later, right? I just wanted to flush out the acronyms and there was one more. Three b is a psa it’s also what’s. It say tax, sheltered and unsheltered anew. Thanks. Deferred annuity for all three b well, the same thing. Okay, we’ll get to we’ll get tau breaking those out shortly on dh. I was asking you about what some first thoughts are, so we know strive to save ten percent, right? Don’t you have to be concerned about outliving your assets, so that would be the first thing. Another thing is to really take stock of what you’re entitled to. Many corporations. Um, we’re not-for-profits that have been around for a long time offer their employees pensions, actual pension and a pension is something that when you retire your company, your organization is going to provide you with a monthly income for the rest of your life and that’s something that the organization probably contributes to. They are. And this would be something called a find benefit plan where the company on ly contributes to it. And foreign since i spent twenty, is at merrill lynch way back when and they owe me a pension. I know a lot of the lodge in not-for-profits have guaranteed their employees when they turn, it can be fifty five, sixty, sixty five they when they’re retired. They will get a monthly paycheck for the rest of their life and that’s really the difference between a pension on a retirement plan, a pension is typically the fine benefit guaranteed most companies our cutting them out or do not offer them to new employees now on dh, small and midsize non-profits are not likely to have pension that’s, right? Yeah, so i’m sort of going on the assumption, and we will that that we’re talking to people who don’t have non-profit whose employers don’t have a pension plan, but as you know, other things, one of ah recent client of ours found out that she had a huge pension and she actually changed jobs into a smaller not-for-profits because her pension was so big and she was able to collect that pension, roll it over into an ira, and now she’s working for a small enough for-profit so i think it makes some sense for people at least understand what you have and if you left a large not-for-profits make sure you understand whether or not you have a pension coming to you any other things that we should be looking at, maybe maybe with respect. To the employer, seeing what the employer might offer aside from a pension well, typically it’s mostly gonna be retirement plans again. Most not-for-profits can’t really give pensions, so they set up one of the retirement accounts that you can contribute into, okay, and what type of one of those? And that would be those four o three b in the four oh one k. Often, the not for profit will give an employee some kind of match for if you put in four percent, they may match you’re four percent contribution, and you typically have to put in a certain amount what to get the employer match what’s your recommendation. Do you recommend putting in as much as you can to get that match? Well, i wouldn’t at least put in as much as you need to get the match. Don’t give away free money. We do have a caller already. Excellent. Tracy, tracy, you’re on talking alternative broadcasting that tony martignetti non-profit radio welcome. I think we lost tracy tracy, hopefully you will call back let’s, continue with mary-jo what about some of the issues that revolve around beneficiaries naming naming beneficiaries of whatever your plan is? Aren’t there pitfalls there and things that people need to know about? Generally, if we’re married, we under law, we must name our spouse that’s number one um, there is some pitfalls, though you don’t want to name your minor children. Typically, you might want to find a custodian for your minor children, because if they if you pass away and your five year old inherit your retirement account, they can’t use it, and then you have to go. A court has to appoint a guardian, and that child may not be able to get any of the benefit of that money until they become of majority age. I see. So now now we’re talking about naming beneficiary named beneficiaries receive the balance of your a count count, correct, and that could that’s true of ira’s fora one case for three bees or any type of retirement accounts you should name, name a custodian for your children. The other thing is a lot i see a lot. Of clients, but their mom down, you know, you’re a young woman, a young man, and you’re just starting out, you put your mom down. We had one gentleman in our office who, after twenty years of being divorced when he passed away unexpectedly, his ex wife actually got his retirement account. Twenty years worth of savings, which is not what has tended. So whenever you have a life event, you want to change your beneficiaries, we’re going to take a break. Mary-jo night is with us, we’re talking all things retirement, your retirement focusing on you in this hour. Mary-jo will stay with us after the break, and i hope you do, too. You’re listening to talking alternative network at www dot talking alternative dot com, now broadcasting twenty four hours a day. Are you suffering from aches and pains? Has traditional medicine let you down? Are you tired of taking toxic medications, then come to the double diamond wellness center and learn how our natural methods can help you to hell? Call us now at to one to seven to one eight, one eight three that’s to one to seven to one eight one eight three or find us on the web at www dot double diamond wellness dot com. We look forward to serving you. I really need to take better care of myself. If only i had someone to help me with my lifestyle. I feel like giving up. Is this you mind over matter, health and fitness can help. If you’re expecting an epiphany, chances are it’s not happening. Mind over matter, health and fitness could help you get back on track or start a new life and fitness. Join joshua margolis, fitness expert two one two eight sixty five nine to nine xero. Or visit w w w died mind over matter. N y c dot com wolber is your marriage in trouble? Are you considering divorce? Hello, i’m lawrence bloom, a family law attorney in new york and new jersey. No one is happier than the day their divorce is final. My firm can help you. We take the nasty out of the divorce process and make people happy. Police call us ed to one, two, nine, six, four three five zero two for a free consultation. That’s lawrence h bloom two, one, two, nine, six, four, three five zero two. We make people happy. Hyre xero. Hey, all you crazy listeners looking to boost your business? Why not advertise on talking alternative with very reasonable rates? Interested simply email at info at talking alternative dot com. Dahna tony martignetti the host is tony martignetti non-profit radio big non-profit ideas for the other ninety five percent. My guest today is mary-jo night senior financial consultant and retirement planning specialist with access advisers were live, and we would love to be taking your calls on you’ll know that this is a very high tech station because we have technical problems, we can’t seem to keep a call on the phone, so don’t call eight, seven, seven etcetera instead. Email info at talking alternative dot com. So if you have questions for mary-jo, please email info at talking alternative dot com. We’ll get your message and read it on the air, and you and everyone else will benefit from it mary-jo you ah, i mentioned earlier if someone changes jobs, they might roll over and let’s, talk a little about what happens, what you should be thinking about if you are in a job change. Um, it’s really? Never smart to take your money out of your retirement account, as i said, you’re going to really be you need to save a lot of money so that you’re not. I told my clients, i don’t want you flipping hamburgers at eighty years old at mcdonald’s so you really need to put money away today. The life expectancy of a newborn is one hundred twenty years, so even if you retire, say it seventy years old, you still have another fifty years that you have to potentially i have to have your money last four. So when you’re changing a Job the best 1 of the best things thiss tool turn it is that i see one is rolling your money over or transferring directly, transferring your money over to your own ira and that’s, very simply done by getting the paperwork from your employer than having an ira set up at a bank of mutual fund company with your financial advisor. However you do that, so essentially, if you have the money in your retirement account, you fill out the paperwork and the money is sent from that employer sponsored retirement account to your own ira that’s one alternative the other alternative is if if you go to another corporation, another not-for-profits another organization, you can also directly transfer that money from your current employers plan to the next employer’s plan, and there’s benefits to doing both if you combine and this is again what i typically advocate if you combine your retirement accounts as you change jobs into your own ira, then you always have the ability to control how that money is invested, what you’re paying for that investment, but the management of those investments and you don’t lose track. I have one client who has literally moved to india, and she still has a retirement account in new york, one in california and she’s in india and it’s really difficult at this point to combine them until she comes back to the states so you can lose track and it gets really messy. And if you are doing any kind of investment management for yourself, unless you have them in one place, it gets really complicated. Teo try toe manage five or six different iras or five or six different accounts with your employers. So now if you have an i r a, you can also have an employer sponsored, maybe for three, right? Sure, sure, i’m i again at Acts. I have my 40 one k and i have. I also have some self employed in comment. I also have an ira, so i have three. Things, but i am very careful about combining and managing them. They’re all in my control. They’re just not at other companies, one of the benefits of and if you have the thing on the difference on from an ira to a corporate retirement account or your employer sponsored for o three b is that in the four o three b or in the four oh one k, you can typically borrow money while you’re still working at that company. You will have to pay it back before you leave that company, but you can borrow money from your four oh three typical. Yes, and i don’t know about tia specifically, and i won’t go into that because it really worked too much on that. But typically most organizations and the federal government says you can borrow up to fifty percent. Now. If you’re buying a home, you might borrow a piece of the down payment. You may use it for paying taxes. There are, you know, um, emergency comes up, so there are things to use that for. But you must. The trap is if you don’t pay it back by the time you changed jobs, then you have to pay regular income tax on that money plus a ten percent penalty. So you always have to be where the tax ramifications of borrowing you want to get that money back in your account before you change jobs. And the way to find out those implications would be to talk to the plan administrator or yes or your accountant or your own tax advisor, right? Everything that we say here is it should be under the umbrella of talk to your tax advisor. This is not tax advice as muchas general knowledge s o but the other side of it is if you have an ira, even though under most circumstances you cannot borrow from that ira, you can take the money out for sixty days. It must be back in the account by the end of sixty days. So the irs does allow you to use that money for sixty days has to be back in the ira. Well, you’ll pay that income tax again. And the ten percent sort of ah, a bridge loan. It’s a quick. Give yourself it’s. A quick like yourself. A bridge loan. We have a couple of email questions. Excellent. Thank you. For emailing your questions. The first one is from tracy, who were lost on the phone. Sorry about that, tracy on dh, she asks a self employed freelance writer what are my options for retirement? Since i don’t have a company that offers a four oh one k like us, we’re talking about ira’s well do-it-yourself employed, the irs allows you to open something called a sep s p i r a what’s up stand for self employed retirement plan pension there’s also a start but it’s much more complicated there’s a surprise like serpent i don’t wantto dahna let’s start with step so self employed all is that by right now? There’s a catch to this? Some corporations pay you on a ten nineteen r w too, even though you are a freelance that’s, one of the really hard places to save on attacks preferred basis so if you’re freelancing and being paid on a w two, you cannot open a set by array it’s on ly if it’s a ten, ninety nine basis so there’s a distinction there so what you can do or anybody can dio is one of the products that’s out on the market that allows people to save its not tax. You don’t get a tax deduction, but one of the products out there is something called nonqualified or none. I arrest nondeductible variable or fixed rate annuities where you can literally save as much as you want. The money that goes in is an after tax money. The money grows tax deferred when you take that money out what you put in is obviously tax free comes out again tax free. But any profit is taxable as at ordinary income tax rates. Alright, eso profits tax what you put in his tax free. But like a mutual fund, your profit always comes out first. So you’re paying tax on the profit first i’m opening the doors again. Teo jargon jail. I want teo flesh out. You just said qualified plans so let’s before the final unqualified right? We have about a minute or so before the next break. Explain what qualified and nonqualified means qualified plan is something that the irs sanctions and gives you a tax benefit for so a qualified plan would be your employer’s retirement plan would be your a pension plan on ira is qualified on ly in that it gives you a tax deduction. That’s what i mean qualified means hyre e-giving deduction and non qualified is after tax money that is going to be taxed at the back end. And so i’ll stick a roth ira right in the middle of that tax at the back end, meaning when you withdraw, if it is that’s, when that’s, when you attack, correct. Okay, we’re going to take a break after the break. We have an e mail from christine. Email your questions to info at talking alternative dot com, please stay with us. Talking alternative radio twenty four hours a day. Are you suffering from aches and pains? Has traditional medicine let you down? Are you tired of taking toxic medications, then come to the double diamond wellness center and learn how our natural methods can help you to hell? Call us now at to one to seven to one eight, one eight three that’s to one to seven to one eight one eight three or find us on the web at www dot double diamond wellness dot com way. Look forward to serving you. I’m tony martignetti, the aptly named host of the tony martignetti show. Big non-profit ideas for the other ninety five percent. You’re non-profit is ignored because you’re smaller medium size, but you still need expertise and help with technology fund-raising compliance, finance and accounting will look at all of these areas on the tony martignetti show. Big non-profit ideas for the other ninety five percent on talking alternative dot com fridays. One, too hyre you’re listening to the talking alternative network. Oppcoll she’s. All mrs back-up he’s called. I can’t officially jumping. My rival will love back-up on talking alternative broadcasting, this is tony martignetti non-profit radio big non-profit ideas for the other ninety five percent. I’m your host, tony martignetti my guest today is mary-jo night senior financial consultant and retirement specialist with axe advisers were going to start with a question mary-jo that came in by e mail. By the way. Email your questions, please today to info at talking alternative dot com that’s info at talking alternative dot com this question is from christine, who says, i was also taught the ten percent rule about saving when i started working, my parents wisely told me i look at that, she says, wisely told her she loves her parents. This is wonderful. My parents wisely told me that if i started saving from the beginning of my employment, i would never even notice that decrease in spending money that having been said, what advice do you have for adults who are in the middle of their career and take a decrease in pe or for a period, leave employment altogether to care for children or aging parents? It’s hard to remain focused on retirement and discipline when life gets complicated in the present thank you. For your question, christine mary-jo what do you think? It’s? A great question, christine and it’s, not something unusual today there are so many people out of work, there are so many people struggling, so here, just some of the things that we’re experiencing in our financial planning practice is downsizing and and i empathize sympathize because i know how difficult it is, especially a lot of women are taking care of children wearing about college, and they’re also taking care of their parents, and we call it the sandwich generation it’s really, really difficult. So, um, one of the things i would say starting out is the most important thing is really, and i think this is for everyone when you’re doing retirement planning college planning, we’re just trying to save is sit down and know what you’re spending every month, sit down and really figure out a budget, and you can send an email to tony if you want our budget sheet and i will make sure everybody, anybody that emails him gets a copy of it. Well, actually, the way to reach mary-jo is to goto mary-jo site, it’s mary-jo mary-jo dot biz mary-jo that is that’s. An m a r y joo dot biz that’s our website, but so ah, budget, you hear that by so often, but rarely not about guilty about how you’re spending your money as much as it is about self awareness about what we’re doing without money and where we can make changes. Ah lot of us owe housed were working with, um, some clients who were advising to move into less expensive apartments. You know, credit has dried up in a lot with the bank, so it’s hard to get a home equity lines in a lot of places, so i think the thing is, number one, start out with a budget, see where you can cut expenses and, you know, assuming you’re going back into the workforce and, you know, give yourself a little bit of a break and don’t depends so much on the retirement account on the retirement plan and focus on getting through the next year or two, i think we will get out of this recession i think the world will get better on we will have brighter days ahead, but i would say, you know, the other thing is sit down with a good financial advisor um, who may charge you a fee for the service but may save you and give you some ideas on how to get through this how to use some of the benefits you have, um, or maybe even augment what you’re already doing. So anything financial advisor, i think, understand your budget, look at the possibility of downsizing not only expenses, but also housing and don’t worry immediately about retirement. Maybe maybe that retirement planning and saving needs to be put off for a short period a couple of years, but to get back to it exactly before the break mary-jo we were talking about you mentioned the roth i r a, and why don’t we explore that a little bit as a as an alternative account overtime account, i think it’s great, you know, circling back to a lot of the smaller admit size non-profits not having retirement accounts, formal retirement accounts for their employees, those employees can set up individual iras. Um, which is just simply a vehicle that allows you to save i think it’s six thousand dollars excuse me for not knowing that number, um, a year on attacks preferred basis, let’s see is it five thousand dollars on attacks preferred basis and you could do that either in a deductible ira or a roth ira, and we don’t say i’m sorry wait when you say attacks preferred basis, what does that mean going okay, so a deductible i r a traditional ira, if you put five thousand dollars away, then you’re income taxes will be reduced, or the income that year will be reduced by that five thousand dollars. So if you’re earning one hundred thousand dollars and you put five thousand dollars into an ira, you’re only going to be taxed by the irs at ninety five thousand dollars if you do, and so that money will grow tax free for the rest of your life or until you have to take money out seventeen and a half, but we’ll go there later when you have to take money out, then you’ll pay taxes on that money because you didn’t pay any money up front. You’ve got the taxi to the traditional, traditional or deductible ira. The other type of ira is a roth ira. And this again, i think it’s it’s perfect four self employed people. It’s really excellent if you have a corporate or organization sponsored retirement plan? You can also do a roth ira for up to five thousand dollars a roth ira is an after tax contribution to an ira, so you already paid your income taxes on that money. It will also grow tax free until you decide to take it out, but he is the good part when you decide to take it out, it is also tax free, so essentially you’re pre paying your taxes upfront that five thousand dollars gets to grow until you take it out. There are you can leave that to your grandchildren to your children. The tax benefits for roth iras of fabulous but you don’t want to name a minor is the beneficiary, right? You never wanna name a minor, so you would so let’s just fall that’ll bit. So what suppose you did want the money teo in a roth ira to ultimately get two grandchildren? And you’re not sure what age there’ll be, but you don’t want them to get it when they’re under, say twenty or it doesn’t have to be just eighteen. What what do you do? Everybody with children should really hear this loud. And clear. Don’t name your children as beneficiaries. And do you get a well done? Seventy four percent of the population does not have a will. You should have a custodian, someone you trust, a sister, a brother, a relative. Um, someone that you trust that we’ll take care of your children’s money for you. So you have that in your will. You should have that on your life insurance. And you should have that on your retirement accounts. So what you do is your naming a custodian for the benefit of your children as long as they are minors. Once your children are not miners, then fine. Then you can name them directly, and you’re naming the custodian in your will. Is that right? As as the beneficiary as the custodian is the person that will take care of your children’s money. Yes, but also directly on your retirement. You know, when you, when you altum in an ira, correct on a beneficiary form. When you open an ira, you have to name a beneficiary. Here’s the key. If you name your a state as the beneficiary of your ira, that estate must pay out with the bent. The ira four oh, one k for three be any retirement account must pay out in five years. If you do not name an individual person, if you name your estate the ira must pay out in five years in effect for donors. If you name a charity that ira must pay out in five years a non natural person on on a beneficial as a beneficiary of an ira or any kind of retirement account, non natural people, which is non people, okay, must pay out in five years. So you want to name an individual a person. But if it’s minor children name it as a custodian for those children, as long as they minor, i see. So on the beneficiary form itself, you’re naming the custodian as custodian for the minor child. Correct? That’s what exactly? What you put on the change of beneficiary? Correct. Okay. Is anything more than you wanted to say about the roth ira now, this sounds like something. Let me just say that it could be valuable for the woman tracy three mailed. Doesn’t have an employer. Could be a roth ira oran or a traditional correct. Correct. You khun do either, but again, and and for younger people, where it looks very likely that over the next ten, fifteen years, taxes will probably be hi there. When i started working in nineteen, seventy two, capital gains rates were up around seventy percent. Now, that’s a long time ago, most people don’t remember that long ago, but tak capital gains rates and now fifteen percent. So we’re one of the lowest tax time’s in, you know, decades, our memories are short way. Don’t think back that far. We don’t realize that way weren’t born that far back. So for the younger people, um, a roth ira, if you pre paying your taxes now, by the time you’d use this money, if tax rates are a lot higher and you don’t have any taxes to pay because it’s a roth ira, it is such a bonanza. So that’s, really, i think good advice for people who don’t have an employer plan like tracy, who emailed, by the way, email your questions to info at talking alternative dot com were not able to take calls today through a technical problem, so email mary-jo if you have a question at info at talking alternative dot com, this is tony martignetti non-profit radio mary-jo what about thinking about sort of pre retirement? If you’re maybe five years out from retirement when you think you’re going to be retiring, are there things you should be doing in preparation? Well, i guess one of the most important things, you know, i just talked about it a little bit a few minutes ago is i understand what it cost you to live, um, everything that you do, going forward in retirement is going to be based on what does it cost you to live? And if you have a handle on that, if you know it cost you five thousand dollars, if you know it cost you seven thousand dollars, then you can start to prepare for how much do you need to retire? Five years out? You still have time to make adjustments. Um, you may think it’s five years out, when in fact, if you do a financial plan, it turns out it’s seven years or eight years out. So it’s really helpful to number one. Understand what your cost of living is if you one of the rules of thumb that the industry is looking at right now is if you take your balance as of december thirty first say you have a half a million dollars saved and your offices in all savings, everything, everything that you’re going to spend wants to retard. So the ideas how do you turn that into an income? So if you look at your december thirty first balance and this isn’t even a gauge for younger people cause then you can start to monitor. How close are you to having enough? Or are you saving enough? Or are you way way off? So a half a million dollars if you calculate four percent of that, that four percent well, pretty much withdrawal once a year. Well, pretty much allow youto have your money last twenty five years. So if i have a half a mostly around them, as i have a million dollars four percent withdrawals forty thousand dollars if that’s all my money can i live on forty thousand dollars? It’s a pretty simple way to understand whether or not you have enough now add to the forty thousand dollars your social security, which we will get a reminder from social security three months before our birthday. How much our social security payment is estimated to bay. So if i know i have a million dollars, um, so i know i can take forty thousand out of my assets, plus my social security. If i have any pensions, add that on and now you know, you have an idea of how much or how much income you’ll have during retirement if you don’t have enough to go on vacation with that four percent this year, skip the vacation next year if investments are hyre and your account has gone up on december thirty first of the following year, and you have enough to take the vacation. Great. But you need to know let’s talk about maybe had invested all this money also, and that four percent rule is that that will give you a gauge of how that your money will. Last for twenty years, twenty five years, twenty five years. That so, if you’re so if you expect a latto live longer than twenty five, you need to have more money or that’s produced the four percent two and a half or three percent quick. And as you get, you know, when you when you get to be seventy, you can use five percent when you get to be, you know, eighty, you can use six percent in the minute or so we have left before a break. What else should people in those pre retirement years be thinking of anything else? Well, i think you really again. From our perspective, you really should be sitting down and doing a formal financial plan so that you can identify. How do you allocate your money? How much should be in fixed income? How much income should you have? You know what? You want to equate your fixed expenses with fixed income, your variable expenses, your, you know, luxuries, things that you can change around on and have that invested a little bit more let’s. Say aggressively. So let’s talk about how to allocate on and you really want to be ableto lock that in before you sit down and and retire from your job. This is tony martignetti non-profit radio, your host, tony martignetti. My guest today is mary-jo night, senior financial consultant and retirement planning specialist with access advisors. We’re going to take a break. Mary-jo will stay with us, and i hope you do, too. 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No, and that is the name of the block post actually is unheralded e-giving we learned last week that johnny carson donated one hundred fifty six million dollars to his foundation at his death through his estate and what really caught my attention about that is nobody knew it. It got discovered by the investigators at the smoking gun because they were filing coming through nine, ninety forms, the annual filing form that the carson foundation it’s actually called the john w carson foundation and the smoking gun went through the nine, ninety form for the tax year and found a significant gift from johnny carson himself and that’s the only way that this became news, nobody at the foundation was disclosing it. Obviously, johnny carson didn’t say anything before his death, and i just that gets me just thinking about, ah sort of revered status of someone who gives quietly, silently. I can’t technically call his gift anonymous because the john w carson foundation is certainly making gifts to charities and those charities know where the money is coming from so it’s not strictly anonymous but still got me thinking about how we just should respect the people who give to your organization’s quietly, silently, you know, there’s a lot of attention being paid to the to the buffet gates, six hundred billion dollars challenge, and that is a very worthy challenge not to minimize that or disparages at all it’s outstanding for the attention that it brings to philanthropy, but there’s another kind of giver, another kind of donor of the secret, quiet donor a person is someone that maybe we should be thinking about and and paying honor to when when we come across them, their their their occasional, they’re rare. I’ve worked on just a few anonymous gif ts on, hopefully you have had the pleasure of working with such donors. You’ll find my block post at on this subject at m p g a d v dot com, which is the home of my blood. My guest is mary-jo night mary-jo, of course, is still with us mary-jo we, we’ve talked about traditional iras, roth iras, we compared and contrasted. Them, but you’ve mentioned something that’s important i think we want to explore, and that is that these get invested. If you’re doing your own investment management, what do you do? You’re not a professional advisor. Financial advisor? How do you determine how you should have your accounts invested? I think this is ah, really critical information for everyone. There’s an awful lot of information available. And so i’m going to just go through a couple of things that i think go from the very, very simple, too. A little bit more complicated. There’s a rule of thumb that i heard from a very, very wise investment manager years ago, and i think it probably still holds a lot of validity a cz faras investing. So if you take your take one hundred, subtract your age. The difference is the percentage that you should have in stocks, and that would be for a very conservative investor. So let’s, take the example of a forty five year old. Okay, i was going to use a forty year old but that’s great. So forty five year old if you take one hundred, subtract forty five that person should have if it’s a conservative investors should have fifty five percent in stocks, so now you’re going to re balance this annually. So it’s a very simple way to manage how you invest stocks to bonds to cash and and you said it twice. I just want to emphasize that’s for someone who’s conservative. So so if you’re if you’re more of a risk taker, then you’d have more than the fifty five percent clolery in-kind in stocks, so go ahead so let’s go into that a little bit, you know, generally the most effective way to investor money in any retirement plan today is using mutual funds. There are so many different mutual funds, and if you find a family of mutual funds that you’re comfortable with or mutual fund investment company, by all means go on their website and create a strategy. Every single mutual fund company has something called a risk tolerance profile where you can literally go in and say, you know, if you’re not comfortable with what happened in your account two years ago and not many people are very comfortable with the value of their account going down forty percent, um then go on, do one of these risked tolerance, profiles and, well, personal risk tolerance and create a strategy. Um, i studied very high math about six years ago, and i was absolutely blown away by the sophistication that goes into the models that people use probabilities, et cetera to understand what, how much stocks, how much bonds, how much should be international, how much should be small cap, large cap, etcetera? So go on to a website and really answer the questions of very simple questions and answer them honestly, if you didn’t change your portfolio when the market went down forty percent, and yet the question says, how often do you change your portfolio when the market goes down and you didn’t change it? Then answer xero you didn’t change it, so i would spend the time to go on there, and that will give you an idea of what the allocation is. And then you can look for the mutual fund that’s going to fit your comfort zone? Is it sixty percent stocks or and forty percent bonds? You don’t want to ever have one hundred percent bonds or one hundred percent stocks either way, it’s too risky? We found that that bonds don’t always work two years ago, and we know that stocks don’t always work because there’s too much volatility and it’s when the market is down the most that people get scared and get out. One other thing is, when you’re putting money away every month, you have to also realize that when the market is down, i think warren buffett he’s buying in on sale when the world goes to hell in a handbasket, he wants to own stuff. So the worst time to get out one of his one of his adage is that i love is it’s time to be fearful when everyone else is greedy and it’s time to be greedy when everyone else is fearful. He sees a lot of fear in the market and that’s, why he’s doing what you just said exactly so there’s ah technique called dollar cost averaging. So you’re putting money in every paycheck or every month when the market’s down you want to stay in there buying those stocks because they’re cheap when the market goes back up a year, two years from now or whatever that cycle is, and typically the seven year cycles you will have bought a lot of stock, very cheap relative to look ahead five years, how much it buy and how cheap was it? So dollar cost averaging is a great thing when you’re buying when you get to be fifty five, sixty, sixty five and looking at retirement again, you want to make sure you’re readjusting that portfolio to your temperature. At that point, my guest today has been mary-jo night, senior financial consultant and retirement specialist with aksa advisers, you could reach mary-jo at mary-jo dot biz, you can reach tony martignetti non-profit radio on the fan page, which it’s going to be safe to click in just a minute because i’ll be done and on that player window, just scroll down and click to the fan page go over there and like us, my guest next week will be stephanie strong she’s, the non-profit beat reporter for the new york times. She’ll be with us here in the studio, and joining us by phone next week will be can cerini of cerini and associates were going to be talking about compliance and auditing, and we’re certainly gonna include a conversation aboutthe possible revocation of tax exempt status for this small and mid sized organizations that didn’t file their form nine, ninety within the past three years. The irs has a procedure for you to save your tax exempt status, and we’ll be covering that with ken cerini also joining me next week. As i said, stephanie strong, i want to think clear meyerhoff, our creative producer, sand liebowitz, line producer, and regina walton, who takes care of our facebook page. I’m tony martignetti, the host of tony martignetti non-profit radio. Big non-profit ideas for the other ninety five percent. Thanks for listening. Join us next week, friday at one p, m eastern at talking alt-right dot com. Oppcoll hyre