Lifetime Financial is a boutique financial planning service for non-profit professionals that want expert financial answers about retirement, college planning, investing, and insurance. Lifetime Financial helps you build the financial support to lead your best life.
Lifetime Financial LLC
7000 Carroll Ave Ste 201A
Takoma Park MD 20912
202-350-1515
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All in Retirement
What is a 403(b) and why does it exist? If you’ve ever asked you were probably told ‘it’s the nonprofit version of a 401(k)’ and that’s true more or less. The 403(b) was indeed created by Congress 1958 specifically for nonprofit organizations. It is the grandparent of the 401(k). 403(b) plans are fine if set up correctly, but there are many bad ones with lousy investments and high fees sold to trusting nonprofits by consultants and brokers that are not fiduciary financial advisors.
On a coarse level, it was the German Empire under William I and Otto von Bismarck that created the first general (non-military) welfare program for older workers introducing the concept of retirement for the working class. It was a plan, along with mandatory health insurance, to counter growing support for Marxism. One would get a modest pension from the state at age 70, a seemingly cynical choice for a population with a life expectancy in the mid 40’s that was declining.
Most 401k plans offer ‘target date funds,’ one-stop investment portfolios with a mix of US stocks, international stocks and bonds that automatically get more conservative (less stocks, more bonds) as we approach retirement. But it’s not that simple. Here are the four things most common mistakes I see with target date funds.
You might think the frothy stock market is a risk for current retirees, and you aren’t wrong. What about historically low bond rates? That’s much less of an issue than people think. Long term care insurance, yeah but at least there is Medicaid as a (terrible) last resort. So what is it?
Does your nonprofit have foreign workers or US citizens abroad? Have you thought about providing them financial planning support?
Have you heard of the SARSA? The ‘Super Awesome Retirement Savings Account?’ No, you haven’t because it doesn’t exist. Instead, it’s stupidly called a ‘Healthcare Savings Account’. Do you have one? Are you maxing it out ($3,600 single, $7,200 family) and not spending it? You should.
