Category Archives: Uncategorized

From Teacher to Millionaire in 3 Steps

Becoming a millionaire can be more than just a pipedream, even on a teacher’s salary. Some people do have the good fortune to win the lottery; but for most, those chances are slim. If you want to be a millionaire, it really boils down to two things: commitment and strategy.

First, you must transform your perception and redefine your goals. Only with the proper mindset can your aspirations of becoming a millionaire can come to fruition. You’ve got to make it your number one goal and then formulate a plan to make it happen.

Teachers are typically strong in the planning department, but amassing wealth sometimes takes an extra push. After all, if it were easy, then everyone would be a millionaire. Here are three easy steps to get you from teacher to millionaire by retirement.

Invest in 403b

Teachers and other public sector employees are usually given the option to invest in a 403b plan. These are tax-deferred retirement savings plans that employers often match. Some of the biggest benefits of investing in a 403b plan are that the contributions are tax-deductible and the savings grow tax-free.

Since you pay taxes on distributions in retirement, many end up in a lower tax bracket before its time to pay Uncle Sam. For instance, socking away $10,000 per year for 20 years will give you $200,000. However, properly allocated plans tend to generate an average of about 7 percent return annually.

If your employer matches just 3 percent, which many do, you’ll end up with $436,540. That’s almost half a million right there.

Invest in IRAs

The road to wealth is a much shorter trip with multiple savings plans. You can easily get half way to the millionaire mark with your 403b plan. An alternative IRA, specifically a Gulf Coast Educator’s Federal Credit Union’s Premium Market IRA, will take you the rest of the way.

This tax-privileged savings plan earns a higher dividend than other plans and doesn’t charge administrative fees. You can choose from a traditional or a Roth IRA, depending on your specific strategy.

Depositing a little less than $11 per day into an IRA will grow to a million dollars in 40 years. This amounts to little more than a snack and a cup of coffee, and it still doesn’t max out the contribution limit for the year.

Invest Even More!

Compounding interest is a beautiful thing in the world of finance, especially if you’re trying to build wealth. It basically amounts to earning interest on interest. For example, suppose you invest $1,000 into an account earning 10 percent simple interest. At the end of 10 years, that account will be worth $2,000.

However, suppose you invested that same $1,000 into an account earning 10 percent compounding interest. At the end of the same 10 years, that account will be worth $2,594.

When building wealth, you want to opt for investment accounts that offer compounding interest whenever possible. You’ll earn more money in a shorter period of time, meaning you may get to millionaire status even before retirement.

Telemarketers Prey on Seniors

Jamieson Mackay

Jamieson Mackay, Certified Credit Union Financial Counselor

My mother called me recently to tell me that she had signed up for an extended vehicle protection plan that she thought was only $200 (first red flag: if it sounds too good to be true it is). A sales agent had called her and she agreed over the phone and gave her credit card information. She has since come to find out that the plan was $200 a month until it was paid off, totaling about $3,000. She knew better, but said she felt pressured and did it to get off the phone (second red flag: never give your payment information out over the phone unless you initiated the call). This is a common issue we hear about with our senior members and unfortunately sales people prey on the trusting nature of seniors.

The main problem in this case is that my mother had a stroke a year ago and hasn’t been driving, which means she was sold something she didn’t even need. We always reinforce the idea with our team members that we won’t sell something the member doesn’t need and only recommend things that will improve our members’ financial lives (see our service promises). Too many businesses out there don’t adhere to the same ideals and find seniors, such as my mom, an easy sale.

I have a power of attorney for mom to handle certain things for her, so I called the company and was put in touch with a supervisor who gave me cancellation instructions. Hopefully this is the last I write about this specific incident, but there are several take a ways that this example reinforces:

  • We must look out for our senior family members. My mom is a smart lady who I never thought would have done this. She usually calls me to discuss decisions like this. She felt really badly about the whole thing, but I assured her it was ok and that it was taken care of. Basically, we can’t make assumptions that our older family and friends won’t do these types of things.
  • A power of attorney (POA) can be a valuable instrument in helping our aging family members take care of financial and other issues. Without the POA, I would not have been able to help mom in this case. She would have had to deal with the entire issue herself, which would have been even worse and added to the bad feelings she already had from this instance.
  • Never give out payment information over the phone if you didn’t initiate the call. If someone calls you and you are interested in their product or charity, ask where you can pay online or where you can call back after checking into the business or charity further. We’ve seen too many incidents where members have been scammed into giving their payment information over the phone to scammers, businesses and fake charities.

In this case it was a legitimate product that was sold, but in a manner that I find repulsive. The sales person that sold this to my mom is the type that gives sales people a bad name.

Retirement Strategies That Work

Whether you are close to retirement age, or just starting out in your career, having a strong retirement plan is essential to a financially-stable retirement. Let’s review a few key strategies to get your started.
Invest a Consistent Amount Each Month. With this strategy, you may want to consider automatically contributing to your IRA or other retirement account with every paycheck (up to the maximum annual contribution allowed).
Plan for Retirement Adjustments. It is important that you plan for adjustments to your income after retirement. While some of your retirement income will likely be a fixed amount each month, you will also have some retirement accounts that will pay out varying amounts based on market performance. If possible, try to funnel your monthly retirement costs toward the retirement payments that are not variable. This will allow you some flexibility in good times as well as security and peace of mind when times may get rough.
Control Your Plan. Too many people cede control of their entire retirement plan to someone they don’t know really well, and more importantly, who may not know them. Be an active participant in your investment plan. Ask questions. Go to every seminar or webinar you can find, especially if it is tied to your employment. It’s never a bad idea to remain educated.
As you take the time to get involved in your retirement planning and develop strategies that benefit you and your family, you will start to see a brighter future. If you would like to learn more about the different retirement accounts and options available to you at Gulf Coast Educators, you can click here or call 281-487-9333 to speak to one of our financial advisors.
Sources:

  1. http://www.thestreet.com/story/13269223/1/here-are-the-3-most-effective-retirement-strategies.html
  2. http://www.investopedia.com/articles/retirement/09/counterintuitive-retirement-strategies.asp?header_alt=c

 

Cyber Security Awareness

October is National Cyber Security Awareness Month.

No such thing as too much security when it comes to online

Michael Barry GCEFCU Security Officer

Michael Barry
GCEFCU Security Officer

“Why do we have to have all those security questions and passwords on our accounts?” A question we get asked all the time. “It’s so time consuming and we have so many passwords to remember.” Yes, we know. “What’s the big deal?”

Well, you may think it’s all a hassle… until you get hacked. If you aren’t utilizing all the security features available and don’t keep your anti-virus software up to date, then you may be a prime target for attackers. And these “hackers” may not be in some foreign country across the world. They might be as close as a next door neighbor, or even a relative.

How many of you have a wireless network at home that isn’t password protected? Not sure? I bet your neighbors know. It’s so easy for someone to drive by and see what wireless signals that can be picked up and accessed. Check with your Internet Service Provider to make sure that your internet router is password protected so hackers can’t tap into your home network and access your personal files.

So your internet is secure, now what? Do you have an antivirus program on your desktop or laptop? And more importantly, is it up to date? Hackers can put all sorts of Trojans and viruses on your computer to capture data while you are typing and send it to a third party. Make sure you have an anti-virus program and malware program that can prevent, detect and eliminate any threats. Don’t have money to buy a program? Search online, there are many free anti-virus programs and malware programs available.

So, internet secure, anti-virus program up and running, what’s next? What about your passwords? Are those secure? Make sure you aren’t using easily identifiable information (birthdays, anniversaries, pets name, the word “password”) These passwords are the first guessed, along with any other information you may have in a public profile on a social website account. Choose phrases that don’t go together, like “dog sleep loud date.” Add spaces, uppercase letters and special characters. Secure, for example could become “S3cuR3.” Pick a long phrase and choose the first letter of every word. The cow jumped over the moon and the dish ran away with the spoon could become a password of “Tcj0tmatDrawtS.” Change passwords regularly and don’t increment the last character or number by 1. I know that’s easy to do, but if it’s easy for you, it’s easy for a hacker.

Setup login notifications. Did you know that the credit union can alert you to over 15 different events? (And that’s just events, by the way, I didn’t include account specific alerts or reminders) We can tell you if your account has been locked out, your PIN changed, you logged in outside the US, a specific state, city or even if you log in from another IP Address. Check out all the alerts we can send you through text, email and secure messages from online banking. After logging in, choose Accounts, then Account Alerts from the drop down menu. Perhaps you want to create an alternate login for your account, so you aren’t typing in your member number. You can do that by selecting Member Info under Options. Want to change your authentication questions, maybe create your own? Try Options, then Authentication Questions.

Some other easy things to remember… don’t share your password… to anyone, kids included. I know we all think our kids can do no harm, but it turns out a lot of fraud is initiated by someone you know. Be very careful when using Internet cafes or public internet access. None of that is secure, and if you start logging into your account, someone could easily be “watching” everything you do. If you must use one of these free internet services (hotel, airport, restaurants) don’t do anything you wouldn’t want someone else to see. Make sure you log out of any account you are logged into and close all your browser windows. Don’t have your browser remember any account passwords for you. It may be easy for you, but it’s also easy for anyone that may get a hold of your laptop, tablet or desktop.

With so many new technologies available, security is something that we should all be concerned with. I don’t want to scare you away from anything, but you should always make sure you are staying up to date with security and using any security features that are available to you. If you would like help setting up additional security on your online credit union account, give us a call, we’d be happy to help!

Is It Too Late to Begin My Retirement Fund?

Many people, for one reason or another, have put off planning and saving for retirement until retirement age is just around the corner. Getting a late start with your retirement fund doesn’t exclude you from participation, but it may require you to do a little extra to enjoy the retirement you have always dreamed about.

Whether you choose to open a Roth IRA or participate in your employer’s 401(k) or 403(b) plan, you should start putting money into a retirement fund today. While the amount you contribute may not be great, something is better than nothing.

Next, you should focus on paying off your debt and avoid gaining new debt. Start by eliminating your smallest amounts of debt and then use the extra funds you’ll have to work on the next loan. This particular step may require you to make some painful lifestyle changes, but your new found discipline, and financial resources, will put you on a path to a more secure retirement.

You should also take advantage of any available tax breaks. For example, after age 50, the IRS allows “catch up” contributions to an IRA. This basically allows you (and your spouse) to pay more into IRA accounts than the standard annual amount. These additional contributions can add up quickly as the years roll by.

Another strategy you may want to consider is supplementing your income. If you can manage to earn extra funds by taking on a part-time job, adding more shifts or working overtime, you’ll be able to put more money toward your retirement.

And finally, use automatic withdrawals to fund your various retirement and investment accounts. It is significantly easier to save your money when it never actually gets into your hands.

Saving for retirement can seem overwhelming, but it is not the mountain it appears to be. Begin today, gain momentum, and watch a more secure future unfold.

Sources:
1. http://www.forbes.com/2010/03/16/retirement-planning-401k-ira-personal-finance-late-start.html
2. http://www.cfinancialfreedom.com/late-start-retirement-investing-tips-catch/
3. Southwest Strategic Marketing, LLC

Is a Roth IRA the Right Choice for You?

A Roth IRA is a special type of retirement account where you pay taxes on what you contribute to the account, and then all future withdrawals are tax-free. Investment advisors usually tell their clients that a Roth IRA is designed to benefit younger people — but a Roth IRA can be a good choice for people of all ages. Consider the following to see whether a Roth IRA is right for you.

If you want to take distributions tax-free during retirement, a Roth IRA is the right choice for you. If you’re eligible to open a Roth IRA, you’ll be able to make contributions to your account, get taxed now for those contributions, and then withdraw your funds without paying taxes on that money when you need it in retirement. A traditional IRA gives you the ability to deduct the interest on your taxes now, but you’ll pay taxes on your withdrawals later.

If you expect that your tax rate is going to be the same or higher than it is now, a Roth IRA is probably a stronger choice for you. A traditional IRA is a better option if you expect your tax rate to be lower in retirement because you’ll be able to take a tax deduction when it benefits you most. With either choice, your earnings in an IRA grow tax-free.

If you want flexibility in contributing to your IRA and taking distributions, you’ll likely choose a Roth IRA. Once you turn 70-1/2 years old, you must stop contributing to a traditional IRA and are forced to take distributions and begin paying taxes on your money. On the other hand, a Roth IRA has no required minimum distributions. Plus, if you’re still working after you’re 70-1/2, you may contribute to your account (as long as you stay within the income limits of the account).

To learn more about Roth IRAs or to speak with a financial advisor, click here, or give us a call at 281-487-9333.

Information is for informational purposes only and is not intended to provide legal or financial advice. The views expressed are those of the author.

Sources:
• https://www.nerdwallet.com/blog/investing/roth-or-traditional-ira-account/
• Southwest Strategic Marketing, LLC

IRA Investing for Beginners

Although many employers offer 401k and other retirement options, it’s a good idea to set aside personal funds as well to ensure you can enjoy retirement the way you want to. A great place to start is to invest in an IRA (or Individual Retirement Account).

What is an IRA?
An IRA is a personal savings account set up specifically for retirement. Employees under the age of 50 can contribute up to $6,000 a year into an IRA – after age 50, you may contribute up to $7,000 a year. Because it’s designed for use during retirement, there are specific rules and penalties for withdrawal.

IRA and Tax Benefits
One of the most appealing attributes of an IRA is its tax benefits. The two most common types of IRAs are Traditional IRAs and Roth IRAs. The interest and earnings of both IRAs grow tax-free within the account; however, each varies in the way it’s taxed on contributions and distributions. You should talk to a financial planner and/or tax advisor to determine which IRA is right for you.

IRA Security
Typically, you can open an IRA with a low minimum balance requirement (sometimes there is no minimum requirement) – it all depends on your financial institution. One of the downsides of an IRA is that it’s a savings account. It earns less interest than investing in stocks or bonds, but it provides safety and stability. At Gulf Coast Educators, we offer a different type of IRA, called our Premium Market IRA. This IRA earns a higher dividend that fluctuates with the market, without risking your money in stocks and bonds. An IRA is federally insured so you can be certain your future is safe.

IRA Distributions
With a Traditional IRA, you must make a distribution after age 59-1/2 and before you’re 70-1/2. For Roth IRAs, a distribution may be made after the account is five years old and the individual is at least 59-1/2. In both instances, there are some exemptions for distributions of up to $10,000:
• Buying your first home
• Paying for higher education (e.g., college, trade school, etc.)
• Paying for major medical expenses

Discuss any IRA distribution you’d like to take with your tax advisor to be sure it’s in your best interest.

It’s important to save now for your future. An IRA is a great way to put money aside today so you can enjoy the retired life you want tomorrow. To learn more about IRAs available through Gulf Coast Educators FCU, click here, or give us a call at 281-487-9333.

Information is for informational purposes only and is not intended to provide legal or financial advice. The views expressed are those of the author.

Sources:
http://www.investopedia.com/articles/personal-finance/032715/best-ira-accounts-beginners.asp
http://money.cnn.com/retirement/guide/IRA_Basics.moneymag/
http://www.bankrate.com/finance/investing/ira-investing-for-beginners-1.aspx

Is a Rollover Right for You?

Deciding what to do with retirement funds can be a tricky business. Whether you are changing jobs or it is time to make a decision on what to do with a maturing IRA, understanding your options is the best way to ensure you are making the right decision.

While the concept of a rollover may seem simple, there are several variables that can add complexity to your decision-making process. If you are changing jobs, should you (or can you) roll your 401k from the old job into the new job plan? If you are retiring, should you roll any, or all, of your existing 401k plan(s) into IRAs? When you take a new job, should you (or can you) roll your existing IRAs into your new employer’s 401k plan?

There are four primary questions to consider prior to making any rollover decision:
1. Do you want your money right now?
2. Do you want to continue to defer tax payments?
3. Do you want to pay a tax now and withdraw money tax-free later?
4. Do you want to have control of your investment decisions?

If you want to use retirement savings now, you will have to pay income tax and likely a penalty for early withdrawal. So, if you are changing jobs and decide you would rather cash out your 401k from your old employer rather than rolling it over to the new employee plan, you can do that. Just recognize that some penalties will apply to this decision. However, you are not required to rollover any existing 401k accounts to a new employer-managed 401k or into an IRA. In fact, you can simply choose to leave your money in the existing 401k.

In answer to the second question, you should understand that one of the primary benefits of a 401k is tax-deferred growth. Your investment will grow without a tax being applied; in other words, the money is not taxed until you begin making regular withdrawals. This is a significant benefit because the tax rates on investment income are typically higher than the tax rates on regular income. Money withdrawn in regular intervals from a 401k after retirement will be taxed as regular income and not as investment income.

The next question to consider is whether or not you want to be taxed now and have tax-free money later. The answer? You may want to consider a Roth IRA since contributions are made with after tax funds. If you want to roll an existing 401k over to a Roth IRA, you will have to pay a one-time tax on the amount being rolled over; however, after that, the Roth IRA will grow tax-free and distributions taken after retirement age will not be subject to income tax withholding. There are some income restrictions involved in obtaining a Roth IRA, but if you are interested in having tax-free money after retirement, this is a good option to pursue.

The final question to consider is whether or not you want to control your investment. In many 401k, pension, or other employer plans, the employer controls the investment. For example, if you work for a large corporation, its pension plan may be 100% invested in the stock of that corporation. After you leave that corporation, you may decide that investment strategy is too risky. So, rolling that pension plan over to an IRA will give you the opportunity to diversify the investment to better suit your risk structure.

Whatever answer you give to the questions above, there is a retirement plan that is right for you. At Gulf Coast Educators FCU, we have financial advisors available to help you make the best decision for your particular circumstance. Click here to learn more about the IRAs, Roth IRAs and other retirement programs available at GCEFCU. If you prefer, you can call us at 281-487-9333, or stop by one of our branches for more information or a free consultation today.

Financial Literacy Games

Financial Football

Give your brain a Financial Football workout — play the NFL-themed video game developed by Visa.

Play

 

Financial Soccer

Put your financial skills to the test with Visa’s World Cup-themed Financial Soccer, a multiple choice question video game. Are you ready to play?

Play

 

Money Metropolis

Navigate Money Metropolis’ multi-dimensional world while making life decisions that will affect whether virtual bank accounts shrink or grow.

Play

 

Peter Pig’s Money Counter

Learning about money is fun with Peter Pig. In this interactive game, kids practice identifying, counting and saving money while learning fun facts about U.S. currency. After completing the game, players are rewarded with a trip to the virtual store to buy accessories within budget and dress up Peter Pig in fun scenes.

Play