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Saving Savvy
Local experts weigh in on maximizing retirement funds in turbulent times.


Feb. 2019

Are you entering the last chapter of your career and wondering if your nest egg is where it should be? You’re far from alone.

In fact, the statistics are shocking. According to Forbes, just 40 percent of workers were covered by a workplace retirement plan in 2017. PricewaterhouseCoopers reports that less than half of baby boomers have $100,000 or more set aside for their golden years. And Generation X is even worse off, with a median nest egg of $35,000 according to a recent study by Allianz Life.

“Sometimes people feel that there is plenty of time to start down the road,” Aaron Kowal, managing director and senior financial advisor at Waukesha’s Kowal Investment Group, explains of the sobering stats. “Even in their 40s and 50s, they say, ‘I’ll start saving later.’ Or they’re just nervous about investing overall.

“I also think it’s under-education,” Kowal continues. “People in general haven’t been educated enough in the school system or in their families, because families don’t like to talk about money. So people make mistakes.”

Costly ones.

Boomers and Gen Xers are the first generations deprived of the comfort of knowing that robust Social Security payments and a healthy pension will cover them in retirement, moved by their employers to less costly and more risky products like 401(k)s and IRAs. In addition, Americans are living longer than ever, meaning Gen Xers and late boomers often simultaneously support aging parents and adult children even as their own age-related health woes and costs emerge. And they often need their nest egg to last longer than they’d planned.

Here, Kowal and Jennifer D’Amato, chair of Trust Services for Reinhart Boerner Van Deuren, share simple, sound advice on making the most of your retirement savings, whether you’re an experienced investor or need to catch up.

Don’t Panic. Use Volatility Proactively.

That’s easier said than done when you realize that there’s no turning back the clock — or if you’ve suffered bad experiences with past market crashes. Kowal says wise investors don’t panic and pull out of the market, but rather use its fluctuations to their advantage.

“The volatility we’ve had recently is normal volatility,” says Kowal. “The lack of volatility we had in 2017, that was weird.” The best strategy, he says, is to “put your blinders on and try not to worry too much. … Businesses are reporting strong numbers, and entrepreneurs are continuing to innovate. They need to grow and that’s why they will lead to a better market. People pay way too much attention to what the fed is doing or what the government is saying. Businesses are doing well and that makes me optimistic.”

Rather than second-guess your investments, Kowal suggests embracing the idea that market instability presents opportunity. “When the markets are bouncing around, a good mindset to have is, ‘Oh good! I can get something on sale,’” he explains. “[The market] will always go up eventually. It just takes patience. The ones who lose are the ones that pull out of the market.”

Just be sure to always buy quality and time major changes to when the market is on an upswing.

Make Your Employer Plan WORK.

Both D’Amato and Kowal agree that it’s deceptively easy to believe your employee-sponsored retirement plan is in good hands and skip the regular check-ins.

“You can’t just assume your employer’s going to take care of your retirement,” D’Amato says. “No one’s going to care about you and your retirement more than you should. So you need to be educated and ask questions. Read some basic books on investing and on financial planning. Don’t try to do it all yourself, but educate yourself enough that you’re an informed consumer.”

That goes beyond making sure your portfolio is performing well.

“For people [who] work in companies with employer matching, that’s free money that they’re giving up if they don’t do the match,” Kowal says. “Take advantage of it. It’s a 100 percent return rate.” In addition, he says, “there are catch-up provisions in 401(k) plans and in IRAs for people over age 50. And with each raise and bonus, increase your contribution to retirement planning. You could build up some serious assets over time.”

Consider A Roth IRA.
Really Consider It.

You can only contribute to a Roth IRA if you make less than $137,000 for single filers and $203,000 for married couples filing jointly. In other words, if you’re among the vast majority of workers. And it could be a lifesaver, if you’re able to pay taxes on your contributions now, while you still draw a paycheck, unlike traditional IRAs that allow you to defer paying income tax on your savings until you retire.

“There are a couple benefits to a Roth,” D’Amato explains. “They grow tax-free once you pay the tax and put them aside to work for you. Then you can take out funds tax-free once you have a Roth IRA for at least five years and you’re 59-and-a-half or you’re disabled or you die. … Another benefit is there are no minimum distributions, so you don’t have to take anything out. People who are fortunate enough to be fairly wealthy can actually pass that [money] on to the next generation and it really can be a multi-generational income tax shelter.”

There may be no time like the present to convert, D’Amato adds.

“Given the fact that the market has been volatile, it’s a good time to think about a conversion, because if you time the market right and you convert when the market is relatively low, over a long-term period you’re going to see some nice growth,” she explains. “If you can pay the tax at a relatively low valuation, that’s a good deal — if I’m able to do an IRA conversion in my early 50s and I may not have to pull that money for 20 years. But you’re going to want to come with after-tax dollars on the side to pay the tax, so that all of the funds in the Roth IRA can continue working in that tax-free environment.”

Find an Advisor You Trust.

Do it now, whether it’s through your employer or an outside firm.

“I don’t think there is any financial planner or lawyer out there who has a silver bullet for someone who’s 55 years old and has saved $40,000 for their retirement, but they’re used to spending $150,000 a year,” says D’Amato. But, she and Kowal agree, an expert can ease your fears, give you a clear-eyed view of the future, and make sure you stay on track in terms of smart investments and realistic spending habits.

“We deeply care about our clients, but a financial advisor can be a little more objective and say, ‘Here is why we don’t want to do this. Here is where we see things going and here is how we can plot out decisions in the future.’” Kowal says.

Work Longer Than You Planned.

Even if it’s just a part-time gig. The additional paychecks and contributions to Social Security and your employee-sponsored retirement plan are well worth a few lost years of leisure.


It’s hard to ignore bold-type headlines and gloom-and-doom TV talking heads, especially when you’re already feeling uncertain. But, Kowal says, you should. “Keep in mind with the financial media, that their job is to scare you,” he explains.” You could have the market double and, in a day, so-and-so is coming on to say why we’re going to enter the worst bear market in a generation. Their job is to sell advertising. And they sell advertising by scaring investors.”

In Short …

“Discipline will set you free,” says Kowal, “and automation has to be a key part. People who save on a regular basis — not just that they’re writing checks to an investment account or moving money over to an investment account, but have money taken automatically from a paycheck on a regular basis so that they don’t even touch it — have the most successful outcomes. If you have to make a positive choice every month, every quarter, every year, to save for your retirement, the vast majority of the time you won’t do it.”

 And if you’re one of those fortunate people, “most of the clients I deal with are looking for smart tax-planning ideas,” says D’Amato. “They do have funds and they’re just looking to maximize on retirement savings. The Roth is a great way to do that. Make sure you’re diversified and then you basically have to trust that, even if the market’s up and down, you’re well positioned. When it’s down, don’t open that envelope. Find a good investment professional that you have trust and confidence in … and educate yourself enough that you’re an informed consumer. In my mind your financial advisor, just like your lawyer or your accountant, is someone you partner with.” 

This story ran in the Feb. 2019 issue of: