Wednesday, March 14, 2007

Retirement account update

About 2 weeks ago, I met with Ester, my financial planner through Ameriprise. She was a former co-worker from Gymboree and I sought her services shortly after she became a financial planner. I had always wanted a financial planner, but was turned off my the cold calls I used to get at work from places such as Merrill Lynch and Smith Barney. I wanted a planner that I could be comfortable with, and Ester fits the (pardon the pun) bill perfectly.

Ester reviewed the numbers with me as to how much my account has progressed. I was rather surprised to see the amount I gained from the time the account was first established. But what really became the eye opener for me was to compare my balance from last year to this year. As I am now officially "middle-aged", it's comforting to see that my investments are doing well. I hope I can say that when I'm ready to retire.

Last May, I jotted down my current balances in my retirement accounts. I have 2 retirement accounts (regular and Roth IRA) and my 401K from work. I established the regular IRA as the account where I rollover 401K distributions whenever I changed jobs. I could kick myself for cashing out my 401K when I was with Charles Schwab in the late 80's. But being young and poor, I didn't know any better. Many of us at that age think of this as rent money. I ended up having to pay hefty penalty fees for the early cashout. If I knew then what I know now, it would be a big chunk of change on top of what is already there.

Getting back to the last year versus this year comparison, my Ameriprise account balance today is about $1K less than what it was 10 months ago. This is excellent considering I withdrew $5K to pay closing costs for our condo purchase last July. My 401K balance has gained almost $10K, a gain of nearly $1K each month.

To me, enrolling in a 401K is a no-brainer. It's something that goes into an account every pay period. If you budget accordingly, then you won't miss the money. Plus, whatever is leftover in your pay is taxed anyway. I wouldn't have been able to do this without a financial planner. Yes, they're not cheap, but the best ones will make your money work for you.

I will never be Bill Gates or Larry Ellison, nor is this my wish. I just want enough to be comfortable.
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