When Your 401(k) Isn't Enough - Black Enterprise

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Black Enterprise Magazine September/October 2018 Issue

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When it comes to saving for a financially secure future, Adrienne Livingston knows that making a plan is half the battle. The 27-year-old was forced to look elsewhere for investment options because her 403(b) (the equivalent of a 401(k) for employees of nonprofit organizations) offers just one fund option. And her company, Portland-based Black United Fund of Oregon, a philanthropic organization that aids low-income communities, matches just 2% of employee contributions.

“Part of my position [as director of major and planned gifts] includes educating the African American community about creating wealth for self as well as community,” says Livingston. “So last year I organized a financial planning seminar.” What she learned from it prompted Livingston to get her own retirement planning into gear.

Anyone hoping to truly enjoy their golden years should follow Livingston’s example. In 1999, fewer than one in 10 people were doing an adequate job of planning for retirement, according to Washington, D.C.-based Employee Benefits Research Institute. This is a big mistake, because when it comes to retirement, a little planning goes a long way. According to EBRI, folks who take the time to figure out how much money they want to save for their golden years go on to save five times more than those who save haphazardly.

While employer 401(k) plans have spearheaded many Americans’ retirement saving, relying on them as your sole investment vehicle can get you into financial hot water-particularly if your plan is limited to company stock or a handful of mutual funds with similar objectives. Retirement planning is a much more comprehensive puzzle, with pieces that include an emergency fund, IRAs and a diverse investment portfolio. Yes, putting together your own plan requires more time and elbow grease, but meeting your financial goals and securing your retirement are certainly worth it.

Before you crunch even one number, though, decide exactly what you’re saving for. “When Adrienne initially set up her investments, she didn’t have a clear idea of her goals,” says Patricia Stallworth, a financial educator whom Livingston met at the financial seminar. Stallworth, founder of her own Portland-based company, MoneyStrategies, and author of Minding Your Money (Book Partners Inc., $14.95), says, “The first thing I tell my clients to look at is what they’re shooting for-what goal they want and when they want to get there. Then we match their goals with their risk tolerance, and let the investment choices come from that.” In Livingston’s case, those goals include buying a home and one day opening a consulting firm for organizations and nonprofit agencies-and ultimately a secure retirement.

It’s important to establish for yourself the age at which you’d like to retire, so you can calculate how many years you have to save. You should also estimate how much post-retirement annual income you’ll need. According to the 1999 Retirement Confidence Survey of Minorities, 51% of African American households have not calculated how much money they must save for retirement. Andrew Burleigh, a Gardena, California-based financial advisor who has spent decades helping

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