05-16-2019 Columns

Why should recent graduates care about retirement planning? If you’ve graduated from college in the past year or so and started your first job, you’re no doubt learning a lot about establishing yourself as an adult and being responsible for your own finances. So thoughts of your retirement are probably far away. And yet you have several good reasons to invest in your 401(k) or similar employer-sponsored retirement plan. First of all, by contributing to your 401(k), you can get into the habit of regular investing. And since you invest in your 401(k) through regular payroll deductions, it’s an easy way to invest. Furthermore, your 401(k) or similar plan is an excellent retirement-savings vehicle. You generally contribute pre-tax dollars to your 401(k), so the more you put in, the lower your taxable income. Plus, your earnings can grow on a tax-deferred basis. Your employer might also offer a Roth 401(k), which is funded with after-tax dollars; although you can’t deduct your contributions, your earnings can grow tax-free, provided you meet certain conditions. And with either a traditional or Roth 401(k), you generally have a wide array of investment options. But perhaps the main reason to start investing right away in your 401(k) is that, at this point of your life, you have access to the greatest and most irreplaceable asset of all – time. The more time you have on your side, the greater the growth potential for your investments. And by starting to invest early in your plan, you can put in smaller amounts without having to play catch-up later. Suppose, for example, you begin investing in your 401(k) or similar plan when you’re 25. For the sake of simplicity, let’s say you put in $100 a month, and you keep investing that same amount for 40 years, earning a hypothetical seven percent rate of return. When you reach 65, you will have accumulated about $256,000. (Your withdrawals will then be taxable, unless you chose the Roth 401(k) option.) But if you waited until you were 45 before you started investing in your 401(k), again earning that hypothetical seven percent, you’d have to put in almost $500 per month – about five times the monthly amount you could have invested when you were 25 – to arrive at the same $256,000 when you turn 65. Clearly, the expression “time is money” applies when it comes to funding your 401(k) – there’s just no benefit in waiting to contribute to your retirement plan. This isn’t to say that you have a lot of disposable income, especially as you may be paying off thousands of dollars in student loans. But, as mentioned above, the money for your 401(k) is taken before you even see it, so, in a sense, you won’t miss it. And you can certainly start out with small amounts, though you’ll at least want to put in enough to earn your employer’s matching contribution, if one is offered. As your career progresses and your salary goes up, you can steadily increase the amount you put into your 401(k) or other retirement plan. When retirement is decades away, it can seem like more of an abstract concept than something that will one day define your reality. But, as we’ve seen, you have plenty of incentives to contribute to your 401(k) or similar plan – so, if you haven’t already done so, get started soon. This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.

Reforming car insurance As we all know, Michigan has the highest car insurance cost in the nation. I’ve heard from many of you about the burden this poses on you and your families, which is why I recently voted to support real reforms to our broken no-fault system. Last week, the Michigan House passed historic reform to give families, seniors, and drivers much needed financial relief. After over 14 weeks of public hearings and meetings this year alone, we were able to put together a comprehensive plan that addressed every issue that was brought to our attention. We’ve found that Michigan’s high costs are largely due to a number of primary factors, such as mandated unlimited personal injury protection (PIP) coverage, price gouging, fraud, and lawsuit abuse. While unlimited lifetime benefits would still be an option for those who wish to purchase them, this plan includes a number of other PIP options from which to choose. This allows drivers the choice to purchase a plan that best fits their needs and their budgets, or allow them to entirely opt out and use a qualifying form of health care coverage instead. The plan also includes a mandated rate rollback on all rates. This legislation also puts an end to the practice of overcharging car accident victims for the same medical services provided to people who were not in an accident, and includes specific changes to combat fraud, better protect customers and accident victims, improve transparency, and stop abuse of the legal system. The legislation (House Bill 4397) is now in the Michigan Senate and awaits their consideration before moving to the governor’s desk. I hope that these reforms become law and bring much-needed relief to all Southwest Michigan families. If you have any questions or would like to learn more, please don’t hesitate to contact my office at 1-800-577-6212 or via email at BethGriffin@house.mi.gov.

Boating safety an important part of summer fun From our beloved Lake Michigan to the thousands of inland lakes and streams that dot the landscape throughout Southwest Michigan and the rest of the state, there are nearly endless opportunities for boating fun. When boating, kayaking and canoeing, safety should always be your top priority — for you, your loved ones and for our natural resources. To help keep safety at the forefront, the U.S. Coast Guard offers a free boating safety mobile app for Apple and Android devices. It features navigation rules, float plans, a safety equipment checklist, weather reports and more. An emergency assistance button will call the closest Coast Guard command center for help, so long as you enable the app’s locations services. Newer state laws have also been enacted to help boaters, including one that allows electronic verification for a boater’s safety certificate, which is more convenient and lessens the chance of lost paper certificates. It is also important to ensure watercraft are properly registered. Nonexempt vessels are registered through the Secretary of State and must display a registration decal. There are exemptions, including watercraft 16 feet or less that are propelled by oars or paddles and not used for rental or commercial purpose; nonmotorized canoes and kayaks not used for rental or commercial purpose; and watercraft registered in another state and used temporarily in Michigan. Registrations are renewed every three years and expire on March 31 of the third year. Find more information at