Planning for the Future: Goals-based Retirement Planning

It probably doesn’t come as a surprise to hear that planning for retirement is more complicated today than it was a generation ago – especially as companies steer away from traditional pension plans toward 401Ks or other defined contribution plans. You now determine how much you will put aside for retirement, and how it will be invested.

Rather than focus solely on risk tolerance and performance measurement when managing your retirement assets, consider a goals-based wealth management plan approach, that takes into account all of your lifetime objectives. The primary focus may be on what you will need for a comfortable retirement, but the full scope adds in the other stages of life: starting a family, funding a child’s education, the hope of a second home or world travels, as well as being able to cover health issues that may not be apparent today. This type of wealth management plan doesn’t stop at IRAs and investments, but rather starts there and stakes out a pathway that adjusts with the curves, detours, and re-routes of life.

It’s important to remember that financial goals are personal and not “one size fits all.” Setting and realizing a solid plan starts with an individualized, in-depth analysis of each of your long and short-term goals. You then work with your financial advisor to map out how to meet those goals, based on your age, your assets, and market conditions.

Successful planning can be as simple as following a well-thought out investment roadmap during the stages of your life -- when you are building assets, when you are securing them against market fluctuations as your approach retirement and when you are living your retirement.

Jeff Nelligan is a Financial Advisor with the Global Wealth Management Division of Morgan Stanley in Denver.

It’s a Good Time to Review your Retirement Plan

By Anthony Paul

For those who have an employer-sponsored retirement plan, the beginning of the year is always a good time to look at the market and check in on your plan. I hear a lot of people say they do not consider themselves an investor; but if you put your money in a retirement account, then you are indeed an investor.

Here are some basic tips to keep in mind when it comes to your retirement plan:

·       The most important thing is to understand your plan. Figure out the features and benefits. What are your investment options? What are the risks associated with each of those funds and the associated fees? You’ll also want to max out your employer matching contributions. Believe it or not, most people do not take full advantage of this.

·       Be sure to start early and save more. Most people wait until the latter stages of life to plan for retirement. The earlier you start, the better you are going to be in the long run. There is no time like today. Even if you only contribute $50 or $75 a month.

·       Evaluate your current asset allocation. Then review your significant other or spouse’s retirement plan afterward. Do his or her investments complement yours and align with your overall financial plan? A lot can happen in a year, so it’s important to review your assets and make sure they are properly distributed. 

The investments you pick are going to be different depending on your age. If you are in your 30s and you still have three or four decades until retirement, you can be more aggressive. Do not let the short term market volatility scare you because you have a longer time horizon. If you are middle-aged, you’ll want to tone down your risk levels a bit by increasing your fixed income and cash allocation. For those nearing retirement, you’ll really want to reduce risk and look at more capital preservation.

A lot of people ask me how often they should review their retirement plan. I always recommend doing an initial check at the beginning of each year and then several times throughout. If you are nervous about the markets and any potential short term news, wait awhile until the next time you review. You do not want to affect your portfolio with short term news and volatility.

One last piece of advice, keep dollar cost averaging in mind. This means that you are putting money in every month; sometimes at high points, sometimes at average points, sometimes at low points. It does not guarantee you better returns but it will reduce that risk and volatility because you are buying at different prices through the history.

It’s important to look at your financial plan holistically. Considering reaching out to a financial expert who can help you figure out your goals, review your risk tolerance and create a plan right for you.

Anthony Paul is a Financial Advisor with the Global Wealth Management Division of Morgan Stanley in Denver. He can be reached at 303-925-9683 or Anthony.D.Paul@MS.com.

Metro Denver Economic Development Leader Tom Clark Announces Retirement

Tom Clark, Chief Executive Officer of Metro Denver Economic Development Corporation and Executive Vice President of Denver Metro Chamber of Commerce, announced his retirement on January 11, 2017.

The economic development community, statewide and nationally, will greatly miss his leadership and dedication. Clark stands out as one of the Denver area's Magnificent Seven (later Crazy Eights), founding leaders in the regional approach to economic development that shaped growth since the 1980's. As he humbly stated when chosen as the Denver Post Business Person of the Year in 2012, "I haven’t done a single thing by myself. Everything I’ve accomplished has been part of a team effort.”

Best wishes to Tom in his retirement!

Tom Clark is always referred to as "The Economic Development Guru," and here, he takes on the role officially.

Business Roundtable President John Engler Announces Plans for Retirement

WASHINGTON – Business Roundtable President John Engler announced on Thursday, December 15 his plans to retire in mid-2017.

Engler, 68, said he was staying on through July 1, 2017, at the latest to ensure a successful transition to a new president and to lead Roundtable policy efforts in support of strengthening the economy and creating more good-paying jobs.

“The outlook in early 2017 to achieve passage of major components of the Business Roundtable economic growth agenda is very bright,” he said. “Tax reform, regulatory relief and immigration reform are all possible with the new Administration and Congress. I expect the pace to be brisk as everyone gets to work next year.”

A former three-term governor of Michigan, Engler assumed leadership of Business Roundtable in January 2011 after serving six years as President and CEO of the National Association of Manufacturers.

He informed Roundtable Chairman Doug Oberhelman, Chairman & CEO of Caterpillar, and incoming Chairman Jamie Dimon, Chairman and Chief Executive Officer of JPMorgan Chase & Co., of his plans earlier this week.

“Under John’s stellar leadership, Business Roundtable has enhanced its reputation as a credible voice for an economy that serves all Americans,” Oberhelman said. “He has focused on giving policymakers solid research and arguments, reaching across party lines and always keeping a deep belief that the United States is the world’s greatest land of opportunity.”

On January 1, 2017, Dimon will succeed Oberhelman – who is retiring from Caterpillar – as Chairman of the Roundtable, which represents 196 CEOs of America’s leading companies, crossing all sectors of the economy.

“John has earned an enormous amount of respect with the CEO members of Business Roundtable, within the D.C. political community and in the broader business arena for his sound judgment and depth of experience,” Dimon said. “He has also shown deep integrity and a fierce commitment to serving our country. I think of John Engler as a true patriot.”

Engler said the chairmanship transition provided an opportunity to solidify his existing plans for retirement. In addition, he said, family considerations were a factor. He and his wife, Michelle Engler, have triplet daughters who will graduate college this spring.

Engler said he was confident the Roundtable would continue to be a leading voice in Washington with Dimon as Chairman and his successor as President.

“I am proud to leave Business Roundtable financially strong, with a sterling reputation and focused on the priorities that our CEOs have established,” Engler said. “My successor will inherit an organization of talented and dedicated staff prepared to deliver on those priorities.”

Engler’s Business Roundtable biography is available online here.

Roundtable Discussion Invites Groundwork for Public Pension Reform

Health and Retirement is one of Colorado Business Roundtable’s nine Key Issues, and we recently hosted a Secure Futures Colorado discussion about the Public Employees’ Retirement Association (PERA). This event was held on October 25, 2016 at the training facility of our major sponsor CAP Logistics.

Chuck Reed, the former mayor of San Jose, California and a leading national expert on pension reform, was one of the speakers. He was joined by Ben Valore-Caplan, CEO of Syntrinsic Investment Counsel and former PERA Board member. Political analyst Eric Sondermann moderated the discussion and talked about Secure Futures Colorado.  

Attendees represented an array of public and private interests, from PERA and AARP to small business as well as former, current and prospective legislators and other political leaders. Sondermann opened the discussion by relating the significance of his mentor Governor Lamm’s concerns over Colorado’s current employee pension system. 

Valore-Caplan, a fifth-generation Coloradan, discussed how PERA impacts all corners of the state but will require a different kind of statewide response than we ever needed previously. He noted that the financial challenges faced by PERA are not because of its participants nor its Board but a fundamentally-flawed financial model. Those financial challenges are complex, but basically PERA’s 2015 financial report shows approximately $70 billion total liability with $27.9 unfunded for a total funding level only around 60%. 

Although a financial expert by profession, Valore-Caplan spoke deeply about the social implications of PERA reform, particularly in the way that one generation may seem pitted against another. Retirement reform on a policy level can quickly be felt on the personal level. While he said, “It would be inaccurate to say that PERA can fix” everything, open discussions like this one lay the groundwork for improvement in Colorado. 

Looking to other public entities who have succeeded in retirement reform, we were pleased to welcome Chuck Reed as a guest to Colorado. Reed serves on the Board of Directors of Retirement Security Initiative and provides special counsel at Hopkins & Carley law firm in California’s Silicon Valley. As the mayor of San Jose (the tenth-largest city in the country and third largest in California), Reed was a key figure in its 2012 pension reform which saves the city more than $40 million each year.

In this discussion, Reed related the background of San Jose’s predicament -- going from $73 million annual pension payments to $273 million in just one decade – and noted that while Colorado’s situation is not nearly as dire, its currently unfunded 40% begs the question, “How much pain will Coloradans endure?” before our plan is stabilized and reformed.

Reed admitted that there is a lot to be said for proper plan design, but that there are political issues. “The fundamental problem with a defined benefit plan,” said Reed, “is the incentive to over-promise and under-fund. But those issues can be fixed.”

Overheard during the discussion was this strong statement, “Holy cow, we’ve made incredible promises to these people.” For those unfamiliar with the system, PERA-eligible employees do not receive Social Security benefits, and they must be covered by PERA. There is no choice nor dual enrollment. The obligation has been made to 547,500 employees who work for 402 government agencies and public entities around the state.

Doug Krug, leadership expert at the Institute for Unlearning, asked the panel what they hoped the outcome of the day’s discussion might be. Indeed, many of the people “in the room” for PERA reform, literally and metaphorically, might not even be a direct recipient of its benefits. However, it is important to consider the investments our businesses have made in this state and the investments its employees have made by working for it. This conversation brought people together, and that was the desired outcome for the day.

Down the road, Reed advises, “You can’t let the fight put off the decision-making.” 

Colorado Business Roundtable President Jeff Wasden was glad to have PERA in the room for this roundtable discussion. He said, “We need to talk with – not at or about but with – PERA in order to work with it.” Wasden concluded that we can be pragmatic and leverage these lessons learned by other leaders in reform.

We would like to hear how this issue of Colorado public pension reform impacts your day-to-day or your bottom line, so leave us a comment below. And check out all the great photos, courtesy of ICOSA Media.

Secure Futures Colorado is a non-profit advocacy initiative to advance substantive reforms of Colorado’s public employee retirement system. The initiative is built around four principles -- ensure retirement security for public employees; add fiscal responsibility and solvency to the system; expand transparency; and support a system that fits the employment patterns for younger, future generations. Check out this Connect and Collaborate podcast with Secure Futures Colorado.