Question from Ingrid: Do you have information about how somebody starts an individual retirement plan?
CSP: Great question, Ingrid. Congratulations on taking action on your financial future.
There are two different IRAs to consider: The Roth IRA is available depending on your income. It does not allow you to deduct your $5,000 contribution, it does grow tax free and withdrawals are tax free when you turn 59 and a half. Two: The traditional IRA, depending on your income level, typically let's you deduct your $5,000 contribution from your income and grows tax-deferred. However, when you start to take withdrawals, it is taxed at your ordinary tax rate.
I would check with your tax adviser on which of these IRAs is best for your tax situation.
JBQ: Great tips, Carrie. There are two places to call for an individual retirement account: your bank and mutual fund groups.
Question from KJ: What is the best way to find a financial adviser? Is there a good way to check their background?
JBQ: Excellent question, KJ. Many call themselves "financial advisers" or they may call themselves senior advisers or financial consultants, they are sales people who sell products. Their advice will be influenced by that fact. It might be good advice for you or might not. My favorite financial advisers are called "fee-only." They charge for advice [and] they do not sell any products. They may charge a flat fee for a tune-up or a plan.
If they manage your money, they will charge typically 1 percent or less of the money they manage. Try a search engine and search "fee-only financial planners." One warning: Some planners call themselves "fee-based" and they usually sell products as well as advice.
CSP: All great points, Jane. Another resource is to tap your friends for their advice. When you do meet with an adviser, ask for their ADV form — which explains their investment philosophy.