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[Music] don't be scared hey thanks for tuning in I'm Alan GISI president and founder of North Star Financial Planners your fr-s special risk wealth manager all the time I am talking to people who are just about ready to retire from an FRS employer almost all of them have deferred comp plans but few of them have really taken full advantage of how that plan can help them especially special risk folks because you tend to retire younger ages but the problem is that they're on the brink of retirement and the opportunity to strengthen that 457 plan has mostly passed if somebody had just explained to them even just a few years ago how much that plan is gonna mean to them it would have made all the difference but the window is now closing for them but not for you many years ago one of my closest friends brought to me his entire FRS retirement plan for review including his deferred comp plan now he also shared with me the advice that he was getting from the plan advisors as well as some of the financial product sales people that are out there when I saw how poor that advice was I realized that we could make a real difference for so many FRS special risk families because of my friends experience and my nearly 30 years as a financial planner our passion here at North Star is helping special risk FRS participants make better decisions with their finances and better achieve what is most important to them so in this short video over the next nine minutes or so I'm going to show you the four things that you can do right now to make your 457 plan better and stronger and if you listen and do these things when it's you on the brink of retirement you'll be glad that you did [Music] my first piece of advice is as you might expect choose the right investments but what are the right investments it's going to depend a lot on who you are what you think of how markets work and your thoughts around how much risk you're comfortable with you don't have any thoughts about risk or have any idea how markets work well listen up for starters because I know this is how many of you choose your investments throw away that past returns chart you know that chart that shows what the past performance was for every investment in the plan over the past 1 3 5 years that will in all likelihood lead you down the wrong path throw it out but you need a strategy now some people for example will go on the belief that there are some fund managers that are smart enough or intuitive enough to pick good stocks over bad stocks and they somehow know when they should be invested when they shouldn't then there are others that say well there's no real evidence that stock picking and market timing actually works or adds any value so you're better off using funds that buy and hold whole markets what you believe should be reflected in the fun choices that you make but it's important that you have a strategy if you're going to be picking and choosing different funds if you don't have any thoughts on the subject you might want to take a hard look at those retirement target date funds that your plan offers let them make the choice for you we definitely have some thoughts on the subject and if you want to know more about how we think you should be invested drop me an email and I'll shoot you back our ideas on the subject to get you started [Music] the second thing you can do is actually participate in a meaningful way in other words take a look at what you're contributing and maybe think about increasing your contribution if you can listen this is all you're really doing you're sending money today to your future self you'll be tomorrow and for doing this the IRS is going to give you a nice little tax break on your income tax return this year as well as potentially when you retire which reminds me of an interesting little benefit that a lot of people aren't aware of that is a somewhat unique benefit for deferred comp plans did you know that you can use your deferred comp plan in retirement to pay up to $3,000 per year in insurance premiums on a pre-tax basis think about it that's a pretty decent deal you have there that basically very few people outside of government can get so anyway putting $50 per paycheck and your deferred comp plan is nice but it's really not going to get you anywhere the max that you can put in is nineteen thousand five hundred this year's 2020 that'd be $750 per paycheck and that's without utilizing any of the catch-up provisions if you can do that you'll be happy you did when you get to the end of your career we talk about a lot more benefits that deferred comp plan offers you in our book a public safety officers guide to the Florida Retirement System get one today by just sending an email to us and asking us for it it's yours free will even pay the postage [Music] okay third here's something not a lot of you are aware of and some of you who are aware of it should probably forget about it it's the sto or the self-directed option account this is the deal where your deferred comp provider like ICMA or nationwide has teamed up with another large brokerage house like TD Ameritrade or Charles Schwab and allows you to open up an account over there yet still keep it all inside your deferred comp plan the advantage a lot more investment choices including stocks and mutual funds that your third comp provider just doesn't offer but you know how in life a lot of times an advantage for one person can also be a disadvantage for another like someone who really understands high-performance automobiles versus someone who doesn't but they both get into Lamborghinis and open them up ones have to kill himself well there's a lot of people out there utilizing the sto that would probably be better off if they didn't basically because they don't understand what they're doing go back to reason number one if you really don't have an idea what your investment strategy is then giving yourself more choices isn't going to help you it's just going to make things more of a mess and you're probably not going to have a very good investment experience we here at Northstar feel like we know how to make the best of an sto account and have it actually help you and be worth it but that doesn't mean you should open up an sto in your deferred comp especially if you don't know what you're doing so if you have a good game plan and you know your stuff it can be an awesome advantage if you don't my advice is a stay away from it [Music] stay away if at all possible from taking a loan against your deferred comp plan let's say for a second that you needed to borrow some money and I was gonna loan it to you I'll charge you a nice little rate of interest and even give you that interest back but here's the deal any money you borrow from me you have to pay the IRS twice on it for income taxes the ectopy income tax is two separate times on any money that I'll let you borrow would you think that's a good deal I know I wouldn't yet this is an essence the deal when you take a loan against your 457 plan but you're paying yourself back the interest you say I hear that all the time quite frankly who cares how much interest are we talking about anyway five percent what's your top tax bracket if you're making over $80,000 you're paying at least twenty two percent in taxes that's what you should be worried about see here's the deal take a loan against your deferred comp plan so you can add that spotty or swimming pool or whatever it is that you want to do you'll typically have five years to pay that loan back so where's the money going to come from well comes from your paycheck right they take the money right from your paycheck super easy but the problem is they take it after they take taxes out it's not an above the line deduction so you're paying the loan back with after-tax money and that's a tax tax number one now fast-forward a few years and it's time to retire and actually use that money that's in your deferred comp plan for whatever you want to use it for so you take the same dollars out to put in with your loan payments and when you get taxed again text number two there's no credit for the fact that you put money back into the plan with after-tax dollars the IRS treats it as if it went in pre-tax and has never been taxed even though it has now if you're really needed my advice is to consider this the last place you go to get money the last place after you've exhausted all other possibilities then maybe it makes sense probably means you're in some kind of trouble it might be worth it at that point but not for home improvements or vacation funding or things like that that's just lousy planning and expensive okay the number one question we get from FRS special risk participants thinking about retirement is if we could give them a second opinion on what it is if they're doing just to see if they're on track or could be doing something better and the answer is absolutely and it doesn't cost you anything other than some of your time and one of three things is going to happen if you take us up on our free second opinion offer first possibility is that you're doing everything well and we see no place to add any value and we tell you that basically it's an attaboy you're an at a girl and we tell you to stay the course don't change a thing you're going to feel great because it just got confirmation that you're on track the second possibility is that we're going to see that you could indeed use some help you'll benefit from it and we can help you we'll tell you what we can do how it'll help you and what it'll cost you to work with us keeping in mind of course that the value you receive has to be greater than the benefits you pay that's a good deal and you'll be glad you reached out the third possibility is that we're going to see that you could use some help but we're not the right firm to do it for you and if that's the case we will point you in the right direction to the kind of help that you need again it'll be to your advantage to have gone through the process because you'll be better off for it I have one last thing to share today I got a new truck not too long ago and the reason I'm telling you this is because of the way that I got it you see at least my truck through my business and the lease was come and do on my old truck and now I hate getting new trucks because I don't have time for the hassle and I'm always feeling like I'm getting just slightly taken which of course I probably am but I got a call from a broker that convinced me to just try them and he sounded pretty convincing so I did I actually had him quote me the exact same make and model that I was currently driving and you know what he came in literally hundreds of dollars per month less than I was currently paying for exactly the same truck but three years newer I'm driving that truck today and the deal was exactly as promised no hidden tricks or fees or anything else just a few hundred dollars less per month in payments here's what I know to be true sometimes in life for whatever the reason we're put in front of somebody that actually has a good offer that won't make us better off but like with my truck I had to take a little leap of faith to let them prove themselves to me that they indeed could do what they said they could do and they did so can we and the sooner you reach out the sooner we can start helping you achieve what is most important to you so hey thanks for watching please like us below and I hope we'll be seeing you soon [Music] don't be scared [Music] [Applause]