Unity One informs: Paying off student loans while saving for retirement

shutterstock_524164801.jpgPaying student loans and saving for retirement

How you can tackle both

Student loan debt is the oft-touted enemy of millennials, but it's becoming a problem for a growing number of older Americans, too. According to the Federal Reserve Bank of New York, nearly 17 percent of student loan debt is currently held by borrowers age 50 and older. For many of these borrowers, this student loan debt is money borrowed for their children's or grandchildren's educations.

Whether you've just left school or are getting ready to retire, it can be hard to know which to prioritize — paying off student debt or saving for retirement. Although it's tempting to simply throw all of your money at debt first and worry about saving later, saving for retirement early can help you earn more with years of compound interest — making the need to save now important.

If you need to pay off student loans as well as save for retirement, there are a few ways you can do so:

Rein in spending — Evaluate your current spending and identify areas where you can cut back. This may mean buying less expensive food items, cutting the cable or even turning to public transportation for your work commute. Funnel your monthly savings toward retirement and loans.

Automate it — You can make saving for retirement and paying student loans easier by making use of "auto-pilot." Employer-sponsored retirement plans automatically deduct money for your retirement savings, making it easier for you to save without having to think about it. If your employer provides matching contributions, make sure you're contributing enough through payroll deduction to earn the full match. You can also automate payments for student loan debt with many lenders — many will even offer a lower interest rate when you do so!

Take advantage of tax breaks — Tax advantages are available both for your retirement savings and paying down your student loans. When you make contributions to tax-deferred retirement savings accounts, such as a 401(k) or a traditional IRA, you can lower your taxable income.* With a lower taxable income, you'll have less money going to taxes and more that you can put toward paying off student debt. Plus, your retirement savings can grow faster with tax-deferred compounding. You'll enjoy additional tax benefits when you claim a student loan interest deduction of up to $2,500 on your tax return, if you're eligible.

Allocate extra funds — When you receive extra money such as a tax refund, bonus and other cash windfall, consider putting it directly to paying down student loans and saving for retirement so you can get an extra boost.

If you're looking for a great way to earn a little extra income on your savings, Unity One is currently offering an 18-month Certificate of Deposit special for a limited time only. 

Contact Us

* Taxes will be due at ordinary income tax rates upon withdrawal from a traditional individual retirement account (IRA) or employer-sponsored retirement plan. Premature withdrawals (generally, those made before age 59½) may be subject to a 10 percent tax penalty, too (does not apply to 457 plans).

Credit union informs: Investing for #FirstTimers

You’ve probably been told at least a few times in your life that you should be putting money aside “for a rainy day”, but perhaps it hasn’t yet crossed your mind to begin planning, specifically, for your future retirement. If you think it’s too early, or if you feel you’re not yet ready, financially … think again. Even with a certain amount of debt from car payments, student loans, and living expenses, there are several different ways that a young person can invest their money (and their time) wisely.

While it’s true that some people begin investing later in life and still manage to enjoy comfortable returns on their investments, one only needs to see a few friends have financial troubles to realize that things don’t always work out that way. Investing earlier in life can sometimes make the difference between retiring when you are ready and retiring when you are able; while you may be healthy well into your senior years, that’s not always guaranteed.

401(k)s and Roth IRAs. Many employers offer 401(k) plans, which are retirement savings accounts. You may be fortunate enough to find a job where the employer offers matching contributions to the plan. 401(k) plans are fairly versatile and, since the contributions are generally not taxed until disbursement, your take home pay may not seem quite so diminished.1

Another investment which can go a long way is the Roth Individual Retirement Account (IRA). Since the money is taxed before deposit, the funds can be enjoyed tax-free upon retirement. One other feature is flexibility: you have the option to withdraw the money you have deposited (though not the earnings) without penalties, making the Roth IRA a potential source of emergency funds.2

A powerful force. Perhaps the greatest advantage to investing at an early age is the effect that compound interest can have on your savings. A long disputed quote has Albert Einstein claiming that compound interest “is the most powerful force in the universe.” Regardless of who actually said it, there is some truth to the joke.

What makes compound interest special?  It is interest based not only on the principal, but from previously accrued interest. In the short term, it’s not terribly impressive, but over thirty years or more, it can produce a handsome dividend.

Great minds have been fascinated with compound interest for generations. Founding Father Benjamin Franklin, who liked to posit that a penny saved was a penny earned, decided to put it to the test. At his death in 1790, he bequeathed £1000.00 each to the cities of Boston and Philadelphia, with intent to build trade schools and public works projects in one-hundred years’ time. Compound interest did the trick, netting $572,000 for those cities in 1891.  The fund was closed in 1990, with institutes named for the statesman and scientist earning a $7 million dollar bounty.3

Making it work for you. If you were to place a small sum of money into a bank account that offers compound interest and leave it alone for a long period of time as Franklin did, your money would grow. For example: $100.00 left alone in the bank for thirty years at a 10% annual compounded interest rate would multiply to $1,744.94.4 

However, if you were to add money to the account over time, the compounded interest would only grow and could create a very healthy supplement to whatever other retirement plans you may have in place.  Say that you started with $1000.00 in an account offering 15% interest; an account you added $600.00 to per year ($50.00 a month). In 40 years, if you kept up your deposits, the account would hold $1,495,435.86.4

Things to consider. These are hypothetical situations; you may be able to contribute more or less money as time goes on. You may find an account that earns a different level of interest. Inflation needs to be considered as well; just as a million dollars today doesn’t get you as far as it did forty years ago, it may not seem like a lot of money once you’re ready to retire.

There is no guaranteed path to financial security, but a young person has advantages that shouldn’t be squandered. A combination of investments, with an eye to the long-term, can make all the difference.

Bill Fairley

Sean Weaver

This article was presented by Bill Fairley and Sean P. Weaver of WWK Wealth Advisors. Bill Fairley & Sean P. Weaver, CFP® are Investment Advisors with WWK Wealth Advisors, a Registered Investment Advisor and may be reached at 817-336-6300 or www.wwkllc.com

Register Now!

*The views and opinions expressed at this event are those of WWK Wealth Advisors and not necessarily of Unity One Credit Union. 

Credit union informs: Investing for retirement

F.E. Class - FebHow much money do I need to begin investing? Where should I put my retirement money? Stocks? Bonds? What's the right mix?

If you find yourself asking these questions, Unity One can help! We have partnered with WWK Wealth Advisors to help make sense of investing. We know that success in retirement requires careful planning and investing. Together, we want to help our members reach their retirement goals.

Here are a few important tips, whether you're new to investing or just like a quick refresher, to follow when investing for retirement:

  • Consider the lifestyle you hope to lead. You may need between 60% and 80% of your final working year’s salary each year during retirement to achieve your goals. 
  • Consider the inflation factor. Assume that inflation will average about 4% in the future. Develop and refine your plan through the years, keeping in mind that inflation can potentially spike or dip substantially in the short term. 
  • Develop your retirement plan to include stocks, bonds and money market accounts. Each asset class has different risks and return characteristics, so determine your risk tolerance and plan accordingly. An aggressive mix may include 10% money market instruments, 10% bonds and 80% stocks while a conservative mix may include 20% money market instruments, 50% bonds and 30% stocks. 
For more financial tips, join us at our next FREE financial education class. 
Register Now!

ABOUT UNITY ONE CREDIT UNION

Established in 1927, Unity One Credit Union is the oldest credit union in Texas. A member-driven and not-for-profit cooperative, Unity One CU served the employees and families of the BNSF Railway for 70 years. However, after transferring its corporate headquarters to Fort Worth in 1998, the credit union expanded its field of membership to include other non-railroad companies, organizations and individuals.

Today, anyone who lives, works, worships or attends school in Fort Worth, Blue Mound, Saginaw, Haslet, Keller, Colleyville, Bedford, North Richland Hills, Southlake, St. Paul, MN and Kansas City, KS may apply for membership. Unity One CU has seven branches to serve over 30,000 members nationwide. For more information about Unity One Credit Union, visit www.unityone.org. Think outside the bank.™ www.unityone.org

Credit union informs: FREE Investment Fundamentals class

Financial Ed - Feb 2015Join Unity One Credit Union and WWK Wealth Advisors at an informative workshop on how to pursue your retirement goals. It's never too soon - or too late - to start!

No matter what your age, this workshop will provide you with insights and techniques that can help you manage your retirement investment plan. 

When: Tuesday, February 17, 2015
            6:30 - 8:00 p.m.

Where: Unity One Credit Union
             6701 Burlington Blvd.
            Fort Worth, TX 76131

Register Now!

*The views and opinions expressed at this event are those of WWK Wealth Advisors and not necessarily of Unity One Credit Union. 

ABOUT UNITY ONE CREDIT UNION

Established in 1927, Unity One Credit Union is the oldest credit union in Texas. A member-driven and not-for-profit cooperative, Unity One CU served the employees and families of the BNSF Railway for 70 years. However, after transferring its corporate headquarters to Fort Worth in 1998, the credit union expanded its field of membership to include other non-railroad companies, organizations and individuals.

Today, anyone who lives, works, worships or attends school in Fort Worth, Blue Mound, Saginaw, Haslet, Keller, Colleyville, Bedford, North Richland Hills, Southlake, St. Paul, MN and Kansas City, KS may apply for membership. Unity One CU has seven branches to serve over 30,000 members nationwide. For more information about Unity One Credit Union, visit www.unityone.org. Think outside the bank.™ www.unityone.org

Credit union informs: Retirement survey

If you are close to retiring or retired, please consider taking five minutes to complete this survey: https://www.surveymonkey.com/s/uoretirement

About Unity One Credit Union

Established in 1927, Unity One Credit Union is the oldest credit union in Texas. A member-driven and not-for-profit cooperative, Unity One CU served the employees and families of the BNSF Railway for 70 years. However, after transferring its corporate headquarters to Fort Worth in 1998, the credit union expanded its field of membership to include other non-railroad companies, organizations and individuals.

 

Today, anyone who lives, works, worships or attends school in Fort Worth, Blue Mound, Saginaw, Haslet, Keller, Colleyville, Bedford, North Richland Hills, Southlake, St. Paul, MN and Kansas City, KS may apply for membership. Unity One CU has nine branches to serve over 28,000 members nationwide. For more information about Unity One Credit Union, visit www.unityone.org. Think outside the bank.™

Like, Follow, and engage with us Socially

Stay in-the-know by finding us on one of our many social media platforms. With information about upcoming events, scheduled maintence, and much more, you're sure to see the benefit of engaging and banking with Unity One!