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When it comes to planning for retirement, many people are making it up as they go along. But winging it can lead to negative consequences such as not saving enough or being hit with a significant, and likely unnecessary, tax bill later on. Mark Condon of Commonwealth Financial Group shares with his insights and advice on smart retirement planning to avoid being caught short-handed and get the most out of your retirement savings now and in the future.
SBT: What’s the biggest mistakes you see people make when it comes to funding their 401k or other retirement plans?
MARK: We tell people they want to save anywhere from 15 to 20 percent for retirement, and while that may sound like a lot, many people are saving anywhere from five to 10 percent through their 401k. The big mistake I see people making is that they are contributing above and beyond their company match.
SBT: What is the typical company match?
MARK: I’ve seen as high as eight percent, but usually it’s between the three and six percent.
SBT: What are the disadvantages of contributing more than your company match?
MARK: When we’re talking about over funding the 401k over the match, you’re filling up a bucket of money that is 100 percent taxable at a later date. Every dollar inside your 401k hasn’t been taxed yet. What will your tax rate be? We don’t know. In the early ‘80s, tax rates were 50 percent. In the ‘40s, tax rates were 91 percent. I’m assuming we’re not going to hit that number, but why leave everything up to the economy, the President and any changes that can take place over the course of 30 years, for example? Put the money in something that will work more efficiently for you so that you’re not paying taxes 10, 20, 30, 40 years from now.
SBT: What would be a more efficient option?
MARK: I was recently working with a client who was contributing 10 percent to his 401k. Saving 10 percent is a good amount but he had no company match. In his case and income bracket he could contribute to a Roth IRA. He is able to contribute the maximum amount of $5,500 annually and now he pays no taxes on the dividends and gains in the Roth IRA. We moved the same amount of money from a 100 percent taxable bucket to something that’s 100 percent tax free.
SBT: If you’re in a situation where you have a substantial company match, what would you recommend?
MARK: Another client of mine was getting an eight percent match from her company. In that case, the money she is getting from the company is going to grow more than the taxes she will have to pay. Each situation is different. I can work with two people making the same income at the same age and have completely different situations and goals.
SBT: How do you help your clients make sense of these retirement options?
MARK: My entire job is educational and informational. You can Google “retirement income planning,” and get 20 million hits when you do that. Half of them will tell you one thing and the other half will tell you something different. So the biggest part of my job is educating people on all the options they have and how they work for their specific situation. At the end of the day, it’s your money. You’re going to do whatever it is you want to do with it. I’m here to show you how things would play out if you did option A, B or C. It all starts with a simple conversation and any amount of money, even if it’s just $50 a month.
SBT: What inspired you to become a financial services professional?
MARK: Before I got into this business, I owned a snack franchise for Cape Cod and Wise potato chips. I owned a territory and would deliver the chips to the supermarkets and convenience stores. It was a great gig but I was waking up at 3 a.m. Monday through Saturday and 5 a.m. on Sundays for about 11 years. I ended up selling half of the business. During that time, I reached out to a friend for investment and insurance advice and he put me in contact with someone who could help. I met with him, not knowing that he is also a recruiter for the business. I was expecting a financial plan, and after a couple of meetings he said he thought I would excel in this industry because of my analytical and relationship building strengths. So I went for it and my entire life has changed. It’s very rewarding and I wish I got into finance 10 years ago.
SBT: What are the common myths or misconceptions around financial planning in general?
MARK: People are afraid to sit down and talk to somebody because ultimately, they think we’re going to sell them something they don’t need – it isn’t like Wolf of Wallstreet. They don’t know what to believe. A lot of people don’t really know how everything works and they’re afraid that I’m going to tell them they need to do usually one of four things. They need to save more or they need to delay their goal. They need to take more risk or spend less money. Why would you want to talk to me if I’m going to tell you one of those four things? It’s not a fun conversation to have.
The other thing is some people, quite frankly, are embarrassed about their situation, so I use a different analogy. If your car is in terrible shape then you take it to your mechanic immediately. Start to plan and take the appropriate steps every six or 12 months from there. It’s an ongoing relationship. Work on building a relationship with your advisor because creating a strong financial foundation is a lifetime commitment.
SBT: How are you different from other financial planners?
MARK: Trust. It comes down to trust. Anybody can put somebody in an aggressive or moderate or conservative investment portfolio. That’s not hard to do from a personal standpoint. The difference between myself and somebody else is the relationship and trust factor. Within my company structure at Commonwealth Financial Group, we have an infrastructure in place so you don’t get just me, you get everybody and anybody in the company. If there’s something I don’t know, somebody else does. We have a whole team of people that work on just investments, just insurances, just estate planning. So with me, you get all of the ideas, the personal relationship and then behind me you get the structure of an incredible company. We have a whole team whose job is to go over every single case with every single advisor to make sure we don’t miss anything. I’ll put an initial plan together and they make sure I didn’t miss anything.
SBT: What specific outcomes have your clients achieved by working with you and your network?
MARK: In addition to the infrastructure within Commonwealth Financial Group, I’m a member of Business Networking International (BNI). Our group’s sole purpose is to find ways to help each other’s clients. I have somebody who does auto and home insurance in my group, so one of the first things my clients get is a free review of their auto and home insurance. Let’s be honest, nobody cares who handles their auto and home insurance. It’s transactional. I have a real estate agent and a loan officer within my BNI group. A good financial advisor has a network outside their company and industry. My clients get the quarterback in me and I can put them in any direction that they need. They outcome is a personal relationship with someone who has access to more people than just myself. That is a benefit to anybody I work with.
SBT: How can people learn more about you, Mark?
MARK: Email me at MarkCondon@FinancialGuide.com or call 781-603-3202. You can also schedule a meeting by connecting with my calendar through https://calendly.com/markcondon/15min. We’ll have a 15-minute conversation and I promise you’ll learn something valuable during that time.
Mark Condon is a financial services professional with Commonwealth Financial Group specializing in helping clients meet and exceed their essential financial needs and goals by uncovering money-making and money-saving opportunities.
Gayle Nowak is a contributor to Small Business Trendsetters and Business Innovators Magazine covering influencers, innovators and trendsetters in business, health, finance and personal development. She also has contributed to Founderswire.com, an American digital news magazine and video channel that provides in-depth analysis and reporting on modern entrepreneurship and technology that solves global problems. She was previously a staff writer and contributor for several local newspapers in the Boston media market including the Ludlow Register, Ashland and Holliston TABs, MetroWest News and Taunton Daily Gazette.