'The key is participation' when it comes to retirement savings: Advisor

·2 min read

Last year turned out to be a challenging one for retirement savers. Average balances for 401(k) and IRA accounts declined over 20% in 2022, according to a recent Fidelity Investments report.

Tim Speiss, partner in charge at EisnerAmper's Personal Wealth Advisors Group, recently appeared on an episode of Yahoo Finance live to offer his view on the best tax retirement saving strategies. “The key is participation,” Speiss told Yahoo Finance. “Enrolling, understanding your risk tolerance, how you should be investing, taking proper measured risk in the context of maybe some higher yield fixed income.”

Speiss explained that plans can offer Americans reassurance as they face the daunting prospect of saving for retirement.

“They understand that they're investing for 10, 20 longer periods of time. They have families they're concerned about a healthcare issue that might arise,” he said. “This is why retirement planning, the way we see it, is done in the context of a total financial plan.”

U.S. Senate Minority Leader Chuck Schumer holds a news conference on their proposal to expand 401(k) retirement savings in response to Republicans' tax plans, at the U.S. Capitol in Washington, U.S. October 31, 2017.  REUTERS/Jonathan Ernst
"To me, it still comes down to the counseling of the individual:" U.S. Senator Chuck Schumer (D-N.Y.) touting the 401(k) back in the day. REUTERS/Jonathan Ernst

Speiss said savers should begin by consulting an investment advisor or plan administrator, who can help them decide what works best for them in the context of their retirement goals and timetable. While assessing plans, Speiss said savers should consider asset allocation, spending, cash flow needs, and risk tolerance, among other variables.

“We do a lot of that in the context of modeling and helping clients understand,” Speiss said. “Visually, when they see that it's very much more real because it's very difficult to think through these things in your head without any modeling.”

Speiss added that consultants, meanwhile, should communicate their clients’ options to them as clearly as possible.

“You don't want to have your relationships uncomfortable with your advice unless you can help them understand why— and...that they have another choice,” Speiss said.

Different savers, he emphasized, have different needs. For instance: when is a 401(k) plan appropriate? When is a Roth IRA a better choice for savers? A smart advisor can help sort it all out.

“Most plans that we see have a lot of investment options,” Speiss added. “But to me, it still comes down to the counseling of the individual.”

Dylan Croll is a reporter and researcher at Yahoo Finance. Follow him on Twitter at @CrollonPatrol.

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