New FINRA site provides information and tools

If you are a longtime reader of this column, you know I’m a strong supporter of financial literacy education for all, and I’m a big believer in identifying solid, unbiased resources for learning how to make good financial decisions. One of those resources is the Financial Industry Regulatory Authority.

Recently, FINRA launched a new website that I’d like you to look at: https://www.finra. org/investors#/. There you will find information that, in FINRA’s words, will help you “feel confident about participating in the financial markets.” I agree.

In addition to robust tools and calculators, the site has information about topics of interest to investors of all ages and backgrounds. If you explore the “Learn to Invest” menu, which I recommend, you’ll see six topics for both sophisticated investors and novices.

Anyone of any age can benefit from the “Young Adults and Investing” tab. The page starts by asking this thought-provoking question: “Where Are You in Your Financial Journey?” From there you can easily find resources that are most suitable to your situation. Choose topics from one of the following headings: “I’m Just Getting Started Saving,” “I’m Saving in a Retirement Account” or “I’ve Got Other Investments, Too.”

If you are just starting out, browse topics such as “#Adulting: Managing Your Finances”; “Savings Calculator”; “Set Your Financial Goals”; “Start an Emergency Fund”; and “Contributing to Your 401(k) Plan.”

If you are currently saving in a retirement account, either through your employer or on your own, you may want to read “Pre-Tax vs. Tax-Advantaged Accounts”; “Traditional and Roth 401(k)s”; “Getting Started with Investing Pros”; and “How Your Credit Score Impacts Your Financial Future.”

If you are interested in other types of investments, check out “Understanding Investment Returns”; “Fund Analyzer”; “Opening a Brokerage Account”; “Managing Your 401(k)”; and “Understanding Brokerage Account Statements and Trade Confirmations.”

Let’s focus on one of the tools, the “Retirement Calculator,” at https://tools.finra.org/retirement_calculator/.

Before inputting your own data, I recommend you check out the prepopulated example of a 30-year-old. Look at the sample inputs, select the account type, then click on the “Calculate” button to see the results.

You’ll find a summary, which includes how much you need to save based on the inputs. You’ll notice different results based on the selected type of account you choose for your primary savings vehicle.

I caution you that any calculator, including this one, has limitations. For example, the rates of return are assumed by you, and they are static, which is not the case in the real world. Rates of return will change, as will tax rates. The calculator warns that FINRA recommends that you “seek advice from an appropriate financial professional when planning for retirement.”

The results also provide tips to help you achieve your retirement savings goal, quoting from the calculator:

“1. Give yourself a ‘savings raise’ by increasing the amount you put away each pay period. Even a little increase helps.

“2. Automate your savings. This is particularly helpful for IRAs and savings outside the workplace, where savings may not be taken out of your

paycheck automatically each pay period, as is generally the case with an employer-sponsored retirement account.

“3. For 401(k)s and other employer-sponsored retirement accounts, ask if your employer can automatically increase your savings by a certain amount each year (for example 2 percent per year). If automatic escalation of savings is not available, set a reminder to yourself to increase your savings each year. And make sure you are saving enough to get a full employer match, if one is available.

“4. For retirement savings accounts, try to save the maximum amount allowed each year by the IRS.

“5. Since your return on investments, inflation rate and tax rate are likely to change over the years, it is a good idea to rerun your retirement savings calculation every few years.”

All good advice indeed.