Individual Investors Frequently Asked Questions

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What should I do with my 401k account balance when I leave/retire from my employer?

You have several options when deciding what to do with your 401k account balance:

  1. Rollover to a self-directed IRA. This option also avoids the taxes and penalties on your money. It allows you to choose your investments and be properly diversified for your risk tolerances.
  2. Take a lump sum distribution. You are liable for income taxes on the entire amount and possible early withdraw penalties. (Don’t spend it- save it!)
  3. Rollover to your new employers’ plan. This will allow you to transfer the money with no taxes or penalties.
  4. Leave it where it is. Some plans permit this. This give you the ability to keep your money invested and watch it grow, however, you are no longer able to contribute to this plan. Also, there is no matching company contribution.

How much risk is right for me?

There are several factors that go into determining what type of investor you are. Most investors fit into one of four categories:

  1. Conservative: Individuals with less than 10 years until retirement. This investor needs to preserve capital at the risk of not participating in long term wealth creation.
  2. Balanced: This investor is in mid-career and has amassed some retirement assets through years of aggressive investing and now wants to take a “middle of the road” approach yet, still be well diversified.
  3. Growth: This investor is primarily interested in capital appreciation and is willing to take some risk. They realize these investments will have risk on a short term basis, but should provide superior performance over a long period of time.
  4. Maximum Growth: This investor wants to build significant wealth over time. They understand that significant losses can occur in the wrong environment, but the potential for significant gains over a long period of time are justifiable.

Why should I buy long-term care insurance?

The cost of health care is on the rise.  Long-term care insurance can aid you in preserving assets in the event that you require care for a period of time. Typically, you want to purchase this as soon as possible in order to lock in a low premium.

When must I begin taking Required Minimum Distributions from my retirement account?

When you turn 70 ½.  You must take the distribution before December 31st of that year or you may elect to delay the first payment until the following year. If you delay for one year, you must take that years distribution in the same year. One exception to this rule is if you are still working, you do not have to take the minimum distribution from your company retirement plan. However, if you have an IRA, you must begin required minimum distributions as stated above.

What college savings options are available to me?

529 College savings plans, Roth IRA’s, Education IRA’s- Contact our office and we can explain the differences and which is best for you.

How do I figure how much to save to meet my needs in retirement?

Most people need around 70% of their current income in retirement.  Social Security will cover approximately 40% of your current income.  To receive a Social Security income statement call 1-800-772-1213. PRC can assist you in planning for retirement.

How do I know how much I need for my child's education?

The average cost of a 4 year college degree is $50,000 for a public university and $100,000 for a private university today.  If your child is one year old now, the estimation is that the cost will double by the time your child graduates high school. So the sooner you start saving the more you will have to offset the rising costs of education. A college saving 529 plan makes it easy to save for these future expenses.

Let’s work together towards your financial independence.