Inga Timmerman brings years of academic expertise to her financial consultation practice. The Certified Financial Planner (CFP) also has a PhD and teaches MBAs about finance and financial planning. It should come as no surprise that she specializes in helping professors and teachers plan their future and save for retirement.
Whether you're a teacher or just someone who's interested in learning about cash flow, debt, or investment, Inga is the person to talk to. Below, we run through many of the common financial mistakes she sees and advice she would give people who are wondering how best to plan for retirement.
What got you interested in doing fee-only advising?
I got into this kind of advising because I don't want to sell products, or be dependent on selling products. I wanted to be as independent as possible to focus on what the client needs. While clients do need products, I wanted the flexibility to find whatever they needed from different sources. That way, I wouldn't be forced to sell them whatever my company wants them to buy.
What are some of the common things you find teachers and professors need as a specific clientele?
Clients always need to understand their retirement options. Those options are really complicated and there are so many of them, which is why focusing on them is a big issue. Selecting the right retirement options improve your life, which is why I focus on both retirement and cash flow.
"I don't care how much money you have, everybody deserves good advice."
What are some of the most common financial mistakes you see people make?
One that I see again and again it is when people want to pay off their debt when it doesn't make sense to pay it off. Often, these clients are better off keeping the money and investing. They just want to pay off their mortgage but it doesn't make any sense.
So for example, let's say you have a mortgage of 3.75 % interest. If you're taking a mortgage deduction the first few years, it doesn't make any sense to pay that off because you can go invest the money and earn up to 5 or 6% in the long-term. Clients often want to get through the debt because it's psychological.
What would you say to a person who is reluctant or skeptical about getting a financial planner?
If you get a good financial planner, they will definitely get you more money than you paid for them. And even if it's organization and showing you exactly where your money is going, it's still worth to pay somebody a few hours for that. Because if I can save you $500 a month, you already paid me back – and now money can go towards something else.
What are some of the biggest misconceptions you see about financial planners?
A lot of people think of the typical kind of salesperson. They think that's a financial planner when there's no planning going on there. People don't really understand how financial planners get paid. They think the financial plans are free, but they're not for free. Somebody's selling you some products. If it's a really good financial plan, you have to pay for it. It's never going to be for free.
What tips would you give someone if they're not sure a financial planner is trustworthy?
"If you get a good financial planner, they will definitely get you more money than you paid for them."
If you go to a place like XYPN, you can find somebody from that list and you know they're fee-only. That's a good starting point. I usually tell people to find somebody who is fee-only who has a CFP [and has] 5 years of work experience. After that...it comes down to match or how you like each other. Unless you have a very specialized problem. In some cases, certain financial planners are good because they've dealt with the same problem many times.
What are some big mistakes you see people make with their retirement planning?
Many people don't put enough money in their retirement savings. They think that putting $300 in a month is going to be enough, but that's not really enough if you want to retire at 60. People have unrealistic expectations of how much they need for when they can retire.
And then the other big [mistake] I see all the time is to figure out which funds to choose. Choosing the right funds is important because you can save so much money. If you choose [the wrong funds and] max out your 401(k) over 30 years, you are going to have like $600,000 less just because of the 1% differential.
What advice would you give to people who are just starting out to build their retirement plan in their 20s and 30s?
I would say find a way in your budget to start saving every month, then increase it month by month just a little bit. For example, start saving $50 this month, then $55 next month, until you get to the point where you think you cannot add any more money. If you do this consistently over 30 years, you're going to have a pretty significant amount of money in your account every month.
Do you have anything else you'd like to add?
I don't care how much money you have, everybody deserves good advice. Even if you don't have any money to invest, we can make your life better by taking you from where you are right now to a little bit better in the future. So if I can incrementally improve your life by 5%, you're going to be so much better off in the long term.
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