Wealth Management


Could Atomic Habits Help You Reach Your Goals in 2020?

Posted by The Axial Company

Posted by Chris Stuart, CFA, Jan 17, 2020

Brad here. There is a lot that goes in to investing. One of the underappreciated problems, though, is simply how to be most effective with the limited time and energy we have. Today’s post from Chris Stuart, a senior analyst in Commonwealth’s Investment Management and Research group, looks at how we can do better at everything over time, which certainly applies to investing. I found his thoughts to be both interesting and helpful. I think you will, too.

I consider myself a nonfiction reader—my bookshelf is filled with finance, investing, and self-help books. Yep, I’m a self-help fan. My mind-set has always been that I can be a little bit better or smarter today than I was yesterday. Occasionally, I’ll come across a self-help book that truly captures my attention and offers some life-altering revelations. One such book is Atomic Habits, by James Clear. Of course, there have been many books written about habits. But for me, Clear’s book provides a fantastic outline of how to build and to break habits.


Making 1 percent improvements

You might be thinking, why should I care about habits? After all, many of us engage in daily habits without even realizing it. But once you start to reflect on these daily activities, there’s a lot you may realize about yourself. Further, by building good habits (which become automatic over time), you will likely see a compounding effect.

Clear notes that if we can get 1 percent better at something for each day of the year, we’ll end up 37 times better by year-end. In fact, Clear used this very principle in his own life. He committed to writing a blog post every Monday and Thursday, which helped him build his subscriber list from 1,000 to more than 100,000 in less than two years.

It’s common to believe that grand steps are necessary to reach goals. Indeed, this approach does work for some. But you might find that making small, incremental improvements over time is a more effective method. Clear says, “Just as money multiplies through compound interest, the effects of your habits multiply as you repeat them.”


Moving beyond the plateau of latent potential

To be sure, this approach has its challenges. For one, it goes against the human desire for instant gratification. Think of clients who might be inclined to trade in and out of their portfolios instead of watching their investments compound over time. For myself, I think back to when I struggled to learn Vietnamese. The varying dialects and my lack of consistent practice made it hard to stay motivated when my incremental knowledge just didn’t seem to be improving.

This challenge is quite normal, according to Clear. It results when we reach the “plateau of latent potential,” where we expect to make linear progress in our goals but feel frustrated when we don’t see any changes in the first few weeks or months. But the work you put in before reaching that plateau hasn’t been wasted. Instead, it should be considered stored energy—and once you get past that plateau, you’ll start to see success.

To move beyond this plateau, Clear suggests that we focus less on goals and more on systems. Goals can help us set some direction, but the systems we create dictate our progress. Sometimes, for example, two competing teams have the same goal, yet the winner is the one with the better systems in place. Here, let’s use the New England Patriots as an illustration.

The Pats are considered by some to be the epitome of success in professional sports. Coach Bill Belichick doesn’t have to tell his players that the year-end goal is to win the Super Bowl. Why? The team has systems in place, and Belichick has instilled repeatable habits in his coaches and players. You’ll often hear about ‘the Patriot way,” and it is a perfect example of how effective systems can help you reach your ultimate goals.


Breaking the pattern

From a behavioral and psychological perspective, there are definitive patterns that each habit (good or bad) follows. As Clear notes, the pattern includes the cue, a craving, a response, and a reward. To help illustrate this pattern, let’s use one of my bad habits: social media use.

In this example, the cue is the notification in the app (e.g., the glowing red notification in Facebook) that triggers your brain to initiate a behavior. The craving is that feeling you get knowing that there is a reward at the end of the habit. The response is actually picking up your phone (the habit). Finally, the reward is that feeling you get knowing that someone responded to your message, liked your post, and so on.

For a lot of us, checking Facebook, Instagram, or Snapchat has become so automatic that we don’t even think about it. How many times have you pulled out your phone when you’re at the water cooler, in line at the coffee shop, or even in the bathroom?

Clear writes that if we want to destroy a bad habit (e.g., checking Instagram nonstop), we need to make the habit (1) invisible, (2) unattractive, (3) difficult, and (4) unsatisfying. After tracking my screen time on the iPhone for a few months, I realized that I was wasting an inordinate amount of time on social media. My simple solution was to delete the app, which made my habit invisible (i.e., the app was gone) and difficult (i.e., I’d have to visit the websites instead of simply clicking on the app).


Creating good habits

Clear suggests that we need to make new habits (1) obvious, (2) attractive, (3) easy, and (4) satisfying. The less friction there is between us and our intended habits, the more likely it will be that we will stick with them over time.

He also provides some good tips on creating new habits. First, he says to set an “implementation intention”: plan out ahead of time where and how you will act in relation to each habit. This doesn’t mean declaring, “In 2020, I will eat healthier.” That statement tells you nothing about how you plan to reach your intended objectives. Instead, think along the lines of, “I will cook meals for the week every Sunday at 1:00 P.M. and store them in containers so that we have food for the week.” Clear notes that an implementation intention will “sweep away foggy notions and transform them into a concrete plan of action.”

Another suggestion Clear makes is getting an accountability partner to ensure that you stick to your intended habits. Personally, this method has worked for me when it comes to sticking to a healthy eating plan. Over the past six months, I have lost about 10 percent of my body weight after following a system of religious daily food tracking and monthly weigh-ins supported by a program called DietBet. The gist of the program is that you commit to paying into a pool each month and win money if you hit the monthly targets. I also tracked every single piece of food that went into my body (via MyFitnessPal). My weight has always been a little all over the place, but these systems that held me accountable to hitting my goals worked wonders for me. For budgeting, I do something similar, tracking all expenses by hand in an app called You Need a Budget.


Are you ready to get atomic?

Personally, I love the end of the year. It’s a time to assess how the previous year went and what I can do to make incremental improvements in the year ahead. In 2020, I intend to watch less TV, read more, continue eating healthy, and spend less money on dining out. But I know I won’t be able to keep these resolutions without a system in place.

Maybe you have personal or family goals you want to achieve in 2020. Maybe you aspire to build your practice even bigger than it is today. Whatever your goal, a good place to start is by assessing your current habits. To help you do so, Clear provides resources on his website. From there, figure out the things you want to change and those you want to improve upon.
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Weekly Market Update, January 21, 2020

Presented by The Axial Company                                                                     

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Weekly Market Update, January 13, 2020

Presented by The Axial Company                                  

General Market News              

  • The bond markets experienced more volatility last week. The 10-year Treasury yield was as low as 1.70 percent and as high as 1.90 percent as a result of news from Iran. It opened at 1.83 percent on Monday. The 30-year bounced between 2.19 percent and 2.38 percent before opening at 2.29 percent. The 2-year, which is usually more stable given its shorter duration, swung between 1.44 percent and 1.61 percent.
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Market Thoughts for January 2020

Posted by The Axial Company

By Brad McMillan, CFA, CAIA, MAI, January 2, 2020

We closed out the year and the decade on a burst of strength. December was a great month, and it capped a great 2019.

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The SECURE Act 2020 Explained

Posted by The Axial Company

The Setting Every Community Up for Retirement Enhancement (SECURE) Act

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Weekly Market Update, December 31, 2019

Weekly Market Update, December 30, 2019

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Weekly Market Update, December 23, 2019

 General Market News

  • Last week, long-term Treasury yields spiked to their highest levels in more than a month. On Thursday, the 10-year Treasury yield hit a high of 1.95 percent before ending the week at 1.92 percent. The 30-year hit a high of 2.37 percent before retreating to 2.34 percent at week’s end.
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Year-End Financial Planning 2019

Posted by The Axial Company

Year-End Financial Checklist to Prevent

Tax Penalties and Missed Planning Opportunities


By CASEY ROBINSON, November 14, 2019

Several significant tax and savings deadlines are fast approaching. Before you flip your calendar to December, consider making some of these smart money moves.

As you approach the end of the calendar year, there are many financial deadlines and cutoffs that you may not be aware of. From minimum distributions to annual gifting exemptions to tax-loss harvesting, there are more annual rules and limitations than any one human could reasonably be expected to know.

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Weekly Market Update, December 17, 2019

 General Market News

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Thank You for Attending Axial's Holiday Open House!

Posted by The Axial Company

Thank you for joining us at our annual Holiday Open House! We had a wonderful time  celebrating the season with all of our clients and friends. The photo booth was a big hit and we collected an overwhelming amount of necessities for the Burlington Food Pantry once again!

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Year-End Charitable Giving 2019

Posted by The Axial Company

With the holiday season upon us and the end of the year approaching, we pause to give thanks for our blessings and the people in our lives. It is also a time when charitable giving often comes to mind. The tax benefits associated with charitable giving could potentially enhance your ability to give and should be considered as part of your year-end tax planning.


Tax deduction for charitable gifts

If you itemize deductions on your federal income tax return, you can generally deduct your gifts to qualified charities. This may also help you potentially increase your gift.

Assume you are considering making a charitable gift of $1,000. One way to potentially enhance the gift might be if you increase it by the amount of any income taxes you save with the charitable deduction for the gift. With a 24% tax rate, you might be able to give $1,316 to charity [$1,000 ÷ (1 - 24%) = $1,316; $1,316 x 24% = $316 taxes saved]. On the other hand, with a 32% tax rate, you might be able to give $1,471 to charity [$1,000 ÷ (1 - 32%) = $1,471; $1,471 x 32% = $471 taxes saved].

However, keep in mind that the amount of your deduction may be limited to certain percentages of your adjusted gross income (AGI). For example, your deduction for gifts of cash to public charities is generally limited to 60% of your AGI for the year, and other gifts to charity are typically limited to 30% or 20% of your AGI. Charitable deductions that exceed the AGI limits may generally be carried over and deducted over the next five years, subject to the income percentage limits in those years.

Make sure you retain proper substantiation of your charitable contribution. In order to claim a charitable deduction for any contribution of cash, a check, or other monetary gift, you must maintain a record of such contributions through a bank record (such as a cancelled check, a bank or credit union statement, or a credit card statement) or a written communication (such as a receipt or letter) from the charity showing the name of the charity, the date of the contribution, and the amount of the contribution. If you claim a charitable deduction for any contribution of $250 or more, you must substantiate the contribution with a contemporaneous written acknowledgment of the contribution from the charity. If you make any noncash contributions, there are additional requirements.


Year-end tax planning

When making charitable gifts at the end of a year, you should consider them as part of your year-end tax planning. Typically, you have a certain amount of control over the timing of income and expenses. You generally want to time your recognition of income so that it will be taxed at the lowest rate possible, and time your deductible expenses so they can be claimed in years when you are in a higher tax bracket.

For example, if you expect that you will be in a higher tax bracket next year, it may make sense to wait and make the charitable contribution in January so that you can take the deduction next year when the deduction results in a greater tax benefit. Or you might shift the charitable contribution, along with other deductions, into a year when your itemized deductions would be greater than the standard deduction amount. And if the income percentage limits above are a concern in one year, you might consider ways to shift income into that year or shift deductions out of that year, so that a larger charitable deduction is available for that year. A tax professional can help you evaluate your individual tax situation.


A word of caution

Be sure to deal with recognized charities and be wary of charities with similar-sounding names. It is common for scam artists to impersonate charities using bogus websites and through contact involving email, phone calls, social media, and in-person solicitations. Check out the charity on the IRS website,, using the Tax Exempt Organization Search tool. And don't send cash; contribute by check or credit card.


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Beware of Holiday Scams & Fraud

Posted by The Axial Company

November 27, 2019

By FBI Miami, Public Affairs Specialist Jim Marshall


With the holidays coming up and seasonal shopping in full swing, criminals are also gearing up for a busy season. Shoppers should be more vigilant than ever for scams designed to steal their money and personal information.

Though scam artists can be aggressive and creative, there are certain red flags and common schemes holiday shoppers can guard against this holiday season.


Online Shopping Scams

Scammers often offer too-good-to-be-true deals via phishing emails or advertisements. Such schemes may offer brand-name merchandise at extremely low prices or offer gift cards as an incentive. Other sites may offer products at a great price, but the products being sold are not the same as the products advertised.

Consumers should steer clear of untrustworthy sites or ads offering items at unrealistic discounts or with special coupons. They may pay for an item and give away personal information and credit card details and receive nothing in return except a compromised identity.


Social Media Scams

Consumers should beware of posts on social media sites that appear to offer vouchers or gift cards. Some may appear as holiday promotions or contests. Others may appear to be from known friends 

who have shared the link. Often, these scams lead consumers to participate in an online survey that is actually designed to steal personal information.

Consumers should not post pictures of event tickets on social media sites. Fraudsters can create a ticket using the barcode obtained from the photo and resell the ticket. Consumers should protect ticket barcodes as they would credit card numbers.


Gift Card Scams

During the holiday season, consumers should be careful if someone asks them to purchase gift cards for them. In these scams, the victims received either a spoofed email, a spoofed phone call, or a spoofed text from a person in authority requesting the victim purchase multiple gift cards for either personal or business reasons.

As an example, a victim receives a request to purchase gift cards for a work-related function or as a present for a special personal occasion. The gift cards are then used to facilitate the purchase of goods and services which may or may not be legitimate. Some of these incidents are combined with additional requests for wire transfer payments, as described in classic business email compromise (BEC) scenarios. Learn more on


Charity Scams

Fraudulent charity scams, where perpetrators set up false charities and profit from individuals who believe they are making donations to legitimate charitable organizations, are common after natural disasters or man-made tragedies. Charity fraud also increases during the holiday season when individuals seek to make end-of-year tax deductible gifts or are reminded of those less fortunate and wish to contribute to a good cause. Seasonal charity scams can pose greater difficulties in monitoring because of their widespread reach, limited duration, and, when done over the Internet, minimal oversight.

Charity scam solicitations may come through cold calls, email campaigns, crowdfunding platforms—soliciting money from many people usually over the Internet—or fake social media accounts and websites. They are designed to make it easy for victims to give and feel like they’re making a difference. Perpetrators may divert some or all of the funds for their personal use, and those most in need will never see the donation.


Consumers can do the following to reduce their chances of being victimized:

  • Check credit card statements routinely. If possible, set up credit card transaction auto alerts or check your balance after every online purchase. It is important to check statements after the holiday season, as many fraudulent charges can show up even several weeks later.
  • Ensure a site is secure and reputable before providing credit card number online. Don’t trust a site just because it claims to be secure.
  • Beware of purchases or services that require payment with a gift card.
  • Do not respond to unsolicited emails.
  • Do not click on links contained within an unsolicited email.
  • Avoid filling out forms contained in e-mail messages that ask for personal information.
  • Be cautious of emails claiming to contain pictures in attached files, as the files may contain viruses. Only open attachments from known senders and scan all attachments for viruses if possible.
  • Verify requests for personal information from any business or financial institution by contacting them using the main contact information on their official website.
  • Secure credit card accounts, even rewards account, with strong passwords. Change passwords and check accounts routinely.
  • Be wary when replying to unsolicited emails for work-at-home employment.
  • Be cautious of exaggerated claims of possible earnings or profits.
  • Beware when money is required up front for instructions or products for employment.
  • Do not give out personal information when first interacting with a prospective employer.
  • Be leery when a job posting claims “no experience necessary.”
  • Be cautious when dealing with individuals outside of the country.
  • Only donate to known and trusted charities. Legitimate charities do not solicit donations via money transfer services or ask for donations via gift cards.
  • Make contributions directly, rather than through an intermediary, and pay via credit card or check. Avoid cash donations, if possible.
  • Beware of organizations with copycat names similar to reputable charities; most legitimate charity websites use .org (not .com).
  • Follow the Federal Trade Commission’s tips for online charity research.


Consumers who believe they are the victim of a scam should:

  • Contact their financial institution immediately upon suspecting or discovering a fraudulent transfer.
  • Ask their bank to reach out to the financial institution where the fraudulent transfer was sent.
  • Contact law enforcement.
  • File a complaint with the FBI’s Internet Crime Complaint Center at, regardless of dollar loss. Provide all relevant information in the complaint.

Learn more about scams and Internet safety at

The accompanying pages have been developed by an independent third party. Commonwealth Financial Network is not responsible for their content and does not guarantee their accuracy or completeness, and they should not be relied upon as such. These materials are general in nature and do not address your specific situation. For your specific investment needs, please discuss your individual circumstances with your representative. Commonwealth does not provide tax or legal advice, and nothing in the accompanying pages should be construed as specific tax or legal advice. Securities and advisory services offered through Commonwealth Financial Network, Member FINRA/SIPC, a Registered Investment Adviser. Fixed insurance products and services offered through Axial Financial Group are separate and unrelated to Commonwealth.

© The Axial Company. All Rights reserved. 5 Burlington Woods, Suite 102 Burlington, Massachusetts 01803 781.273.1400 is an official site of the U.S. government, U.S. Department of Justice



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Weekly Market Update, December 9, 2019

 General Market News

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Retirement Numbers You Need To Know for 2020

Posted by The Axial Company

These are the retirement numbers you need to know for 2020

With a new year comes a new start, and your retirement is no exception.

That's because the limits for pretax saving have gone up for aspiring retirees. And those already in retirement will see a modest boost to their Social Security retirement benefits, along with increased Medicare Part B premiums.

These charts give you an idea of how these changes may pad or pinch your wallet.


Retirement savings

Next year, you will be able to save as much as $19,500 in your 401(k) plan and up to $6,000 in your individual retirement account.

Savers who are age 50 and over will be eligible to put away up to $6,500 more in their 401(k) plans or another $1,000 in their IRAs.

The chart below shows how those limits have changed since last year.


Social Security benefits

If you are receiving Social Security benefits, you can expect a modest increase to your checks next year.

That extra 1.6% for 2020 is less than the 2.8% boost retirees received in 2019. But it is in line with the average 1.4% cost-of-living adjustments over the past decade. The changes are calculated based on inflation.

The chart below shows exactly how much of an increase you can expect based on the level of benefits you're receiving.


Medicare premiums

You may need to brace yourself for higher costs next year if you are on Medicare.

Standard monthly Part B premiums will increase to $144.60 in 2020, up from $135.50 in 2019.

But how much you will pay depends a lot on your income.

One rule, called the hold harmless provision, prevents individuals from having their Social Security benefits reduced because of higher Medicare premiums.

But many individuals will pay more for their premiums based on income-adjusted amounts.

The chart below shows how much coverage will cost you if you have income in excess of $87,000 individually, or $174,000 if you're married and filing joint tax returns.


The accompanying pages have been developed by an independent third party. Commonwealth Financial Network is not responsible for their content and does not guarantee their accuracy or completeness, and they should not be relied upon as such. These materials are general in nature and do not address your specific situation. For your specific investment needs, please discuss your individual circumstances with your representative. Commonwealth does not provide tax or legal advice, and nothing in the accompanying pages should be construed as specific tax or legal advice. Securities and advisory services offered through Commonwealth Financial Network, Member FINRA/SIPC, a Registered Investment Adviser. Fixed insurance products and services offered through Axial Financial Group are separate and unrelated to Commonwealth.


© The Axial Company. All Rights reserved. 5 Burlington Woods, Suite 102 Burlington, Massachusetts 01803 781.273.1400


© 2019 CNBC LLC. All Rights Reserved. A Division of NBCUniversal


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Weekly Market Update, December 3, 2019

 General Market News

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Giving Tuesday - Axial Drops Off Over 2,000 lbs. of Food to Pantry

Posted by The Axial Company

December 3rd is Giving Tuesday! Great timing for our quarterly donation pick-up and drop-off from the The Greater Boston Food Bank to the Burlington Food Pantry.

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5 Finance Lessons Learned by Preparing Thanksgiving Dinner

Posted by The Axial Company

By KRISTI MUSE, staff writer for RetireBy40


Who doesn’t love eating a week’s worth of calories in one sitting? Thanksgiving is the one day each year it’s alright to indulge in too much food while celebrating with friends and family. I love the time spent with loved ones each year, eating good food, enjoying each other’s company, and kicking back a bit before the hustle and bustle of the holidays begin again.

Some of my favorite memories from childhood take place in the kitchen on Thanksgiving Day when I helped my mom to prepare the meal. Even though I didn’t realize it at the time, learning how to prepare Thanksgiving dinner was one of my first real life experiences in financial planning.


Here are 5 finance lessons that can be taught by preparing Thanksgiving dinner.


1) How to budget

Thanksgiving dinner is one of the most expensive meals of the year. Most families need to plan their budget for ingredients before they go to the store. Knowing how many people you need to feed, how much you have to spend, and what you need to buy to pull it off, is a great budget lesson for any kid.

It’s also a lesson in prudence. It would be ridiculous to indulge in that kind of food and lifestyle throughout the year, but by budgeting and setting money aside ahead of time, you can feel free to enjoy the gluttony of the celebration since it’s a special occasion.


2) How to plan

Thanksgiving dinner takes time to plan, not as much time as retirement planning, of course, but the lessons still apply. You need to find the recipes ahead of time, check your ingredients, fill in the gaps, and create a time schedule. Do you have all of the tools you need? Are your knives sharp enough for the job, and do you have enough dishes and space to accommodate everything?

Likewise, do you have enough investment options? Are you making smart decisions to prepare for your future? Do you have the right financial tools to help you accomplish your retirement goals? If you don’t take the time to plan out your actions, then you might end up struggling.


3) Learning when to wing it

Even the best-laid plans can fall to ruin. Sometimes you just have to wing it and make the most out of the situation. If you forget an essential ingredient and the store is already closed, how will you fix the recipe?

Puns aside, preparing Thanksgiving dinner teaches you how to be creative, know when substitute, and how to use the resources available to you.  Learning how to wing it with the resources you have on hand is a valuable life lesson, especially when applied to finances.


4) Planning for more than you think you’ll need

Life has a funny way of making you need more than you thought you might. Eggs crack on the floor, rolls burn, and your cousin shows up unannounced for dinner along with a guest. Planning Thanksgiving dinner helps you learn how to build in wiggle room for those little contingencies. Instead of planning for 2 rolls per person, plan for 4 rolls per person just in case.

You should plan for retirement like you would plan for Thanksgiving dinner. Always budget for more than you think you’ll need and make sure to have extra just in case something unexpected happens. Do you have a plan for if the market crashes? Do you have enough diversity in your investments to account for any shortcomings in your financial plan?


5) Protection to keep from getting burned

No one in their right mind would reach into an oven without putting protection on their hands first. Likewise, you wouldn’t carelessly thrust your investments into an account without making sure you’re protected.

You need to protect yourself and your finances by covering yourself from getting burned. Does your financial institution have fraud protection? Do your credit cards have microchip protection? How much will you be liable for in the case of identity theft?


Start them young

If you have kids, grandkids, or nieces and nephews, consider letting them help you prepare Thanksgiving dinner. Ask them to help you build a budget. Take them with you to the store for the ingredients and have them help calculate the costs of the ingredients. Help them to figure out a time schedule for when to put all of the food in the oven.

They may not realize it now, but you’ll be helping them to practice valuable finance skills. Along with the mashed potatoes, you’ll be serving them a big heaping pile of financial discipline for their futures.


The accompanying pages have been developed by an independent third party. Commonwealth Financial Network is not responsible for their content and does not guarantee their accuracy or completeness, and they should not be relied upon as such. These materials are general in nature and do not address your specific situation. For your specific investment needs, please discuss your individual circumstances with your representative. Commonwealth does not provide tax or legal advice, and nothing in the accompanying pages should be construed as specific tax or legal advice. Securities and advisory services offered through Commonwealth Financial Network, Member FINRA/SIPC, a Registered Investment Adviser. Fixed insurance products and services offered through Axial Financial Group are separate and unrelated to Commonwealth.


© The Axial Company. All Rights reserved. 5 Burlington Woods, Suite 102 Burlington, Massachusetts 01803 781.273.1400


Copyright © 2010 to 2040 – Retire By 40

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Weekly Market Update, November 25, 2019

 General Market News

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The Problem With (And Solution To) Leaving Your 401(k) With Your Former Employer

Posted by The Axial Company

Authored By, Chris Carosa, Forbes Contributor, Oct 24, 2019

There should be a “Leave No 401(k) Behind Law.” Too many people forget to take their retirement savings with them when they clean out their desks at their old employer. Why is this so pandemic and what should you do to inoculate yourself from this potentially debilitating financial disease?

There’s a trend permeating throughout the retirement plan industry right now. Have you heard of it? It’s called “set-it-and-forget-it.” It’s generally credited with encouraging more people to save more for retirement.

That’s a good thing.

On the other hand, this same philosophy may also be responsible for people having less interest and even less awareness of their own retirement nest egg.

That’s a bad thing.  

“The biggest problem with the way people treat their 401(k) retirement savings accounts with former employers is that they ignore them altogether,” says Laura Davis, a Financial Planner at Cuthbert Financial Guidance in Decatur, Georgia.

This isn’t a temporary problem. It’s chronic. Once people have “set it,” they then naturally “forget it.” How long does it usually take before an ex-employee finally notices their orphan 401(k) account?

“Typically, the employee does nothing with it,” says Wesley Botto, a Partner at Botto Financial Planning & Advisory in Cincinnati. “It sits unmanaged for years before the employee makes any changes to it.”

This apathy can have long-term repercussions for your financial well-being. “When employees have old accounts, they risk losing track of them and they lose the ability to have an overall cohesive financial plan,” says Alexandra Demosthenes, Director of Financial Planning at Investment Advisory Professionals, LLC in Boca Raton, Florida.

Believe it or not, when it comes to their old 401(k) account, ex-employees often choose a far worse alternative to ignorance. They take it with them. “Another problem, and potentially more damaging than ignoring it, is cashing it out,” says Urban Adams, Investment Advisor at Dynamic Wealth Advisors in Orange County, California. “This creates tax liabilities, penalties and untold impact to their plan for securing retirement.”

“Nothing grinds my gears more than hearing otherwise intelligent Americans tell me, ‘I’ll just cash out my old 401(k) to cover myself until I get a new job or to pay for moving expenses,’” says Gary Herman, President of Consolidated Credit in Fort Lauderdale, Florida. “They see a 401(k) as free money today instead of an investment in their future. We chide our children for not thinking about what happens tomorrow if they eat a lot of candy right now, but we don’t take our own advice as adults. Trust me, if you raid your 401(k), you face an epic stomachache that will last the rest of your life.”

There’s a far better way to take your retirement savings with you—without the penalties, without the taxes and without harming your best interest. You simply roll it over. Do this and you increase the odds you won’t lose sight of decades-old savings when it comes time for you to retire.

“Depending on your circumstances, you should always roll your old plan into your new employer’s plan or into an IRA,” says Davis. “You would be surprised how many say they simply don’t remember if they contributed to an account and haven’t kept track of it, sometimes over more than a decade. You certainly don’t want missing money and the best way is to consolidate and simplify whenever possible.”

But, is it better to roll your precious retirement savings into your new employer’s plan or into your own personal IRA? (Or perhaps neither if you expect to be rejoining your old employer again sometime in the future.)

“Every situation is unique, so you’ll want to evaluate all the options—there are great reasons to roll your 401(k) together at your current job while someone else may find it’s best to rollover to an IRA,” says Kelley Long, Senior Financial Planner at Financial Finesse in Chicago and a member of the AICPA Consumer Financial Education Advocates. “There also may be a reason why you would leave your retirement savings at your former employer. The best news here is that this is not a time-sensitive decision unless your old employer requires that you make a withdrawal due to a low balance. In that case, this should be toward the top of your list, and you’ll want to explore the pros and cons of rolling your account to your new job versus to an IRA.”

Indeed, some will argue it’s better to leave your money in an old 401(k) plan. Still, it’s important to recognize the risks inherent in leaving your retirement savings behind.

“Often we assume the original selections we made when we started at our last company are still relevant, in terms of investment decisions, when in fact we should take a yearly look at things with our financial advisor,” says Matt Pietsch, Chief Revenue Officer for ENGAGE Talent in Charleston, South Carolina. “The best time to do this is when we change jobs.”

It’s not just a change in your personal circumstances. Your former employer might have changes of its own. As time goes by, and you move further from that firm, it only gets harder to reclaim your retirement assets.

“The old company could shut their doors or be acquired,” says Kelley Steven-Waiss, Founder of Hitch in Los Gatos, California. “It will become tedious to try to figure out what institution that account is still with. Additionally, you have the problem of forgetting passcodes or your email is no longer working. It just makes it that much more difficult. Make it a part of your onboarding or exit process!”

There’s also a risk in leaving lots of little baby retirement accounts strewn across your financial landscape. “Like anything else too much of something is bad for us,” says Raquel M. R. Thomas, CEO of Dream Catchers Corp in Columbia, South Carolina. “In the day-to-day of operating in the on-the-job space, having multiple IRA accounts could be mishandled or not handled at all due to having multiple accounts. Consolidating allows for a one stop shop.”

You can’t underestimate the value of “one stop shopping.” You shouldn’t misunderstand it, either. All it means is the ability to bring independent experts under one single umbrella. It’s easier for them, it’s easier for you and it improves your chances for success.

“Consolidating retirement savings from your old company into a single IRA account streamlines the management and administration of your retirement funds and makes it significantly easier to track and invest in the future,” says David Levine, COO at BerlinRosen in New York City. “In addition to being able to see all funds in one place, it’s easier to make changes to fund investments in one central location rather than several disjointed accounts. Additionally, consolidating into the right IRA may give you better investment options and lower administrative fees, ultimately helping you maximize your investments and get a better return.”

Eventually you’ll retire and you’ll need to roll over your retirement savings into a personal IRA. At the same time, you’ll want to have built your team of advisors well in advance of your retirement party. Why wait? You can begin this process the moment you leave your first job for your second. This will allow (and encourage) you to start working with the professionals you’ll need to work with down the road.

“It is beneficial to keep all of your retirement savings in a personal account with the help of an accountant or financial advisor as this will keep your funds safe from any change that might happen with you or the company itself,” says Sean Collins, VP of Operations at Maine Marketing Association in Portland, Maine. “This is an added safety measure that not many employees take advantage of.”

Don’t let the fear of the unknown keep you from acting. Ask around. See how others have addressed this same situation.

“The point of surrounding yourself with experts is genius,” says William Tincup, President of RecruitingDaily in the Dallas/Fort Worth Area. “We’re not taught personal finance in school. That’s why most Americans make horrible financial decisions.”

Don’t be like most Americans. Don’t make horrible financial decisions.

Seize the opportunity.

Even if retirement is years away, changing jobs provides you the opening to take your first step towards controlling your future.


The accompanying pages have been developed by an independent third party. Commonwealth Financial Network is not responsible for their content and does not guarantee their accuracy or completeness, and they should not be relied upon as such. These materials are general in nature and do not address your specific situation. For your specific investment needs, please discuss your individual circumstances with your representative. Commonwealth does not provide tax or legal advice, and nothing in the accompanying pages should be construed as specific tax or legal advice. Securities and advisory services offered through Commonwealth Financial Network, Member FINRA/SIPC, a Registered Investment Adviser. Fixed insurance products and services offered through Axial Financial Group are separate and unrelated to Commonwealth.

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