PERSONAL FINANCE
Answers to your FAQs
Time a strong ally in saving for retirement Answers to your FAQs:
Keep in mind that these examples are hypothetical, for illustrative purBy Pete Shelp poses only, and do not represent the Father Time doesn’t always have performance of any actual investment. a good reputation, particularly when Returns will change from year to it comes to birthdays. But when it year, and are not guaranteed. You may comes to saving for retirement, time also lose money in your retirement might be one of your strongest allies. plan investments. Shelp Why? When time teams up with the But that’s why when you’re saving growth potential of compounding, the for retirement, it’s important to stay focused on results can be powerful. long-term results. Also, these examples do not take into acTime and money can work together count plan fees, which will impact total returns, and taxes. The premise behind compounding is fairly When you withdraw money from your tradisimple. Your retirement plan contributions are tional (i.e., non-Roth) retirement plan account, deducted from your paycheck and invested you will have to pay taxes on your withdrawals either in the options you select or in your plan’s at then-current rates. default investments. Your contribution dollars Early withdrawals before age 59½ (age 55 may earn returns from those investments, then for certain distributions from employer plans) those returns may earn returns themselves--and may be subject to a 10 percent penalty tax, unso on. That’s compounding. less an exception applies. Nonqualified withdrawals from a Roth acCompounding in action count may also be subject to regular income and penalty taxes (on the earnings only — you To see the process at work, consider the receive your Roth contributions tax free). following hypothetical example: Say you invest $1,000 and earn a return of 7 percent — or $70 Q. Once I begin receiving Social — in one year. You now have $1,070 in your Security retirement benefits, can my child account. In year two, that $1,070 earns another receive benefits too? 7 percent, and this time the amount earned is $74.90, bringing the total value of your account A dependent child may qualify to receive to $1,144.90. Over time, if your account continues to earn benefits based on your earnings record. To receive benefits, your child must be unmarried positive returns, the process can gather steam and be under age 18 (or 18 to 19 if a full-time and add up. Now consider how compounding might work student in elementary or secondary school) or be 18 or older and disabled from a disability that in your retirement plan. Say $120 is automatically deducted from your paycheck and contrib- started before age 22. Your child may be your biological child, adopted child, stepchild, or uted to your plan account on a biweekly basis. dependent grandchild. Your qualifying child may Assuming you earn a 7 percent rate of return each year, after 10 years, you would have receive a benefit that is up to one-half of your full retirement benefit. invested $31,200 and your account would be Contact Peter D. Shelp, AWMA, ChFC, CFP, worth $45,100. That’s not too bad. If you kept CRPC Kingston Retirement Group of Janney investing the same amount, after 20 years, Montgomery Scott LLC 270 Pierce Street, you’d have invested $62,400 and your account Kingston 18704. Call (570) 283-8140 or visit would be worth $135,835. www.kingstonretirementgroup.com. Janney And after just 10 more years — for a total investment time horizon of 30 years and a total Montgomery Scott LLC is a member NYSE, FINRA, SIPC. Portions of this article were preinvested amount of $93,600 — you’d have pared by Broadridge Investor Communication $318,381. That’s the power of compounding Solutions, Inc. Copyright 2015. at work.
44 NORTHEAST PENNSYLVANIA BUSINESS JOURNAL TS_CNG/NPBJ/PAGES [B44] | 02/25/15
17:32 | ZYGMUNTLIZ
MARCH 2015
HERITAGE TOURISM
Success of Scranton’s half marathon is a tribute to our heritage the area to run and watch the race, a team On April 12, thousands of feet will of about 300 volunteers will help ensure hit the streets of Scranton — and paths that everything runs smoothly. Volunteers along the Lackawanna River Heritage will cover seven miles of roadway in the Trail — as the Electric City hosts the city, with two to three people at each second annual Scranton Half Marathon. intersection along the course. Each team After a tremendous inaugural event led by a captain, the traffic volunteers will that welcomed more than 2,500 runners enjoy seeing much of the race because Gelb to the race last year, it is so encouragthey’ll move from intersection to intersecing that this year’s registration is already filled to tion as the race safely progresses. capacity of 3,000 runners. In addition to registraAnother type of “traffic control” is needed at tion filling up early, the race has already earned Valor Credit Union Field. This is a busy area for accolades in the running community. The Scranton spectators and race enthusiasts where volunteers Half Marathon was named Best Half Marathon in will help manage the flow of foot traffic. They’ll 2014 in the Northeast Region of the United States answer questions, offer directions, and distribute by Competitor magazine’s readers. printed materials about the Scranton Half Marathon. There’s so much to celebrate in this story. From Volunteers will also be stationed throughout the the success of the athletes who laced up their running course to distribute water to the runners as they make shoes and took a chance on a new race in the city, their way to the finish line, and to cheer them on at key to those who first envisioned that Scranton could be points along the way — including along the trail. the next great Half Marathon city; to the sponsors Volunteer and Course Coordinator Sandra Opwho showed their financial support and the dedicated shinsky knows how much runners appreciate the volunteers who shared their time and talents with all encouragement as they make their way to the finish in the community. A community that comes together line, and she’s hoping to add more volunteers along truly inspires greatness, and the Scranton community the trail to make this year’s race extra special. has certainly come together in this case. There are so many ways to make a difference With something for people of all ages, this race on race day. As Ms. Opshinsky says, “If you want showcases the best of what our community has to to help, we absolutely have something for you to offer, and is a tribute to our heritage. This region was do.” Whether it’s two hours, four hours or more, founded by strong, innovative, creative people dedicated to improving the quality of life for their families scheduling is flexible and race organizers appreciate any amount of time volunteers can give. and neighbors. So too are events such as this. To encourage our youngest athletes to enjoy The Scranton Half-Marathon was born from outdoor recreation, a kids ¼-mile Fun Run for progressive thinking, a will to succeed, and a desire children ages 5 to 10 will also be held at the to improve the quality of life for those who live and Stadium on race day. About 100 children have work here. It is a lovely tribute to our history, and a already registered to participate, and there is room preview of the many good things yet to come. for more. There is no registration for the Fun Run, The 13.1 mile course is unique in and of it itself, which kicks off at 9:30 a.m. starting and ending at Valor Credit Union Field For more information and to register, visit www. Memorial Stadium. Designed to give runners of all scrantonhalf.com and click on the “Kids” tab. backgrounds and levels the opportunity to experiA Race Expo will also be held at the Ice Box Sports ence the City of Scranton from a different perspecComplex on West Olive Street (across from Memorial tive, participants will enjoy the diversity of running Stadium) on Friday, April 11, from 6 to 9 p.m. and on on paved roads through Green Ridge, Downtown Saturday, April 12, from 11 a.m. to 5 p.m. Scranton and South Scranton, and well-groomed, To learn more about how you can become crushed stone paths along the Lackawanna River involved in the Second Annual Scranton Half MaraHeritage Trail. After a scenic run along the trail, participants will make their final loop at Valor Credit thon, visit www.scrantonhalf.com. Union Field at Memorial Stadium. What a marvelNatalie Gelb is executive director of the ous way to see the city! Lackawanna Valley Heritage Authority. Email her at As the city welcomes about 10,000 people into natalie@lhva.org. By Natalie Gelb