Life and Money With Helaine

Dear Helaine: I need some advice on where to save for my retirement. I am 47 years old, and my wife and I own our home and have no debt. Over the years, my various employers have been on a downward trend as far as matching contributions to a 401(k).

I am currently saving 10 percent of my income into the company-sponsored 401(k), with a 4 percent company match. We have received news that due to a pending merger, our new corporate overlords will no longer offer us any match at all. I was going to increase my own contributions by another 5 percent, but I am reluctant to rely on this company-sponsored 401(k) as an investment vehicle. Any advice on options I should explore outside of this 401(k)? -- Retirement Blues

Dear Blues: This is a question that sounds easy but is anything but. I'm going to ask you to weigh a couple of different factors. Then you need to make the decision, not me.

First, it is absolutely true that companies are not required to offer their employees a 401(k) at all, never mind a match on their contributions. No surprise, many will change reimbursement amounts. During the last recession, it was common to see major employers cut back or eliminate the match entirely. Many have since restored it, at least in part. Things change, in other words. Will you stay on top of this, or are you the sort to ignore the company plan once you are no longer part of it?

Second, the law permits you to put aside much more money in a 401(k) than an Individual Retirement Account. For 2018, a person under the age of 50 can set aside $18,500 in a 401(k) vs. $5,500 in an IRA. In the ideal world, of course, most of us would max both out, but few can afford to do that.

Finally, there are fees. Mutual funds are not free. Investment advice is not free, either. Ditto administering a corporate retirement plan. Those fees, of course, eat into your profits over time. As a general rule, large companies have the heft and expertise to make it more likely their employees are offered low-cost investment options in their 401(k)s. Small businesses -- not so much. Individuals? It depends how savvy you are.

There are extremely low-cost index fund offerings -- heck, sometimes even no-cost selections -- at brokerages like Fidelity and Vanguard. Are you the sort who will compare options between your 401(k) and a low-cost brokerage, and then follow through based on what you discover? Or will you fall prey to the financial adviser recommended by a friend or cousin, who might not have a legal duty to act in your best interests?

Again, only you can answer these questions. Good luck!

(To ask Helaine a question, email her at askhelaine@gmail.com.)

(EDITORS: For editorial questions, please contact Sue Roush at sroush@amuniversal.com)

Dear Helaine: Personal finance has been very straightforward for my husband and me so far. We simply cut our expenditures (such as eating out) whenever possible and have that money available for therapies for our twin children, who have both been diagnosed with autism. So when an acquaintance talked about a financial services company and the amount of money I could earn if I signed up, I was intrigued.

It's like an Amway for financial products. Its main product is universal life insurance. I did some research, and it looks like if you have an acumen for selling universal life insurance products and signing up others to do so, you might actually make a lot of money. But I am not sure people will actually benefit from the products I would be asked to sell. If that's the case, I could not sleep at night. What do you suggest? -- To Sell or Not to Sell

Dear Sell: Autism places a huge financial stress on families. But signing on with a multilevel marketing company -- which is what this is -- in hopes of increasing your household income is likely to make things worse, not better. The reason is how MLMs work. The major earnings come not from hawking the product, but from signing up other people to do so. A recruit will then forever pay a percentage of their earnings to their recruiter (as long as that person remains with the organization) and further up the line.

This is not exactly an easy task, and most don't do well at it. According to a report issued by the Federal Trade Commission in 2011, 99 percent of people who sign up with multilevel marketing companies will ultimately lose money. Another survey, this one from the website Magnify Money, found the typical recruit earned less than 70 cents an hour -- and that was before expenses were factored in.

And that's not all. Almost all MLMs suggest that you get your start by turning your friends and family into a customer base, as well as possible future recruits. This is the sort of behavior that's bound to strain your close relationships even when you love what you are selling.

That brings me to my second point. You are quite right to be wary of universal life insurance. For the uninitiated, that's life insurance that also offers an investment component. The problem? Term life insurance -- life insurance that offers protection for a set number of years -- is significantly less costly. The vast majority of people would be better off signing up for a term policy and investing their money in low-cost index funds.

Thanks to this combination -- the business model and the need to sell something you don't believe in -- you'll definitely sleep better at night if you give this opportunity a pass.

(To ask Helaine a question, email her at askhelaine@gmail.com.)

(EDITORS: For editorial questions, please contact Sue Roush at sroush@amuniversal.com)

Dear Helaine: What sort of financial papers and documents do I need to save? I grew up with a parent who saves everything. I mean that literally. She has calendars and old Macy's bills going back 20-plus years saved in boxes. So I never learned what kind of paperwork I actually need to hold on to and what I can shred.

Do I need to hold on to every pay stub for the last 10 years? What about invoices for stuff I bought online five years ago? How long should I hold on to this paperwork? I really want to declutter my life and pare down my filing system, but I don't know what I need to keep. -- Drowning in Paperwork

Dear Drowning in Paperwork: That's a lot of paperwork -- and not, I am guessing, the full extent of what your mother, er, saves. But that's her decision, not yours. The practical result of this is that you never learned what should be kept or what could be discarded, and in adulthood you find yourself at a loss. So let's begin at the beginning.

Your birth certificate? Keep that forever. The same for your Social Security card, marriage and divorce papers (if this describes you), and the like. If you own a home, you should keep your mortgage paperwork, deed and other documents related to your ownership of the property. Also keep receipts for any home improvements and repairs; there is a chance you will need them when the day comes to sell the home.

Then there is the paperwork related to your taxes -- everything from your tax return to the pay stubs and other documentation that go along with it. As it turns out, there are different rules for what you need to keep depending on why the IRS is asking for it. For the most part, you can shred relevant documents three years after you file your annual return, but there are cases where the tax authorities can go back six or seven years. And before you trash old files, you need to know the laws where you live, too. There are states where the tax authorities can ask for documentation going back a decade.

As for online shopping receipts, there's no reason to keep them at all, never mind five years. The site you shopped at should keep copies on file. As for stuff bought day-to-day, you can unload the receipt as soon as you can no longer return it (unless it's a business expense you plan to write off on your taxes).

One last thought: If you truly want to reduce clutter, consider online storage. There are apps that can help with this, but most charge a monthly service fee.

(To ask Helaine a question, email her at askhelaine@gmail.com.)

(EDITORS: For editorial questions, please contact Sue Roush at sroush@amuniversal.com)