New tax laws have not only raised your maximum allowable tax-deferred Individual Retirement Account (IRA) contributions from $2000 to $3000, they also allow you to play catch-up. If you are 50 years of age or over, you can now invest an additional $500.

Depending on the type of IRA for which you qualify, you can get a tax deferral (pay taxes upon cashing in) or take a deduction now (pay no taxes upon gains, within tax guidelines.)

If you don't already have a retirement investment account to take advantage of these retirement benefits, it's never too late to get started. And you can do so through special programs that have been developed for Realtors by the National Association of Realtors in partnership with Charles Schwab & Co. Inc..

As a Realtor VIP partner, Charles Schwab & Co brings the services of one of the nation's largest full-service brokerage firms including complete retirement and investment programs and at substantial discounts to NAR members.

Mary Stark Hood, vice president of member benefits and strategic alliances for the NAR, says "It is a greater challenge for self-employed people who have commission-based income that ebbs and flows to plan for retirement. It takes more discipline and planning to set up a strategy for the use of their finances, not only for retirement but other forms of investments."

Stark-Hood speaks from experience. Not only is she an attorney, she is a Certified Financial Planner. As a young attorney, Stark-Hood did some pro bono work for several years, and was moved by the predicaments that many of her clients were in.

"Many of these people had jobs, but they didn't plan for their futures well," says Stark-Hood. "That got me to thinking that real estate is an industry of self-employed people, and they need more assistance from a company such as Schwab to set up retirement planning. After seeing what happened to people who didn't manage money well, I didn't want the same thing to happen to our members."

That's why she, among other NAR directors, put a priority on finding a financial planning partner that could provide a variety of investment and retirement programs. "Our board felt it was very important, and it is part of the strategic plan for NAR to provide a menu of benefits that our members could take advantage of," says Stark-Hood.

Is it ever too late to begin investing?

"The important thing for our members is to think about focusing on asset allocation," says Stark-Hood. "Realtors know the real estate industry, and a retirement plan is buying rental homes for monthly income. They need to look at the bigger picture and allocate their investment money across stocks, bonds, money markets - an investment portfolio based on their age and objectives, and they need to reallocate their investments from time to time."

So how is investment/retirement planning different for independent contractors such as real estate agents? "As a financial planner, I look at the income and expenses that people have, how they fulfill their income to handle necessities, and then how they allocate their discretionary income."

According to Stark-Hood, the four areas of financial planning include insurance, general investing, estate planning, and retirement planning.

Says Romero Scigliano, vice president of Schwab's corporate broker service group, "It is impossible to put real estate into a retirement account, and we have products that can offer tax advantages."

Adds Rene Kim, vice president of core product management group, "We believe that it is important to be diversified. With equities, mutual funds, bonds to round out their portfolio, agents can have liquidity and different asset classes to grow."

How to get started? "A person has to sit down and build a retirement plan based on what they want when they want to retire, what their expenses will be, what kind of lifestyle they want, and if they are five, or 20 years away," says Kim.

Equities have proven volatile in recent markets. How do you know you're getting the right investment advice? "From someone who is inexperienced, the market seems complex, and it used to be you were kept an arm's length away and couldn't make informed decisions on your own," explains Scigliano. "At Schwab, we have built our offering on full transparency and keep investors informed to provide them information to feel comfortable."

Says Kim, "We work with members according to how they are most comfortable with a risk profile - conservative, moderate or aggressive. The client can choose to trade over the Web and the fees are nominal. If we manage the portfolio, we have several programs depending on your asset level, and the fees will never be over .6 of one percent.

"There is no guarantee that the market will go up, but when you set up a diversified portfolio, you aren't putting all your eggs in one basket," continues Kim. "There are ways to approach it to lower your risk."

"Schwab analysts are available one-on-one, and they are consultants," explains Stark-Hood. "Our members aren't going to be sold products based on what's paying the highest commission that month. NAR members will have access to advisors who are paid with a base salary plus bonus, based on customer satisfaction and growth."

Is now a good time to get started?

"It is getting close to April 15, and you can buy a 2001 contribution now," says Kim. "You want to make sure you can contribute for all the years you possibly can, it is always better to start today than tomorrow."

To learn more about the exclusive NAR member brokerage and financial services available at Schwab, call 1-800-979-9017 for personal assistance or visit www.schwabpreferredbrokerage.com/nar.

Published: March 7, 2002

Use of this article without permission is a violation of federal copyright laws.