Where should I place my IRA after retiring to ensure sustainable investing?

WBEZ and the Chicago Sun-Times are gathering your questions about all things money and finances. Then, each week, we bring you answers from the people who know best.

Sheri in Skokie asked about moving money out of a 403(b) plan, a tax-deferred retirement savings plan often for employees at nonprofits or government entities.

Timeline is key

John Campbell, chief wealth strategist and head of wealth planning and trust services at Calamos Wealth Management, said there are limited options with sustainable investments, which focuses on companies that have a positive environmental and social impact.

"These options are going to be curtailed even more so in light of the most recent tax policy changes, where a lot of the tax credits and tax breaks associated with sustainable investments as well as other types of impact investments may be curtailed a little bit," he said.

While you may want to look at investments that align with your values, it's also important to make sure they can help you achieve your financial goals and give you flexibility.

"When you look at sustainable investments, they tend to benefit individuals who have a three- to seven-year time horizon and especially those with a seven-plus time horizon," Campbell said. That's because those investments generate better income for you after at least three years.

"If you're into retirement, it's important to make sure you provide for yourself and set funds aside and manage it accordingly to provide the cash flow that you need for that one- to three-year period, and sustainable investments are usually not recommended for that," he said.

Things to ask yourself when considering sustainable investments:

• What is your time frame?
• How much income do you need?
• What kind of return do you need in order to achieve your retirement goals?
• How do sustainable investments fit into your goals, especially when there may be limited offerings?
• How can you plug the gap with other types of investments to complement your sustainable investments?

Mix it up

Retirement planning should happen years before you actually retire, and once you do, chances are your spending habits won't change.

"You're going to have a lot more time," Campbell said. "You're going to want to spend more time traveling, doing other things with family — that's going to be a cash flow outlay requirement."

So it's helpful to think of retirement as three buckets where one is filled with cash that can meet immediate needs, another with funds that can grow with inflation and then a third that's long-term investments for when you're 75 and older.

Changing retirement accounts

If you have a 403(b), like Sheri, it would make sense to move those funds into an IRA.

"You're going to have greater access, generally, to different investment vehicles that allows you to better model your portfolio ... to achieve those different objectives and lifestyles," Campbell said.

An exception would be if you work for a for-profit company or one that offers stock and it's growing. "There are some advantages of leaving some of that money in a qualified plan like a 401(k) or profit sharing," he said.

If you want to set up an IRA, it's relatively easy, Campbell said. You can set up an IRA at a financial institution, a registered investment advisory firm or brokerage firm. Then, you can complete the necessary paperwork through your employer to do a direct rollover into your IRA.

"Once it goes into your IRA, [you can] work with a financial adviser to assess your risk tolerance, your timeline, your desired objectives and more immediate income needs to fashion a portfolio that reflects your unique situation," Campbell said.

Have a financial question you want answered by an expert? Leave us a voicemail at 312-312-2122 or email us at moneyquestions@suntimes.com.