Company benefits are better than nothing, but still,(in today's market) allowing this to be your entire investing portfolio not only shows a low level of financial intelligence but makes us out to be financially lazy. It's not the best ideal to just say "NO" to other portfolio options. Along with that, we usually say "NO" to vehicles outside of work, that can get us great performance. We all have good intentions and want to make the best financial decisions but in most cases that ends up becoming fully dependent on social security or whatever pension we can get from our place of employment. "Wonk woooonk wonk, wonk wonk (In my Charlie Brown teacher voice)." That's what most of us hear when you start talking about a 401K, an Annuity, or how any type of portfolio investment works. You can’t help but walk away feeling like they got over on When you get to that last page of the register to purchase, the price has
When you put the tickets in your shopping cart it has one price, but It’s kind of like when you go online to purchase tickets toĬoncert. Trustee Fees, Transitional Fees, Stewardship Fees, Bookkeeper Fees, Finder’sĪll those fees are taken, some Financial Companies even charge another 0.50%įor what is called a “Wrap Fee,” which is some kind of miscellaneous All Them that there a list of fees attached to the account that they aren’t even Or 30 thousand dollars because of the market drops. It’s always a shocker when they come to the realization that they have lost 20 Never look at their 401K account, but assume it must be doing well for them. When people say this to me I ask them, “Do you wait until the battery on your cell phone is fully charged before you make a phone call?”Ĭlients I’ve sat down with display a bad case of what I call Financial S ome of us feel like we have to wait until we get everything “in order” before we can start saving and paying ourselves. However if you haven't been paying yourself 12.5%, or your first working hour, and you're over 40, you need to pay yourself 15%, or the first and last hour of the work day just to get back on track for a comfortable retirement. That’s less then what some of us pay a month in gas. With 4 weeks in the month that equals $200 a Job that pays you $10 an hour, and you work 5 days a week, then you should pay You pay yourself you’re first working hour. Of us that find that close to impossible, usually you can come pretty close if Only pay yourself first but to pay yourself 12.5% of your paycheck. Spent? At that time how much can we really pay ourselves? It’s important to not When do we pay ourselves? When most of our money is nearly In some cases people are forced to live off of a third of the As you already know the larger the money, the Him just taxing that 4%, he taxes the whole account. You never paid taxes on the 4% contributions in the beginning.
As soon as you pull it down Uncle Sam rudely reminds you that But instead of paying a tax on theĤ% that was used to grow the account, you now have this large sum of money that Have a large sum of money waiting for you. When you come time to retire you hopefully that money has grown and you So let’s say you contribute 4% of your paycheck into a Qualified The government still makes you pay taxes on that money and the growth made in The problem is when it comes time to retire, Taxes are taken out of your check then that is called a Tax Qualified And if this amount of money is put into the retirement fund before the More cases than not if the job is offering it than it is in the stock
SEP, SIMPLE, Valvac, Deferred Comp, etc) to grow and give themselves a largeĪmount of money that they can stop working in the future and still satisfy their need for Working people participate in their job’s retirement fund (401K, 403B, TSP, The first Retirement Trap is The Tax Trap.
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