Last Year’s Paycheck

Believe it or not, lots of people do not know how much they get paid. That is, in terms of total compensation. Of course, there are that handful of people who know exactly what they make – and most people know precisely their “net pay” that gets deposited into their bank account periodically. But in my years of discussing total compensation with my clients (who typically make a fair amount of money) a great deal of the time they do not know accurately enough how much they made in a given year.

Believe it or not, lots of people do not know how much they get paid.

January is an ideal time to take a closer look at a print-out of last year’s year-end pay stub to learn valuable details and information. Why is this important?

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The 401k Trap

The real title of this edition is: The 401k Trap – Have a 401k Strategy.

It has become clear that there is more to saving in a 401k than…simply saving in a 401k. Last year, amidst no travel and not being able to see clients and friends face-to-face, two colleagues and I took 5 months to write an actionable guide to the critical need – due to potentially higher taxes in the future – for a strategy around 401k saving TODAY. For Everyone. The name of the paper is: The 401k Trap.

The 401k Trap: Contact me for a copy. kdebbs@msfsolutions.com

For those who are just getting started saving in a company 401k or 403b, the strategies we suggest could make a huge difference in 10 years and beyond; for those who have been saving in a 401k for 15-20 years or more, a strategy may be even more urgent.

The key reason is taxes. It is true that no one knows for sure where tax rates will be in 5-10-20 years from today. But with history as a guide and the fact that tax rates on the federal level are near all-time lows, the conclusion can be drawn that tax rates will only be higher in the intermediate- and long-term future. This state of affairs will punish those who have done the hard work of saving large balances in pre-tax 401k and IRA accounts.

Here is the Table of Contents – please ask me for a copy of the paper.

  • Oh, How Times Have Changed!
  • Longevity
  • 401k Today
  • Risk of Increased Government Spending
  • An Aging Population
  • Dirty Little Secret
  • Historic Tax Brackets
  • Surprise
  • The Earlier the Better
  • The Debt Clock
  • The Wake-Up Call
  • Bonus Checklist

Thank you for reading, stay safe and TGIF!

Hindsight is 2020

Perhaps the perfect way to “look at” 2020 – is in hindsight! Who on earth could have predicted what went down in world and market events in 2020, both bad and good? Who will ever be able to accurately predict markets? And why is this important?

Funny, there will always be those people who seriously believe and will say out loud that:

  • they knew a pandemic would strike,
  • the economy was due to come to a screeching halt,
  • they predicted the timing of the market turnaround,
  • they knew the US Fed would abruptly lower benchmark interest rates back to zero,
  • Etc., etc., etc.
The smartest of the smart recently admitted they could never have predicted the events of 2020 and how they played out in stock, bond, real estate, and commodities markets.

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