More on the topic of 401k saving: Can there be an “optimal amount” to have in a traditional 401k? At the very least, adjustments can be made to get close-to-optimal. And timing wise with the calendar approaching mid-year there is ample time (unless you have already maxed out your 401k) to make meaningful adjustments to your 2019 401k elections and start the optimizing process.
This topic is especially important for those who take saving seriously and who have at least $400,000 TODAY in a 401k or IRA Rollover accounts combined with a 401k account. (For those with less, these concepts still matter but with less urgency.)
First: How old are you?
Age matters because TIME is one of the biggest determinants of how much a 401k balance can potentially grow.
If you are younger than 40, these concepts could affect you A LOT as the power of compounding can kick in over multiple decades (this does not mean trading; rather saving, allocating and allowing compounding to do its work).
If you are older than 60 and nearer to retirement or selling a business, these concepts matter greatly but the solutions will be slightly different.
If you are in your 50’s, a combination of strategies can work – and keep in mind the “catch up” that allows you to save more.
It is nearing year-end and I cannot emphasize enough how important it is to double-check certain items NOW. The best financial advisers can and should be drawing your attention to these items in order to make your year-end easier and less stressful.
Here is a list of questions I review annually with clients:
If it is “TGIF” that is a good thing. Let’s have a little fun here.
What is your current mindset, financially?
If that is a difficult question to answer right way – or even if not – check out a useful tool: “The Retirement Mindset Scorecard.” Even if retirement is not your primary concern today, the Scorecard is still relevant and helpful!
There are 8 categories to Financial Mindset, as we see it:
Thank you to my friend and loyal reader, Bob, for the title of today’s edition. The idea of “reflection” came up last weekend while I was enjoying time in a wonderful Southern beach town where the restaurants and bars were full, the sidewalks hopping with people of all ages, the lovely (large) homes newly built or renovated, people enjoying relaxing time on the beach – even the dogs’ tails were wagging with joy! Times are GOOD in lots of places!
These things are what we live for. These things also take planning and discipline – because good times come in cycles. Nearly everyone with whom I spent my weekend is engaged in a different and exciting line of work: from real estate finance, to “retired”, to the medical profession (both human and animal), to start-up tech… to owning or having sold their own businesses. Conversations were around “what’s next?” in terms of work, homes, vacations, kids’ camp, and kids’ college. Continue reading “Reflections From the Beach”
AS IF we need to hear any further “noise” about the debate in Washington, DC regarding tax policy. There is a basic silver lining (or two) to the discussion worth pointing out. First, a quick review of the big-picture elements in the limelight:
The number and rate of Individual tax payer brackets (15%, 25%, 35%, etc.)
The corporate tax rate (20%? 35%? pass-through? etc.)
Individual retirement savings vehicles and allowances (IRAs, 401k, “Roth-i-fication”, etc.)
Might I offer TWO “silver linings” to this prolonged, politically entrenched back-and-forth on tax policy: