Yes, fee based is becoming more well known and preferred by those that are realizing the conflict of interest of paying commissions to an advisor. The DOL ruling requiring advisors to become fiduciaries is helping to clean up and remove the advisors who are just collecting a commission. This is similar to weeding out the mortgage brokers once regulations required more standards and recourse for those who were making big profits on fewer deals and who helped to create the mortgage mess by getting homeowners loans to homes they shouldn't have.
Retirement thread
- Thread starter CloneGuy8
- Start date
Your young and getting started that's what counts. If you figure the market will get 6-10%. If your interest rates you are paying are above that you're better off paying your notes off first. This sounds really simple but maybe throw your spare change in a jar then the jar gets full invest that amount in your Roth. It won't be a lot but every little bit helps and it's probably money you won't miss anyway.
This thread is about retirement so for the most part the tax question is pay now (Roth style) or pay later (traditional IRA/401k). I don't think there is a wrong answer there but it certainly can be a complex question. For either option though I don't think there are really any tax issues that impact returns during the wealth generation phase.
A combination of these may be a good option. In retirement use the investments that you will have to pay taxes on when withdrawing for your regular expenses. Use the investments where you paid up front and can withdraw tax free (Roth) for large one time expenses like an automobile or vacation so you don't take a huge hit on taxes all at once.
Where you get he impression I was taking advice from people here? That is 100 % false.
Once the DOL is in effect and advisors have some time to digest the procedures for submitting financial plans, I will begin working with an advisor.
Taxes most definitely should be considered on determining which type of account (Roth or 401k/IRA) to invest in. Depending on your tax brackets should help to determine which account makes the most sense and it could mean doing a combination of the two. Most people don't realize that if you have too much money in a tax deferred account it can be a tax deferral time bomb once you become 70.5 years old and have to take required minimum distributions which causes taxable income. There is more to taxes than just this example but too much to go into now.
Again I can't stress enough that getting advice on a message board is not a good strategy. Too many people don't know what they are talking about but give advice like they do.
Sorry, to clarify, I was not trying to say you in particular were getting advice from people on this message board. This was a general statement to the masses that getting advice on something as important as your personal finances should not be done on a message board. NO one knows each other's situation and thus posting blanket financial advice statements can do more harm than good even if there was good intentions.
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PS, the DOL ruling technically has been in effect for a month now but the large brokerage firms that pay commissions have been fighting this tooth and nail.
11% is WAY too much to plan on. I use a very conservative 3%. This assumes inflation and the lower returns of fixed income (bonds, etc.) as I get older.
When you're 64 and have $4 million (or whatever....) in your retirement accounts, will you be invested 100% in the risky S&P? I sure won't be.
When you're 64 and have $4 million (or whatever....) in your retirement accounts, will you be invested 100% in the risky S&P? I sure won't be.
I'm not one bit worried about having enough retirement savings. What scares me is my wife or I getting sick during retirement and draining all the retirement from the other person. Paying $6k/month at a nursing home wouldn't be fun.
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I like these guys, their approach, their advice and their methods. I just don't like their fee so I don't use them. They are out of Twin Cities but I believe have a Des Moines office.
https://www.wealthenhancement.com/
I find this thread interesting and encouraging. I've been retired for 15 years and my contribution can be best summed up by a paraphrase of something that General Eisenhower said. He said that in battle, all your plans are thrown out the window but failure to plan ensures defeat.
My experience is that things change constantly. When I started my career, we didn't have IRAs, 401Ks, Roths, etc. We didn't have Medicare and only rudimentary Medicade (which I wouldn't qualify for if I planned properly). We had fewer pension rules and company benefits varied widely. Accordingly, salaries were significantly impacted by a company's benefit package and perceived viability. Throughout my career, these changes impacted my salary, health benefits, company-provided insurance, and, of course taxes (even in retirement) I'm not complaining; I'm only noting that, almost assuredly, there will be significant changes throughout your life. Technology and economies will change and invariably changes will be made to your earning power, income and retirement tax laws, and investment options. These changes will cut both ways and it would be extremely rare to expect that your circumstances would be dead-on average (e.g. the average family has 1.5 kids but yours won't).
Summarizing my advice:
1. Plan conservatively but plan. Underestimate projected investment returns or salary increases. Overestimate costs and taxes.
2. Review your plan when there are impending changes that impact the structure of your plan. I'm not saying that you should watch your investments daily and react to every movement; you can do that if that's your hobby but, as has been by someone else, there is no evidence that anyone can do that perfectly.
3. Review your plan on a scheduled basis; more frequently when you are younger and changes will be magnified.
3. Know that things will change. I wanted to be able to do extensive traveling when I retired. I am able to do that financially but our health and safety have changed so it's time for me to review my plan again.
My experience is that things change constantly. When I started my career, we didn't have IRAs, 401Ks, Roths, etc. We didn't have Medicare and only rudimentary Medicade (which I wouldn't qualify for if I planned properly). We had fewer pension rules and company benefits varied widely. Accordingly, salaries were significantly impacted by a company's benefit package and perceived viability. Throughout my career, these changes impacted my salary, health benefits, company-provided insurance, and, of course taxes (even in retirement) I'm not complaining; I'm only noting that, almost assuredly, there will be significant changes throughout your life. Technology and economies will change and invariably changes will be made to your earning power, income and retirement tax laws, and investment options. These changes will cut both ways and it would be extremely rare to expect that your circumstances would be dead-on average (e.g. the average family has 1.5 kids but yours won't).
Summarizing my advice:
1. Plan conservatively but plan. Underestimate projected investment returns or salary increases. Overestimate costs and taxes.
2. Review your plan when there are impending changes that impact the structure of your plan. I'm not saying that you should watch your investments daily and react to every movement; you can do that if that's your hobby but, as has been by someone else, there is no evidence that anyone can do that perfectly.
3. Review your plan on a scheduled basis; more frequently when you are younger and changes will be magnified.
3. Know that things will change. I wanted to be able to do extensive traveling when I retired. I am able to do that financially but our health and safety have changed so it's time for me to review my plan again.
Balance in retirement investing and life to be stressed. I visit a lot of folks in assisted living/nursing homes that retirement saved to the extreme. Most are wishing they had enjoyed a few more things when they were young. Save but take advantage of life while you can really enjoy it.
Having worked in the retirement world for the last 15 years and have listened to thousands of calls and saw thousands of emails.My one piece of advice......don't borrow from your 401k unless it's life/death situation.
I think Buffet said, live cheap in your 20's & 30's. This advice is so simple, but by your 30's you will start to see the compounding interest build up. Push yourself to max out the 401K, you wont regret it.
Or did you mean incredible balloons, based on your avatar?
Maybe I'm not understanding you correctly. You can invest your money in a roth 401k if your employer offers that option.
