Sometimes, it’s hard to make financial sacrifices when the reward seems so far away. However, delayed gratification can be extremely beneficial when it comes to your finances. Eric talks about four situations when people may be tempted to choose instant gratification over a better long-term pay out.
(Click the featured times below to jump forward in the episode)
[1:10] 401(k) Match
- You can’t leave this money out there.
- David Bach, author of “The Automatic Millionaire,” says you have to pay your future self first.
- If your company has a match, you need to put at least enough in to get the match because this is free money.
- Eric gives an example of his son who is saving in a Roth account.
[3:40] Saving Only in Tax-Deferred Accounts
- You have to have tax diversification within your accounts. Taxable, tax-deferred, and tax-free money each have their place.
- If all of your retirement money is tax-deferred, then you’re at the mercy of tax rates.
- You don’t know what tax bracket you’ll be in when it’s time to retire.
- Having money that’ not subject to income tax is going to be a huge benefit later.
[6:53] Cashing Out Retirement
- Eric shares about a time in his youth when he cashed out stock for car upgrades.
- When you take the money out, you lose future growth, and it will be heavily taxed.
- Your retirement money is meant to support your life once you are in retirement.
- When you change jobs, make sure to roll over your 401(k) instead of cashing out your account.
[10:32] Working with the Wrong Advisor
- Consider who your advisor works for. The bigger firms may have sales managers that advisors answer to.
- If you work with a true fiduciary then you have full access to make your plan work toward your best interest.
Check out some other recent episodes
Did you take the trash out? Oh, and what is our income plan after one of us dies? One of these is a question you might ask your spouse regularly after dinner while the other one is important but often overlooked. We’ll talk about five questions you should start to ask now when it comes to planning your retirement with your spouse.Read More
Asking questions is always a good thing. The more you ask, the more you understand. But sometimes you don’t get the answer you need until you ask the right question. These four common financial questions are a bit better when they are rephrased and reconsidered.Read More
Do you know the difference between a financial myth and financial reality? When you make a plan for your future, you want to make sure it is based on what’s true. We’ll talk through four ideas to discover whether they are myths and real.Read More
What do you do when…? Eric answers three pressing questions from the mailbag in today’s podcast. Whether you are being thrust into an early retirement or are considering delaying retirement due to debt, financial advice from an advisor will set you in the right direction.Read More
When you are working with an advisor, you want your relationship to be built on trust and quality expertise. But how do you know if an advisor is a bad fit? What red flags should you avoid? We’ll tell you in this episode.Read More
Inside of a mutual funds, the actions of others can impact you. If a lot of people are trying to sell that mutual fund, the manager has to sell some stuff to meet the redemptions and that can negatively impact you.Read More