Stop Your 401(k) From Robbing You Blind

high 401k fees

You know how much you pay for your mortgage payment, your cell phone bill, and your car payment. But do you know how much you’re paying for your 401k plan? You probably don’t, and that could be costing you tens of thousands of dollars. Because we don’t actually have to write a check to pay for the fees associated with our 401k we never think about what it’s costing us. A few dollars here and there doesn’t seem like much, but over time, and as your nest egg grows, these fees start to add up fast. In some cases they actually take years off of your retirement! I know people (myself included) who have changed banks over a monthly fee being charged to their checking accounts. I know people who will drive an extra 2 miles just to save $0.03 on a gallon of gas. I know people who will spend … Continue reading

myRA: What You Need To Know About The Newest Retirement Plan

retirement-fund

If you tuned in to President Obama’s ‘State of the Union’ Address last week you heard him mention a new type of retirement account called the ‘myRA’.  While the President didn’t go into many specifics as to what exactly the myRA would be in his speech, The White House has since released more details. The prospect of having a new retirement account at our disposal piqued my interest. So I went digging to see what it was all about, and more importantly, if it’s a good idea to open a myRA. Here’s what you need to know. What is the myRA? We all know that most people have shockingly little stocked away for their retirement, and according to The White House, about half of American workers don’t have access to a 401(k) or similar employer sponsored retirement plan. The myRA aims to be a “starter” retirement account for people who have little … Continue reading

What Makes A Good 401k Plan

is saving more or earning more money better

For most people the 401(k) plan is their main, and sometimes only source of retirement savings. We know that if we can’t max out our contributions we should at least be contributing enough to receive the full match from our employer, but we really don’t know what constitutes a “good” 401(k) plan. Every year the major financial news sites publish the same articles about this years “best” 401(k) plans, and every year I take major issue with the results in those articles. Too often the studies that these articles reference weigh criteria such as the average account balance per participant too heavily. The same goes for judging the generosity of an employer by looking at the average amount they contributed to each employee in the plan. Of course you’re going to tell me Goldman Sachs has a better 401(k) plan than Wal-Mart if that’s how you’re judging it! Metrics like … Continue reading

The Government Wants To Limit Your Retirement Savings!

uncle-sam

The US government wants to limit how much money you can save across your tax-advantaged retirement accounts (401k,IRA, Roth IRA…). President Obama released his budget plan the other day and one specific proposal really caught my attention. In the name of raising $9 billion in new revenue for the government, the President wants to limit the amount you can save in your retirement accounts to $3 million. The reasoning for the $3,000,000 limit is that it’s about equal to an annuity that would pay out $205,000 per year. A “reasonable retirement” in their terms. My initial reaction to the plan was some combination of shock and anger. “How dare they tell us how much we can save in our retirement accounts!” However, after taking the time to sit down and think about it some more, I can see both side of the argument.   Not many people are affected, at all. Currently 0.3% … Continue reading

What Is Your Retirement Scenario?

passive-income

Retirement and the process of saving for it is not a new topic for anyone that has ever read a finance blog before. The question that few people ask however, is what exactly is retirement? If we want to go the dictionary route, retirement is simply: “The period of one’s life after leaving one’s job and ceasing to work.” That’s all fine and good, but to really plan for retirement we have to get a little more specific. Retirement means different things to different people, to accurately plan for yours you have to decide what your definition of retirement is. For a large number of Americans retirement is something that only happens when they’ve become too old to work anymore. They didn’t save anything on their own during their working years and will live out the rest of their life relying on social security or a pension if they were lucky enough to have one. … Continue reading

Should I Contribute to a 401(k) With No Match?

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If there’s one piece of advice that I, and just about every other personal finance blogger has  written a thousand times it’s: “Always contribute enough to your 401(k) so that you get your employers full match.” But what if your employer doesn’t match your 401(k) contributions? What should you do then? It’s not a situation I ever gave much thought to. Then, right before the new year, the following email from the CEO of my company showed up in my inbox… Needless to say, this did not make me a happy little worker bee. I had planned on making a significant increase in the amount of my 401(k) contribution, now I started wondering if I should even contribute at all. If you find yourself in the same situation  with your employer cutting its 401(k) match. Don’t make any rash decisions, it can still be worth it to contribute to a 401(k) … Continue reading