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7000 Carroll Ave Ste 201A
Takoma Park MD 20912
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All tagged retirement
Imagine you pass away and leave $75,000 in a bank account (approximately the median inheritance for the 50th-90th percentile of total wealth.) That sum represents money you didn't you didn't need to earn, right? Effectively, says author of 'Die with Zero' Bill Perkins, you worked for 'free'. I would add you might have missed out on experiences (like travel) . You could have taken an amazing safari or two with that money!
On a coarse level, it was the German Empire under William I and Otto von Bismarck that created the first general (non-military) welfare program for older workers introducing the concept of retirement for the working class. It was a plan, along with mandatory health insurance, to counter growing support for Marxism. One would get a modest pension from the state at age 70, a seemingly cynical choice for a population with a life expectancy in the mid 40’s that was declining.
Last week I wrote about who is exposed to inflation risk and identified low-income workers and retirees as the most endangered. To minimize exposure to inflation risk retirees can use both planning techniques or investment strategies. One planning technique we don’t like is to simply spend less, although sometimes that’s the best choice. Technically, one could die younger. We really do not like that. But the math undeniably works. But, here are some planning techniques I do like.
Most 401k plans offer ‘target date funds,’ one-stop investment portfolios with a mix of US stocks, international stocks and bonds that automatically get more conservative (less stocks, more bonds) as we approach retirement. But it’s not that simple. Here are the four things most common mistakes I see with target date funds.
Have you heard of the SARSA? The ‘Super Awesome Retirement Savings Account?’ No, you haven’t because it doesn’t exist. Instead, it’s stupidly called a ‘Healthcare Savings Account’. Do you have one? Are you maxing it out ($3,600 single, $7,200 family) and not spending it? You should.
