There’s more than one way to plan for retirement, and not all of your options were created equally. Bobbi Rebell Kaufman, CFP and financial wellness advocate explains how to actually plan for your future.
Transcript:
Conway Gittens: So what are some of the
most powerful financial habits, other than that one that you’d
recommend, everyone adopt?
Related: 3 reasons why Social Security is better than stocks for retirement income
Bobbi Rebell: Well, it’s really important. You know, we watch so many gyrations in the stock market, it can be really hard to stick with it when we see the market dive one day and we’re like “my goodness my goodness.“
So I want people to keep up those automatic contributions in your 401ks. Make sure that you put away as much as you can when you’re allowed if you can afford it. So if you turn 50, you can contribute more. Make sure you step it up right. Make sure that you’re paying attention to things like the taxes, the fees that are involved and so on. So you want to pay strict attention to that.
But don’t get obsessed with the day to day. Play the long game for sure. The other thing I want to remind people of, and we were talking about how things have changed. You know, we’ve become better at saving and retirement vehicles. And in fact, now most jobs, when you sign up, they will automatically enroll you in a 401. K these are good things. But one of the struggles people have been having and one of the reasons we’re seeing a trend where people are actually taking more money out of 401 K’s, even if they incur a penalty. And we do have some new provisions where you can take out money out of 401k without a penalty.
The reason is that that’s where all the money is, right? When people have struggles. Where’s my money? Well, it’s all locked up in these retirement accounts. Remember that while you always want to get the advantages, the tax advantages, and you want to get certainly the matching money you can save for retirement anywhere, you can save for retirement, diversified in CDS, which you may want to lock in if you think rates are going down, by the way, you may save retirement just in a brokerage account that you invest.
It doesn’t all have to be in an account that would have penalties because you do want to have that flexibility. If you have a short term emergency that you can get to the money without a penalty. And so it’s important to diversify. In other words, in terms of what you have available to you long term meaning after you retire versus medium and short term. Don’t put it all in retirement money.
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