Assets allocation is just not one of those topics that most people find particularly sexy. Usually it’s the sort of thing that gets about as much attention as the instruction manual to your Blu-ray player. But as you’ll see below, it’s one of those parts of investing that you simply can’t ignore – largely because it can have a MAJOR effect on your finances and how long they ultimately last. The reason I wanted to bring this up is because of the roller-coaster of market activity lately. In case you haven’t checked your stocks or 401k balance in a while, there have been some pretty big up’s and down’s to the stock market. Sometimes the Dow index has been down as much as 300 points – that’s almost a 2% down in one day! How does … [Read more...] about How a Good Asset Allocation Model Can Impact Your Financial Future
Retirement
Ask MMD: Should I Do a Rollover, Pension Lump Sum or Annuity?
How do you know you’re a true financial geek? The answer: You get excited when one of your friends asks you a money question because it means crunching some numbers with Excel! Okay … maybe not to that extreme, but that’s pretty much how I felt recently for a friend who had a question about whether or not to cash out his pension with an old employer. Here was his email: So I attended a webinar today about the buyout (with my old employer). Attached is a snip of the five options they gave us and what the amounts would be. Rollover to an IRA or another employer’s plan = $33,165.41 Rollover to the old employer’s 401k plan = $33,165.41 Take a pension lump-sum cash payment = $23,215.79 (minus taxes) Begin collecting monthly … [Read more...] about Ask MMD: Should I Do a Rollover, Pension Lump Sum or Annuity?
Our Ultimate Plan to Retire at 45 and Achieve Financial Freedom
If you have any aspirations to retire early some day, then this is the post you’ve been waiting for. It’s my annual update to our plan for financial freedom. Trust me – you’re not going to find another plan like this anywhere else. For some time now I’ve been saying that my wife and I plan to retire when I turn 45 years old. How do we plan to pull off such an ambitious goal? That’s what this plan is all about. We put numbers to paper and actually see what our cash flow will look like all throughout the future. Hence the name of the blog, this is our “money design”. If you have any desire whatsoever to retire at 45 (or any age really), but you’re not really sure how you're going to do it, then this post is for you! I'll … [Read more...] about Our Ultimate Plan to Retire at 45 and Achieve Financial Freedom
Should I Go for a Pension Purchase Option or Invest the Money? – A Reader Question
A few weeks ago I receive a really great question from a friend of mine (we’ll call him LJ) regarding whether or not he should take a pension purchase option that his employer is offering him. Here’s the email he sent me: I'm thinking about buying 5 years of generic pension service time. Seems like a no brainer, right? Not quite. I've had the actuarial done and it will cost me $37,800. A good chunk. I have the money in a 457 account and can roll it over to my pension administrator. I plan to retire in 22 years at 60 when I am eligible to draw the pension. I have 13.5 years of service currently. This would make it 18.5 years. The reason that I'm considering this is that my pension multiplier is going to be reduced on Jan 1st from 2 to … [Read more...] about Should I Go for a Pension Purchase Option or Invest the Money? – A Reader Question
2015 Maximum 401k Contribution Increases to $18,000 – How You Can Get There
If you’re one of those people who are really good at saving their money diligently for retirement, then the IRS has some good news for you next year: The 2015 maximum 401k contribution has just been increased to $18,000 (up $500 from 2014). For those people 50 and older, the $5,500 catch-up limit was also bumped up to $6,000. I’ve personally been saving up to the 401k maximum for a while now and am looking forward to bumping up my contributions. By saving so much I know that I’m not only helping my family to get closer to reaching financial freedom, but we’re also taking advantage of a few other extremely important benefits. Here are what they are and what you can do to help yourself get that point too. Why Max Out or … [Read more...] about 2015 Maximum 401k Contribution Increases to $18,000 – How You Can Get There
Should I Do a 401k to IRA Rollover? The Benefits and Drawbacks
Recently during a discussion with my money coach client there was a very important question that came up: “I have an old 401k with a former employer that is still sitting right where I left it. I’m wondering if I should make a 401k to IRA rollover or simply leave the money right where it is?” That’s a really good question. I’m sure for a lot of people (myself included) that the money you have in your 401k account is probably the largest percentage of your wealth you have saved up – anywhere! Even if you’ve got nothing more than the average 401k balance of $81,000 as reported by Fidelity, that’s still a very serious amount of retirement savings that you want to be putting to work as hard as possible. Unfortunately, however, … [Read more...] about Should I Do a 401k to IRA Rollover? The Benefits and Drawbacks
Some Unconventional Thoughts on Investing for Your Retirement
When I first started in financial planning, this would be back in the 1980’s, investing for your retirement was simple. When you were young, the theory went, you dutifully started putting away a little bit of your salary each month. The amount was as high a percentage of your income as you could manage. It was supposed to be a sacrifice. Give up something now to have something later. You invested in the stock market, of course. Equity returns were the way to go and you had plenty of time to ride out cyclical fluctuations. Your risk return profile indicated a higher acceptance of risk. You also bought a home. This was more a place to live than a retirement investment. Still, it increased your net worth. As you got older you … [Read more...] about Some Unconventional Thoughts on Investing for Your Retirement
What To Do When You Retire Early – Here Are My Plans
Answer me honestly: If you never went to work again, what would you do with the rest of your life? It’s a simple question. But one where the answer is probably more complex than you realize. You see recently I’ve been giving the matter of what to do when you retire early some serious thought. I don’t there’s anyone out there who hasn’t fantasized about the day when they finally have enough money to call it “quits” at work and do whatever it is they want from that point forward. Designing your financial freedom. It’s what this blog is all about. But recently I’ve been asking myself what happens AFTER you get there? What is it that is truly so wonderful and waiting for me on the other side of the early retirement gates? Can … [Read more...] about What To Do When You Retire Early – Here Are My Plans
