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National 401k Day! · Money In Motion with Klaas Financial

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Speaker 1: And our phone lines are open for you. If you've
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Speaker 1: got a question for our retirement planning professionals from Coss Financial,
0:05
Speaker 1: telf for number to get on the air six oh
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Speaker 1: eight three two one thirteen ten. That's six oh eight
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Speaker 1: three two one thirteen ten. Love to have you join
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Speaker 1: us this morning, whether you got a question about our
0:15
Speaker 1: topic or any retirement related question. Love to have you
0:18
Speaker 1: join us on the program, don't forget. You can learn
0:20
Speaker 1: more about Coss Financial on their website Coss financial dot com.
0:24
Speaker 1: That's Coss Klaas Financial dot com. Great website to learn
0:28
Speaker 1: more about cost Financial, learn about their separate divisions, learn
0:31
Speaker 1: about the team there. You can also sign up for
0:33
Speaker 1: the weekly Market Pulse newsletter. That's say a weekly email
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Speaker 1: that comes to your inbox. It'll snapshot of what's been
0:39
Speaker 1: going on in the markets. Also link to the most
0:40
Speaker 1: recent podcast. Again that available to you at Cossfinancial dot com.
0:44
Speaker 1: They're telephon number six oh eight four four two five
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Speaker 1: six three seven. No charge for that initial gets no
0:49
Speaker 1: you appointment at Coss Financial. It will be complementary to
0:52
Speaker 1: you again their number six oh eight four four two
0:55
Speaker 1: five six three seven and joining us this morning. CJ
0:57
Speaker 1: Closs and Forrest Ross of Coss Financial CJ. How you
1:01
Speaker 1: doing this morning?
1:02
Speaker 2: I'm doing great, Sean, how are you?
1:04
Speaker 1: I'm doing really good. Great to talk with you, for Ust,
1:06
Speaker 1: Great to have you back.
1:07
Speaker 3: How you doing good morning, I'm doing well.
1:09
Speaker 1: It's so great to talk with both of you. And
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Speaker 1: you guys pointed out tomorrow, September fifth is National four
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Speaker 1: to oh one kDa. I'm gonna guess there's a big
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Speaker 1: party at Class Financial with cake and uh and I'm
1:22
Speaker 1: looking for my invite as soon as we get off
1:24
Speaker 1: the show, because I'm a big fan of cake and
1:26
Speaker 1: ice cream. But uh, National National four oh one KD
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Speaker 1: is tomorrow, so we're going to talk about Oh what
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Speaker 1: a great tool four oh one k is and uh
1:35
Speaker 1: And of course obviously we talk with you guys at
1:36
Speaker 1: Class Financial. A big part of what you do is
1:39
Speaker 1: help folks with that and a great opportunity elso if
1:41
Speaker 1: you've got a question, get you on the here six
1:42
Speaker 1: o' eight three two one thirteen ten. That's six o'
1:44
Speaker 1: eight three two one thirteen ten. Other great thing we
1:47
Speaker 1: do on this program, it's the Class Quiz Question of
1:49
Speaker 1: the week, your chance to win a fantastic prize. This week,
1:52
Speaker 1: our friends from Class Financial have provided a twenty five
1:55
Speaker 1: dollars gift card to the Cheesecake Factory. We'll tell you
1:58
Speaker 1: a little bit later on in the program how you
2:00
Speaker 1: can win that little tip. Pay close attentions program because
2:03
Speaker 1: almost every show, the question and answer come up during
2:05
Speaker 1: our conversation. And before we start talking about national four
2:09
Speaker 1: to ROH one K day, let's actually look back at
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Speaker 1: last week's program get the Class Quiz question and answer
2:14
Speaker 1: there as well.
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Speaker 2: Yeah, so thanks to everyone for listening, and congrats to
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Speaker 2: our winner from last week, which was Carolyn of Waterloo.
2:25
Speaker 2: Carolyn correctly answered last week's question, which was in twenty
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Speaker 2: twenty five, the average accumulated debt Americans OH is over
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Speaker 2: one hundred and five thousand dollars and this was a
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Speaker 2: truer false question and Carolyn correctly answered that question as true.
2:43
Speaker 2: So make sure you pay close attention this week because
2:45
Speaker 2: we'll have another question at the end of the show
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Speaker 2: and you could be a winner like Carolyn.
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Speaker 1: Very very cool and again that coming up a little
2:51
Speaker 1: bit later in the program, your chance to win the
2:53
Speaker 1: twenty five dollars gift card to the cheesecake Factory. As
2:55
Speaker 1: much today we're going to be talking about a really
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Speaker 1: powerful actually arguably I think I didn't even know that's
3:00
Speaker 1: arguably the most just we probably put a full stop
3:03
Speaker 1: there most powerful retirement tool available, which is of course
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Speaker 1: your four oh one K. Tomorrow, as mentioned is National
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Speaker 1: four oh one K Day, So it's the perfect time
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Speaker 1: to talk about ways to maximize your plan and avoid
3:16
Speaker 1: common mistakes, isn't it. CJ.
3:19
Speaker 2: Yeah, so you know, every day is a great day
3:22
Speaker 2: to discuss this topic. But yes, it's obviously very timely
3:25
Speaker 2: with tomorrow being September fifth, which is National for one
3:28
Speaker 2: K Day, so it's the perfect time to talk about
3:30
Speaker 2: how to maximize your plan and avoid some common mistakes.
3:35
Speaker 2: That's the reason why we have Forrest ross On with
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Speaker 2: us today. He's our director of retirement Services here at
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Speaker 2: COSS Financial and so Forrest, where should people begin when
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Speaker 2: it comes to getting the most out of their FORUR
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Speaker 2: one K plan?
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Speaker 3: Thank you, CJ and Sean, and good morning everyone. And
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Speaker 3: it's interesting that today when you look at employers that
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Speaker 3: provide retirement plans to their employees, about seventy percent of
4:01
Speaker 3: Americans have some kind of retirement plan available through their employer.
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Speaker 3: So it's really prouded that if you have one of
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Speaker 3: these offered to you, that you take some time and
4:13
Speaker 3: find out about it. You know, what are the rules
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Speaker 3: around that plan? When am I eligible? What can I
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Speaker 3: put in? When can I enroll? But also even more
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Speaker 3: important than those things is is my employer giving me
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Speaker 3: a match if I contribute some of my own money
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Speaker 3: to the four oh one K plan and if they
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Speaker 3: are find out what that amount is and try to
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Speaker 3: maximize it. It really is one of the most powerful
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Speaker 3: things that you can't take advantage of in your four
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Speaker 3: oh one K plan is getting that employer match and
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Speaker 3: maximizing it. And let me just give you a quick example.
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Speaker 3: So let's say that I'm making sixty thousand dollars a
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Speaker 3: year and my employer has a match where they will
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Speaker 3: match one hundred percent of the first four percent of
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Speaker 3: my pay that I put into the plan. So again,
5:08
Speaker 3: if I'm making sixty thousand dollars a year, I contribute
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Speaker 3: four percent, that equals two four hundred dollars a year
5:15
Speaker 3: that I would be putting in. Then my employer would
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Speaker 3: match that dollar for dollar with another two four hundred
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Speaker 3: dollars for a total of forty eight hundred dollars going
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Speaker 3: into my four to H one k plane each year.
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Speaker 3: So again that employer match like is so powerful when
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Speaker 3: we look at the opportunity to help you grow your retirement.
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Speaker 1: Nest Egg talking this morning with CJ. Class and Forrest Ross.
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Speaker 1: They are our retirement planning professionals from Class Financial. Pretty
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Speaker 1: amazing stuff when it comes to the four to ROH
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Speaker 1: one k. Of course, tomorrow is national four to roh
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Speaker 1: one k today, So obviously there are options out there
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Speaker 1: and things that people need to need to know about.
5:56
Speaker 1: What about some of those choices in our retirement plans,
6:00
Speaker 1: things like where to defer our contributions.
6:03
Speaker 2: To Yeah, good question, Sean. So another key decision you'll
6:09
Speaker 2: need to make is choosing between traditional and WROTH contributions
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Speaker 2: and understanding the tax impact of those decisions. So here's
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Speaker 2: a quick breakdown. Traditional four to one ks or four
6:21
Speaker 2: to oh three b's or four forty seven plans are
6:24
Speaker 2: pre tax contributions. We call them traditional because this is
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Speaker 2: the original way that employer sponsor retirement plans were established.
6:33
Speaker 2: It was a way to reduce your taxable income. So
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Speaker 2: we call them traditional because they've been around the longest.
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Speaker 2: But if you think if I earn one hundred thousand
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Speaker 2: dollars and I put five thousand dollars into a traditional
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Speaker 2: four to one K four oh three B. What I'm
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Speaker 2: actually doing is only getting taxed on ninety five thousand
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Speaker 2: dollars because that five grand was pre tax, so it
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Speaker 2: lowered your taxable income. Now, when you do that into
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Speaker 2: the traditional side of the bucket, the good news is
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Speaker 2: you save taxes today, meaning the money you put in
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Speaker 2: is pre tax, and then it grows tax deferred and
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Speaker 2: it has compound interests accumulated with it, meaning it grows
7:08
Speaker 2: you don't pay tax, it grows no tax. But when
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Speaker 2: you get to retirement in that traditional pre tax bucket
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Speaker 2: and then you go to pull that money out to
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Speaker 2: live off of, well, then it becomes income taxable at
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Speaker 2: that time, whereas WROTH four to h one K or
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Speaker 2: four H three B contributions are post tax contributions. So,
7:27
Speaker 2: again using my same example, I earn one hundred thousand
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Speaker 2: dollars and I put five thousand dollars into my four
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Speaker 2: to oh one K, but I do it through the
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Speaker 2: Wroth bucket. Well, I'm still going to pay tax on
7:36
Speaker 2: the full hundred thousand dollars because I'm not putting it
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Speaker 2: in on a pre tax basis, so I don't save
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Speaker 2: any money today on taxes. But here's the key. That
7:45
Speaker 2: five grand that goes in that is post tax. The
7:49
Speaker 2: growth on that is tax free. So same concept here
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Speaker 2: at compounds. It compounds of compounds. And then when I
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Speaker 2: get into retirement and I go to pull money out
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Speaker 2: of the Wroth side of my bucket, there's no tax.
8:02
Speaker 2: There's no tax on my original contributions because obviously I
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Speaker 2: already paid taxes on that, but there's also no tax
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Speaker 2: on the growth as long as I leave it in
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Speaker 2: there till age fifty nine and a half. Now, of course,
8:15
Speaker 2: you know, people go, oh, well that sounds better. I'll
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Speaker 2: I'll just do all Wroth. You know if tax free
8:19
Speaker 2: sounds better than tax deferred. Wow, I wish it was
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Speaker 2: that simple, everybody, But it's actually not. You want to
8:27
Speaker 2: tell what it really is evaluating, and that's going to
8:30
Speaker 2: sound complex, But what you really have to evaluate is
8:33
Speaker 2: what is your current highest marginal income tax bracket compared
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Speaker 2: to what you expect your future marginal income tax bracket
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Speaker 2: to be in retirement. That is the calculation you should
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Speaker 2: be doing to decide between pre tax and WROTH. And
8:48
Speaker 2: here's the kicker. Everybody nobody knows the answer to that question.
8:53
Speaker 2: And therefore anybody who says pre tax is better or
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Speaker 2: WROTH is better, you can just kind of look at
8:59
Speaker 2: them and say, wow, Wow, I didn't know you knew
9:01
Speaker 2: the future. Obviously that's sarcastic. But what we're getting at
9:04
Speaker 2: here is anybody who says they know what's going to
9:07
Speaker 2: be better, they don't. They're making educated guesses about the future,
9:10
Speaker 2: which is often what we have to do as financial planners. Now,
9:14
Speaker 2: there's some pro tips to be aware of here. Pro
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Speaker 2: tip number one would be listen, if you're younger and
9:20
Speaker 2: your overall taxable income is low, or maybe you're paying
9:22
Speaker 2: like little to no federal income tax, you probably are
9:26
Speaker 2: going to want to do all WROTH contributions because you're
9:30
Speaker 2: paying little to no income taxes. Anyways, you might as
9:32
Speaker 2: well get all the tax free growth and then have
9:34
Speaker 2: no tax in the future. Conversely, if you're just getting
9:37
Speaker 2: out of med school to your first job, maybe your surgeon,
9:40
Speaker 2: and you're starting to make four hundred thousand dollars a year,
9:43
Speaker 2: you might be young, but listen, your highest marginal income
9:46
Speaker 2: tax bracket could be thirty two to thirty five percent,
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Speaker 2: you probably are going to want to do mostly pre tax.
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Speaker 2: Save that thirty two to thirty five push it out
9:54
Speaker 2: into the future when you're in retirement and you know,
9:58
Speaker 2: not pay tech or pay lower income tax bracket in
10:00
Speaker 2: the future. And finally, for those of you who go, well,
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Speaker 2: I'm not either of those extremes CGM, somewhere in the middle,
10:07
Speaker 2: we'll consider splitting your contributions a portion into ROTH, a
10:10
Speaker 2: portion into pre tax. You know, a lot of people
10:13
Speaker 2: know about the idea of diversifying your investments, but what
10:16
Speaker 2: about diversifying your future tax risk. So there's a couple
10:20
Speaker 2: of pro tips around pre tax versus ROW.
10:22
Speaker 1: Really great guidance and a lot of great information this
10:25
Speaker 1: week as we talk with our retirement planning professional CJ.
10:28
Speaker 1: Closs and Forrest Ross. Of course they come to us
10:30
Speaker 1: from Claus Financial. I hope you had a chance check
10:32
Speaker 1: out the website classfinancial dot com. That's Class k l
10:36
Speaker 1: aa S Financial dot com. If you haven't been there yet,
10:39
Speaker 1: when you get into the office, you can check them
10:40
Speaker 1: out online. Of course, got your smartphone, they're available there
10:43
Speaker 1: as well. Class Financial dot Com telephone number. Speaking of
10:46
Speaker 1: your smartphone, six oh eight four four two five six
10:48
Speaker 1: three seven. No charge for that initial get to know
10:51
Speaker 1: your appointment tech clause financial. It will be complementary to
10:54
Speaker 1: you again. They're number six oh eight four four two
10:56
Speaker 1: five six three seven. We'll continue our conversation with CJ
10:59
Speaker 1: and Forrest. We will do that next as Money in
11:01
Speaker 1: Motion with COSS Financial continues right here. Thirteen Den Wiba
11:05
Speaker 1: talking this morning with our retirement planning professional c J.
11:09
Speaker 1: Coss and Forest Ross. They come to us from class
11:11
Speaker 1: Financial online colssfinancial dot com. That's COSS k l AA
11:15
Speaker 1: S Financial dot com. Tell phone number six oh eight
11:18
Speaker 1: four four two five, six three seven. No charge for
11:21
Speaker 1: that initial get to know your appointment at COSS Financial.
11:24
Speaker 1: It will be complementary to you again. Their number six
11:26
Speaker 1: soh eight four four two five six three seven. Speaking
11:29
Speaker 1: of numbers, tomorrow is nine five. That's September fifth, National
11:32
Speaker 1: four oh one kDa try to figure out why it's tomorrow,
11:35
Speaker 1: and then I thought, well, maybe it is like a
11:37
Speaker 1: working nine to five kind of thing, or I thought
11:40
Speaker 1: well April first might work better for it. But nevertheless,
11:42
Speaker 1: it is tomorrow nine five, all right, ninth, Yeah, that's
11:45
Speaker 1: ninth month. Yeah, ninth ninth fifth four oh one kDa
11:47
Speaker 1: talking this morning about four oh one ks, and you know,
11:50
Speaker 1: we kind of set up the importance of putting money
11:53
Speaker 1: into your four oh one k. What's kind of that
11:55
Speaker 1: next step then to build your four oh one k
11:58
Speaker 1: over time?
11:59
Speaker 3: Forest, Yeah, that's a great question. And what we would
12:03
Speaker 3: suggest is try to increase what you're putting in a
12:06
Speaker 3: little bit every year if you can. Statistics would say
12:10
Speaker 3: that really to have a good mess egg when you're
12:13
Speaker 3: ready to retire, you should regularly be saving between ten
12:18
Speaker 3: to twelve percent of your pay into your retirement account.
12:23
Speaker 3: And that doesn't include the employerment, that's just your contributions.
12:26
Speaker 3: And you know, most people can't afford to do that
12:28
Speaker 3: right away, right out of the gate, right, So our
12:30
Speaker 3: recommendation is is if you could just try to increase
12:33
Speaker 3: what you're putting in one percent every year, you know,
12:36
Speaker 3: time it when you get your pay raise or you know,
12:39
Speaker 3: and if you do it in small, little incremental steps
12:42
Speaker 3: at one percent a year increases you know, you don't
12:46
Speaker 3: feel like quite as much in your in your take
12:49
Speaker 3: home pay, and it's a little bit easier to digest
12:52
Speaker 3: and account for. So really try to get to that
12:55
Speaker 3: ten to twelve percent amount over time is our recommendation.
13:00
Speaker 3: One of plans these days, we'll have auto escalation features
13:03
Speaker 3: built into them as well to help you do those
13:05
Speaker 3: type of increases. And then also if you're able to
13:11
Speaker 3: try to get up to the maximum contribution amounts that
13:14
Speaker 3: are allowable. So if you're under the age of fifty
13:19
Speaker 3: in twenty twenty five, the maximum amount that you can
13:21
Speaker 3: put into your four to one K plan this calendar
13:24
Speaker 3: year is twenty three thousand, five hundred dollars. Then if
13:29
Speaker 3: you're over the age of fifty, you're allowed an additional
13:33
Speaker 3: seven thousand, five hundred dollars for a total of thirty
13:36
Speaker 3: one thousand dollars that you could put into your plan.
13:40
Speaker 3: New this year in twenty twenty five is an extra
13:43
Speaker 3: special enhanced Ketchup contribution brought to us through legislation called
13:50
Speaker 3: Secure Act two point zero, where if your age sixty
13:54
Speaker 3: sixty one, I'm sorry, if your age, yeah, sixty sixty one,
13:58
Speaker 3: sixty two, or sixty three, those four years you have
14:02
Speaker 3: a special enhanced Ketchup contribution of eleven thousand, two hundred
14:06
Speaker 3: and fifty dollars. So again, if you're one of those
14:09
Speaker 3: four years, you could save up to twenty thirty four thousand,
14:14
Speaker 3: seven hundred and fifty dollars into your four oh one
14:16
Speaker 3: K plane in twenty twenty five, and then once you
14:20
Speaker 3: turn sixty four, it reverts back to the other seven thousand,
14:23
Speaker 3: five hundred dollars ketchup contribution. So it's kind of confusing,
14:27
Speaker 3: but just know that if you're over the age of fifty,
14:30
Speaker 3: you do have some additional contributions that can make over
14:35
Speaker 3: the standard twenty three thousand, five hundred dollars limit.
14:39
Speaker 1: It's pretty amazing, as we talked this morning with Forrest
14:41
Speaker 1: Ross and CJ Closs of Coss Financial, pretty amazing when
14:44
Speaker 1: you think about this stuff as well, and regardless of
14:47
Speaker 1: your age and where you are in your career, it's
14:49
Speaker 1: definitely an important conversation to we have and something to
14:52
Speaker 1: be aware of as well. As we talk with CJ
14:54
Speaker 1: and Forrest o't forgetting it. Gets know them, mean, gets
14:56
Speaker 1: know everybody at Coss Financial online, the website coss financial
14:59
Speaker 1: dot com. That's Closs klaasfinanci dot com. They're telling pH
15:03
Speaker 1: number six so eight four four two five six three seven.
15:06
Speaker 1: So once you've kind of decided on and figured out
15:09
Speaker 1: how much you want to contribute at the at the
15:11
Speaker 1: start of the year, and which investments you've you've chosen
15:14
Speaker 1: should be then revisiting during the year or what's kind
15:17
Speaker 1: of the guidance on that CJ.
15:19
Speaker 2: Yeah, great question, Sean. So you will want to make
15:22
Speaker 2: sure that you're reviewing your retirement contribution amounts midyear and
15:27
Speaker 2: maybe do adjustments as needed, you know, things like did
15:30
Speaker 2: you get a raise? Can you possibly increase your contributions
15:33
Speaker 2: within that maximum amount that Forrest was talking about. Also,
15:37
Speaker 2: you should review your investment mix regularly, so not only
15:42
Speaker 2: how much are you contributing, is it pre tax versus
15:45
Speaker 2: roth like we were talking about before, where am I
15:47
Speaker 2: in those maximums? But also how am I invested inside
15:51
Speaker 2: of my plan? Now I'm going to not get too
15:54
Speaker 2: deep into this, but in previous shows we've talked about
15:57
Speaker 2: target date funds, which of course are are industry loves acronyms,
16:01
Speaker 2: so you've just anything that I say you can turn
16:03
Speaker 2: into an acronym. So target date funds, which are known
16:06
Speaker 2: as TDFs for short. These target date funds the ideas
16:10
Speaker 2: that you put money into the fund that is closest
16:14
Speaker 2: to the date that you will retire. Think target date
16:19
Speaker 2: twenty forty five something like that, and then that fund
16:23
Speaker 2: automatically backs off your wrist the closer you get to that.
16:26
Speaker 2: Now more to come on this in the future, but
16:27
Speaker 2: the idea of this is if you don't put your
16:30
Speaker 2: money into a target date fund, which a lot of
16:32
Speaker 2: people do not, they will buy a stock fund or
16:36
Speaker 2: an international stock fund. What becomes a problem with that
16:40
Speaker 2: methodology if you're not careful, is if you do not
16:43
Speaker 2: review your investment allocation and you're in all say US
16:48
Speaker 2: or international stocks, and you start getting closer to retirement. Well,
16:53
Speaker 2: remember those very things that were powerful and helped you
16:56
Speaker 2: grow when you were young, which is great, could also
16:59
Speaker 2: be the cause of forcing you to work longer if
17:02
Speaker 2: they suddenly, you know, decline in value right before you
17:05
Speaker 2: you were wanting to retire. So we would just suggest
17:08
Speaker 2: about every you know, three to five years, take a
17:11
Speaker 2: look at the underlying investment allocation of your retirement plan
17:14
Speaker 2: to make sure that it still is meeting your needs.
17:17
Speaker 2: And then again consider those target date funds as a
17:21
Speaker 2: way of putting money in there so that if you
17:23
Speaker 2: do fall asleep at the wheel and you do forget
17:26
Speaker 2: to review your investments, at least those target date funds
17:29
Speaker 2: will automatically rebalance you to become more conservative the closer
17:33
Speaker 2: you get to that target year.
17:35
Speaker 1: Really great tools this morning as we talk with CJ.
17:38
Speaker 1: Closs and Forrest Ross. Of course, tomorrow's number fifth is
17:41
Speaker 1: national four roh one k da talking about the importance
17:43
Speaker 1: of your four to ro oh one k of course,
17:45
Speaker 1: if you ever have any questions, don't forget We do
17:47
Speaker 1: this each and every Thursday morning and call in during
17:49
Speaker 1: the show. Also, you can learn more about Coss Financial
17:51
Speaker 1: on their website cossfinancial dot com. That's Coss k l
17:55
Speaker 1: aa s financial dot com. And they're telephone number six
17:58
Speaker 1: soh eight four four two five six seven. No charge
18:01
Speaker 1: for that initial get to know you appointment tech Loss Financial.
18:03
Speaker 1: It will be complementary to you again their number six
18:06
Speaker 1: oh eight four four two five six three seven. There
18:09
Speaker 1: are some mistakes, some folks make some pitfalls. We'll get
18:11
Speaker 1: into that next as Money in Motion with Coss Financial
18:14
Speaker 1: continues right here on thirteen ten, w IBI talking with CJ.
18:18
Speaker 1: Kloss and Forrest Ross our retirement planning professionals from COSS Financial.
18:22
Speaker 1: The website Coss Financial dot com that's Coss klaas Financial
18:26
Speaker 1: dot com Delphy number six, So eight four four two
18:29
Speaker 1: five six three seven no charge for that initial get
18:32
Speaker 1: to know you appointment tech loss financial it will be
18:34
Speaker 1: complementary to you. Talking four oh one k is this
18:37
Speaker 1: week got a great some great information about about of
18:40
Speaker 1: course saving and of course also great information about about
18:45
Speaker 1: monitoring and keeping an eye on your on your contributions
18:48
Speaker 1: throughout your working career. But what about some of the
18:51
Speaker 1: some of the pitfalls and some of the mistakes folks
18:53
Speaker 1: may be making when it comes to their retirement plans.
18:56
Speaker 1: And how should we react today in regards to things
18:59
Speaker 1: like market volt utility and those things when it comes
19:01
Speaker 1: to our retirement plans for us.
19:03
Speaker 3: Yeah, so this is really important to think about as well.
19:06
Speaker 3: And a big mistake or a pitfall that we see
19:09
Speaker 3: people making is taking early withdrawals from their plan or
19:13
Speaker 3: even taken a loan against the fourah one K account.
19:16
Speaker 3: And I'll just give you a quick example on early
19:20
Speaker 3: withdrawals in that if you change employers, don't just take
19:26
Speaker 3: the money take the cash out of your four oh
19:29
Speaker 3: one K account if you leave an employer, instead roll
19:33
Speaker 3: it over to an IRA account or your new employer's
19:36
Speaker 3: four oh one K plan or retirement plan and let
19:38
Speaker 3: it keep growing and keep contributing to it, because if
19:42
Speaker 3: you make the mistake of cashing out your account when
19:46
Speaker 3: you change employers, first of all, it's probably going to
19:50
Speaker 3: be taxable income to you in the year that you
19:52
Speaker 3: take that cash distribution. In number two, if you're younger
19:56
Speaker 3: in the fifty nine and a half, you're also going
19:59
Speaker 3: to have an additional ten percent penalty on top of it.
20:01
Speaker 3: So that's a big hit to take, and we really
20:04
Speaker 3: don't recommend people do that unless you have no other choice. Again,
20:08
Speaker 3: if you leave employment with your employer and you have
20:10
Speaker 3: a four one K account with them, roll it over
20:13
Speaker 3: to an individual EI area account or your new employer's plan.
20:17
Speaker 3: That's really the best thing to do so that you
20:19
Speaker 3: can keep building and saving and continue to grow your
20:22
Speaker 3: retirement mestic and in terms of loans, a lot of
20:26
Speaker 3: employer four oh one K and retirement plans do you
20:30
Speaker 3: allow for you to take a loan against them, but
20:34
Speaker 3: you're paying that loan back with interest and you're really
20:37
Speaker 3: hindering the growth of your account. So again that really
20:41
Speaker 3: should be a last resort in terms of where you
20:44
Speaker 3: want to go. If you get into a financial difficulty. Instead,
20:48
Speaker 3: what we would really recommend a better solution would be
20:51
Speaker 3: is to keep a separate, separate emergency fund so that
20:56
Speaker 3: way you have someplace to go if you get into
20:59
Speaker 3: a difficulty suation instead of having to tap into your
21:02
Speaker 3: flow and can't count. In terms of market volatility, I
21:07
Speaker 3: think a mistake that people can fall into there is
21:10
Speaker 3: they tend to panic if the markets go down. I
21:14
Speaker 3: mean markets don't go straight up, right, I mean they're
21:16
Speaker 3: going to go up and down as we go through
21:17
Speaker 3: economic cycles and as we go through time, and sometimes
21:22
Speaker 3: people can panic a little bit if the markets start
21:25
Speaker 3: to go down. And a good example of this was
21:27
Speaker 3: what happened during COVID. If you remember back in March
21:30
Speaker 3: of twenty twenty, when COVID was still was first hitting us,
21:35
Speaker 3: the markets went down very very quickly, and a lot
21:38
Speaker 3: of people were worried about what's going to happen. We've
21:41
Speaker 3: never been through this before, and they panicked and pulled
21:44
Speaker 3: their money out of the market at exactly the wrong time.
21:49
Speaker 3: And then when the markets bounce back, they really missed
21:51
Speaker 3: out on a lot of that game, and so really
21:55
Speaker 3: get in the habit of just riding out the waves
21:59
Speaker 3: or the ups and downs of the market when it
22:01
Speaker 3: comes to your retirement account. Because this money, use it
22:04
Speaker 3: for tomorrow, it's not for next year. Usually it's for
22:08
Speaker 3: ten or fifteen or twenty years down the road. So
22:11
Speaker 3: so just get used to kind of letting it ride
22:14
Speaker 3: and don't worry about the ups and downs of the market.
22:16
Speaker 3: You know.
22:17
Speaker 1: One of the terms for us, I hear you guys
22:18
Speaker 1: use is that dollar cost averaging, which is which is
22:22
Speaker 1: a really really important, really important thing to keep in
22:25
Speaker 1: mind too as you as you're mentioning there's through the
22:27
Speaker 1: ups and downs and other things. We talked this morning
22:29
Speaker 1: with Forrest Ross and CJ. Closs, our retirement planning professionals
22:33
Speaker 1: from Class Financial website Class financial dot com. That's Coss
22:36
Speaker 1: k l A A s Financial dot com tel for
22:38
Speaker 1: number six so eight four four two five six three
22:41
Speaker 1: seven and CJ. I'll I'll let you wrap you a
22:43
Speaker 1: lot of great information this week. As always, Uh, I'll
22:46
Speaker 1: let you kind of give us the bottom line this morning.
22:50
Speaker 2: Yeah, thanks Sean. So you know your retirement plan at
22:53
Speaker 2: at work, your employer sponsored retirement plan, whether that be
22:57
Speaker 2: a four oh one K of four oh three, be
22:59
Speaker 2: a simple IRA at set by Ray four fifty seven
23:02
Speaker 2: four one, or whatever they call your employers fontor retirement plan.
23:07
Speaker 2: It is truly one of the most powerful tools for
23:10
Speaker 2: your future financial independence, and we would just suggest use
23:14
Speaker 2: it with intention, maximize your match, increase your contributions over time,
23:19
Speaker 2: set up auto escalations, and keep your investments aligned with
23:24
Speaker 2: your goals, and ride through some of those waves. As
23:28
Speaker 2: Forrest was talking about, listen, we have found through being
23:32
Speaker 2: in business for fifty years in this space of retirement planning,
23:37
Speaker 2: that it often is not the separation between those who
23:41
Speaker 2: have a lot at retirement and live comfortably in retirement
23:44
Speaker 2: versus those who do not is often not what you
23:48
Speaker 2: would think it is. What people think it is is
23:52
Speaker 2: really smart people who earn a lot of money. That's
23:56
Speaker 2: often not the case. It's often of those people, regardless
24:01
Speaker 2: of their education level or of their income level. Did
24:05
Speaker 2: they start early and make it automatic? Let me repeat that,
24:10
Speaker 2: did they start early and did they make it automatic?
24:14
Speaker 2: There is a lot of power in just starting to
24:17
Speaker 2: save early, making it automatic, auto escalating your contributions, putting
24:21
Speaker 2: it into a target date fund that automatically rebalances for you,
24:25
Speaker 2: setting it and forgetting it and investing for forty years.
24:29
Speaker 2: I mean, Forrest can attest all almost all of the
24:32
Speaker 2: research that we see, not to mention with our own
24:35
Speaker 2: experience for the last fifty years, would support this ideal
24:39
Speaker 2: of just do the simple things right. So that's the
24:43
Speaker 2: whole point of our show today is just to encourage
24:45
Speaker 2: you really engage those employer sponsored retirement plans, follow some
24:48
Speaker 2: of these instructions, and then obviously if you end up
24:51
Speaker 2: needing help with anything like that, you can reach out
24:53
Speaker 2: to our office and we can talk to you about
24:55
Speaker 2: ways to kind of enhance that overall strategy.
24:58
Speaker 1: It's always a really good day. You mentioned starting early,
25:00
Speaker 1: and it's never too late as well. To start that
25:02
Speaker 1: conversation and start to start those positive good habits. It
25:06
Speaker 1: benefits you greatly, especially as you look towards retirement. Great
25:10
Speaker 1: day to start up. Set up that appointment at Cost Financial.
25:12
Speaker 1: Don't forget that initial one. It's not going to cost you.
25:14
Speaker 1: A thing I got to do is pick up phone,
25:15
Speaker 1: give the call six oh eight four four two five
25:18
Speaker 1: six three seven. I got no charge for the initial
25:20
Speaker 1: get to know you appointment at Lost Financial. It will
25:22
Speaker 1: be complimentary to you. They're number six oh eight four
25:24
Speaker 1: four two five six three seven the website cost Financial
25:27
Speaker 1: dot com. That's cost k l a a s Financial
25:30
Speaker 1: dot com. We don't have a money in Motion listener
25:32
Speaker 1: question corner question this week, but if you do have
25:35
Speaker 1: a question, I know, on I've called radio shows, I
25:38
Speaker 1: get nervous. I know sometimes folks are hesitant to call in.
25:41
Speaker 1: They don't want to be live on the air. As
25:43
Speaker 1: welcoming and as fun as it is, I get it.
25:44
Speaker 1: A cool feature in our great resource our friends at
25:47
Speaker 1: cost Financial provide is an opportunity to email your question
25:50
Speaker 1: in info at Cossfinancial dot com. That's I n FO
25:55
Speaker 1: at Cossfinancial dot com. If you've got a question, whether
25:57
Speaker 1: it's right now or something pops in your head in
25:59
Speaker 1: the middle of the night, you can email at info
26:01
Speaker 1: at Cossfinancial dot com and we'll answer it right here
26:03
Speaker 1: on the program. Speaking other great things right here on
26:06
Speaker 1: the program, the class quiz quesch leak. It is time
26:08
Speaker 1: now for that your chance to win a twenty five
26:10
Speaker 1: dollars gift card to Cheesecake Factory. It works like this
26:13
Speaker 1: and just a moment I'll ask you the class quiz
26:15
Speaker 1: question leak. You then have thirty minutes from the in
26:16
Speaker 1: today's program to call the Cost Financial Office right here
26:19
Speaker 1: in Madison at six oh eight four four two five
26:21
Speaker 1: six three seven. If you are the first call with
26:24
Speaker 1: correct answer, win this week's prize, which is a twenty
26:26
Speaker 1: five dollars gift card to cheesecake factory. This week's Gloss
26:29
Speaker 1: Quiz question week is this. If you are fifty five
26:32
Speaker 1: years old and twenty twenty five, what is the maximum
26:36
Speaker 1: amount you can put away into your four oh one
26:39
Speaker 1: K plan at work? Is it twenty three thousand dollars
26:43
Speaker 1: or three thousand, five hundred dollars. Telephone number six oh
26:47
Speaker 1: eight four four two five six three seven. First call
26:49
Speaker 1: with correct answer win that twenty five dollars gift card
26:51
Speaker 1: to the cheesecake factory. Don't forget as well. That's Loss
26:53
Speaker 1: Financial Office right here in Madison. That number six oh
26:56
Speaker 1: eight four four two five six three seven. And the
26:59
Speaker 1: website Closs Financial dot com. That's Coss k l A
27:02
Speaker 1: A S Financial dot com. CJ. Forrest. It's great chatting
27:06
Speaker 1: with both of you, guys. Have a great Dan and
27:07
Speaker 1: we'll talk soon.
27:08
Speaker 3: Thanks, thank you so much.
27:10
Speaker 1: Take care, guys. News comes your way next year at
27:12
Speaker 1: thirteen ten WU I B I