The New Rules for Retirement Saving
There are three risks each one faces for preparing for life after retirement. In planning for those three risks
you’ll need knowledge, planning and action.
Those three risks are:
Structural Risk – Is the risk you have because of the WAY you save. This is about what tools and what kind of help you have available.
Do you have a 401k plan and does your employer match your contributions? Or do you have a non-matching
plan, or maybe a 403b, 457 or if you work for the government a TSP. Will that plan be around, will your
employer stop matching?
Another is Social Security – will that be around when you retire.
And finally, your personal savings – IRA’s are the most popular.
The sum of what I’m saying is – It’s time to realize that your retirement savings may be in your hands alone.
Market Risk – This risk come with HOW you save and WHO helps you save. Plans such as 401k’s, IRA’s, 403b’s. TSP’s and ROTH IRA’s. All these accounts are probably linked to the stock market. The market is the single biggest determinant on whether or not we grow our retirement funds and most of us don’t know how to manage that growth. How much of your retirement did you lose in the 2002 – 2009 decade and again in 2020 because of the Coronavirus.
Tax Risk – This is probably the most least understood risk you face today saving. Remember, you must account for taxes when you save for retirement.
We live under two tax structures – Tax Deferred and Tax Free.
Tax Deferred – This would be your 401k, 403b, 457, TSP and Traditional IRA. For a tax break today, you are postponing your taxes to when you retire.
Let me ask you a question, do you think taxes are going to be higher, lower or the same when you retire? If you answered higher (most people do) then why would you postpone your taxes and pay more at retirement?