Don’t Quit Your Day Job – Personal Finance, Economics and Investing

Reality check or tempered expectations? The number of 401(k) investors who believe they can retire early has, as expected, decreased over the last few years of market turmoil. Since 2007, the number of investors who think their 401(k) or IRA accounts will be the largest source of income in retirement has fallen 7 percentage points – from 52% to 45%.

The release of the Employee Benefit Research Institute’s 2010 Retirement Confidence Survey is something that really interests a person like me. For years I’ve been digging into personal finance and economics texts in the ravenous pursuit of knowledge in the fields. However, occasionally a report like the RCS comes along and allows me to really benchmark my own behavior against that of my peers – other Americans. What does the report show? In my opinion, many people aren’t taking the whole investing for retirement thing seriously.

A few years back my cousin visited me while I was still in school. Since he had never been to Vegas, my roommate and I decided to take him there… as soon as he landed in Los Angeles. Hilarity ensued… and nothing was learned at all about retirement saving except how not to approach it.

Feel like the United States isn’t saving enough money? Well, so does the current administration. With personal savings rates hovering at a pitiful 4.2% for July, (compared to almost 50% for China) it seems like a reasonable proposal. So, what will some of the new programs to increase savings look like?

Do you get a match? What’s the average management fee on your fund choices? Does your plan have all of the necessary asset classes? If you’ve got a 401(k) at work, no doubt you’ve been pressured to sign up (or automatically enrolled). How does your 401(k) stack up?

Reverse mortgages are a relatively new financial product.  Generally, if you are close to (or in… the minimum age is 62) retirement, you can take out a reverse mortgage on the equity in your home.  Just like the product’s name, you would then get a payment from the bank which holds the reverse mortgage.  Sound [...]

If you saw $1,377.71 lying on the ground, would you pick it up?

I hope you would. That’s the sort of savings you could find from opening a Roth IRA. Any increase in your future tax rates means you made money simply from choosing the right account to invest in. Sound good? Read the article.

Stock Option Grants, Employee Stock Purchase Plans, Restricted Share Grants, 401k Plan Options, Outright Stock Grants, even Index Funds. There are a lot of ways for you to invest in your own company’s stock. However, is that really a good thing?

“A penny saved, is a penny earned,” wrote Benjamin Franklin in Poor Richard’s Almanack. The quote is repeated as fact by many people, often while picking pennies off the ground. Our friend Ben lived in a simpler time, and it’s time to revisit this famous quote with a little (disgusting? intriguing?) math to see if it holds up to closer scrutiny.

One of the more interesting questions that has cropped up recently is whether the Roth or traditional 401(k) is the superior savings vehicle. Most people know that if you expect your tax rate to increase in retirement, a Roth is better, and a Traditional 401(k) is better in the case you believe it will decrease. I would like to show you some of the considerations where this may not be the whole story. I am not a financial planner; I just like to think through these sorts of decisions on my own. The following is my judgment of the situation, and you should discuss your own situation with a financial planner. Hopefully you can use this information for your own purposes. Also, if the middle is too dry, skip to the end. Enjoy!