If she could have convinced herself of one thing during her younger days, financial advisor Tanya Winch would have told herself to save much more for her retirement and to begin saving earlier. “I regret wasting potential gains on magazines and gum” she said. “Back then, I didn’t understand the magnitude of what compound interest can do. It’s a great theory and it’s completely understandable but behaviorally, it’s not real until you get to a certain point in your life and you say, ‘There’s only so much left in my working life. I’d better get on it. I’d better stop fooling around.’” These days, she’s on a mission to help other young working professionals not only understand how compound interest can boost the money they’ve worked so hard to earn, but also how easy it is to do so. Simply directing a small portion of their paycheck into an account now will lessen their future anxiety about retirement and give them a leg up on feeling great about their money skills. Toward that end, she is teaching a class called “Take Control of Your 401(k)” that will be offered both virtually and in person through the University of Wisconsin Oshkosh – Fox Cities. The two-session series will run on Nov. 2 and 9 from 6 to 7 p.m. You can register here. She wants young professionals to take control of their 401(k) and other retirement accounts and to understand that it’s not that difficult to do so. “I think everyone thinks it has to be a giant amount of money that you put into your 401K) to make a difference, but even if you just put a small amount of your paycheck in you’re going to see a big reward,” she said. “That’s the highest form of self-care and it’s really necessary for both your current and your future self.” While the class will cover 401(k) specifics like what a market cap is and… | Read More »
401(k) strategies
There’s no free lunch (except in retirement plans)
We’ve all heard the saying, “There ain’t no such thing as a free lunch.” It’s used to remind us that there is a cost to everything even, or especially, if it is hidden from view. The phrase actually comes from the once-common practice of saloon owners advertising a “free lunch” for patrons who would purchase a drink at their establishment. Of course, the fare offered at these banquets was heavily salted to induce patrons to imbibe more of the money-making beverages. Social critics at the time were keen to point out the hidden costs of this “free lunch.” The average price of drinks where a free lunch was offered were higher than at other establishments. Less obvious, but just as consequential, were the societal costs associated with higher rates of alcohol consumption. And so, as an admonition against thinking that you can get something for nothing, the phrase, “there ain’t no such thing as a free lunch” entered the American lexicon. The phrase achieved its current popularity when the free-market economist, Milton Friedman, used it as the title of a book in 1975. For sure, nothing comes for free. But when we’re talking about saving for retirement there is something that comes as close to a “free lunch” as you can get, and that is the employer match in your 401(k), 403b or other employer sponsored retirement account. As employers have moved away from providing a life-long pension to retired employees, they have stepped up with a commitment to help their employees contribute to their own retirement accounts and the “Employer Match” was born. The Federal government supports employers by making the “match” tax deductible. As of 2016, 66 percent of workers had access to an employer sponsored retirement plan, yet only 49 percent of workers participate in the plans available to them. And worse, of those taking advantage of the employer match about one in four is not getting… | Read More »