Retirement Planning

The Psychology of Wealth for People in their 20s and 30s

The Psychology of Wealth for People in their 20s and 30s

Have you gone to work antsy because you haven’t exercised in a while? Perhaps you planned to visit the gym before work, but time got away from you. Then at work, there’s 10% of your brain that’s thinking “I need to go to the gym”. You don’t concentrate, and you don’t maximize your day. The thought of needing to exercise ruins your productivity and the joy you could have at work. It’s a sense of distraction and a sense that you aren’t accomplishing what you know you could accomplish.

I bring up this feeling because it’s what many people in their 20s and 30s feel when it comes to saving/investing for retirement. I think most people in their 20s and 30s know that early investing is the most important thing they can do for their retirement funds. But when they don’t save intentionally, spending money creates a twinge of guilt that reverberates. “I need to save,” they think, “Why did I buy this?” This feeling takes away from the joy of living in the moment and enjoying what you just bought. It’s not just important to save early for investment reasons, but for the stability it brings to our psychological lives as well.

To be clear, this blog post isn’t about the math of saving/investing early (but you should) nor is it about the amount saved (but 10%-25% of income is a good ballpark to be in). It’s about the importance of CONSISTENT saving for the purpose of investing for retirement. There are 6 reasons why consistent investing is just as important (if not more important) than the actual amount saved. Only one reason is mathematical. The rest are psychological.

(Almost) Everything the Average Person Needs to Know About RMDs

(Almost) Everything the Average Person Needs to Know About RMDs

RMD stands for required minimum distribution. With some exceptions, when you turn 72, the IRS requires that you start taking money out of your 401(k), 403(b), 457(b), profit sharing plans, Traditional IRA, SIMPLE IRA, or SEP IRA. How much money you must take out depends on your age, your account beneficiary, and your account beneficiary’s age(s). Most people use the Uniform Lifetime Table (scroll halfway down) to calculate their RMD.

TD Ameritrade ends Roth Solo 401(k) starting December 1, 2022

TD Ameritrade ends Roth Solo 401(k) starting December 1, 2022

Do you have a Roth Solo 401(k) at TD Ameritrade? If so, you will lose the ability to make after-tax contributions to your account at TD Ameritrade by December 1, 2022. The good news is we can manage your Roth Solo 401(k) assets for you, you can keep your own TPA, and you can still make after-tax contributions to take advantage of the Mega Backdoor Roth strategy. To learn more about the transfer process, view our informational brochure.

What do Cash Balance Plans and Thanksgiving Have in Common?

What do Cash Balance Plans and Thanksgiving Have in Common?

Are you a small business owner? When you get older (above 50), a cash balance pension plan may be a good retirement plan to adopt. 401(k) plans are a great starting place for your business’s retirement plan, but it may be time to add on another plan if your income is in a high tax bracket.

With a 401(k) plan, your maximum annual addition is $61,000 per year (2022). Having a Roth 401(k) plan is even better, and utilizing the Mega Backdoor Roth strategy is an amazing place to start if you are a high income earner. But as you enter your 50s and the advantages of Roth are less pronounced, you may want to investigate reducing your tax-burden. This is especially true if you are in the top income tax brackets (32%, 35%, or 37%).

Enter the potential for a Cash Balance Pension Plan (CB Plan).

Roth Solo 401(k)s and the Mega Backdoor Roth Strategy

Roth Solo 401(k)s and the Mega Backdoor Roth Strategy

Are you a solo business owner earning $200,000+ annually?

You need to look into the Roth Solo 401(k) to super-charge your retirement savings. Imagine getting $61,000 into a “Roth” retirement account per year? The retirement savings are mindboggling. Investing $61,000 per year for 30 years at 8% annual growth compounded monthly would be worth $7,575,497 at retirement TAX-FREE.

To learn more, read our informational PDF here.

We can assist with setting up a Roth Solo 401(k), and we can manage the investments inside it. Give us a call at 571-969-1459 or email us at ryan@ifpinvest.com.

SEP IRA - A Simple Retirement Plan for Small Business Owners

SEP IRA - A Simple Retirement Plan for Small Business Owners

When I see the word “SEP”, my mind goes to a SEPtic system. Immediately, I get the unpleasant thought of what’s inside. Not a pleasant thought. Thankfully, a SEP IRA is the exact opposite, and it provides business owners with a tax-advantaged way to save for retirement. Now that’s the opposite of gross. There are two audiences to which this post is aimed to serve. First, sole business owners with no employees. Second, small business owners with relatively few employees. Before we differentiate, let’s go over some introductory details on the SEP IRA.

What do ESOPs and Coffee have in common?

What do ESOPs and Coffee have in common?

So your company offers an ESOP huh? Well, that’s nice, but what even is an ESOP? And what does it mean for your financial plan? We’ll get into more detail later, but for now, I like to think of ESOPs like coffee sweetener to a good cup of retirement plan coffee. While it’s not needed for your retirement plan, it can add a wonderful sugary boost. But you don’t want too much sugar in your coffee, or you’ll get sick. So first, let’s talk about the basics.

5 key Facts About the New Tax Bill

5 key Facts About the New Tax Bill

The new tax bill has 5 key changes that taxpayers can expect as a result of this new bill, including:
Changes to the personal tax code
Impacts on business owners and the introduction of the pass-through deduction
The ability to utilize a 529 Plan to pay for private elementary and secondary education
The doubling of the estate tax exemption
Read on to learn more.

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Independent Financial Planning, LLC is a Virginia registered investment advisor.

Contact: 571-969-1458