Tag: asset allocation

Common money problems for most of us…and the pay gap.

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If you google financial issues to see if you have “company” with whatever financial issue you personally may be dealing with… Good chance you have company! One of “the issues” that seems to be on every list, is a low income/the need to make more money. It’s actually the first topic on the list from a survey provided by SoFi.

7 Common Money Issues People Face | SoFi

These days it feels like everyone has or seems to need a side hustle.  Is it really because everyone can’t manger their money and not live below their means? Sure, there is some of that, but sometimes I talk to people and can not believe how low their salary is! I know people that have 40 years of experience doing a particular job and I KNOW they make less than someone doing the same job, and they are only 30 years old! What’s wrong with this?  There is no transparence in most companies, and we KNOW the guys still get paid more than most woman in most situations.  The pay gap is very real, and that gap can vary  by state. This article from Business Insider is eye opening. Pay Gap by State: How Much Women Earn Compared to Men (businessinsider.com)

As woman everything seems to be stacked against us… We make less money overall, we are in most cases the primary care givers for children, and or ageing parents, which may result in lost time at work or working part time. Woman also live longer, so NEED more money for retirement.

The ONE thing that IS equal is the cost of college! If woman make approx. 20% less than men in general, then tuition should be 20% less for woman, right!? Ok just me going a tangent there… But a valid point!

Because of the pay gap, women are starting more businesses, and hopefully investing more, to equal the playing field. Woman typically do better at investing they say because we are more patience and will allow the funds to grow and not panic and sell if the market goes down. That might be true, but I also think woman have a full plate most days and do not have time to look at their long term accounts every day, and we know what the term “long term” means. 😊Women have more patience and are willing to “educate” themselves on topics they have an interest in. But when it comes to “investing” people (not just woman) feel intimidated. It’s not intimidating, let’s not over think it. If you have a 401K AND you have “allocated your assets” then you’re investing! What does it mean to “asset allocate”? It simply means you have “picked” how you will divide up the money you are setting aside each month in that 401K.  Maybe you have some in a fund called “Large Cap” and some in “Small Cap” Or “international funds, or Index funds…. Just do NOT leave it in cash! Also do NOT ASSUME the “company”, as in the company you work for or the company that the 401K is with is” asset allocating”  for you! This is on you! But again, do not panic here. Get online and access your 401K account and log in. Find something that gets you to a spot that allows you to allocate the “funds” to “buy”. There are usually RISK assessment questions as well as questions like your age and the age you want to retire. Then the “robo” advisor will allocate your assets. That’s it! You are investing, yes you are an investor! 😊  Look at you, doing big girl stuff! Look at these allocations maybe once a year, you may or may not have to do anything with it.  The market will go up and down, which means your account could go lower than the month before. If the market in general is down, that will be the case for all of us. Remember this is a marathon, this growing your money game we are playing here. IF the market is down, and you still have extra cash in your budget, UP your contributions each month or even if it’s a ONE time shot with extra money. Hey, the Stock market is having a SALE!!! 😊 Good Luck!

Your Work Retirement Plan

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Are you really invested in your works retirement plan???

I know what you’re thinking, of course I am! If you have a 401K, hopefully you see a line item on your pay stub, with the amount or per cent you requested be taken out each paycheck.  These days some of us only have a paperless copy of our pay stub.  So here is why I asked. Last week I happened to be talking to two family members that both work in education. In the state we live in educators do NOT pay into social security, they pay into the state pension plan. Which is 11% of their pay right now. There are only 6 states that follow this plan. In the conversation I asked if they both also take advantage of the 403b retirement plan option? They both said yes. But as we got talking and they pulled up their online pay stubs, I said show me where the 403b is taken out? Well to both of their surprise it was not actually being taken out at all!

One of them had changed districts and filled in all the paperwork and asked everything get shifted over where the same company handled both school districts. Simple and easy right?

Here was the problem, the person on the other end never did anything, plus it is now a different HR/Payroll, because it’s a new school. It’s up to us to make sure the paperwork is in place and that the HR/payroll team is doing what you asked it to do!

One of the people only lost a little time, but the other lost 20 years! The other person also just never even thought of funding it monthly, and only relied on the pension, like the good old days.

Thirty years ago, there were more companies and jobs that offered a “Pension”. Here is the thing, people talk about social security and how there will never be anything left for most of us to collect. Who really knows???  Thirty years ago, if you had a job that offered a pension, people would say you were set for life! Well things started to change in 1978 when they passed the Revenue Act section 401K, which allowed employees to defer the taxes on the funds going into these accounts. Plus, these accounts can grow with compound interest. The law went into effect on January 1, 1980. That’s not that long ago.

Since the 1980’s, fewer private companies have offered a pension and for the people I know working in state jobs that do still offer a pension, they are always moving the mark! EX: The teachers I know were told years ago… Stay 30 years and you get your full pension! NICE, right? What if you started at 22 right out of school. Technically you are eligible for the full pension at 52!

 Not anymore, now they have moved the mark. You need 30 years PLUS you need to be 65 years old. WHAT?!  OK, maybe you just LOVE your job, and you think you will always LOVE your job… But what if after 25 years you’re burnt out and need a change? Now you’re in to deep… Or at least that’s what people say. But what if you let your “pension” money just sit there till your 65 and you do a different job, because you not only have the “pension” money, which is say 40% of your pay, vs 80%, you also have $500,000 in your 403b account still growing tax deferred! Might make it easier to make a change…. Plus your new job, probably has a 401K plan!

 Don’t get me wrong, I think it’s great if you have this benefit! I wish I did! BUT, if you’re young and starting out I think you really need to also put some money in your 403b or 457 retirement plans. It’s never going to hurt you! Even if it’s only $100.00 a month, it’s like $75.00 a month out of your check, because its tax deferred.

The lesson here is, FIRST LOOK AT YOUR PAYSTUBS, do not assume anything. You are responsible for making sure these things get done! There is NO Retirement babysitter checking on you. Once you know the account is being funded, make sure it’s not sitting there in CASH. Talk to the “advisor” of the plan, yes there will be one and have them help you allocate the funds. The term you hear is “asset allocation”. They can help you or if the plan has a ROBO advice, that works too. The online robo advisor will ask you some “risk” tolerance questions, and timelines. Then it will allocate the funds appropriately.  Nothing scarry here… Just taking charge of your stuff! You got this!