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Retirement Plans & Where to start

Lesson 11 from: How to Retire Early: The Latte Factor

David Bach

Retirement Plans & Where to start

Lesson 11 from: How to Retire Early: The Latte Factor

David Bach

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Lesson Info

11. Retirement Plans & Where to start

David orients you to the different types of retirement accounts available, highlighting their benefits depending on your needs. Learn the difference between a traditional vs. Roth IRA, spousal IRA, SEP IRA, 401k and solo 401k plan. What is recommended if you’re self-employed? What if you have employees? David answers your questions and points to brokerages, roboadvisors and apps where you can start.

Lesson Info

Retirement Plans & Where to start

These are the different amounts of money that you can put away today. Your retirement accounts. So we'll go through quickly. IRAs 41 K plan. Step by. Raise sold for one. K plans. This is the numbers. Now read stands for under age 50. Black stands for over age 50. Because of your older, there's a catch up provision. All of that is tax deductible. So I raised from K plans. That's how much you can put away question number one on a 41 K plan if you got one. Are you enrolled? Number one thing you need to do is be enrolled. You need to use it. You need to max it out 150 Endure age 50. It's $19,000. I want you saving an allergy of your income. Ideally, I want you maxing it out. I want you being obsessed with saving. You can't really over save and invest. You can always tap the money later. I don't want you to you leave it there. I don't want to borrow from it, but you gotta Maxie's plans out. Second thing is, if you're self employed, you need to open up a set fire. So self employed retirement...

account. It takes 10 minutes to open myself. Employer time account. All of you watching yourself employed you can save 25% your gross income up to $56,000. Last time I did this class people gave me lots of questions. Where'd Oh, I get it set by IRA. Every major brokerage firm. I'm gonna list him here in a second. Has a set fire? A. You could open them up in minutes online. You can also do what's called a solo 41 K plan. If you have a spouse member, just two of you, that's a great plan. You can put even same amount of money, ultimately maximum winds. But you can cram more money news plan for the lower income. So, like as an example, you could make $50,000 a side business and you could actually get $30,000 put away tax deductible. And so we're going. Wow. Yeah, lot employees have side businesses. If your side business is used for 10 years to fund a retirement account, you don't pay taxes on that money. It's all legal. You get rich a lot faster. These are the places that you go. These the four largest financial service companies that you go to at any moment online. Ameritrade, Schwab, Vanguard, Fidelity. You could do it yourself, or you can hire a R I a fiduciary toe work with you. They're furiously taking notes. Such a good sign. There are other firms. There are robo advisors, personal capital acorns. Some of you were using personal capital right now is your dashboard. To track where your money is going on your investments, they have probably one of the best cash boards you can use. A corns we talked about in the previous episode. Fantastic app. You can use to say small amounts of money. There's more. There's Wealthfront, another great firm. There's betterment. These are all the new robo advisors that make to first find your portfolio's online without an adviser. Very simple. I'm a big believer working with financial visors, but often people don't hire finance adviser until they have about 1/4 of a $1,000,000 in savings and they're ready to retire. So is your enough wealth accumulation phase. These could be great services for you to consider two years. If I were summarized, I would go back to earlier I showed you on that big white board. You're gonna work 90,000 hours. You got a 25 to 35 year career on average to save money. It is decades, not days. And the time to start is now. Now, I know that some of the questions air coming in that I haven't asked yet is. What about Ross? About Roth? Iran? Should I use a Roth Ira or should He's a Roth 41 K plan. These didn't exist 15 years ago, so all the retirement counts I showed you earlier Tax deductible. You put a dollar in, you don't pay taxes on it. Money grows tax deferred. When you go to take it out, you have to pay taxes on it. A Roth IRA. The money goes in after tax, but it grows tax free and it comes out tax frame. All things being equal, you have to choose. Do you want one or the other? What do you do both? Which do I like? I personally like the tax deductible one, because I just don't want to pay taxes as long as I can possibly not pay taxes. So I've put all my money in tax deductible retirement accounts. I started with that $2000 IRA account. I went to a 41 K plan. Then I had a set fire a banana sold for one K plan that I had a defined benefit plan. Have done a ball. I actually don't call five. A Roth IRA man comes to high because there's a limit Certain income. Not everybody qualifies for a Roth IRA. I'm gonna I r s dot gov and look at the limitations and every year, the updates because depending on what year you watch this, all this advice is timeless. But the laws change every year. A lot of people of Roth Foreign K plans, I recommend. If you are young and you can get yourself to say the same amount of money in a Roth that you wouldn't deductible IRA account, then God bless you. Go forward and put it in a Roth. But let me use dollars for a second here, $10,000 to put $10,000 deductible account. You don't pay tax on that money in the beginning, so $10,000 goes right to work to put $10,000 in a Roth. You actually had to make 15 because you have to pay five to get the 10 after tax. So basically you'll save 30% more in order to use a Roth IRA and have the numbers be the same. Does that make sense? Because it's a little complicated people could take. They take Roth IRAs and deductible IRAs, and they compare as apples to apples. And they're not, I recommend, with a foreign K plan of your work, and you've got both options. Go half into a deductible in half into a rock that you've covered two bases.

Ratings and Reviews

Ling Fan
 

Great class! Concise and powerful! Wish I knew this 10 years ago.

Kennie Johnson
 

Very helpful and inspiring

Carlos Figueiredo
 

I thoroughly enjoyed the course love it!

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