2022-2023 Tax Planning Guide
VIEWpoint Issue 1 | 2022
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Many investors don’t pay close attention to their retirement plan investments. This can lead to some unintended consequences. Below are five common mistakes investors make and how to fix them.
Many people don’t know how much money they will need in retirement let alone how much they will need to contribute each year in order to fund their retirement. There are many simplified tools online that can help get you started. A wealth advisor at Polaris Greystone can work with you to set realistic goals and to determine if you’re staying on track.
Many younger workers put off saving for retirement. We calculated that if you started at age 22 and saved $5,000 a year, you would amass $1,927,528 by age 65, assuming an 8 percent annual return. With the same assumptions, if you waited five years to start, you would have $637,000 less saved; and if you waited 10 years, you would have almost $1 million less. Starting early is important because of the power of compounding.
Some investors will only contribute to their employer-sponsored 401(k) plan up to the level at which the employer matches. While it is true that your money will go further with the company match, you may need to contribute far greater amounts in order to retire successfully. In addition, the money put into a 401(k) plan is pre-tax and will compound without tax until withdrawn. This is a huge advantage over investing in after-tax investments.
Many investors set up their initial allocation with limited or no knowledge of their investments or their allocation. Once their decision has been made, these investors may forget to rebalance or reallocate their portfolio. According to David Wray, president of the Plan Sponsor Council of America, “80 percent [of plan participants] don’t rebalance” their portfolio. Ignoring your portfolio puts it at risk to experience significant drops in value. Polaris Greystone believes in “being successful on purpose.” We encourage our clients to rebalance their portfolios quarterly.
It’s important not to forget about plans with former employers. There are several options for these accounts, and a Polaris Greystone wealth advisor can help find the solution that works best for an investor’s personal circumstances.
Polaris Greystone’s wealth advisors and plan specialists can provide solutions that are appropriate for you. Contact them today.
Polaris Greystone Financial Group, LLC is a federally registered investment adviser. The information, statements and opinions expressed in this material are provided for general information only and are subject to change without notice. This material does not take into account your particular investment objectives, financial situation or needs, is not intended as a recommendation to purchase or sell any security, and is not intended as individual or specific advice. Investing involves risk and possible loss of principal capital. Advisory services are only offered to clients or prospective clients where Polaris Greystone Financial Group, LLC and its representatives are properly licensed or exempt from licensure. No advice may be rendered by Polaris Greystone Financial Group, LLC unless a client service agreement is in place.
This publication is distributed for informational purposes only, with the understanding that Doeren Mayhew is not rendering legal, accounting, or other professional opinions on specific facts for matters, and, accordingly, assumes no liability whatsoever in connection with its use. Should the reader have any questions regarding any of the news articles, it is recommended that a Doeren Mayhew representative be contacted.
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