How do I invest beyond my 401K for success?

Speaker A00:00:00

How about we go for a walk today together? Yes. Bear with me here a second because it's going to make sense here in a second. Let's say we're out for a walk.Put your phone away for a second and just enjoy the nature all around. You're walking down the sidewalk and all of a sudden you see something on the sidewalk just a little bit in front of you.You start to think, what is that? As you get closer like that looks like money. You get closer yet it's a hundred dollar bill laying on the sidewalk. So let me ask you this question.Do you pick it up? Of course you did. But what if you didn't? And that's what we want to talk about on today's show.I want to start talking about how do we get beyond just investing in the 401k because truth is, and I'm going to share some statistics in just a few minutes, if you're just investing in your 401k, I'm hate to tell you this, but it's not going to be enough. And I got this listener question. This really nails it. It's an awesome question, Ralph. I'm already getting my employers 401k match. That's free money.I'm so happy that they said that. That is absolutely true. That is free money. But they go on, what should I do beyond that? How do I make sure I'm saving enough for retirement?Again, what an awesome question. Because the answer is yes, it's more than just that 3% match. That's not going to be enough.See, the 401k match is one of the best deals in town out there. It's free money. Absolutely agree with that. But if you stop there, you don't at least bend over and pick up that hundred dollar bill.The truth is, and I hate to tell you this, but it's the truth. It's set out of love today. The truth is you're probably not saving enough for retirement.So let's talk about what comes next to really fund that retirement for an impactful retirement. And you don't feel like you're always scrimping and saving.This is Financially Confident Christian, your daily dose of gospel grounded insight and faith driven tips. And to help you break the cycle of financial shame with confidence. Hello and welcome back to the show.My name is Ralph and I'm so happy you chose to join me today. I've worked with hundreds of clients over the years maximizing their employer plans, building retirement strategies beyond that 401k match.And today I really want to take a few minutes and talk about Ralph, what do I do beyond that? Because there's so many things that you can do.As we talked about a little bit, a lot of employers, if you're fortunate, you've got a 401k at work, they'll match a certain amount, maybe 3, 4. I've even seen them up to 5, 6, 7%.But the problem is in my practice, and this is a sad part, I've seen so many people stop matching at that point they'll say to me, Ralph, well, I got enough. I'm putting in what the employers are. Why should I do more than that?It's a short sighted view of this because in the end, when you get to retirement, I'm going to share some statistics here in just a few minutes, when you get to the end, unfortunately, so many people realize they haven't saved enough. I'll tell you about a client that I worked with.I had a client one time came and said to me, Ralph, we're maxing out our retirement because we got that match. That's what they said to me. They said, Ralph, we're maxing out, we are in good shape. And listen, I'm not judging them.I used to think the same thing back before I started my own practice. I worked for another business where I actually had a traditional 401k.It seems like ages ago now as I've been doing this myself for going on 30 years now. It's hard to believe it's been that long, but so many people think that, well, I'm maxing out, Ralph. I'm putting in the employer match.When I sat down with them and I ran the numbers, this is something I'm going to challenge you to do. It's not a comfortable exercise, but when we ran the numbers, we found out they were way behind.And in that particular case, we added a Roth IRA and it changed our whole trajectory. We'll talk about how to do some of those things today. But I love what Dave Ramsey said. I'm not often on the same page as Dave Ramsey.He has one investment belief, I have a different one. But Dave said this and I 100% agree with this. The match is great. He alludes to that. I agree with him now, but it won't make you wealthy by itself.And he I love what he ends with. If you hear nothing else that Ralph says today, what Dave said nails it. You've got to save more than the minimum. Well said, Dave, what do you think?As you're listening Right now. Do you agree with them? I think we absolutely have to because retirement is going to cost more than you think. Here's the statistics. I planned that.I promise that I will talk about. Here's the truth. Most employers match 3 to 6% of salary. That's generally the go to thing that they do.But if you stop there and just do that 3% to 6%, and like I said, 6% is a pretty big number. I don't see a lot of those in the day to day.There's a lot of customers, a lot of people that I work with, their bosses or their businesses don't match at all. You might find yourself right there. So at least do the match. But here's the thing. They're usually saving 8 to 9% of the total.But here's the recommendation. Most financial gurus, myself included, recommend that you put about 15% of your annual money away for retirement.You might be saying, rob, there's no way I'm going to put 15% away. I'm not saying you're going to get there today. I'm not saying you're going to get there next week or next year.But I think in your mind you got to be thinking about that goal. Because here's the truth. I looked at this statistic.It was rather alarming because if you only do that 3 to 6% where you're only putting about 8 to 9% of your total needed, you're only going to end up without 30 to 60% of what you need in retirement to retire comfortably.And here's one, this one actually was a sad statistic when I read this, and this isn't the first time I heard this, but listen, you need to hear this for people who are in ages 55 to 64. So listen, I'm 53. I'm not far away from the beginning point of this particular statistic. 64, hey, we're getting ready to retire.But for those ages 55 to 64, the median retirement savings means the middle of that. The average person is under $165,000. That's all they've got saved for retirement, $165,000.Now, the goal, we talked about that particular goal, the goal is between a half a million and a million dollars. That's what most households will need. And we look at the numbers, that's what most households will need.You probably say, rob, there's no way I'm going to get to that. But that's a big deal.So if you're younger, it may Mean, if you're like me in middle age, you got to start thinking about how do I kick this up a notch? How do I get to that point where I'm going to be able to make this work? And here's where the real problem is, the confidence gap.And when I've read this, this was really, this is heartbreaking to me. I have a lot of passion for what I do. You probably hear it in my voice every day. A lot of passion for what I do.But only 31% of non retirees say they're on track for retirement savings. Just one third they might be saying, okay, Ralph, that's too bad for them. Sorry about that. But here's the sinister part of this.And when I've read this, think about this one. Who pays for that shortfall? Well, guess what? You and I are paying for that shortfall. And it's estimated to cost governments. Listen to this number.When I've read this number, I about fell out of my chair. It's cost the governments estimated in 2040 to be $1.3 trillion in extra assistance and lost taxes.Now, I'm going to say something that's kind of unkind, but what are we doing there? We're creating a welfare state because people aren't putting enough away for retirement. So we need to figure out how to change that dynamic.So let's talk about how do we do that. I've got a couple of key points that will help you get that point. Listen, I don't have all the answers. I'm going to be very candid with you.It comes down to consistency. It comes down to really paying attention to things we've talked about all through this investment series. I've given you some great ideas.We got to put these things into practice. First thing, if you don't do anything else, I say bend over and pick up that hundred dollar bill, Ralph. What is Ralph talking about?If you work for an employer where there's a 401k match, never ever leave that money on the table. Pick it up, get it, it's free money. If you're not taking it, you're a fool.And I don't like to use that word, but take the free money, but remember, it's just a starting line. It's not enough. Hear me on that? It's not enough. So if you can afford to put more into it. And listen, I get it. It comes down to a budget issue.It comes down to, Ralph, there's only so much money in, in the pot here. I get It. But you got to think about how do I put more away for retirement? So start there. The 401k match.If you're fortunate enough to get beyond the 401k, you're able to put as much as you can into that 401k. I'm not going to get into details today. It's a big number, but let's just say you're blessed you're able to do that.Once you get past that match, one of the things you consider is, is put money into a Roth and I may do a show about Roth IRAs in the future if you go back in the catalog. All of our shows, by the way, are at financiallyconfidentchristian.com. you go in there and do a search and look for Roth iras.I've done many shows about Roth iras, so go back and look at those. But after you get past that match, one of the things a lot of people are doing is putting money into a Roth.The reason I like Roths is they grow tax free. But again, from a. I'm gonna put my tax hat on for a second. From a tax perspective, it's great that they grow tax free.But if you're in your earning years where you're in that higher tax bracket, listen, Ralph's advice, put more into the 401k. So contribute more than the match. Aim for that 15%.Listen, if you want me to give you a number that you really should be aiming for and it might make you feel a little bit deflated here, but I'm going to throw it. It's just coming out of love. This is honestly coming out of love.You need to be thinking of about 15% of your income needs to be going into retirement. So do the math. Every year, whatever your annual income is, 15% of that is what you really need to be thinking about putting into retirement.So push those contribution limits at work if you can at least take the match. Now once you've invested those things, then you can look at some other ideas like brokerage. I'm not going to get into a lot of details.Remember, these are after tax accounts. There are things that you can work with a broker to help you build these things in addition to the 401k. But if you are covered by a 401k work.I know I probably said this 5 times already, but I want you to hear this. Do whatever you can in pre tax dollars. That's what the 401k does. That money comes right off the top for your taxes. I'M wearing my tax hat again.But it's so critical because that money will multiply because of compounding a lot quicker. But have a big picture view. This is my big takeaway for today. Have a big picture view.You're not going to save a retirement over the next couple days. Retirement planning takes decades. But as Dave Ramsey said, don't just do the minimum.Because let me ask you this, do you want to live a life of just enough when you retired? I know about you, but I don't want to live like that. Don't settle for just enough. And you don't have to settle for just enough.Let's get to our Bible verse today. And I found this one in the book of Ecclesiastes, chapter 11, verse 2. And it's all about diversification. Invest in seven ventures, yes.In eight, you do not know what disaster may come upon the land. This really isn't relative to the idea of investing in other things, but it does talk about diversification.And diversification is super important as we talk about investment.So I wanted to give a Bible verse today because I feel like it's so important that we understand even in this particular episode we're talking about today, the 401k, the Roth IRA, the brokerage accounts, those are different ways to fund that. End of the term, when you get to that retirement age, you don't want to live. That just is enough retirement.How about we pray together right now, Lord? We just thank you for the provision you give us in our lives, Lord. Right now we're feeling a little bit empty, Lord. We're feeling a little bit short.We realize now that we may be a little bit behind on our investing, Lord. And we just ask you to give us wisdom right now, Lord, to plan beyond that minimum.Help us to reach beyond that minimum so we don't have that minimum life. You know, we know that's not what you want for us, Lord. And we are so grateful for those of us that have those employer benefits, Lord.And help us to utilize those, Lord, and to really be disciplined in that, Lord. Give us the faith to stay disciplined for the long haul. We realize that retirement planning is not a one time thing.And we realize that over time we've got to let these things grow, Lord. So give us the faith to stay disciplined in that, Lord. And we ask this in confidence in the name of Jesus. Amen.Well, let me give you your action plan, today's real simple action plan. I want to ask you a really simple question. Can you do more? It's really that today, can you do more? Check your retirement savings rates.Are you saving at least to that match? If you are, consider going higher. Open up that Roth, open up that broker account. But really ask yourself this question.And like I said, it's not a comfortable question. Listen, I just turned 53. I've had to ask this question to myself. And I've really had to find ways and listen, I got to scrimp and save on things.But I realize if I want my retirement to be more than just enough, I gotta continually ask myself, can I do more? Well, if you've got a question for this show, just like the young listener had today, I would encourage you. I love to answer questions.As you notice, we've been taking sort of a different approach here with the format of the episodes lately. I've really been focusing on a lot of questions. I'm getting a lot of questions in from listeners.If you've got a question for this show, go to justaskralph.com, you. You can put your name, email address and put your question there. I would love to answer your question.I'm not going to share your name on the show unless you want me to. But it's really super simple. Just go to justaskralph.com and just give me your question and I'll answer it on the show.And remember this, the match for the 401k is a gift. It's a beautiful gift. It's fantastic if you get that from your employer. But it's not enough by itself. So take that gift.But ask yourself, can I do more? And once you do that, build on that foundation. Look at Roth iras, look at more contributions and diversification. Because here's the truth.Retirement success comes from consistent, above average savings. Remember what I said, that 15%. I know that might scare you a little bit, but I'm saying that out of love.And I'm saying that that's what you need to look at. And just remember, diligence today creates freedom.Tomorrow, as we're talking about tomorrow, tomorrow we're going to talk about following up on investing for those larger goals, those things beyond retirement, those things that you really, those big dreams that you have. Tomorrow on the show, I'm going to talk about how to make those things a reality. Just remember this. You can do this.You can be a financially confident Christian. I truly believe in you. Believe in yourself. Stay financially savvy out there. God bless you and make sure you join me tomorrow.You have a great day today.