I think of each of my 401k accounts as children, individuals who, at times, are unruly and difficult to gather in one financial house. I’ve had it on my to-do list for a year to sit them all down for a chat. We need to assess how they are maturing on their own, and I imagine I’d insist that strengthening our family bond is far more important than an independent life that might put each of them (and me) in the poor house.
If only dealing with money came as naturally as dealing with people, then I wouldn’t have three 401ks—that I rarely manage—grating on my conscious. I’ve decided it’s time to make the most of my portfolios—and combine the old with the new—so that at the end of this rat race is an island in the Pacific with my name on it and the funds to sustain my laid-back lifestyle once I’m there.
More Money Now for My Island Later
If you invest in your own IRA or your company’s 401k, you actually have more cash in your pocket now since your contribution is tax-deferred. Money invested now is better than money invested later. Why? Because while money doesn’t grow on trees, it does indeed grow. Even in market fluctuations, if you’re under forty years old, stash away as much as you can when you can and when is now. You won’t pay income tax on it until you’re kicking your feet up in your hammock, which should translate into retirement, when you may be in a lower tax bracket due to less income coming in (unless swinging in a hammock and contemplating moments evolves into a business plan).
Out of Sight, Out of Pocket
Most companies will set up an automatic payroll deduction so that your money will go straight where it should, which is bi-monthly into your 401k. I’ve had to restructure my finances now that there is less in each paycheck, but out of sight is out of mind, and less in my pocket means more in my account come 2038!
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