busted

Myth:
I’m maxing out my retirement contribution because I contribute the % that my company matches.

Truth: Far from it! While putting in at least what your employer matches is a must, it is far from maxing out your retirement savings.

A standard Rule of Thumb is to save 15% of your gross income for retirement - in an 401k, 403b, or IRA for example. If your employer throws some on top that’s great! But you should have a savings goal rate of 15% on your end.

Depending on your cash flow that may be a hard change to do right away. But, if done gradually over several years, it’s not as hard as you think.

Pro-Tip: Set up an auto increase on your 401k to increase your contribution by at least 1% a year - tie it to your birthday to give yourself a gift or to when you normally get a raise. It will be such a small difference you may not even notice it and over the course of several years - or a decade or two - the savings will be significant!

Bonus Pro-Tip: For extra credit every time you receive a down statement on your 401k rather than feel nervous and upset, be opportunistic and increase your contribution rate by another 1%. This will happen statistically every year or so. By combining this with the auto-increases your savings will really add up and be doing so at the most opportunistic times. Come retirement time if you’re already saving, for example 25%, your nest egg should be in good shape and you only need to replace 75% of your income in retirement to have the same cash flow as you did pre-retirement.

Myth:
Accountants/Tax Preparers only work 4 months out of the year and play golf the rest of the year.

Truth: Although this is true for some, we operate a little different. Our accounting team works with clients year-round, taking a proactive approach to payroll, bookkeeping, and tax planning for individuals and small businesses.⁣⁣

By being available when you receive correspondence from various governmental agencies throughout the year, we can help ease the stress and worry from dealing with responding to any requests from the IRS or state. ⁣⁣

Outside of peak season for taxes, our team also provides a great amount of consulting and tax planning advice which can be proven vital for those in business, about to retire, or having a life changing event occur. ⁣⁣

Knowledge is power and the more we can empower our clients the better decisions they can make.

Myth:
Interest rates are near all-time lows, so I shouldn't keep very much cash in the bank.

Truth: Not so fast! While it’s true that interest rates are near all-time lows, it is still recommended to keep some funds in the bank.  ⁣⁣
As a general rule-of-thumb: it’s wise to keep 3-6 months of household expenses in the bank, along with cash for major purchases that are upcoming in the next year or two.  ⁣⁣

At the same time however we can see where you might think this myth to be true. Your $100 bill does not buy you nearly as much as it did 10 years ago - this is referred to as “purchasing power risk.”⁣⁣

When the interest rates are low, the funds in the bank don’t generate enough return to keep up with the place of inflation therefore it can also be unwise to keep too much cash in the bank due to inflation risk. ⁣

Pro-Tip: Try to keep your emergency savings in the bank, but it’s likely wise to deploy those additional assets elsewhere.⁣⁣

Q4

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Q5

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Q6

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