Vermont Retirement Planners, LLC

54 Highland Avenue
Manchester Center, VT 05255
nick@vtretirement.com
(802) 367-3958

87 North Main St.
Rutland, VT 05701
nick@vtretirement.com
(802) 772-7945

Investment Read Time: 3 min

A Decision Not Made Is Still a Decision

Whether through inertia or trepidation, investors who put off important investment decisions might consider the admonition offered by motivational speaker Brian Tracy, "Almost any decision is better than no decision at all."

This investment inaction is played out in many ways, often silently, invisibly, and with potential consequences to an individual's future financial security.

Let's review some of the forms this takes.

Your 401(k) Plan

One of the worst decisions may be the failure to enroll, although more and more companies are automatically enrolling workers into their retirement plans. Not only do nonparticipants sacrifice one of the best ways to save for their eventual retirement, but they also forfeit the money that any employer matching contributions represent. Not participating holds the potential to be one of the most costly indecisions one can make.1

The other way individuals let indecision get the best of them is by not selecting the investments for the contributions they make to the 401(k) plan. When a participant fails to make an investment selection, the plan may have provisions for automatically investing that money. And that investment selection may not be consistent with the individual's time horizon, risk tolerance, and goals.

In most circumstances, you must begin taking required minimum distributions from your 401(k) or other defined contribution plan in the year you turn 73. Withdrawals from your 401(k) or other defined contribution plans are taxed as ordinary income, and if taken before age 59½, may be subject to a 10 percent federal income tax penalty.

Non-Retirement Plan Investments

For homeowners, "stuff" just seems to accumulate over time. The same may be true for investors. Some buy investments based on articles they have read or based on the recommendations of a family member. Others may have investments held in a previous employer's 401(k) plan.

Over time, we can end up with a collection of investments that may have no connection to our investment objectives. Because of the dynamics of the markets, an investment that may have once made good sense at one time may no longer be advantageous today.

By not periodically reviewing what we own, which would allow us to cull inappropriate investments – or even determine if the portfolio reflects our current investment objectives – we are making a default decision to own investments that may be inappropriate.

Whatever your situation, your retirement investments require careful attention and may benefit from deliberate, thoughtful decision-making. Your retired self will be grateful that you invested the time... today.

1. CNBC.com, December 28, 2021

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.

Share |
 

Related Content

Variable Universal Life Insurance

Variable Universal Life Insurance

Variable Universal Life is permanent insurance in which the policyholder directs how premiums are invested.

Separating the Signal From the Noise

Separating the Signal From the Noise

A good professional provides important guidance and insight through the years.

Mastering Mobile Lingo

Mastering Mobile Lingo

Do you understand these common mobile slang terms?

 

Have A Question About This Topic?







Thank you! Oops!

Aware of Employment Rights for Workers with Disabilities?

Approximately 20% of U.S. adults have a disability, according to the CDC.

Financial Fixes: The Hidden Costs of Home Ownership

Six out of 10 millennials regret buying a home because they weren’t prepared for the hidden costs.

Don’t Let Bad Financial Habits Haunt Your Retirement

When it comes to retirement, some people can quit working and fall immediately into good money habits that they’ve practiced for years.

View all articles

Estimate Your RMD

Help determine the required minimum distribution from an IRA or other qualified retirement plan.

Assess Your Life Insurance Needs

This calculator estimates how much life insurance you would need to meet your family's needs if you were to die prematurely.

Paying Off a Credit Card

Enter various payment options and determine how long it may take to pay off a credit card.

View all calculators

Investment Strategies for Retirement

Investment tools and strategies that can enable you to pursue your retirement goals.

Protecting Those Who Matter Most

The importance of life insurance, how it works, and how much coverage you need.

5 Smart Investing Strategies

There are some smart strategies that may help you pursue your investment objectives

View all presentations

The Wild West of Data Theft

Learn about cyber liability insurance in this entertaining video.

Retiring the 4% Rule

A portfolio created with your long-term objectives in mind is crucial as you pursue your dream retirement.

Perception vs. Reality

There’s an alarming difference between perception and reality for current and future retirees.

View all videos