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Welcome to How to Retire on Time, a show that answers your retirement questions. Say goodbye to the oversimplified advice you've heard hundreds of times. This show is about getting into the nitty-gritty so you can make better decisions as you prepare for retirement. Text your questions to 913-363-1234 and we'll feature them on the show. Don't forget to grab a copy of the book, How to Retire on Time, or check out our resources by going to www.retireontime.com.
Welcome to How to Retire on Time, a show that answers your questions about all things retirement, including income, taxes, social security, health care and more. This show is an extension of the book, How to Retire on Time, which you can grab on Amazon or by going to www.how to retire on time.com. My name is Mike Decker. I'm the author of the book, How to Retire on Time, but I'm also a licensed financial adviser, insurance agent, and tax professional, which means when it comes to financial topics, we can pretty much talk about it all. Now that said, please remember, this is just a show.
Mike:Everything you hear should be considered informational. That's it. It's not financial advice. If you want personalized financial advice, then you can request your wealth analysis from my team today by going to www.yourwealthanalysis.com. With me in the studio today is my esteemed colleague, mister David Frandsen.
Mike:Thanks for being here.
David:Yes. I'm glad to be here.
Mike:And David's gonna be reading your questions as they're submitted, and I'm gonna do my best to answer them. Now you can send your questions in by either texting them to 913-363-1234. Text them anytime during the week. 913-363-1234. Or you can email them to heymike@howtoretyme.com.
Mike:Let's begin.
David:Hey, Mike. I've got a couple of old 401 k's that I have neglected over the years because I don't know what to do with them. Any tips?
Mike:Yeah. So as a whole, 401ks have fees. Many people don't realize how high those fees are. Even if you leave a company and you just leave your money in the 401k, they're still charging you fees. Now I wanna be fair, if you move that to a, you know, professionally managed portfolio from, like, a financial advisor like ourselves, there are gonna be fees there as well.
Mike:So I don't wanna say that all fees are bad. But if you're just letting it sit there, you can roll over a 401k at any point in your life into an IRA. It's called a like kind transfer. And you just you open up an account Vanguard, Schwab, Fidelity, wherever you want. You open up an IRA account or a Roth account.
Mike:Then you contact the 41 k itself and you say, I want to roll this over and they'll say, who who who are we gonna send it to? Do not have it sent to your personal account as in you don't wanna have a check made out to your name. And then what they'll do is they'll write a check out. They'll send it to Schwab or they might send it to you, but the check will be made out to Schwab, f b o for benefit of and then your name. You don't cash it.
Mike:You don't sign it. You just drop it off or mail it to the custodian or wherever. And your 401 k will help you with this. They they know how to do this. And then just buy the same mutual funds or or ETFs that you had.
Mike:You're paying less than fees, which means they can grow if you want to DIY it. And if you want a professional portfolio, I would recommend if you do a professional portfolio, do it because they're actively managing it as an actively trading it. I don't think it makes sense to charge an asset under management fee like a 1% fee on something that's just sitting there. Right? You're just you're buying and holding a bunch of stuff.
Mike:You could do that on your own. Maybe get a Morningstar subscription to research some some of the good mutual funds or ETFs that are out there. Also, you need to consider this too. If you're before the age of 59a half, if you put the assets in an IRA, you've got more options than a 4 one k. 4 one k's are limited on the options.
Mike:You've got I mean, the world's your oyster on what you could be buying in there.
David:And so a couple of questions. What, why are there more fees in a 401 k, and why are the options limited?
Mike:So I'm not saying there's more fees. There are fees to be aware of.
David:Okay.
Mike:Because it's it's comparative. Right? Who are you gonna go to? So the 41 k's have all these administrative things to do. Yeah.
Mike:So they charge fees because they're working. It's not greedy. It just is. Right. But if you roll it over to an account, let's say, professionally managed, they're gonna charge you 1% or whatever on the the assets in there.
Mike:Or, you could go to a different company that says we don't charge anything, but they make money from kickbacks from mutual funds that they they offer.
David:Okay.
Mike:So there's a company out there, won't say who, that will say, well, you don't buy stocks, you buy mutual funds through us. It's because that's how they get paid, which is fine. Sure. It's just not often understood. But you could open up your own account by ETFs, which have low fees.
Mike:They're based in the market and you could do it yourself. But you could also explore other options. Like, you could do a self directed IRA and buy gold in there. Don't go all in on gold, but it's an option. You could do a self directed IRA and put real estate assets.
Mike:Or if you're qualified, you can explore the alternative investment space, specifically real estate in there. You could just buy ETFs and just let it grow. You've got more options, though, through rolling it over. So I'd recommend, and this is my in my opinion, to not roll over an old company 4 1 k into a new 4 1 k, rolled over to an IRA. So you're either managing yourself and not paying fees or you find someone that can actively manage it like us at Kedrick to where we can try to grow it more than if you just would have bought and hold a standard portfolio.
Mike:Or you can explore other investment options that may not have been available to you if you would have kept it in the 401 k. The world's your oyster. You could do this on your own. If you want help with it, we can help you too with it. Just get a hold of us.
Mike:But overall, when you kind of ignore things, it typically ends up creating an inefficiency. Mhmm. So you we wanna be very deliberate and organized with our assets. Now if you have old 4 one k's, you wanna look at your investment options, whether it's looking at self directed IRAs, real estate, gold, just a self managed portfolio or a professionally managed portfolio with actively managed models like what we do here at Kedrick. If you wanna explore those options, we're happy to do it with you.
Mike:It just needs to make sense from a comprehensive standpoint, as in what you're doing needs to make sense from all the other strategies you've got going on. We wanna help you get rich, and then we wanna help you stay rich. That's all the time we've got for the show today. If you enjoyed the show, consider subscribing to it wherever you get your podcast. Just search for how to retire on time.
Mike:Discover if your portfolio is built to weather flat market cycles or if you're missing tax minimization opportunities that you may not even know exist. Explore strategies that may be able to help you lower your overall risk while potentially increasing your overall growth and lifestyle flexibility. This is not your ordinary financial analysis. Learn more about Your Wealth Analysis and what it could do for you regardless of your age, asset, or target retirement date. Go to www.yourwealthanalysis.com today to learn more and get started.