Thinking ahead about how investing can support financial goals is the purpose of planning. Naturally, there’s lots of talk about common planning targets: retirement and college. But there’s also consideration of how to achieve multiple goals at various stages of life — whether covering basic needs or leaving a legacy — and how taxes and tax planning could impact results. Articles in the planning category allow you to clarify how today’s decisions can impact efforts to grow, manage, and maintain wealth.

Why 401(k) Default Options May Not Be Enough

I’ve been reading Misbehaving: The Making of Behavioral Economics by Richard H. Thaler. A point of interest is the discussion of automatic enrollment in 401k plans. Automatic enrollment may get employees started saving for retirement. But 401k default options associated with this type of sign-up (such as an investment choice of a money market fund and a savings rate of 3%) may be unlikely to help employees achieve the outcomes needed for a comfortable retirement.

According to Thaler, “Both of these default choices — the money market investment option and the 3% savings rate — were not intended by the employer to be either suggestions or advice. Instead, these options were picked to minimize the chance that the company would be sued.”

So, what’s the story about these default options?

My Reaction to How to Retire Early (Book)

Recently, a reader pointed me to How To Retire Early: Your Guide to Getting Rich Slowly and Retiring on Less by Robert and Robin Charlton. She mentioned this book is an example of the type of information that can be helpful to readers as they pursue and achieve financial goals.

According to the book and its charts, the authors accumulated over $900,000 (on a relatively modest combined income of less than $100,000 per year for most of their investing years), retired early at age 43, and began traveling the world. You can see where they’ve been at Where We Be and learn about their investing, frugal living, and retirement journeys.

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