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401k retirement plan without matching contributions - YouTube
Channel: Travis Sickle
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today is Q&A Tuesday and today's
question is should I save into the 401k
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if I don't have a match so we're gonna
talk about but before we do if this is
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your first time at her channel or you
haven't subscribed click on the
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subscribe button at the bottom my name
is Travis Sickle CERTIFIED FINANCIAL PLANNER
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with Sickle Hunter Financial
Advisors
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okay so there are a lot of
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moving parts to the 401k so of course
the answer is not gonna be the same for
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everybody but let's talk about what it
looks like if you don't have a company
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match and whether or not it makes sense
to do so
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so let's start with the basics of the
401k so the way the 401k works is you
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can put up to $19,000
into the 401k pre-tax and if you're 50 or
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older you can do an additional $6,000 bringing that total
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contribution to $25,000 that's a lot of money to put
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into a retirement plan but that's the
max that you can do if you're 50 or
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older so regardless of how much you can
put into that retirement plan does it
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make sense to put it into the 401k if
you're not also getting a match because
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there are other plans that you can
really control those investments anyway
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that you want but you can't inside the
401k so we'll start with some of the
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pros or the reasons why you would want
to put money into the 401k so one of
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those big reasons is it is a deduction
meaning that it's reducing your taxable
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income for every dollar that you put
into the 401k you know it doesn't matter
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if you have a match or not every dollar
that you put in to the 401k will reduce
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your overall tax liability so that's a
huge benefit not to mention we're saving
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for our future for retirement so you're
putting money aside for retirement and a
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big one for the 401k that I've been
talking about lately, are credits if you
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reduce your income enough you might
actually qualify for some credits so
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don't just look at how much you're
putting into the 401k for retirement
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also look at your overall situation to
see if it makes sense to put additional
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dollars into the 401k to possibly
qualify for some credits or some other
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benefits that you might be missing out
on the number one thing I love about the
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401k is that it's systematic
so with something that's out of sight
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out of mind you turn it on it starts
contributing to the 401k you set it you
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forget it and then lo and behold down
the road you have a little bit of a nest
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egg so it's a great savings vehicle all
you need to do is just go ahead and
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start contributing to it now one of the
biggest reasons people don't want to put
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it into the 401k or I should say two
reasons or fees now it's okay to be fee
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conscious but not to be fee adverse and
the reason that is if you're just not
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gonna save into the 401k because
something is cheaper elsewhere you might
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not be better off because there's not a
whole lot of places that you're gonna be
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able to save that amount pre-tax now on
the other side of that are the actual
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investments now the investments might
not be as good as outside investments
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because you have a lot of choices
elsewhere that would work specifically
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for you but again going back to the
retirement and where you can save
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pre-tax the 401k is an excellent option
now the alternative to that would be a
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traditional IRA but what you have to
understand is every dollar that you put
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into the traditional IRA is a dollar
less that you could have put into the
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Roth IRA and really it all depends on
how much you're earning because there
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are income limits to qualify for the
traditional IRA if you have a 401 K at
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work now it's very important to
understand that even if you have that
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offered and you don't participate in the
401K it doesn't matter it's still
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considered a workplace plan that's
offered to you but it also doesn't mean
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the only planning strategy is to use the
401K because maybe you don't like your
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401K because it doesn't have a match
you know like the investment options
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it's too expensive but maybe your spouse
does now if you're single well obviously
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you're not going to have a spouse so
there's no other plans to consider but
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if you do have a spouse you could look
at their plan and if your total
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contribution that you need for
retirement is below the $19,000 then
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you don't have a problem could you just
put it into your spouses retirement plan
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and if you do qualify for a traditional
IRA then it's perfectly fine to open up
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a traditional IRA and save into the
traditional IRA over the 401K just know
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again that every dollar that you put
into the traditional IRA
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is a dollar less that you
can put into the Roth IRA so I'm gonna
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say that again the traditional IRA and
the Roth IRA have a combined
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contribution limit of $6,000 now that's an additional $1,000
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if you're 50 or older just like
the 401k bringing that total
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contribution to $7,000 but the total contribution traditional
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IRA Roth IRA is $6,000 now
another thing to consider if you have
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other income or maybe a side hustle you
can also look at a SEP or a simple IRA
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to get additional dollars into a
retirement plan above and beyond which
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wouldn't affect the Roth IRA that is
really the only other way that you can
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look at pre-tax dollars while still
getting into those retirement plans and
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still having the Roth IRA available to
you the bottom line is this you want to
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focus on what's in your control and
that's your ability to save now weigh
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the pros and the cons of where the best
place is to save but don't worry if you
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don't have a company match you can still
reach retirement and you can still have
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a ton of benefits from the 401k as well
as all the other retirement plans if
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you've enjoyed this video be sure to
subscribe and leave your comments down
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at the bottom
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