Four Retirement Pitfalls That Cost Thousands

Welcome back.

This segment is for anyone in retirement or getting close to it because there are four issues that come up over and over again and getting any one of them wrong can cost real money.

So let's start with the first one.

You've been contributing to your 401k or your 403b for 30 years.

You retire.

What do you actually do with that account? Do you leave it right where it is or do you roll it into an

IRA account? There's no universal right answer, but here's how we think about it.

Leaving it in the old plan has real advantages.

Institutional plans often have access to lower cost investment options than you'd find in a retail IRA because they're buying in bulk on behalf of thousands of employees, but that lower cost does come without any advice attached to it.

And nobody at the plan provider is calling you to build a withdrawal strategy or help you think through any of this.

And if you're still working past age 65 at a new employer, leaving an old plan alone doesn't complicate anything.

On the other side of that, an IRA typically gives you a much wider universe of investments.

Your 401k is limited to whatever menu your employer picked, usually a dozen or two mutual funds.

An IRA opens up individual stocks, bonds, structured notes, alternative investments, almost anything you could invest in.

You also get more control over required distributions and frankly, better access to actual planning because most 401k providers aren't going to sit down with you and build a withdrawal strategy.

So the

other piece people miss is consolidation.

If you had four or five employers over a career, you may have four or five old retirement accounts sitting in different places.

So rolling them into one IRA makes it dramatically easier to actually manage the whole picture, rebalance it, and coordinate it with your tax planning instead of guessing it at five separate accounts, how they all add up and interact together.

And

we see this constantly.

Someone comes in with a 401k from three jobs ago, a 403b, a SEP IRA from a stretch of self-employment, and a roll of IRA nobody's touched in years.

Nobody's coordinating the required minimum distributions across all those accounts.

Nobody's making sure that the asset allocation across the whole household makes sense as one portfolio instead of looking at four SEPs rent.

So the honest answer is it depends on your specific plans, fees, and investment menu.