By coinnews 
00:00 Brad
According to a Yahoo Finance Harris poll, banked households in America are not enthusiastic about the money they have saved. Only 10% say that they are completely satisfied with their savings. One of the key accounts Americans use to save for retirement is a 401K, and we want to discuss how to become more satisfied with your savings. Joining me now in studio, we’ve got back, live in living colors, Cedric Nash, Oakland Consulting Group CEO and founder of the Black Wealth Summit. Cedric, great to have you back here.
00:28 Cedric Nash
Thank you, Brad, happy to be here.
00:30 Brad
So let’s discuss this. How can you take advantage of your 401k? A lot of people have probably been checking their 401Ks over the past several weeks with some of the market volatility.
00:40 Cedric Nash
Yeah, it’s interesting. 401k is an incredible tool for planning for retirement. However, unfortunately, people are not contributing enough. And it’s one of those things that people constantly put on the back burner. I mean, according to studies about 41% of people eligible to participate in 401Ks are participating in them. And um, and a lot of times they keep deferring it. So, you know, so I I think that people need to take more advantage of it. One of the things they need to do especially when they’re first coming out of college getting their first job is to immediately maximize their contribution. That’s the one thing that most people older says that if they started all over again, they would do, especially if the company is is uh contributing a match, uh you’re leaving money on the table, and that’s something you never want to do.
01:32 Brad
And so with this in mind, how much should you contribute to your retirement savings account at every age?
01:38 Cedric Nash
You know, I honestly believe and I wrote a book about about this topic that people should be contributing about 22 to 27% into what I call their freedom fund. However, there are maximums based on your employer’s plan that you can contribute to your 401k. And once you maximize that maximum in your 401k, you can always use an IRA account, which is a tax deferred instrument. There’s also, you know, after tax investments and Roth IRAs that you can put money into that are after tax. So I think there’s a lot of instruments that are there, people just have to get busy starting early, contributing as much as they possibly can and not waiting until they earn more money in order to invest more money because nine times out of 10 when you earn more money, you have more bills and you it’s harder to actually get started. So that’s one of the things and that’s why people I think are dissatisfied because they did not maximize early on.
02:53 Brad
Now, this is not the only retirement account. What are some alternate uh retirement accounts that you can really leverage in your broader saving strategy?
03:03 Cedric Nash
You know, it’s interesting, it’s and there’s some, you know, for entrepreneurs like I’ve been an entrepreneur for the majority of my life. There’s several other programs that you can implement if you don’t have a corporate program, like a SEP, like right, like a separate individual retirement program, plus they also have a solo 401k program. Another way that people can save for retirement if they don’t have a corporate retirement program is dividend stocks by building up their capital and investing in dividend stocks, it’s a great way to create income in retirement. And finally, I always think of multi-family properties as a great way to build income because of the uh the increases allow you to stay ahead of inflation at the same time as you pay down that mortgage, that income becomes real money that you can use in retirement.
04:16 Brad
What if you have fallen behind? Say you’ve, you know, fallen out of the workforce and you’ve needed to tap your 401k just because of emergency funding that is necessary just as a bridge, and then you want to make sure that you’re restarting some of your savings effectively. How can you go about that?
04:43 Cedric Nash
Yeah, I think that, you know, um, and that’s also the same situation with people who did not who did not um maximize their account the first time. I think that as you get increases, always continue to add more money to your 401k. I mean, I always had this rule of thumb that if you as you get an increase, you have to maximize those increases because over time your salary’s gone up 10, 15, $20,000 more, but your 401k hasn’t gone up. That’s why I think it’s important that 50% of their increase should go into their 401k, put 25% into paying down bills and the other 25% should go in their pocket.
05:26 Brad
Yeah. And so, as we’re thinking about the different tiers of saving, when do you know to finally start to tap those retirement savings?
05:36 Cedric Nash
You know, it’s I think you have to have a very, uh, very, very clear plan of how you want to retire. You have to and that depends on if you’re going to have a pension, if you’re uh if you’re going to be able to rely on social security, you know, all those things are a factor. And I love the old 4% rule uh for retirement where you can for withdrawals out of retire program as a standard for how you should withdraw from your 401k plan.
06:06 Brad
Absolutely. Cedric, great to see you. Thanks so much for joining us in studio again.
06:11 Cedric Nash
Thanks for having me, Brad.