There is nothing pleasant about a bear market—not the anxieties they cause, not the paper losses, not the relentless drip, drip, drip of reports in the media about this or that daily downturn. The gut instinct is to stem the losses by selling before the market goes down further, but locking in losses after the fact has, historically, almost always been the wrong move.
The “money illusion” refers to how we view our buying power today versus in the future. Are you falling victim to this potentially dangerous ideology?
. . . a need for precision sometimes can be paralyzing. We want the perfect outcomes so badly that we make no decision out of fear of making the wrong one . . . The question to ask yourself is, “Would you prefer the opportunity to be precisely right or the opportunity to avoid being precisely wrong?” Read more . . .
Teachers nearing retirement (and teachers who are taking maternity, extended sick time, or working part-time) should pay close attention to the retirement credits being awarded to you.
How does it Work? Surrender charges usually come in two flavors: Fixed Period: Where the surrender charge is based on when you start the annuity. For example, if you started the annuity in 2017, the annuity could be free of surrender charges by 2024. In this example, the annuity has a seven-year surrender schedule. The number of years will vary depending on the insurance company. Another variable is the percentage, which represents the actual fee on the withdrawal. If you dig in the prospectus of an annuity, you will probably see something that looks like this- 8%, 7%, 6%, 5%, 4%, 3%, 2%. This indicates the annuity has a seven-year surrender period with an 7% surrender charge in the second year, 6% charge in the third year, and so on until the eighth year.
For anyone that has a TSA for their 403b, you can multiply your balance by 2.5% and that would give you a rough estimate of the total cost of your 403b per year (please understand there are many fees imbedded in a TSA so your personal account can be higher or lower than my estimate above). This means, if your 403b account value is $100,000, then you are paying approximately $2,500 per year in fees! If you want to get a more accurate estimate of cost, please see my new calculator by clicking 403b Calculator. This is a great tool to see how cost will impact your account balance over time. If you have a statement in front of you, it should take you about 5 minutes to enter in the data.