This is the 7th in a series of 10 “fragments” articles. Behold the fragments of wealth you can extract from your everyday life with the “Walk Up” strategy.
With a raise of 1%, you would increase money going into retirement accounts by 0%.
With a raise of 2%, you would increase money going into retirement accounts by 1%.
With a raise of 3%, you would increase money going into retirement accounts by 1%.
With a raise of 4%, you would increase money going into retirement accounts by 2%.
With a raise of 5%, you would increase money going into retirement accounts by 2%.
With a raise of 6%, you would increase money going into retirement accounts by 3%.
With a raise of 7%, you would increase money going into retirement accounts by 3%.
With a raise of 8%, you would increase money going into retirement accounts by 4%.
With a raise of 9%, you would increase money going into retirement accounts by 4%.
With a raise of 10%, you would increase money going into retirement accounts by 5%.
With a raise of 11%, you would increase money going into retirement accounts by 5%.
With a raise of 12%, you would increase money going into retirement accounts by 6%.
With a raise of 13%, you would increase money going into retirement accounts by 6%.
With a raise of 14%, you would increase money going into retirement accounts by 7%.
With a raise of 15%, you would increase money going into retirement accounts by 7%.
With a raise of 16%, you would increase money going into retirement accounts by 8%.
With raises over the next few years, Ella and her husband will "walk" the withholding amounts into the 401K's up to the maximums allowed. Then each of them will start an IRA at Edward Jones and use raises with the same schedule to "walk" the deposits up to the maximum allowed. As this money is automatically deposited into their 401K's and IRA's, it will never be in their hands and they will never have to exercise the will power required to refrain from spending it. They will still see more take home money in their paychecks after each raise.
Edward Jones will help them understand the difference between a traditional IRA and a Roth IRA, so they can decide which type of IRA to invest in. After they max out monthly deposits to the 401K's and the IRA's, they will check with Edward Jones again to set up automatic investing into another self-directed retirement account. The limits on this change over the years, but after maxing the contributions to the 401K and the IRA, you are allowed to put up to a certain amount into another self-directed retirement account. The money you deposit into this retirement account each year is not exempt from taxes in that particular year, but the growth of this account over the years is exempt from taxation. Ella and her husband will use the "Walk Up" strategy with every raise until they have maxed out all allowed contributions to their 401K's, IRA's, and the other self-directed retirement account.
The process of maxing out monthly retirement contributions to all 3 investment vehicles mentioned will take several years. After accomplishing this, Ella and her husband will use the same "Walk Up" strategy with every raise to increase contributions to the after-tax "buy and do" investments, primarily mutual funds, available through Edward Jones.
Please note that I am not recommending or promoting Edward Jones. When I first heard of Edward Jones, their required minimum balance to open an account was lower than the other firms that had asset management accounts. I also noticed that their offices were spread out all over town. I just got in the habit of mentioning Edward Jones when I give examples. There are several other fine brokerage/financial services operators that can help you now that you understand that your wealth is hidden in the fragments of your life.
http://www.ehow.com/members/littlecashgiant.html A how-to blog about family financial planning, building wealth, and destroying debt.
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