Deferred compensation
I am a city employee with a pension and deferred compensation plan. I plan to retire in 5 years. I have only recently in the past 3 years contributed to the deferred compensation. What should my strategy be? Very aggressive or aggressive or easygoing? What funds should I be investing in? I of course want to get the most out of it, but do not want to throw money away also. I am not very savvy with investing and feel intimidated and am wondering if the funds I have are the right ones. Can you help me find the best options?
Terry Says
OK, you recognize that the money you take out eventually will be taxed as ordinary income. So you don’t get the benefit of lower capital gains tax rates for speculative gains. It’s tough for me to judge your risk tolerance.
I think you really need a session with a fee-only FIDUCIARY financial advisor to review your entire retirement situation, other income, expenses, taxes, health insurance etc in order to make this decision. Watch the video here.
In general, the real benefit of deferred comp is the expectation of lower tax rates in the future — not the chance to speculate with money you have worked hard to earn. So I’d chose the most conservative option.
