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James Crosson, Lincoln Financial Securities Rep

James Crosson Enlightens The Mistakes Of Saving Money Outside Of Your 401k Plan

James Crosson Enlightens The Mistakes Of Saving Money Outside Of Your 401k Plan At Work

James Crosson Enlightens The Mistakes Of Saving Money Outside Of Your 401k Plan At Work

Many people mistakenly believe that investing money and creating wealth is a complicated game, and that it is completely out of their reach. It doesn’t matter if you’re starting to invest for the first time, or you’ve been at it for decades, you can increase your net worth over time using simple principles and avoid the mistakes of saving money for a better future. 

Why is it not a great deal to save money outside of a 401k at work? James Crosson explains the perks and pitfalls! Crosson has been serving in the financial service industry since 1984, and has gained trust and vast experience. From correcting mistakes that people usually make before and after retirement, to providing a resourceful life; James Crosson is an industry-leading financial advisor striving to offer a better future to people across the globe. Crosson and his work have been featured in multiple magazines, such as Wall Street Journal, Money Magazine, and Investment News.

Making retirement plans can be overwhelming, but James Crosson helps to facilitate a stress-free transition. Being in this industry for years and witnessing people making mistakes saving their money, Crosson explains how to save your money and invest it properly:
“Over the years the number one mistake I see people making, is saving money outside of the retirement plan accounts that are usually available through their employer, e.g., 401k, 403(b), or an IRA account outside of their employer plan”, says Crosson. Many times, people do not take advantage of their employer sponsored retirement plans and choose to save money in their checking and/or savings account. One of the main reasons people do this is because they wouldn’t be able to access their money until the age of 59½ without a penalty and taxes on a normal basis. While this is usually true, people have either never contributed into their retirement accounts or they will only contribute up to what the employer matches, which is usually a high of approximately a 6% match. James Crosson says “the good news is that even if people have not been contributing into their retirement plans at work to take advantage of the pretax contributions, untaxed yearly growth, and possible company match, there are steps they can take to correct, what I would consider a major mistake of not placing money in a retirement account, is to “transfer” the money in their savings account to their retirement account at work.”

So how does one accomplish this? For tax year 2021, an employee can contribute a maximum of $19,500 into their 401k plan at work, and if you’re 50 or older, you can make an additional $6,500 catch up contribution, for a maximum of $26,000. Also, if your company has a contribution match, you would receive the company maximum match. For instance, a couple has over $100,000 in a checking or savings account that is earning very low interest, the suggestion would be to max out their 401k contributions at work, by having that money taken out of their paycheck, pretax up to the maximum contribution amount, and spending down the $100,000 in their checking or savings account on normal living expenses, to make up for the “loss” of income that is now being contributed to their 401k account. If both husband and wife max out their 401k contributions, this extra money in their savings or checking account, could very well be gone in a matter of two years, because they have spent it down and instead of taking their normal weekly paycheck, they placed those proceeds into their retirement account at work.

By implementing the above steps and spending down your savings/checking account and substantially increasing your 401k contributions at work, you will save a substantial amount of money in taxes, because the contributions going into your 401k are pretax and you will be able to cut your tax
obligations on what one would normally need to be paid on your ordinary income. The funds placed into the 401k account can now grow tax deferred for many years to come, usually until retirement, which at that time, you would need to withdraw the funds for retirement purposes, and most people would then pay taxes on these funds as ordinary income, but most should be at a lower tax bracket then they were in when they were working. Crosson also tells “you will also save money on the taxes on the interest you
were receiving from your savings/checking account, because the funds are no longer there, of course the recommendation is to always have at least 3-6 months worth of living expenses in one’s emergency account, before taking the steps of “transferring” the money into your retirement plan at work. The only other item I would recommend to do, with regards to your retirement account, is to take the time to double check that your beneficiary information is up to date. With life event changes either due to divorce, death, or even births, it becomes important to check on who you have listed as your
beneficiaries, to make sure that when you pass away your account is disbursed to the correct people you had in mind.”

Check out his website in order to know more about his exceptional retirement strategy development services!
The mistakes people make saving money outside of their 401k plan at work may cause financial crises and other troubles. A financial advisor like James Crosson could help you reduce concerns about your future.
James Crosson is a registered representative offering securities through Lincoln Financial Securities Corporation, Member SIPC. Branch Office: 809 Aquidneck Avenue, Middletown, RI 02842. Lincoln Financial Securities and its representatives do not offer tax or legal advice. Individuals should consult
their tax or legal professional regarding their specific circumstances. LFS-3746641-090321.