Are You Making These Retirement and College Savings Mistakes?

·34 min·3 clips

Why do people with target date funds still add three other equity plans, grossing up their risk?

The episode begins with Chris Boyd introducing Brian Regan to discuss mistakes in retirement and college savings. Brian highlights a frequent error in 401k plans where investors allocate to a target date fund but also add other equity funds, inadvertently increasing risk. He explains that target date funds are designed to be all-in-one solutions, adjusting allocation over time. The conversation shifts to risk assessment, critiquing the common benchmark of comparing investments to the S&P 500, which misunderstands appropriate risk levels for most people. Brian mentions a LinkedIn article he wrote on this topic. They discuss investor behavior, citing the Dalbar study showing investors often underperform funds due to poor timing. Brian presents a backtest example where a portfolio underperforms short-term but outperforms long-term. The focus then turns to college savings, with Brian sharing his personal chart aiming to save $1.27 million for his two children's private college education by 2044. He emphasizes starting early and using 529 plans for tax advantages. The hosts note that costs are high and encourage prioritizing savings over luxury expenses. Finally, they debate homeownership, suggesting it may not always be the best wealth-building strategy currently due to high prices and mortgage rates, and highlight hidden costs like maintenance and taxes.

As heard by us

A grounded review of balancing education savings with long-term retirement security.

Retirement planning and education savings are framed as connected choices, especially when well-meant support for children starts to press against a parent's own long-term security.

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Why you'd press play

If retirement savings and your children's education costs are pulling on the same dollars, press play.

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