Where We Focus vs. What Sinks Us
By Kevin Estes
We tend to focus on what we know.
It’s specialization at its finest!
Unfortunately, this laser focus can create painful blind spots.
College Blank Check
One person retired early, manages their own investment portfolio, and uses the Rule of 55 to avoid the tax penalty for retirement withdrawals before age 59.5.
However, they uttered some expensive words:
”If you get in, we’ll figure it out.”
Their Senior applied Early Decision to an expensive private school… and were accepted!
Unfortunately, they hadn’t:
run the Net Price Calculator for the school,
completed the FAFSA, or
considered the CSS Profile
They’re paying full private school tuition even though their student would have had many good, affordable options.
It was like buying an 18-year-old a new Ferrari without checking the price tag.
Retirement, Uninvested
Someone else is saving aggressively.
They max out their 401(k) contributions, contribute to their Employee Stock Purchase Plan, own their home outright, and save into a Mega Roth.
How are their retirement funds invested?
Oh, they aren’t. They’re sitting in cash.
The person’s been waiting for a “good time” to jump back into the market.
Massive Conversion
A third person made good money, saved aggressively, and retired early.
They figured that since they had no earned income, it would be a good time to do Roth conversions.
So they did… about $500,000 of Roth conversions in a year!
Doing so would have pushed their income tax rate higher than it was when they worked.
Fortunately, they got the conversions reversed.
Break the Stigma
Money’s been a bit of a taboo topic.
As a result, personal finance blind spots seem to be widespread and significant.
Please discuss your financial decisions with trusted friends, family members, and/or professionals.
If you’re interested in a review of your specific situation…
Disclaimer
In addition to the usual disclaimers, neither this post nor this image includes any financial, tax, or legal advice.
