Hopefully, everyone who has access to a 401k is contributing to a 401k. To not do so is a mistake you don’t want to realize when you’re old and unwilling or unable to work. This post will discuss all the top 401k mistakes that hurt your retirement.

Let us be clear. The government isn’t going to save you. With a large Social Security funding shortfall, the government is having a hard time saving itself.

Further, thanks to a global pandemic and massive stimulus, the government has a huge budget deficit. Therefore, the government will probably adversely affect your retirement life by either raising the eligibility age to receive Social Security and Medicare, raise taxes or both!

Having contributed to a 401k and a Solo 401k since 1999, I’ve made plenty of mistakes that have likely cost me over $200,000 in lost appreciation over the years. My goal for this post is to help you not make the same 401k mistakes I made.

Contrary to popular belief, the ideal retirement age isn’t as soon as possible. Retire too soon and you may feel empty for never living up to your true work potential. Retire too late and you might always be left wondering what could have been if you had changed course sooner.

For example, a 35-year-old couple making $400,000 might love their jobs. With two young kids under three, both parents might both want to work for 20 more years. This way, they can maximize their capital and support their kids through college.

Then you might have a 30-year old couple making a combined $200,000. They don’t have kids and don’t want kids. Instead of needing a 4-bedroom, 3-bathroom home, they are happy living in a 1-bedroom condo for much less. All they want to do is travel and lead a simple life. In their mind, the ideal retirement age is 40.

To minimize regret and maximize happiness, I believe the ideal retirement age range is between 41-45. Let’s go through why.

Deca-millionaire Democratic Presidential-elect, Joe Biden, has stated he will raise taxes on people making over $400,000 a year if he is elected. Biden has called anybody who makes more than $400,000 “rich” and should, therefore, pay “their fair share” in taxes.

Further, Biden has stated once you make more than $400,000 a year, you will face a top marginal income tax bracket of 39.6%, up from 37% currently. In addition, you may likely have to pay FICA tax on income above $400,000 despite a cap on benefits.

Under billionaire Donald Trump’s tax plan, only after an individual makes over $518,401 does he or she pay the top marginal income tax rate of 37%. For married couples filing jointly, their income would have to breach $622,051 before facing a 37% marginal income tax rate.

$400K For Individuals Or Couples

It’s not clear whether Biden is making the $400,000 income threshold for the top marginal income tax rate for individuals or married couples.

If the $400,000 pertains to married couples only, then the income threshold for individuals facing the top marginal income tax rate will likely decline to somewhere around $250,000 – $300,000.

If the $400,000 pertains to individuals and married couples, then high-earning individuals best not get married! It would be much more tax-efficient to earn up to $400K per individual and just live happily ever after with another $400K-earning individual.

Now that the Democrats control both chambers of the house, federal income taxes are undoubtedly going up for the highest income earners.

When Supreme Court Justice Ruth Bader Ginsburg died on September 18, 2020, at 87 years old, the first person I thought about was my 9-month-old daughter.

I thought about how RBG fought her entire career for women’s rights so that daughters, mothers, and sisters everywhere could lead better lives. Thank you RBG!

I’m not sure if you’re aware, but I’ve been writing about the importance of gender equality for a very long time on Financial Samurai. Here are some of my posts throughout the years:

Someone Has To Give Birth: Why Women Shouldn’t Be Penalized For Being A Mom (2009). A wakeup call for people who get snippy when women take maternity leave.

The Government Is Sexist And Nobody Seems To Care (2010). Discussed the absurdity of the marriage penalty tax and why it came to be.

The Gender Wage Gap And A Solution To Gender Inequality (2012). A no-brainer solution that should be adopted by all firms.

Over The Hill At 40: A Discussion On Age Discrimination In The Work Place (2014). Argued why people over 40 rock.

Sexual Harassment At Uber Reminds Me Why HR Is Not Your Friend (2017). Highlighted how the company did nothing after repeated complaints by one brave female employee.

The Marriage Penalty Tax Has Been Abolished, Hooray! (2018). Reviewed the new tax laws that are essentially a victory for higher-earning, career-focused women who wish to get married.

How To Negotiate A Severance As A High-Performing Employee (2018). Showed how my wife was able to negotiate a severance after getting passed over for a raise and a promotion gotten by two other guys.

Each post’s existence originated from the deep frustration I have about the lack of gender equality that has made its way into our systems. If our systems were governed by a more balanced group of people, our systems would treat all people more equally.

My goal is to bring about more awareness so that we can all speak up and take action to level the playing field.

The right asset-to-liability ratio is important if you want to retire comfortably. If your ratio is too low, you may stress too much about your finances. If your ratio is too high, you might not be taking enough advantage of cheap debt to get richer.

As interest rates decline and stay close to zero, the propensity to take on more debt increases. Low interest rates also encourages more investment. This can be good for economic activity, but it can also create asset bubbles that end up destroying a lot of wealth. Be careful.

On the corporate finance side, companies are taking on more debt to fund operations, investments, and acquisitions. The hope is that the return from various corporate activities will surpass the cost of debt in order to bring even more wealth to shareholders.

On the government side, the Treasury Department is issuing more Treasury bonds to pay for more government spending. It is logical to conclude that tax hikes are on the horizon. Luckily for us, the U.S. government can also print an unlimited amount of money to in essence pay back the debt.

On the personal finance side, consumers are taking on more debt to live a better life today. Below is a chart of my favorite type of debt, mortgage debt. Mortgage debt is the least bad type of debt because it generally improves the quality of your life and can often help build wealth through an appreciating asset.

As mortgage interest rates drop to record-lows, millions of Americans are smartly refinancing their existing mortgages to increase cash flow. Meanwhile, there’s a growing number of Americans buying new homes to live a better life.

After my post, The Proper Withdrawal Rate: 4 Percent Rule Is Outdated, caused a ruckus, I began to wonder why people argue so much on the internet. Arguing is exhausting and pointless. There’s no need to win a financial argument. Just get rich instead.

The last time I got into a financial argument must have been when I was in my early 30s. I thought I knew so much after only 10 years of working in finance. I was willing to battle with people who saw the world differently. How naive.

But as I’ve gotten older, I now just shrug my mental shoulders when there’s a financial disagreement. I do try my best to understand the person’s point of view. Goodness knows I have many blind spots. However, if I still disagree, then I move on. No big deal.

In the professional investment world, we are taught to always entertain the possibilities. As soon as you ossify your way of thinking, you expose yourself to tremendous potential loss. To get rich, you must try and see opportunity before others.

In personal finance land, the main thing you must focus on is whether your views and actions are making you richer or poorer. If you disagree with someone’s financial point of view, yet are getting poorer or are not keeping up with everybody else, then you should consider changing your ways.

Be flexible in thought. Otherwise, you’re just going to get angry as the world passes you by.

If you’re still apoplectic that I challenged the sacred “4% Rule” from the 1990s and introduced the new Financial Samurai Safe Withdrawal Rule, do not fret! Just because you can’t save 200X your annual expenses or don’t want to only withdraw 0.5 percent a year in retirement doesn’t mean you’ll never be rich. Let me share with you how to feel rich instead.

To feel rich consistently is even better than actually being rich. In fact, learning how to feel rich might be the biggest wealth hack of them all.

I define rich as earning a top one percent income of $1+ million or having a top one percent net worth of over $11 million. You may disagree, but if you make more or have more than 99% of the population, you are rich.

However, you can be rich and still be miserable because your spouse left you. You can be rich and still feel terrible because your children hate you for neglecting them growing up. Making $3 million a year is great, but due to tremendous job stress you hate your life. You may have a $20 million net worth and never feel rich because you sacrificed your health to amass your fortune.

Obviously, if you can consistently feel rich and actually be rich, then you’ve got the best of both worlds. But sometimes, we can’t have everything we want.

This article will share my ideas on how to feel rich even if you can’t get rich.