Ep 48: How Delayed Gratification Can Help Your Finances

Delayed gratification is a difficult skill to master and that’s just as true with financial matters as it is the other areas of your life. Let’s talk about some instances where you might be faced with a choice of being satisfied now or satisfied later.

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On this episode of The Retirement Huddle podcast, Mark Howard shares some helpful hints for mastering delayed gratification so it can help you financially in the future.

Getting some relief on the household budget vs. getting the 401k match 

When the budget is tight, it’s tempting to forego contributing to your 401k so that you can bring more money home. Usually, you tell yourself that you’ll start the 401k contributions once you’re making more money.

But the matching funds that your employer contributes to your 401k could be the best possible return you can get on an investment. The money that you leave on the table by not contributing to your 401k and taking advantage of the match can amount to a huge sum of money that could have been yours after years of compounding.

If you don’t save for your future, you won’t have anything there when you get there.

Getting a tax deduction now vs. better tax planning for the future 

Contributing to traditional IRAs, 401Ks, and other tax-deferred accounts is awfully convenient at the time that you do it because it lowers your tax bill for that year.

But most retirees today are looking back and wishing that they’d contributed more to a Roth because they now have a tax time bomb on their hands with all of their retirement income being fully taxable.

Starting Social Security at 62 vs. starting later and getting a bigger benefit 

After 40 years of working and contributing to Social Security, it’s very tempting to start getting that monthly check as early as possible. But your benefit will be significantly reduced if you do that, so this approach usually isn’t ideal unless you’re planning to die soon. More often than not, you’d be better off to wait and get a bigger monthly check.

Listen to the full episode or use the timestamps to jump to a specific section. Thanks for listening! We’ll be back for another show every other Thursday.

Today’s Rundown:

2:09 – Budget vs. 401k match

4:22 – Tax deductions

6:33 – Social Security

 

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