Question for the Money Doctors

Question submitted on May 3, 2022.

Question

I work for the State of NE in addition to a retirement account, they offer the option for a Deferred Compensation Plan. If I want to contribute to that, I need to do so now. I am just not sure if it would be a good idea financially. I would contribute about $60/month with the option to adjust the amount after I have enrolled. Is the market good enough to even attempt this or should I wait until next year? I am 35 with two teenagers if that makes a difference as well.

Answer

I wish I knew more about your personal financial situation, so I could give you a more complete answer.  Generally, if you can afford to save an additional $60.00 per month in a company sponsored retirement account, it is a good idea, especially from someone that may be thirty plus years from retirement.  I would not suggest trying to time the market, that has been shown to be a crap shoot.  However, if you regularly and consistently save $60.00 or more each month over possibly thirty years, you will be very pleased with the results.  From 1926 through 2020 the S&P 500 has had an average return of 10.3%.  While there are no guarantees that you will receive a comparable return on investment, such a return would produce an additional nest egg in excess of $123,000.00.  Consider meeting with a financial advisor to discuss your personal situation in more detail.

For additional information visit //www.360financialliteracy.org/