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Re: Need advice on retirement plan


From: Maggie White (mwhiteaz_at_TeacherArtExchange)
Date: Fri Mar 28 2003 - 10:28:03 PST

Woody Duncan wrote:
> I'm a big believer in before tax income invested in the market
> through a 403B plan. But with the steady fall in stocks over the
> past two years why listen to someone who has lost 50% of his
> value and is still investing.

Woody's right on recommending a 403b plan (not a 401 as someone else
mentioned). The 403b tax-sheltered annuity was created for public
employees. You can contribute up to, I think, 20% of your pre-tax gross
income each pay period. Then you are taxed only on what's left. When
the annuity matures and you begin withdrawing, you will pay income tax
on it then. By then you will probably be in a lower bracket.

I've been in the stock market for a very long time, courtesy of my
parents. The enormous bull market we saw at the end of the 90s was
completely unrealistic and fooled a lot of new investors into thinking
it would always be that way. While it is indeed heartstopping to read
the bottom line on my monthly statements nowadays, you are still going
to come out ahead if you stay in the market for the long term. The DOW
only hit 5000 about seven years ago, and it's hovering around 8000 or so
now, so we are still way ahead of the game. The stock market, over the
long term, has outperformed every other type of investment.

A good finanacial planner will take the time to get to know you and your
lifestyle and help you assess your risk tolerance--as in, do you want to
invest conservatively or more aggressively. Interview several and pick
the plan that works for you.