BUSH: Why don’t all the rich people get rich? | Local News
Perception, hesitation and bad decisions are factors.
Why do some people let their lifetime wealth potential slip away? Some people are better off economically at 30 or 40 than they are at 50 or 60. In some cases, fate gives them a hard time. In other cases, poor decisions and inaction are to blame.
Some buy depreciating assets instead of letting the assets appreciate. They get into debt and live beyond their means. What are they spending so much on? It’s not just about basic consumer goods. It’s not unusual for a family to “keep up with the Joneses”.
Unlike the sticker, the person who dies with the most toys is not necessarily the winner. In fact, this person may leave a lot of debt and nothing else behind. Today’s hottest cars, clothes, flat screens, phones and tablets could be tomorrow’s trash and clutter.
Some never prioritize a retirement strategy. For many, there are opportunities to invest, whether through a traditional individual retirement account or a workplace retirement account. In the case of company retirement accounts, some companies offer top-ups, which can be an opportunity to increase your savings power. That being said, not everyone takes advantage of these opportunities.
Once you reach age 72, you should begin receiving the required minimum distributions from your 401(k) plan and your traditional IRA in most cases. Withdrawals are taxed as ordinary income and, if made before age 59.5, may be subject to a 10% federal penalty tax.
Some never build an emergency fund. Financial challenges will arise, and a rainy day fund can help you meet them. Making an effort to save for that rainy day also helps promote good lifelong saving habits.
Some invest without a strategy. Pursuing the recent fad is a behavior that can lead to frustration instead of financial freedom. Instant wealth rarely comes from an overnight winner. These ideas do not prevent people from dangerously allocating an excessive portion of their assets to a single investment.
Some accept a “middle class forever” mindset. Some people define themselves as middle class and accept that definition all their lives. The danger is that it can be a sort of psychological barrier, a feeling that “this is it” and that “getting rich” is for other people.
Behavior and belief can matter as much as effort. It takes some initiative to create lifetime wealth from current wealth, but a person’s view of money (and their view of their purpose) can influence that effort – for better or for worse.
This information should not be construed by a client or potential client as personalized investment advice. For more information, please visit BushWealth.com for our full reveals.
Stacy Bush works for Bush Wealth Management.