yes, I agree and understand the above risks. They certainly should impact our decision. Your last point is a good one as well. The longer the time period before disbursement of the deferred comp funds (whether due to retirement, being let go, etc.), the less favorable participating seems to me, because of the longer time out of the market.I decided not to participate in my program for several reasons.
1) I wasn't sure if I would have another job after this employer. The money is required to be taken out starting at the time I leave the employer, so there is a chance that I'd be stacking it on top of regular income and would not save any money.
2) Employer bankruptcy risk. Perhaps low, but I decided risk wasn't worth it for a low benefit.
3) If I retire early, I'd prefer to use the tax bracket space for Roth conversions or to get ACA subsidies. Deferred comp paying out during early retirement years wouldn't allow for either of those.
4) For me, I could have invested in Vanguard index funds, so low return wasn't an issue.
Given the low returns and the above issues, I'd skip deferring comp unless are certain you will retire in 1-2 years.
Statistics: Posted by We're wolves — Wed Mar 06, 2024 4:17 pm — Replies 5 — Views 158