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Yahoo
3 days ago
- Business
- Yahoo
The No. 1 Reason You Won't Retire Rich Is a 4-Letter Word
Retirement planning often focuses on numbers like how much to save, when to start and which investments to choose. But the biggest obstacle to building wealth is not found in a spreadsheet or buried in a fund fee. It is a simple four-letter word that stops progress before it even begins: Fear. Be Aware: Consider This: GOBankingRates unpacks how fear is keeping you from achieving your wealthy retirement goals. How Fear Can Unravel Your Dreams of Retiring Rich Fear causes hesitation, second-guessing and sometimes total avoidance. Mary Clements Evans, certified financial planner (CFP) and founder of Evans Wealth Strategies, said fear is often the root cause of financial paralysis. In her book 'Emotionally Invested: Outsmart Your Anxiety for Fearless Retirement Planning,' Evans explains how anxiety, self-doubt and avoidance can quietly sabotage years of planning. Fear appears in many forms. The fear of losing money can lead to never investing at all. The fear of making a wrong decision causes people to procrastinate. Some worry so much about outliving their savings that they become overly conservative, missing out on long-term growth. These emotional patterns often work in the background and are easy to overlook, yet they have lasting consequences. Trending Now: Delaying retirement contributions can sharply increase the amount someone must save later. Even a few years' delay can leave people behind. Yet many hesitate — not because of lack of information, but because of fear-driven avoidance, according to Evans. In an article in Healthline, psychologists refer to this dynamic as the Yerkes-Dodson Law, which describes how stress or fear can improve performance up to a point and then rapidly degrade it. When applying the Yerkes-Dodson Law to retirement planning, a moderate amount of fear can motivate initial action; however, too much of it creates paralysis that outweighs any benefit. During times of market volatility, investors often experience heightened emotional reactions that can lead to impulsive decision-making. In response, financial advisors now frequently integrate emotional coaching alongside traditional investment guidance. They guide clients through acknowledging their concerns, reaffirm small wins and reframe fears as manageable challenges. This approach helps sustain behavioral momentum and prevent fear from undermining long-term financial goals. How To Tackle Fear in Retirement Planning In the Inside Personal Growth podcast, Evans said emotional awareness is a powerful tool for addressing fear in retirement planning. The process demands not only financial knowledge but also mental resilience. Recognizing emotional triggers enables people to manage anxiety instead of letting it dictate their decisions. This mindset shift fosters steadier, more disciplined action throughout the planning journey. Digital tools such as robo-advisors can offer cost-efficient investing, but they cannot address emotional barriers like fear or guilt. These require human intervention. Advisors who acknowledge and work through emotional resistance can help clients move from hesitation to disciplined, long-term investing. Fear also interferes with communication. Many families avoid discussing retirement goals, long-term care or inheritance planning. This avoidance delays important decisions and leaves loved ones unsure of how to prepare. Encouraging honest dialogue around money can relieve tension and create shared direction. The good news is fear can be managed. Simple techniques such as visualizing future goals, journaling, using checklists and breaking financial tasks into smaller steps have all been shown to reduce anxiety. According to Evans, the goal is not to eliminate fear but to act anyway with clarity, intention and structure. Evans highlights what most retirement calculators leave out: The human side of money. Her work reflects a growing understanding that confidence, not just capital, plays a central role in building wealth. More From GOBankingRates 6 Big Shakeups Coming to Social Security in 2025 This article originally appeared on The No. 1 Reason You Won't Retire Rich Is a 4-Letter Word
Yahoo
13-07-2025
- Business
- Yahoo
Here's how a $1,000 ‘Trump account' could swell to $100,000 by age 21—and $2 million by 60—even with modest contributions from families
The One Big Beautiful Bill that was signed into law last week includes a provision for so-called Trump accounts that provide a one-time contribution of $1,000 from the federal government for U.S. babies born from 2025 to 2028. Depending on how much is invested and how well the stock market performs, the accounts could grow substantially over time. Parents are getting a new option to build wealth for their kids under the new tax-and-spending law signed by President Donald Trump last week. The so-called Trump accounts, which are expected to be available next July, are open to babies who are U.S. citizens born from 2025 through 2028 and have Social Security numbers. The federal government will make a one-time contribution of $1,000. Families can also contribute up to $5,000 a year, with employers allowed to chip in up to $2,500 of that amount. The money must sit in low-cost stock mutual funds or ETFs tracking a U.S. stock index, such as the S&P 500. Key details have yet to be spelled out as federal agencies must begin the rule-writing process to implement the program. But the investment community is already touting the potential benefits. 'It can help Americans build financial security earlier and more confidently and, over time, ease the pressure on both the safety net and the federal budget,' Russell Investments Chairman and CEO Zach Buchwald wrote in the Washington Post on Thursday. 'This kind of long-term investment in people addresses a deep, persistent challenge: Most Americans don't save or invest nearly enough during their working years.' The ability for employers to make contributions, which wouldn't count as taxable income, is key because it can allow the accounts to grow significantly, even with modest sums from families, he added. Buchwald laid out a hypothetical scenario where a family contributes just $20 a week into a Trump account, or about $1,000 a year, with an employer adding another $2,500 a year. Assuming a 7% rate of return, the account could top $100,000 by the time the child turns 21, he estimated. It's a relatively conservative figure considering the S&P 500's annual return has averaged above 10% since 1957, albeit with some big swings in the process. If contributions keep rolling in, the magic of compounding could swell the Trump account to more than $2 million by the time the holder is 60, Buchwald added. 'That early start doesn't just help with paying for college or buying a first home—it sets the foundation for lifelong financial security through to retirement,' he said. Of course, more aggressive contributions and a stronger stock market would result in fatter accounts. A family that maxes out the $5,000 annual contribution limit could see the account jump to more than $190,000 after 18 years and an 8% annual return. Trump accounts represent another investment tool for families looking to establish some financial resources for their children. Parents can already open Roth IRAs and 529 education accounts for their kids. But they can only start IRAs when their kids are earning income, and withdrawals for 529s are largely limited to education-related expenses (though unused funds can be rolled into a Roth IRA with certain limits). In addition, other families may not have the financial means to set up IRAs, while many Americans don't open their own retirement accounts until they've landed their first jobs in their 20s, or later. A key advantage of Trump accounts is that contributions can start very early in a child's life, allowing for more years to build wealth. 'To me, it's a supercharged IRA,' Cheryl Costa, a financial adviser in Framingham, Mass., told the New York Times. This story was originally featured on
Yahoo
12-07-2025
- Business
- Yahoo
Here's how a $1,000 ‘Trump account' could swell to $100,000 by age 21—and $2 million by 60—even with modest contributions from families
The One Big Beautiful Bill that was signed into law last week includes a provision for so-called Trump accounts that provide a one-time contribution of $1,000 from the federal government for U.S. babies born from 2025 to 2028. Depending on how much is invested and how well the stock market performs, the accounts could grow substantially over time. Parents are getting a new option to build wealth for their kids under the new tax-and-spending law signed by President Donald Trump last week. The so-called Trump accounts, which are expected to be available next July, are open to babies who are U.S. citizens born from 2025 through 2028 and have Social Security numbers. The federal government will make a one-time contribution of $1,000. Families can also contribute up to $5,000 a year, with employers allowed to chip in up to $2,500 of that amount. The money must sit in low-cost stock mutual funds or ETFs tracking a U.S. stock index, such as the S&P 500. Key details have yet to be spelled out as federal agencies must begin the rule-writing process to implement the program. But the investment community is already touting the potential benefits. 'It can help Americans build financial security earlier and more confidently and, over time, ease the pressure on both the safety net and the federal budget,' Russell Investments Chairman and CEO Zach Buchwald wrote in the Washington Post on Thursday. 'This kind of long-term investment in people addresses a deep, persistent challenge: Most Americans don't save or invest nearly enough during their working years.' The ability for employers to make contributions, which wouldn't count as taxable income, is key because it can allow the accounts to grow significantly, even with modest sums from families, he added. Buchwald laid out a hypothetical scenario where a family contributes just $20 a week into a Trump account, or about $1,000 a year, with an employer adding another $2,500 a year. Assuming a 7% rate of return, the account could top $100,000 by the time the child turns 21, he estimated. It's a relatively conservative figure considering the S&P 500's annual return has averaged above 10% since 1957, albeit with some big swings in the process. If contributions keep rolling in, the magic of compounding could swell the Trump account to more than $2 million by the time the holder is 60, Buchwald added. 'That early start doesn't just help with paying for college or buying a first home—it sets the foundation for lifelong financial security through to retirement,' he said. Of course, more aggressive contributions and a stronger stock market would result in fatter accounts. A family that maxes out the $5,000 annual contribution limit could see the account jump to more than $190,000 after 18 years and an 8% annual return. Trump accounts represent another investment tool for families looking to establish some financial resources for their children. Parents can already open Roth IRAs and 529 education accounts for their kids. But they can only start IRAs when their kids are earning income, and withdrawals for 529s are largely limited to education-related expenses (though unused funds can be rolled into a Roth IRA with certain limits). In addition, other families may not have the financial means to set up IRAs, while many Americans don't open their own retirement accounts until they've landed their first jobs in their 20s, or later. A key advantage of Trump accounts is that contributions can start very early in a child's life, allowing for more years to build wealth. 'To me, it's a supercharged IRA,' Cheryl Costa, a financial adviser in Framingham, Mass., told the New York Times. This story was originally featured on
