Life Lessons, IRAs, And Nursing--My Start To FI
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There I was on a slow (nurses never say this s-word out loud but it may be okay to type it) night shift scrolling aimlessly through my Facebook feed. Fortunately, the majority of my posts are from ChooseFI, but occasionally I happened to see a few other non-FI posts permeate my feed. Abruptly, a post caught my attention. This individual’s post was bragging about their job. Naturally, I perk up when someone posts about one of their largest asset producing levers.
On one hand, the post was a positive note about someone actually liking their job. The individual's post listed about 15 different perks their job allowed them to experience this past year. They didn't focus on the actual job nor even list what they do. They just listed their past year's job perks. Don’t get me wrong, I enjoy positive perks of my job--like the free Christmas turkey that my hospital provides.
Investigating
I put on my best Facebook stalking hat and combed through this person’s profile to investigate what their day to day employment resembled. Deeper into their profile I saw that they worked at a financial group. I went from "hmmm that sounds pretty cool" to "here we go again". I have become quite snarky when it comes to seeing the word “financial group” especially if it expands beyond the holy grail of Vanguard, Schwab, or Fidelity. This lack of enthusiasm stems from the fact that a majority of these groups immediately want to sell annuities, whole life policies, and mutual funds with high expense ratios. My curiosity was sparked. I earnestly clicked on this financial group’s website, because who doesn't want to drive a race car by virtue of their employment. That jovial Christmas turkey started slipping down a few notches on my employee perks list. This financial company sold the typical life insurance, long term care insurance and two retirement options. The two choices were annuities and indexed universal life insurance. An indexed universal life insurance policy is a fancy name for whole life policy. Cue the eye roll.The past can hurt
When I left my coal mining job to pursue nursing, I rolled my 401k into what I thought was an IRA. Alas, it was listed under a variable annuity IRA. At the time, I assumed this was just a regular old IRA, and I had no idea the actual definition of an annuity. My financial adviser even praised me for saving this much money. My 401k had been set to 6% with a 6% match, and for a $65,000 to $70,000 mining job this was nowhere near the IRS limits for 401k at the time. I started learning more and more about finances, and quickly realized my mistake. Fixing this problem was priority number one. When rolling over an annuity to a regular IRA, the insurance company will charge you surrender fees. Surrender Fees? I would have to pay a certain percentage that would decrease each year, just to roll money out of this annuity, really? Companies can stretch these fees out for 5-10 years to keep your money in their contracts. That got me more curious, and I finally went to research the expense ratio. 1.2%, yuk, I decided this annuity needed to be rolled into an index fund. I made the choice to wait one more year to counterbalance the amount owed for surrender fees. All in all, it cost me almost $500 when I finally rolled it over to Vanguard.Learn together
In the spirit of learning from our mistakes and attempting to better ourselves, I will list some of the perks of my job. This year my job allowed me to:- Max out my 401k and IRA
- Max out my spouse's IRA
- Increase my salary 14%
- Write this blog post while working--slow night at a critical access hospital
- Receive a Christmas turkey--arguably the best one
- Gain a leadership role
- Add an HSA
- Educate myself
- Hold a patient’s hand as they take their last breath
- Make a difference in people’s lives
- On Occasion, save lives
