Are Deferred Compensation Plans (DCPs) the strategic and supercharged path to FIRE, or can a taxable brokerage account get you to the exact same place? We break down exactly how DCPs work, their risks, their realities, and how they’ve worked for each of us personally. The forced-savings approach of a DCP could be the ultimate in forced savings, or the flexibility of a taxable brokerage account could be just the solution we all have access to. Are you missing out if you don’t have access to a DCP? Let’s figure out if this is the most amazing perk ever or a trap we should avoid.
Andrew joins this week’s podcast as we talk about:
– Demystifying Deferred Compensation Plans (DCPs) and how they bridge the gap to traditional retirement ages.
– The massive tax benefits of deferring income until you hit a lower tax bracket
– The difference between non-qualified DCPs for corporate high-earners and 457b plans for public sector workers
– Real-life examples of how we structured our payouts and the frustrating mistakes we made along the way
– The ultimate risk of Deferred Compensation Plans
– The pros and cons of DCPs vs. taxable brokerage accounts
– Leveraging a Donor Advised Fund (DAF) to increase your giving and strategically offset large tax bombs
Show References:
- Inside Out Money episode #076 – Investing Terms You Should Know – ETFs vs. mutual funds, target date funds, expense ratios, dividends, market vs. limit orders, and more!
- Liz Gets Loaded podcast 4.18 Charitable giving hacks: ‘Smart giving’ through Effective Altruism and Donor Advised Funds: what I’ve learned and how it changed how I give
- Inside Out Money episode #029 – The great mortgage debate: payoff or invest?
- friends on FIRE podcast #056 – Paying off your mortgage is a great investment
- Inside Out Money podcast #112 – Withdrawal strategies in early retirement – A flexible strategy and account playbook to fund your retirement
- Inside Out Money podcast #025 – Our biggest financial regrets and what we’d have done differently
- Inside Out Money episode #135 – The get rich quick trap – Why slow and boring wins the money race
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