I read this astonishing article today titled “3 reasons to ditch your IRA.” The author makes the case against contributing to traditional IRAs but all his arguments could be used against traditional pre-tax 401(k) plans as well. Before you cancel your pre-tax retirement account contributions, let’s take a look at his arguments and why they might be problematic: Continue reading “3 Reasons Not to Ditch Your IRA”
According to a new report by the Centers for Disease Control and Prevention’s National Center for Health Statistics, Americans are living longer—o.1 years longer to be exact—as the national life expectancy has reached a new record high of 78.8 years. Women, with an average life expectancy of 81.2 years, live on average 4.8 years longer than men, at 76.4 years. While some may see this purely as a blessing, it does present a financial challenge for today’s women. Namely, women may need to save more for retirement than men in order to account for these additional years. Here are five things women can do to help address this added financial challenge: Continue reading “Living Longer May Not Be All Good News For Women”
In my last blog post, I addressed the myth that Social Security benefits are based on an accumulation of assets and that collecting a spousal benefit would reduce the amount a spouse would otherwise be eligible to receive. This brings up another myth that is circulating out there that suggests that one has to be married in order to collect a spousal benefit. That is not the case. Continue reading “Social Security Myth #5: You Only Receive A Spousal Benefit If You Are Married When You Retire”
Saving for retirement is a must these days and retirement confidence in general is pretty low. Our recent retirement preparedness study revealed that only about 20% of employees feel they’re on track to reach their desired income in retirement. In order to bridge this gap, it’s no secret many of us need to save more. 
Continue reading “Can The IRS Help You Save For Retirement?”
One of the most valuable aspects of the Social Security formula is the accrual of spousal benefits for couples that have been married for at least one year at the time they file for benefits. However, some think of these benefits as a pool of money that somehow is split between the two of them. For this reason, they sometimes fall under the misconception that if one of them starts to collect a spousal benefit, the other’s benefit will be reduced. Continue reading “Social Security Myth #4: Collecting a Spousal Benefit Reduces the Amount Your Spouse Will Receive”
You’ve worked hard both in the professional world and at home raising your family and retirement is just around the corner. Now it is your turn to relax – somewhat — and do the things you love and want to do. But what if you haven’t finished paying off your student loan debt? Continue reading “How to Manage Student Loan Debt in Retirement”
In my previous two blog posts, I’ve addressed the myths of Social Security insolvency and calculating Social Security using final average earnings. Next up is a myth concerning the receipt of benefits while employed. Most of us know that the earliest we can collect a Social Security retirement benefit is age 62, but that doesn’t mean most of us plan to stop working by then. For this reason, I am often asked about the implications of collecting a Social Security benefit while working. Continue reading “Social Security Myth #3: You Will Lose Benefits If You Collect While You Are Working”
Last week, I addressed the first myth about Social Security benefits, namely that they won’t be there by the time you’re eligible to receive them. For this week’s post, I’d like to address another common myth related to how benefits are calculated: Benefits are based on your last five years of earnings. Continue reading “Five Myths About Social Security: Myth #2 – Social Security Is Based on Your Last Five Years of Earnings”
When I facilitate a workshop or webcast on retirement planning, I like to poll my audience to see which areas of retirement planning they would prefer to spend more time talking about. The audience generally ranks saving and investing for retirement as their top two choices but depending on who is in the audience, Social Security may rank as third. Even when it doesn’t, I find it amusing that a government benefit that some are skeptical will even be there by the time they retire ends up being the topic that generates the most questions. I guess it’s because it’s a source of retirement income that many are familiar with yet so few truly understand. Continue reading “Things You Need to Know About Social Security: Will It Be There?”
As a financial planner, I feel that it is important to encourage people to realistically think about what their retirement will look like. No matter how young or old, now is always a good time to plan for the future. It is not uncommon for some of these popular questions to come up during a typical conversation: Continue reading “Retirement: You Might Need to Visualize It to Realize It”
Some couples could benefit from a split strategy in retirement but I don’t mean breaking up with your loved one. The Wall Street Journal‘s MarketWatch blog recently highlighted a split strategy for couples when deciding on the best time to take Social Security benefits. One spouse (the lower income earner) takes benefits as early as possible, which is at age 62. The other spouse would wait until age 70 to take their own benefit but at their full retirement age (66 to 67 – depending on your year of birth) would claim the spousal benefit based on the lower income earning spouse. Continue reading “Should You Split Up With Your Spouse In Retirement?”
Should you make pre-tax or Roth 401(k) contributions? I recently read this article by Penelope Wang called “The Great Retirement Account You’re Not Using” that argues for Roth contributions. However, I still think pre-tax contributions make more sense for most people. Here is my response to each of her main arguments: Continue reading “In Defense of the Traditional 401(k)”
Many friends of Financial Finesse and readers of our daily blogs send us direct questions and various inquiries through our social media sites. Occasionally we will highlight some of the more frequently asked questions and provide you with a summary response. In this version of the Ask-A-Planner mailbag, we will examine a couple of questions regarding Individual Retirement Accounts. To help examine these questions, I thought I’d turn to Paul Wannemacher, one of our resident financial planners and a recent addition to the Think Tank at Financial Finesse, for some guidance. Continue reading “Ask-A-Planner Mailbag”
As traditional pension funds continue to go the way of the typewriter all across America, you may find yourself in the position of having to decide what to do with a pension plan that’s being terminated by your employer. Fortunately, that doesn’t mean the money disappears. It just won’t be added to anymore and you have to choose what to do with the money. While this may sound like the kind of thing you’d rather not deal with, these come with an expiration date and a default option that may not be your best choice. So let’s look at the pros and cons of some common options. Continue reading “What to Do When Your Pension is Terminated”
When doing retirement planning sessions with people, we often talk about their retirement resources in order to help them plan for the future. We look at any pension incomes that will come their way. We look at their savings and investment accounts, their contribution levels and the potential growth of those accounts. Continue reading “Why Your Social Security Projection is Probably Wrong”
One of the most common pieces of investment wisdom is that you should invest more in conservative “loan” investments like cash and bonds and less in more aggressive “own” investments like stocks and real estate as you get closer to retirement. This may have made sense when bonds were paying 6% or more but with long term bonds rates now closer to 3%, this could actually make it harder to retire comfortably or more likely you could run out of money in retirement. Cash is paying less than inflation. Rather than to low-interest bonds and cash, why not shift towards high-yielding dividend stocks and real estate? Here are some advantages of this approach: Continue reading “Be an Owner Rather Than a Loaner in Retirement”
1979 – Happy Days was a popular TV show, disco clothes were in, and a top tune was Y.M.C.A. by the Village People. My husband recently relived all these memories at his 35th high school reunion for the Class of ’79. I got dragged along, but at least the classic rock and disco tunes were fun to listen to. Continue reading “Those Were the Days”
We hear a lot in the financial media about the looming retirement crisis in our country and in general, retirement confidence is lacking. Therefore, it comes with no surprise that one of the most frequently asked questions that financial planners receive is “am I on track for retirement?” This is commonly accompanied by this question: How much do I need to save for retirement? Continue reading “How Much Income Will You Really Need During Retirement?”
By “magic number,” I mean how much money will you need in order to retire comfortably? Without giving away too much, let me answer briefly. A WHOLE LOT!!!! Of course, it’s going to be a different number for each of us and there are countless ways to arrive at a number that makes sense for your life so my goal here is to try to help you figure out a reasonable estimate of what you might need without having to run numbers on a spreadsheet or a website that may or may not be worth the time it takes to prepare the estimate. I’m not saying it’s going to be super-easy but at least it won’t require much math! Continue reading “What’s Your Magic Number?”
Real estate can be a great asset for retirement planning. Last week, I explored a couple of ways you can supplement your retirement income using real estate, namely by owning rental property or investing in REITs. This week, I’d like to take a look at a few other ways you can use real estate to supplement your income by tapping into the equity you may have in the home you are living in right now. Continue reading “Using Real Estate to Supplement Your Retirement Income (Part II)”
