Updated February, 2018
A while ago, I wrote about some reasons to consider contributing to a Roth IRA. But if you earn too much to contribute to one, these arguments may seem like a moot point. However, there are a few things to keep in mind before completely writing off the Roth IRA. Continue reading “How to Get Around Roth IRA Income Limits”
Several weeks ago, I had the pleasure of meeting a young man who emigrated to the U.S. from Africa, and he wanted to know if he was saving enough for retirement. As I proceeded to ask him the usual questions—when would you like to retire, what kind of lifestyle would you like to have, how much have you already saved — I began to realize that this individual was quite different from most of the ones I talked to. It turns out that he is already saving 25% of his pay but was able to save more and wanted to discuss his options. Continue reading “What’s On Your “Dream Board”?”
In his blog post this week, Scott Spann wrote about some reasons not to contribute to a Roth IRA. But there are also lots of reasons a Roth IRA can make sense. Let’s take a look at each of his arguments: Continue reading “Reasons to Contribute to a Roth IRA”
Roth IRAs are not a secret anymore since they first became available in 1998 as a way to use after-tax money to save for retirement. The biggest benefit is that as long as the Roth IRA account has been open for 5 years and withdrawals take place after age 59 ½, you never have to pay taxes on the earnings (contributions are always accessible without taxes). Tax-free earnings growth has a lot of appeal for younger generations and people not in their peak earning years who expect to be in a higher tax bracket during retirement. Continue reading “Reasons to Stay Away From a Roth IRA”
A friend of mine recently sent me a link to this much talked about Frontline episode called “The Retirement Gamble” on the problems in our current retirement system. The show points out that half of all Americans say they can’t save for retirement and lays the blame on several main culprits: Continue reading “Your Retirement Planning Doesn’t Have to Be a “Gamble””
I saw a news story over the weekend about ten ladies who were able to escape a burning limo. What makes it a good news story is that there were no significant injuries. And, most of the women were in their 90s. Continue reading “Does Your Financial Life Feel Like a Burning Limo?”
Following a recent financial planning webinar presentation, I was faced with a frequently asked question. Does it make sense to take out a 401(k) loan to consolidate debt? This employee had definitely done her research on 401(k) loans but she was wary after reading warnings from many financial planners and media gurus. However, this didn’t deter her from exploring a 401(k) loan as she was eager to eliminate her high interest credit cards and get them out of her life forever. Continue reading “Are 401(k) Loans a Really Bad Idea?”
One of the most common questions we get is whether to prioritize paying down debt, building up savings, or investing for retirement. Ideally, of course, we would do all three but most of us have limited dollars with which to work with. So what should take priority? It’s a topic that has generated some disagreement among some well-known financial gurus. Here are some guidelines to follow: Continue reading “What Comes First: Saving, Investing, or Paying off Debt?”
Last week, we talked about how various sources of retirement income are taxed. Here are some strategies you can use to minimize those taxes:
Continue reading “How to Pay Less Taxes in Retirement”
Last month I took a phone call from a gentleman who is in the process of preparing for retirement. He has done a good job saving and now that he is getting ready to take distributions from his retirement accounts, he is concerned about taxes. We are often lead to believe that taxes will be less in retirement and for many taxpayers, that will be true not because of a change in the way things are taxed but rather because many retirees will be able to enjoy retirement on less income. Income sources are taxed no differently in retirement than they are while we are working. Sure, we receive an additional deduction once we turn 65, but the primary difference between our working and retired years is not how our sources of income are taxed, but the “sources” of income themselves. Continue reading “How Is Your Retirement Income Taxed?”
A friend of mine recently sent me an article titled “It’s a 401(k) World and It Sucks.” I realize that the 401(k) is not perfect (but what is?) and the author does make some good points. But that being said, “sucks” is a pretty strong word about the vehicle that has encouraged more retirement saving than anything else, especially considering how much we need to increase those retirement savings. Let’s take a look at each of the author’s main arguments: Continue reading “Does the 401(k) “Suck?””
If you’ve ever talked to a financial planner about retirement, you probably know the retirement planning process spends a lot of time focusing on important questions like the following: Continue reading “The Journey to Retirement Begins With Self-Discovery”
I recently saw this clip of the Today Show that discussed one man’s goal of retiring before 40, a topic I’ve written about before. He’s 30 years old, earns $50k a year, and has accumulated $100k of savings over the last 3 years. His goal is to save 60-70% of his net income to retire at age 35 with a $400k nest egg to cover his $15k of annual expenses. To do that, he’s moved to Florida to avoid state income taxes and be able to live without a car (he points out that waiting for the bus is much easier in warmer weather) and has decided not to have children. Is his plan feasible? Continue reading “When to Retire? How About 40?”
I recently answered a question from a blog reader and received the following message:
“Thanks VERY much! In the past few years, I have paid $500 to two separate financial planners to get this kind of advice, to no avail. In a few minutes you provided me more useful information than they provided. They have been helpful telling me how much I CAN invest with them, where, and how much that investment will grow to – but they haven’t, can’t or won’t tell me how much I SHOULD be saving now to get to a recommended savings target – so that I have enough to retire, but also am not unnecessarily saving too much now rather than enjoying it while my family is young, all together (before kids get big and move out) and all healthy (and capable of enjoying it).” Continue reading “How Much Do You Really Need to Retire?”
Almost three years ago, we launched this financial wellness blog and I was pleased to be one of the financial planners chosen to share bits of wisdom and personal finance tips with you. Since then, I’ve written on everything from saving money by couponing to more advanced topics such as taxes and estate planning. My goal was to share tips on anything and everything that could help you with your personal finances, reduce financial stress and improve your financial wellness and hopefully keep you entertained a bit along the way. Continue reading “7 Retirement Planning Blog Posts That Can Help You Retire on Time”
The more I think about the funding shortfalls with Social Security and Medicare, the disappearance of traditional defined benefit pension plans, and the lack of Americans’ saving for retirement, the more I realize that there will likely be some major changes in the future of retirement and retirement planning. Everyone talks about entitlement reforms like raising the Social Security retirement age and reducing Medicare benefits. But here are 5 other possible changes affecting retirement that you may not have heard as much about and some things you can to prepare: Continue reading “5 Potential Changes That Could Affect Your Retirement”
From the thousands and thousands of pre-retirees I’ve talked to over the past decade, two consistant comments I hear over and over again are “I wish I’d started saving earlier” and “I wish I’d saved more along the way.” Since I’ve yet to have an employee tell me they’ve saved too much for retirement, every employee could benefit from knowing the 7 essential habits of highly confident retirees that were concluded from the BlackRock 2012 Retirement Survey, which was conducted by Boston Research Group. Continue reading “Retirement Education: Sharing the 7 Habits of Confident Retirees With Your Workforce”
Do you want to retire this year? Next year? Do you want to retire sometime soon? Continue reading “Three Common Retirement Questions You Need To Ask”
Retiring before 65 can be a challenge even for the folks that have their financial ducks in a row. Last week, an employee called into our financial helpline and asked me what he should be considering to retire early. He was 62 and wanted to retire in a year but he didn’t know of anyone in his professional or social circles that was retiring early and could give him advice. No one he knew was retiring before 65. Continue reading “Retire Before 65: It May Pay To Wait”
As a rule of thumb, financial planners generally say that you can safely withdraw about 4% of the value of your nest egg as income in retirement and increase it by inflation each year. That number was based on the “Trinity study” that looked at the outcomes of various withdrawal rates from 1926-2009 as well as additional research by financial planner and author William Bengen. However, I recently came across this interesting blog post that points out a few shortcomings of the study: Continue reading “How Much Retirement Income Can You Really Get From Your Portfolio?”
