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?”
I’m lucky to be only a 20 minute drive from the Delaware line, which is known for tax-free shopping all year long. Whenever I need to make a big purchase, I head out of Pennsylvania to avoid the 6% sales tax. If you live in a state that has a high sales tax, you may not have that option. Continue reading “Does Your Summer Include a Sales Tax Holiday?”
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”
Owning your own home has long been considered part of the American dream but as the housing market starts to heat up in certain areas of the country, home ownership may not be the most economical solution to housing. A recent article in The New York Times draws attention to several factors that must be considered when evaluating the financial benefits of home ownership and provides a link to a Rent v. Buy Calculator* that potential homeowners can use to quantify the tradeoff. Here are some guidelines you can use when considering each factor: Continue reading “Rent vs. Buy: Seven Factors to Consider Before Buying a Home”
Roth IRAs are increasingly becoming one of the most popular savings vehicles for retirement. The most appealing feature of the Roth IRA is that these type of retirement accounts offer tax-free withdrawals of earnings at age 59 ½ as long as the account has been open for at least 5 years. The term “tax-free” is quite appealing in the current economic environment where higher future income tax rates appear to be a real possibility. Millennials and Gen Xers, who may not be in their peak earning years, may be particularly prime candidates to contribute to a Roth IRA. Perhaps that is one reason why the growth in Roth IRAs far outpaces that in traditional IRAs as more account owners are choosing to use after-tax dollars to save for retirement to receive the tax break during retirement. Continue reading “Should a Roth IRA Be Part of Your Emergency Safety Net?”
As the school year winds down and the invitations to high school graduations start pouring in, I can’t help but think about the day when my own little girl Rachel—who is finishing up her sophomore year—will be sending out her own invitations. It all seems to be going by so fast but fortunately Susan and I have been preparing for that day by saving in a 529 college savings account. For some of you moms and dads out there, you too have been using this savings vehicle to help pay for those oncoming college expenses but as Kathryn Flynn writes in a recent post called “Clearing up the confusion: Five popular 529 plan myths,” there are a number of myths floating around out there that could cause confusion when it comes time to using these accounts. Understanding each one will help you and I when it comes time to funding our child’s higher education. Continue reading “Five Myths About Your 529 College Savings Plan”
Over the last couple of weeks, I’ve written about the advantages of investing in individual stocks and some tools to make the process simpler and easier. However, most people don’t invest directly in individual stocks. After all, it’s more time consuming and is generally not available in the employer-sponsored plans like 401(k)s that people generally do the bulk of their investing in. Continue reading “How to Invest in Mutual Funds”
No, I’m not talking about “sell in May and go away.” If you invest in stocks, you probably do so through mutual funds. After all, they’re available in your employer’s retirement plan and you get a degree of instant diversification even if you don’t have much to invest. But here are some reasons you might want to consider investing directly in individual stocks: Continue reading “Time to Dump Your Mutual Funds?”
Have you completed your tax return yet? The tax deadline is just a few days away so if you haven’t filed, it’s time to gather your documents and prep your return. If filing your income taxes stresses you out, you can keep your stress level in check with a few simple tricks. Use these six strategies to file your tax return accurately and effectively. Continue reading “How to Prepare Your Tax Return Stress Free”
April 15th is just a few days away and while most people think of it as tax day, it’s also the deadline to contribute up to $5,500 (or $6,500 if you’re over age 5o or over) to a Roth IRA for 2013. Why is this so significant? Well, here are 5 reasons it’s a good idea: Continue reading “5 Reasons to Contribute to a Roth IRA in the Next 5 Days”
For years, the IRS has maintained a somewhat complicated method for calculating the amount of deductible expenses small business owners and work-from-home employees could claim under the Job Expenses section of Schedule A. Starting with the 2013 tax return, the IRS now offers a simplified option for calculating this deduction. This simplified option greatly reduces the complexity of the regular method—which requires completing a lengthy tax form (Form 8829) and making complex calculations of allocated expenses, depreciation, and carryovers of unused deductions—and is expected to save small businesses 1.6 million hours a year in paperwork and recordkeeping. Instead, taxpayers claiming the simplified option need only complete a short worksheet. Keep in mind that the simplified option does not change the criteria for who may claim a home office deduction—it just simplifies the calculation and recordkeeping requirements. Continue reading “Simplified Rules for Calculating the Home Office Deduction”
Time is running out to stay off of Uncle Sam’s naughty list and complete those income tax returns prior to the April 15th deadline. (Even if you choose to file an extension until October 15, 2014 taxes are still due by April 15 to avoid paying interest and penalties.) Beyond making sure you aren’t missing out on any itemized deductions or tax credits, there are still some moves you can make to reduce your tax bill or increase your refund. Last minute contributions to deductible IRAs and HSAs are two effective strategies to lower your 2013 tax bill (or increase your refund). Continue reading “The Deadline to Reduce Your Tax Bill is Approaching”
As you fill out your 2013 tax return this year, you may notice a few extra lines on the 1040. That’s because the Affordable Care Act created new tax provisions for higher income households. If you were not expecting them then you may have been blindsided, and while it may be a little too late to do anything about them now, you should start thinking about reducing their impact for 2014. So if your household income is $150,000 or more, pay attention. Continue reading “Start Your 2014 Tax Planning Now”
As I write this, there is a lottery jackpot in excess of $200 million that has people lined up to buy tickets. Someone (or maybe a few people) will walk away with way more money than they ever dreamed of having. Sometimes, that can be great. Sometimes, not so much. Continue reading “Found Money Can Be a Blessing or a Curse”
While we usually discuss investing in the context of retirement planning in 401(k)s and IRAs, I was recently asked by a young mother about investing $50k in her 1 year old child’s name. (Since it’s in the child’s name, the money has to be used for his benefit but since he’s a minor, the mother has control over how the money will be invested and spent on his behalf.) Here are some things to consider. Continue reading “How to Invest for Your Child”
You’ve probably seen the commercial with pallets of money being dropped from above, representing a billion dollars of missed tax deductions and credits from taxpayers who do their own taxes. You don’t have to go to a tax pro to get your fair share, however. Just make sure you don’t overlook some of the following items that could increase your tax refund: Continue reading “Don’t Overlook These Commonly Missed Tax Breaks”
When I worked as a 401(k) enroller, my regional sales manager (who happened to be my step-dad) used to demonstrate the tax advantages of the 401(k) by ripping a dollar bill into two pieces to show the effect of taxes on income. He would then go on to say that trying to save for retirement with after-tax money was the equivalent of saving only a portion of every dollar we earned and by putting that money in the 401(k), we got the benefit of the whole dollar instead.
Not only did this grab my attention—unless they are a magician you rarely expect someone to voluntarily rip dollar bills in half—but it drove home the idea that tax-deferred saving was better than saving after taxes. There was only one problem: that money would eventually get ripped, figuratively speaking, when it was withdrawn in retirement. Continue reading “Why I Max Out My Health Savings Account (And You Should Too)”
Last week, I discussed some of the advantages of investing in direct real estate for retirement. Of course, there are downsides to it too. Here are some of the challenges would-be real estate investors will face:
Continue reading “The Challenges of Real Estate Investing”
One of the things that always astounds me is the behavior of people when there is money on the table. The bigger the pile, the more interesting the behavior gets at times. In my days working with clients of substantial means, sometimes their decision making would particularly puzzle me. Continue reading “What Risks Are You Willing to Take?”
I recently got a question in one of my retirement workshops about investing in rental properties for retirement. This can be a great idea for some investors. In fact, I just closed on my own first investment property. Here are some of the unique benefits to supplementing your other retirement investments with direct real estate: Continue reading “Why I’m Investing in Real Estate”
