IRAs http://www.wisebread.com/taxonomy/term/2378/all en-US How to Enjoy Retirement If You Haven't Saved Enough http://www.wisebread.com/how-to-enjoy-retirement-if-you-havent-saved-enough <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-enjoy-retirement-if-you-havent-saved-enough" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/retired_couple_vacation_000038250840.jpg" alt="Retired couple taking cheap vacation" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Are you ready to retire, but haven't managed to save enough yet?</p> <p>In fact, the U.S. Census Bureau of Labor Statistics says that although the average retirement age is 62, many seniors are retiring at age 65 or older, and a large percentage &mdash; roughly 80% &mdash; still will not have saved enough by then. Of them, about a third will depend entirely on Social Security benefits. If you're within five years of calling it quits but haven't saved enough to retire, here are a few steps that may bring retirement closer within reach.</p> <h2>1. Wait Until You're 65</h2> <p>Wait until you're age 65 or older before you start collecting Social Security benefits, as the longer you wait, the larger your benefit. Use Bankrate's Social Security <a href="http://www.bankrate.com/calculators/retirement/social-security-benefits-calculator.aspx">benefit calculator</a> to estimate your future payments.</p> <h2>2. Don't Wait to Downsize</h2> <p>Consider selling your home and investing the profits. Downsize to a lower-cost senior living community or condominium in an area where your property taxes will be affordable. You can also inquire about school parcel tax exemptions that allow seniors to apply for tax exemption from taxes imposed by local school districts.</p> <h2>3. Move to a No Tax State</h2> <p>Move to a state with no income tax on pension, Social Security, or dividend income. Florida, Nevada, New Hampshire, Pennsylvania, Washington, and Wyoming are among the states that do not tax that income.</p> <h2>4. Accept Government-Sponsored Medical Insurance</h2> <p>Medicare provides adequate health insurance coverage for doctor's visits, emergency care, assisted living, etc., but does not cover prescription drugs, dental, or vision care. For this, you will need add-on coverage like those offered by Medicare Advantage and Supplemental Insurance (Medigap). Consult with your insurance provider prior to retirement to ensure you can afford proper health insurance coverage. If you can't, inquire about government subsidies or senior plans offered by the likes of <a href="http://www.aarp.org/">AARP</a>.</p> <h2>5. Max-Out Retirement Accounts</h2> <p>By now you should be fully funding all of your retirement accounts and making any catch-up contributions. The 2015 catch-up contributions for IRAs total an additional $1,000 ($6,500) and $6,000 ($24,000) for your 401(k). As they are the most tax advantageous, make sure you are fully funding these accounts over the next few years preceding your retirement.</p> <h2>6. Diversify Using Bonds and ETFs</h2> <p>As you are nearing retirement age, you will want to gradually rebalance your portfolio so that it has less of volatile investments like stocks, and more of safer investments such as bonds and exchange-traded funds, or ETFs.</p> <h2>7. Join AARP</h2> <p>The benefits of joining AARP are endless. For those unfamiliar, AARP is the popular senior citizens advocacy group. The annual membership fee is only $16 and is discounted even further when years are bought in bulk. Members receive invaluable discounts on dining, travel, roadside assistance, auto insurance, health benefits, and more. This is a program that's definitely well worth signing up for.</p> <p><em>Are you prepared for retirement? What are you doing to get ready?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/qiana-chavaia">Qiana Chavaia</a> of <a href="http://www.wisebread.com/how-to-enjoy-retirement-if-you-havent-saved-enough">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-states-with-the-lowest-taxes-for-retirees">7 States With the Lowest Taxes for Retirees</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/follow-these-5-steps-to-full-health-care-coverage-in-retirement">Follow These 5 Steps to Full Health Care Coverage in Retirement</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-retirement-rules-you-should-be-breaking">6 Retirement Rules You Should Be Breaking</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-reasons-why-your-retirement-cost-calculations-may-be-wrong">8 Reasons Why Your Retirement Cost Calculations May Be Wrong</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-start-saving-for-retirement-at-40">How to Start Saving for Retirement at 40+</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401(k) aarp investments IRAs saving money social security Fri, 01 May 2015 15:00:25 +0000 Qiana Chavaia 1400950 at http://www.wisebread.com How to Start Saving for Retirement at 40+ http://www.wisebread.com/how-to-start-saving-for-retirement-at-40 <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-start-saving-for-retirement-at-40" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/retirement_fund_jar_000020745280.jpg" alt="Retirement fund you should start adding to over 40" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Perhaps you missed the memo urging you to start saving for retirement in your 20s or 30s. Or, if your situation is anything like mine, you started a family early or didn't find your passion in life until you were in your 30s.</p> <p>Fortunately, it's not too late to start saving for retirement, because you're likely earning more today than you did a decade ago. You should be able to start saving now and still retire with a hefty nest egg. But first, you must take some essential steps.</p> <h2>1. Evaluate Your Savings Potential</h2> <p>Be realistic. Sure, we all wish we could save $5,000 per month, but can you <em>actually </em>achieve this based on your earnings and expenses? Remember, no savings amount is so small that it won't positively impact your goals. Save what you can, even if it's only a few hundred dollars per month. There are always ways to push your savings goals further by <a href="http://www.wisebread.com/the-first-step-to-budgeting">establishing a budget</a>, <a href="http://www.wisebread.com/10-great-home-based-side-business-ideas">creating a side business</a>, <a href="http://www.wisebread.com/this-is-how-you-downsize-your-home-and-start-living-a-better-life">downsizing your life</a>, or all of the above.</p> <h2>2. Set a Financial Goal</h2> <p>How much do you need to retire? Start by taking an assessment of where you are financially and where you need to be. How much money do you need to live comfortably in retirement? Do you anticipate a need for $25,000, $50,000 per year, or maybe more? It may be that you have to postpone your retirement by a few years while you make a few adjustments and implement a quick-fix plan to catch up with your goals.</p> <h2>3. Create a Plan</h2> <p>Any good financial plan should begin with an honest assessment of your goals and the steps you'll take to get there. Try using a <a href="http://www.aarp.org/work/retirement-planning/retirement_calculator.html">retirement calculator</a> to determine how much you'll need to save each month in order to retire by your desired date.</p> <p>You may be surprised by how much money you'll need to save, but don't fear the challenge. Consider working longer, finding a second income, or downsizing your lifestyle to enable progress toward your savings goals.</p> <h2>4. Bias Your Portfolio Towards Stocks</h2> <p>Because stocks offer higher returns than other, less aggressive investments, and you're playing a bit of catch-up, you will want to take on more risk by favoring these over bonds or other more conservative investments. As you grow nearer to retirement, you can take a more conservative investment approach.</p> <h2>5. Max-Out Retirement Accounts and Catch-Up Contributions</h2> <p>Max out your retirement accounts. Take full advantage of employer-sponsored accounts whether your employer offers match contributions, or not. If you don't already have one, open an Individual Retirement Account (IRA) and make the maximum contribution of $5,500. At retirement, given your account has been open at least five years, you can make withdrawals absolutely tax-free.</p> <p>If you're over the age of 50, the government allows you to make <a href="http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics-Catch-Up-Contributions">catch-up contributions</a> to your 401(k) or IRA plans, thus enabling you to save even more tax-deferred money for retirement.</p> <h2>6. Take Your Retirement Savings to New Heights</h2> <p>If you need to boost your savings in order to meet your goals, consider falling back on your business consulting skills, or any other skill you've developed throughout your career, and using it to create a second income. Freelancers, independent contractors, and small business owners can deduct many of their expenses.</p> <p>There's also a retirement savings incentive for being self-employed. The self-employed can set-up retirement accounts that allow both employer and employee contributions. For 2015, annual plan contributions for a SEP-IRA is up to $52,000, SIMPLE IRA is up to $12,500 plus an employer contribution of 3% of income, and the Solo 401(k) is up to $53,000.</p> <p>The IRS allows the self-employed to make contributions to both an IRA and 401(k). That's a lot of savings towards retirement.</p> <p><em>What steps are you taking toward retirement savings after age 40?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/qiana-chavaia">Qiana Chavaia</a> of <a href="http://www.wisebread.com/how-to-start-saving-for-retirement-at-40">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/retirement-accounts-and-money-to-spend">Retirement accounts and money to spend</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-facts-millennials-should-know-about-retirement-planning">5 Facts Millennials Should Know About Retirement Planning</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-retirement-rules-you-should-be-breaking">6 Retirement Rules You Should Be Breaking</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/dont-despair-over-small-retirement-savings">Don&#039;t Despair Over Small Retirement Savings</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/12-surprising-things-women-should-know-about-retirement-planning">12 Surprising Things Women Should Know About Retirement Planning</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401(k) budgeting downsizing financial planning IRAs savings stocks Tue, 28 Apr 2015 11:00:29 +0000 Qiana Chavaia 1397574 at http://www.wisebread.com 4 Things Millennials Should Do Today to Prepare for Retirement http://www.wisebread.com/4-things-millennials-should-do-today-to-prepare-for-retirement <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/4-things-millennials-should-do-today-to-prepare-for-retirement" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_work_000015424612.jpg" alt="Millennial woman at work preparing for retirement" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>The Millennial generation &mdash; those born between 1980 and 1995 &mdash; have it pretty tough. After starting their careers in the worst economic downturn in a century, they're now being blamed for everything from <a href="http://time.com/money/3585877/millennials-thanksgiving-shopping/">shopping on Thanksgiving</a> to their own <a href="http://jobs.aol.com/articles/2012/11/12/generation-y-fails-to-prepare-for-job-market-survey-finds/">unemployment rates</a>. (If it makes you feel any better, you should know that they used to blame everything on us Generation X kids, too.)</p> <p>And they face a tough road to retirement, too. Various economists and experts have crunched the numbers and decided that at best, Millennials won't be able to retire until age 73, before keeling over at 84. The reasons are obvious: Student loan debt is at an all-time high of $1.2 trillion overall, with the average college graduate finishing school nearly $30,000 in debt as of 2013. Employment has been tough to come by for this generation, and even those lucky enough to have a job earn less than their parents did at the same age (adjusted for inflation).</p> <p>But this is also an extremely resilient generation that has learned to get ahead in tough times. Here are four things that Millennials (not to mention Gen-Xers and Boomers) can do today to prepare for retirement:</p> <h2>1. Open an IRA</h2> <p>For the most part, Millennials who are given the opportunity to invest in their company's 401(k) do so. According to polls, 70% of Millennials are already saving for retirement, which is a huge accomplishment.</p> <p>Where things get tougher are when young workers do not have access to a retirement vehicle at work. That's why it's a great idea to open an IRA (whether your employer offers a 401(k) or not). No matter the vagaries of your career, having an IRA will always provide you with a retirement vehicle that you can invest in.</p> <p>What kind of IRA should you get? Look for one that offers no-load mutual funds. No-load means you are not paying a commission on your investments, so you keep more of your money.</p> <h2>2. Automatically Transfer $10 Per Week</h2> <p>This kind of advice sounds like something your grandmother would tell you to do, but Nana has the right idea. Automating your savings is the best way to get into the habit of setting money aside, since you don't have to think about it. Starting with a low amount that you are unlikely to miss is an excellent way to build your retirement account.</p> <p>This small action can make a huge difference. After 35 years, your weekly $10 contribution can grow to $76,915.00, assuming an 8% rate of return. If you increase your automatic transfer rate each year to reflect your raises, that growth will be even more impressive. And all from an amount of money you probably won't even notice is missing.</p> <h2>3. Embrace the Side Hustle</h2> <p>More than their parents or grandparents, Millennials recognize that there is no such thing as a dream job &mdash; that is, the one true job that will provide fulfillment and compensation beyond one's wildest wishes. That's partially because many members of this generation have had to cobble together employment from multiple opportunities just to keep the lights on.</p> <p>But getting in the habit of working for several employers is not just good for your current bottom line &mdash; it's potentially good for your career and your retirement prospects, too.</p> <p>That's because your side hustle can help you with networking and time management, which will help your main career. In addition, maintaining multiple gigs can help you weather any financial or career setbacks. (See also: <a href="http://www.wisebread.com/find-a-side-gig-at-these-4-best-micro-jobs-sites?ref=seealso">The 4 Best Micro Job Sites</a>)</p> <p>But most importantly, working a side hustle can help you to redefine work &mdash; which will be helpful in the future when retirement is less likely to look like the blank space between the end of your career and death, and more likely to be a different chapter in an interesting life. No matter what you do with the money from your side hustle (hint: invest it!), embrace the idea that there are many things you can do to make money and feel productive.</p> <h2>4. Split Your Windfalls</h2> <p>Many of us have a tendency to spend <a href="http://www.wisebread.com/mental-accounting-why-you-blow-your-tax-refund-but-not-your-raise">unexpected windfall money</a> on fun purchases. But start getting in the habit of splitting your windfall money between your splurges and your retirement accounts. The splurge-to-retirement account ratio is up to you (although 50/50 is generally a good idea), but starting to think of windfalls as a gift to both present and future you is a great way to enjoy that money twice &mdash; which is even better than spending it all on a shopping spree today.</p> <h2>The Kids Are Alright</h2> <p>It's human nature for every generation to give the next one a hard time. And the pundits who warn of the sky falling for Millennial finances aren't making things up. But they are ignoring all of the things that Millennials have going for them: The experience of watching their parents lose money during the 2008 downturn, a sense of personal responsibility for retirement, and plenty of time.</p> <p>There will come a time when financially secure Millennials will be the ones worrying about the whippersnappers who come after them. Let's just hope the Millennials will be able to keep the hysterical rhetoric to a minimum when it's their turn.</p> <p><em>What are you doing now to prepare for retirement?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/emily-guy-birken">Emily Guy Birken</a> of <a href="http://www.wisebread.com/4-things-millennials-should-do-today-to-prepare-for-retirement">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-enjoy-retirement-if-you-havent-saved-enough">How to Enjoy Retirement If You Haven&#039;t Saved Enough</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-facts-millennials-should-know-about-retirement-planning">5 Facts Millennials Should Know About Retirement Planning</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-start-saving-for-retirement-at-40">How to Start Saving for Retirement at 40+</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/canada-and-us-retirement-showdown-which-offers-more-for-retirees">Canada and U.S. Retirement Showdown: Which Offers More for Retirees?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-ways-to-max-out-your-ira-contributions-by-april-15th">7 Ways to Max Out Your IRA Contributions by April 15th</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement Economy generation y IRAs millennials saving money Mon, 06 Apr 2015 17:00:08 +0000 Emily Guy Birken 1368069 at http://www.wisebread.com 4 Ways Your IRA Beats Your Savings Account http://www.wisebread.com/4-ways-your-ira-beats-your-savings-account <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/4-ways-your-ira-beats-your-savings-account" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/piggy-bank-1206604-small.jpg" alt="piggy banks" title="piggy banks" class="imagecache imagecache-250w" width="250" height="167" /></a> </div> </div> </div> <p>You may wonder why you should save money inside a retirement account.</p> <p>The simple answer is that retirement assets are treated differently than regular assets. The federal government, many institutions, and probably even <em>you</em> tend to consider the money set aside to sustain yourself in your old age as sacrosanct. And there are real benefits to having this perception. (See also:&nbsp;<a target="_blank" href="http://www.wisebread.com/3-reasons-not-to-save-for-your-childs-college-fund">3 Reasons Not to Save for Your Child's College Fund</a>)</p> <p>Here are four big reasons to stash funds in a <a target="_blank" href="http://www.wisebread.com/choosing-a-retirement-account-whats-available-and-what-s-best-for-you">retirement account of your choice</a> instead of a regular savings or investment account.</p> <h3>Retirement Assets Are Not Included in Calculations for College Aid</h3> <p>Even if you have hundreds of thousands of dollars combined in your 401(k) and IRA, your child could qualify for federal aid based on <a target="_blank" href="https://fafsa.ed.gov/fotw1314/help/fotw43e.htm">Free Application for Federal Student Aid (FAFSA) calculations</a>. However, if this same amount of money is held in a regular account, then the likelihood of getting aid is greatly diminished.</p> <p>Federal aid calculations are based on a variety of factors. Colleges and universities may have their own formulas, but these typically mirror federal guidelines. <a target="_blank" href="http://www.petersons.com/college-search/financial-aid-impacted-situation.aspx">The Expected Family Contribution (EFC) considers regular assets but not retirement plans</a>. Sure, a base level of assets is protected and a relatively small percentage is considered available to pay college expenses, but substantial holdings can increase this number to the point that your EFC easily exceeds the Cost of Attendance (COA).</p> <p>Such a scenario may <em>seem</em> unlikely. If you have $500,000 or more saved or invested outside of retirement, then you might think that you would have&nbsp;a high income, a&nbsp;fully funded educational accounts; and&nbsp;a well-stocked retirement portfolio.</p> <p>But you could have easily been a steady saver and accumulated significant wealth without the benefit of a high income, or you could have a high income for much of your working life but experience a career setback when your child enters college. So, putting money in an official retirement fund now can help your family qualify for federal aid in the future.</p> <h3>Tax Benefits Are Available With Retirement Accounts</h3> <p>Whether you have a traditional or Roth IRA account, you enjoy several tax benefits over a regular savings or investment account:</p> <ul> <li>Reduction in the present-year tax liability for contributions made to a traditional IRA or 401(k) plan</li> <li>Exemption of income taxes for qualified distributions from Roth accounts</li> <li>Freedom from taxes on capital gains, interest, dividends, and other earnings while funds are held within the retirement account</li> </ul> <p>Note that you&rsquo;ll pay taxes on distributions from traditional accounts (that is, taxes are deferred until retirement rather than eliminated). However, no taxes on earnings are owed on Roth accounts prior to and during retirement.</p> <p>Embedded in the benefit associated with deferring or avoiding capital gains taxes is the bonus of being able to <a target="_blank" href="http://www.getrichslowly.org/blog/2011/04/20/rebalancing-your-investment-portfolio/">diversify and rebalance your portfolio without tax consequences</a>.</p> <p>For example, if you have a large amount of your employer&rsquo;s stock in your 401(k) plan or a concentrated position of one company in your IRA, you can sell these holdings to fund the purchase of index fund shares (or other investments that would diversify your portfolio) without having to pay capital gains tax. All of the proceeds can be plowed back into your retirement fund. However, if you sold a similar amount in a regular account, you would lose a percentage of your earnings to taxes (unless you qualified for 0% capital gains tax) and have less to reinvest.</p> <h3>Retirement Accounts Enjoy More Protection</h3> <p>Retirement funds are safer than non-retirement assets if you ever have to declare bankruptcy or shield yourself from a creditor&rsquo;s claims.</p> <p>Hopefully, you will never have to face these situations. But if such problems arise, money held in most employer-sponsored plans <a target="_blank" href="http://www.nytimes.com/2009/04/02/business/retirementspecial/02CREDIT.html?_r=2&amp;">is protected from creditors in bankruptcy </a>under federal law (with notable exceptions of the IRS and former spouses). Money in an IRA is also exempted to an extent (up to $1 million plus cost-of-living adjustments).</p> <p>For non-bankruptcy situations, employer-sponsored plans compliant with the Employee Retirement Income Security Act (ERISA ), such as <a target="_blank" href="http://online.wsj.com/article/SB124181801239401917.html">401(k) plans</a>, provide the best protection. IRAs may or may not be sheltered from claims based on state laws.</p> <p>As an added precaution, no matter where your money resides, consider <a target="_blank" href="http://www.latimes.com/la-ira-story3,0,6977190.story">increasing liability coverage</a> by getting an umbrella policy and boosting coverage associated with homeowners&rsquo; and auto insurance policies. These steps may help you pay claims in the event of a lawsuit without tapping retirement or non-retirement funds.</p> <h3>Retirement Funds Are Off Limits for Regular Expenses</h3> <p>You might think that if you mentally designate certain funds for retirement, then you won&rsquo;t ever spend these dollars except in an extreme emergency.</p> <p>But in the decades between setting aside money in your 20s and 30s and full retirement in your 60s and 70s, there are likely to be many opportunities to spend money earmarked for retirement but held in a regular account. These might include anticipated events such as your children&rsquo;s college education or wedding; unexpected setbacks from medical expenses or long periods of unemployment; or hoped-for opportunities such as a backpacking trip out west, an extended overseas visit, or a bargain-priced vacation house.</p> <p>Even money put in retirement plans isn't entirely safe. Certainly, many people <a target="_blank" href="http://www.wisebread.com/tax-penalties-for-early-retirement-withdrawals">withdraw funds</a> for hardships, such as the down payment on a purchase of a home or those medical bills I mentioned earlier. And a recent study indicated that about <a target="_blank" href="http://business.time.com/2013/01/23/cash-leaking-out-of-401k-plans-at-alarming-rate/">25% of employees are tapping 401(k)s for regular expenses</a>.</p> <p>Generally, though, money placed in a retirement account should stay there because you consider those dollars off limits. Tax penalties associated with taking retirement distributions early are often so high that forgoing opportunities, <a target="_blank" href="http://www.wisebread.com/7-delayed-spending-tricks-that-help-pay-off-debt">delaying spending</a>, and finding alternative funds are often simpler and preferred solutions.</p> <p>The main point of contributing to a 401(k), IRA, or similar plan is to accumulate assets that generate a stream of passive income, which helps you pay expenses when you are no longer working. You can build wealth in a manner that creates this income without opening an IRA or transferring money from your paycheck to an employer-sponsored retirement plan. But even beyond the basic tax advantages, there are tangible and intrinsic benefits to putting and keeping money in a retirement account instead of a regular one.</p> <p><em>Where is your money? Have you thought about putting more in a retirement account?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/julie-rains">Julie Rains</a> of <a href="http://www.wisebread.com/4-ways-your-ira-beats-your-savings-account">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-4"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/choosing-a-retirement-account-whats-available-and-what-s-best-for-you">Choosing a Retirement Account: What&#039;s Available, and What’s Best for You?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-roth-iras-are-ideal-for-young-professionals">Why Roth IRAs Are Ideal for Young Professionals</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/did-your-parents-give-you-a-whole-life-insurance-policy-heres-what-to-do-with-it">Did Your Parents Give You a Whole Life Insurance Policy? Here&#039;s What to Do With It.</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-times-you-shouldnt-invest-in-stocks">10 Times You Shouldn&#039;t Invest in Stocks</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/a-simple-guide-to-series-i-savings-bonds-i-bonds">A Simple Guide to Series I Savings Bonds (I-Bonds)</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment Taxes 401(k) plans IRAs retirement accounts Roth IRAs saving Fri, 26 Apr 2013 10:24:35 +0000 Julie Rains 973546 at http://www.wisebread.com Retirement Planning If You’re Under 30 http://www.wisebread.com/retirement-planning-if-you-re-under-30 <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/retirement-planning-if-you-re-under-30" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/young-woman-calculating-retirement.jpg" alt="" title="" class="imagecache imagecache-250w" width="250" height="142" /></a> </div> </div> </div> <p>Hey, you know what sucks? Being under 30.</p> <p>I&rsquo;m not saying that from personal experience &mdash; I&rsquo;ll be 30 in myself in just a few months, and I&rsquo;ve enjoyed my 20s just fine, thank you. But if you read any personal finance news or advice, being a 20-something is apparently <i>the worst</i> &mdash; we&rsquo;re saddled with student loans, burdened by a tepid job market, sinking in quicksandy credit card debt, supposedly spending our money wrong, having trouble getting health insurance, and, oh yeah &mdash; supposed to be saving as much as possible for retirement as quickly as possible.</p> <p>Well, that sounds easy! And fun, too!</p> <p>The reality is that, while people harp at us to start saving for retirement early, it&rsquo;s not always possible &mdash; or the best financial move. However, there <i>are </i>ways to start putting away for the future now &mdash; and not feel like a total miser while you&rsquo;re doing it.</p> <h3>1. Get a Sense of What You Need to Retire (but Don&rsquo;t Freak Out)</h3> <p>It&rsquo;s hard to work towards a goal if you don&rsquo;t have a concrete idea of exactly what you&rsquo;re trying to achieve &mdash; knowing the specifics of the goal makes it real and enables you to plan the concrete steps you need to take to achieve it.</p> <p>To get a better picture of your retirement future, take a look at this <a href="https://pro.genworth.com/riiproweb/productinfo/pdf/49427.pdf">Retirement Workbook</a> &mdash; it can help you better understand your situation and make a specific plan.</p> <div align="center"> <p><a href="https://pro.genworth.com/riiproweb/productinfo/pdf/49427.pdf"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u4/genworth-retirement-workbook.jpg" width="295" height="245" alt="" /></a></p> </div> <p>Remember, though &mdash; don&rsquo;t get nervous when calculating those numbers.&nbsp;While retirement planning is important, it&rsquo;s also a long-term project, and not something you need to do all at once.&nbsp;</p> <h3>2. Deal With the Most Important Things First</h3> <p>Before you start saving for retirement, you should ensure that you have fairly solid financial footing &mdash; saving for later in life will do you little good if there are things wreaking havoc with your finances right now.</p> <p>First, build an emergency fund &mdash; $1,000 is a good goal to start with. Most emergency situations &mdash; car trouble, unexpected job loss, even a medical bill &mdash; can be handled with $1,000. Eventually you want to have at least one month&rsquo;s worth of expenses saved up. Many experts recommend having three to six month&rsquo;s worth of expenses saved, and I think that&rsquo;s a great goal &mdash; but I also know from personal experience that it can be VERY hard for someone just starting in their career to even think about having that much money. So don&rsquo;t worry about that (yet).</p> <p>After you have a little bit of an emergency fund, focus next on your high-interest debt, such as credit card debt or private student loan debt (which often carries a higher interest rate than federal student loans). These debts can eat up thousands of dollars over the life of the loan, and if you look at the comparatively low interest rates currently available for savings and investments, it makes much more sense to pay off these debts before you put money away for retirement. Our writer Philip Brewer has more thoughts about <a href="http://www.wisebread.com/put-off-saving-for-retirement">why it&rsquo;s better to wait to save</a>.</p> <p>But you shouldn&rsquo;t wait forever. Which brings us to&hellip;</p> <h3>3. Contribute to Your 401(k)</h3> <p>If you work at a job that offers a 401(k) or a similar plan like a 403(b), you should begin contributing &mdash; even if it&rsquo;s only a tiny amount, and even if you don&rsquo;t think you&rsquo;ll be at the job long enough or aren&rsquo;t old enough to get a matching contribution from your employer.</p> <p>There are a few reasons why you should do this. First of all, these contributions are taken directly from your paycheck, and since the money is deducted automatically, you probably won&rsquo;t even realize that it&rsquo;s gone. Secondly, there&rsquo;s always the chance that you&rsquo;ll stay at the job longer than you think &mdash; long enough for your company to start matching your contributions, basically giving you free money.</p> <p>The third reason &mdash; and this is the reason why people will harp at you to start saving as soon as possible &mdash; is that the sooner you start saving, the longer you have compound interest working in your favor. That&rsquo;s why it&rsquo;s the first suggestion in this list of <a href="http://money.cnn.com/magazines/moneymag/money101/lesson13/index.htm">tips for planning your retirement</a> from CNNMoney &mdash; saving early can give you a huge boost in the long-term.</p> <p>Personally, I ignored the 401(k) and 403(b) at my first two jobs, annoyed that they wouldn&rsquo;t match my contributions until I had been there at least a year &mdash; or, in one case, until I turned 25. But I definitely regret that decision &mdash; if I had contributed some of my own money, I&rsquo;d have a much bigger nest egg today.</p> <h3>4. If You Don&rsquo;t Have Access to a Plan at Work, Open a Traditional IRA or Roth IRA</h3> <p>These two popular retirement savings plans each have their advantages. As the aforementioned CNNMoney article puts it:</p> <blockquote> <p>&hellip;a traditional IRA offers tax-deferred growth, meaning you pay taxes on your investment gains only when you make withdrawals, and, if you qualify, your contributions may be deductible; a Roth IRA, by contrast, doesn't allow for deductible contributions but offers tax-free growth, meaning you owe no tax when you make withdrawals.</p> </blockquote> <p>Basically, contributing to a traditional IRA can help you pay less (or get more back!) when you file your annual taxes, but you can&rsquo;t make a withdrawal before retirement age without paying a penalty. With a Roth IRA, you don&rsquo;t get the same annual tax benefits, but you can make early withdrawls.</p> <p>For this reason, I think the Roth IRA is especially good for people in their 20s. While I definitely don&rsquo;t advocate dipping into your retirement savings &mdash; what good is it if you don&rsquo;t actually use it to, uh, save for retirement? &mdash; it is nice to know that you can access that money without penalty if you absolutely need to. A couple of years ago, I was in a tough situation where I needed a car &mdash; and withdrawing some money from my Roth IRA is ultimately what made it happen.</p> <p>The key, as with the 401(k), is that you don&rsquo;t need to contribute a lot &mdash; <i>anything </i>can help. Consider saving your change, depositing it at the bank periodically, and putting that in your IRA. Or, if someone buys you a drink or a meal you were expecting to pay for yourself, put that money aside for retirement savings. Put half of your birthday money in the IRA. The important thing is to make these deposits when you can, even if they&rsquo;re small.</p> <h3>5. Don&rsquo;t Stress</h3> <p>Retirement planning is one of the most long-term things you will ever do in your life.&nbsp;And, while starting early has <i>huge</i> benefits, the long-term nature also means you have time to be patient, take care of more-pressing financial matters first, and spend your 20s saving for the long-term, yeah &mdash; but also having fun.</p> <p><strong><i>Are you under 30? Have you started planning for retirement? Share your thoughts in the comments.</i></strong></p> <p><i>This article was made possible by the support and inspiration from&nbsp;<a href="http://www.genworth.com/" target="_blank">Genworth Financial</a>, a S&amp;P 500 insurance&nbsp;company with more than $100 billion in assets. Check out Genworth's <a href="http://www1.genworth.com/content/lets_talk/ri_us/english/calculator.html">Retirement Income Worksheet</a>&nbsp;to plan for the life you want in retirement.</i></p><br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/meg-favreau">Meg Favreau</a> of <a href="http://www.wisebread.com/retirement-planning-if-you-re-under-30">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-5"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-start-saving-for-retirement-at-40">How to Start Saving for Retirement at 40+</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-enjoy-retirement-if-you-havent-saved-enough">How to Enjoy Retirement If You Haven&#039;t Saved Enough</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/retirement-accounts-and-money-to-spend">Retirement accounts and money to spend</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/choosing-a-retirement-account-whats-available-and-what-s-best-for-you">Choosing a Retirement Account: What&#039;s Available, and What’s Best for You?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-states-with-the-lowest-taxes-for-retirees">7 States With the Lowest Taxes for Retirees</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401(k) first jobs IRAs saving in your 20s Fri, 05 Apr 2013 10:30:00 +0000 Meg Favreau 972278 at http://www.wisebread.com Canada and U.S. Retirement Showdown: Which Offers More for Retirees? http://www.wisebread.com/canada-and-us-retirement-showdown-which-offers-more-for-retirees <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/canada-and-us-retirement-showdown-which-offers-more-for-retirees" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/4397782529_2a9bafc1fb_z.jpg" alt="painted faces" title="painted faces" class="imagecache imagecache-250w" width="250" height="141" /></a> </div> </div> </div> <p>Let&rsquo;s just say this &mdash; in all-out ground war between Canada and the U.S., Canada just can&rsquo;t compete. After all, Canada&rsquo;s defended by a few notoriously out-of-date military aircraft, and for some time, the country&rsquo;s largest fleet of submarines was making a tour around a pirate ship in a shopping mall.</p> <p>Of course, aside from a hard-fought game between the Boston Bruins and the Vancouver Canucks, there isn&rsquo;t much animosity between the two countries. After all, we have a lot in common. We share an official language, we have access to the same media and, in many cases, we share a lot of the same values. And here&rsquo;s another thing we have in common &mdash; in January 2012, LIMRA, an association of insurance companies, released <a href="http://insurancenewsnet.com/article.aspx?id=370016&amp;type=exclusiveinn#.UTe5nhyc5FY" target="_blank">a survey of pre-retirees in both countries</a> and found that about half in each said they weren&rsquo;t confident they could maintain their desired lifestyle during retirement. It&rsquo;s an interesting statistic because planning for retirement is quite different in the U.S. as compared to Canada.</p> <p>So, in the spirit of friendly cross border competition, I decided to put Canada and the U.S. head-to-head. Which country is best for retirees? Let&rsquo;s take a look at a few key factors. (See also:&nbsp;<a href="http://www.wisebread.com/choosing-a-retirement-account-whats-available-and-what-s-best-for-you">Choosing a Retirement Account:&nbsp;What's Available, and What's Best for You?</a>)</p> <h2>Retirement Plans</h2> <p>Let's start with the biggie. Which nation offers its residents the better retirement planning options?</p> <p><strong>The U.S.</strong></p> <p>In the U.S., people can opt to save for retirement using a number of different vehicles, including the Traditional IRA, Roth IRA, SEP IRA, SIMPLE IRA, a qualified plan (including the 401(k) and profit-sharing plans), the 403(b) or some combination of these plans (<em>whew!</em>).</p> <p>Of course, not all of these programs are available to everyone &mdash; and many aren&rsquo;t suitable for everyone:</p> <ul> <li>With a Traditional IRA, you get a tax deduction for your contributions but are taxed when you withdraw the funds in retirement.</li> <li>With a <a href="http://www.wisebread.com/7-surprising-facts-about-roth-iras">Roth IRA</a> there&rsquo;s no tax deduction, but qualified withdrawals are tax-free.</li> <li>Employer-sponsored plans like 401(k)s and 403(b)s offer all sorts of other options.</li> </ul> <p>In a word, finding the right retirement plan &mdash; and following the rules &mdash; is notoriously complicated in the U.S. On the other hand, the number of choices available makes it easier for people to find just the right fit for their financial situation.</p> <p><strong>Canada</strong></p> <p>Besides the few remaining employer sponsored retirement plans, Canadians rely on the one, the only retirement saving tool available to them &mdash; the Registered Retirement Savings Plan (RRSP).</p> <p>In a nutshell, this plan allows working Canadians to contribute 18% of their earned income up to a maximum of $23,820 in 2013, and to deduct that contribution from their taxable income. The money isn&rsquo;t taxed until it is withdrawn during retirement. And compared to U.S. plans, RRSPs are subject to few rules and restrictions. It&rsquo;s basically a type of investment account, so people can invest in whatever they like and park that money in whatever bank they choose. As long as they stay within the contribution limits and avoid making early withdrawals, they won&rsquo;t run into any fees or red tape.</p> <p><strong>The Verdict: </strong>The U.S. is known as the land of opportunity and when it comes to retirement plans, it&rsquo;s got just about every option anyone could need. The problem is that with all the different plans and all their various rules about contributions, withdrawals and &quot;qualified distributions,&quot; things can get more than a little confusing. And all of this can serve to deter people from doing what really matters &mdash; saving their money.</p> <p>The RRSP is simple and the tax deduction encourages Canadians to save. I&rsquo;m going to give Canada the point on this one.</p> <h2>Government Sponsored Retirement Programs</h2> <p>In both nations, private retirement accounts are back-stopped by government support. Which is tops?</p> <p><strong>The U.S.</strong></p> <p>There are two government sponsored retirement programs in the U.S.: Supplemental Security Income (SSI) and Federal Old Age, Survivor and Disability Insurance (OASDI). The former provides benefit payments for very low income or disabled individuals. The latter, known as Social Security, has people contribute when they're employed and then provides retirement benefits later in life. In 2012, the maximum OASDI benefit is $2,513 per month at full retirement age, which is 67 as of 2012. During their careers, employees contribute 6.2% of their earnings to Social Security, a number that&rsquo;s matched by employers.</p> <p><strong>Canada</strong></p> <p>In Canada, the government sponsored retirement model has three pillars:</p> <ul> <li>Old Age Security (OAS), which provides a flat benefit to all qualifying Canadians but includes a clawback formula depending on retirement income.</li> <li>The Guaranteed Income Supplement (GIS), which provides additional benefits for low income retirees.</li> <li>The Canada Pension Plan (CPP) (or QPP in Quebec), which, like Social Security, provides benefits to Canadians based on their employment contributions.</li> </ul> <p>The big difference is the maximum benefit. For Canadians, CPP tops out at $987 per month at full retirement age, which is 65 years. OAS adds up to another $540 per month. In other words, most Canadians stand to get <em>a lot</em> less from the government when they retire. To be fair, Canadians also contribute less &mdash; 4.9% of earned income, which is also matched by their employer.</p> <p><strong>The Verdict:</strong> It&rsquo;s hard to argue that getting more money from the government is a sweet deal, but that money has to come from somewhere. That&rsquo;s part of the reason why Social Security may be unsustainable by 2033, <a href="http://www.cbo.gov/publication/43649" target="_blank">according to the Congressional Budget Office</a>, while (at least so far) <a href="http://www.cbc.ca/news/business/taxseason/story/2012/12/21/f-rrsp-2013-cpp-portfolio.html" target="_blank">CPP is well-funded</a> and sound enough to be around for future generations of Canadians.</p> <p>Who wins out on this one? It&rsquo;s a toss-up. Government-sponsored income is what keeps many people afloat, but although many people in Canada complain that the CPP doesn&rsquo;t go far enough, a higher payout comes at a cost. Plus, although in theory the low CPP payout should encourage Canadians to max out their RRSPs, many don&rsquo;t.</p> <h2>Health Care</h2> <p>Canada, with its government-funded health care system, would seem to be the clear winner here. Is it?</p> <p><strong>The U.S.</strong></p> <p>If there&rsquo;s one huge difference between retiring in Canada compared to retiring in the U.S.,and it&rsquo;s health care, says Dale Walters, a Certified Financial Planner and author of &quot;<a href="http://www.self-counsel.com/default/taxation-of-canadians-in-america.html" target="_blank">Taxation of Canadians in America</a>.&quot;</p> <p>&quot;Medicare, as a government-subsidized plan, is similar to the provincial health care in Canada, but there&rsquo;s a large portion that comes out of the retirees&rsquo; own pockets. So Americans have those ever-increasing health care costs to deal with,&quot; Walters said.</p> <p>A 2012 <a href="http://www.eurekalert.org/pub_releases/2012-09/ssm-hch090412.php">report</a> by the &quot;Journal of General Internal Medicine&quot; found that 75% of Americans who were eligible for Medicare paid at least $10,000 per year out of pocket for health care expenses, and that health care costs put seniors under major strain.</p> <p><strong>Canada</strong></p> <p>In Canada, basic health care is mostly funded by the federal government and the provinces. So, for the most part, visiting the doctor and being treating in hospital comes free of charge. And while additional costs such as prescription drugs and other medical supplies and products may have to be purchased by retirees or are only covered on a limited basis, you&rsquo;d be hard pressed to run up a five-figure health care bill in Canada, no matter how sick you got.</p> <p><strong>The Verdict:</strong> Whether the cost of health care is a real issue for a retiree in the U.S. depends on personal circumstances, but it&rsquo;s hard to deny that these costs can be dangerously high for some American seniors. That puts Canada on top here. But there&rsquo;s one big exception. If you need a hip replacement, an MRI or even just a trip to the emergency room, in Canada, <a href="http://www.nber.org/bah/fall07/w13429.html">you&rsquo;ll probably be in for a wait</a> &mdash; often a long one.</p> <h2>Taxes</h2> <p>Because retirees in both countries are earning less than in their working years, tax burden is relatively low. Where is it lower?</p> <p><strong>The U.S.</strong></p> <p>At a glance, the tax rates for Canada and the U.S. appear to be similar, but Walters says the marginal tax rate in the U.S. puts a smaller burden on those in the <a href="http://www.wisebread.com/tax-brackets-explained">highest income brackets</a> and provides more opportunity for tax breaks. The result? Significantly lower taxes.</p> <p>&quot;In the U.S., there is a big difference between gross income and taxable income. In Canada, those are pretty close together. That can mean paying about 30% less tax in the U.S. compared to Canada,&quot; Walters said.</p> <p><strong>Canada</strong></p> <p>Canadians hit the highest tax bracket (29%) at just over $130,000 in income, compared to nearly $400,000 to hit the maximum 35% tax rate in the U.S. For Canadians, that means higher taxes during their working years and, because of the relative lack of deductions, possibly in retirement as well. According to a 2012 <a href="http://www.cbsnews.com/8301-505144_162-57474364/canadas-favorite-tax-haven-the-u.s.a/">report</a> by CBS, Canada also tends to have higher sales tax. That&rsquo;s why the U.S. is increasingly being touted as a tax haven for Canadian retirees!</p> <p><strong>The Verdict:</strong> Canadians pay more taxes, which can make it harder to save for retirement and pay for what they need once they get there. In a straight comparison, the U.S. comes out on top here. I&rsquo;ll leave it to others to argue about who gets more for their money.</p> <h2>Cost of Living</h2> <p>It won't matter how much you've socked away for retirement if the stuff you need to buy costs too much.</p> <p>A bigger market means lower prices. So, thanks to a population that&rsquo;s nearly 10 times that of its neighbor to the north, the U.S. enjoys lower prices on just about everything. According to <a href="http://www.numbeo.com/cost-of-living/compare_countries_result.jsp?country1=Canada&amp;country2=United+States" target="_blank">Numbeo.com</a>, consumer prices are more than 16% lower in the United States than in Canada. And, of course, as a result of the recent crash in the real estate market, buying a home in a retirement-friendly Southern state is cheaper than ever.</p> <p><strong>The Verdict:</strong> The cost of living in the U.S. is considerably lower than it is in Canada. For American retirees, (and Canadian snowbirds) this is a good thing. The U.S. definitely scores a point over Canada here.</p> <h2>Climate</h2> <p>If there&rsquo;s one last thing that matters to a lot of retirees, it&rsquo;s climate. Unless you&rsquo;re one of the hardy few who love the icy winter wind that seems to be inescapable in most Canadian cities, the U.S. has Canada beat hands down on this one. According to Herschel Gavsie, an immigration attorney at Greenspoon Marder in Miami, this has lead to an increase in the number of &quot;endvestors,&quot; a term used to describe the growing ranks of real estate investors who&rsquo;ve been snapping up properties in the U.S., especially in warm, coastal states like Florida.</p> <p><strong>The Verdict: </strong>Many people envision living out their final days on a warm, sunny beach; just try finding one of those in Canada. Point for the U.S.</p> <p><strong>And the Winner Is...</strong></p> <p>This is hardly a scientific analysis, but I&rsquo;m going to give the win to Canada for one simple reason. According to Walters, Canadians tend to have more retirement savings and better financial knowledge than their aging American peers. Why is that a win? Because whether you&rsquo;re retiring in the United States or the Great White North, both systems have the resources to help you <a href="http://www.wisebread.com/6-ways-to-avoid-running-out-of-money-in-retirement">pave the way for a comfortable retirement</a>. The key is to learn about the programs and benefits available where you live and work to use them to your advantage.</p> <p>Oh, and if you feel like you&rsquo;re getting the short end of the stick, you can always take a hike to the closest border crossing. But be forewarned. You know what they say about the color of the grass on the other side of the fence.</p> <p><em>What do you think? Is the U.S. or Canada a better place for retirees? Share your insight and experience in comments!</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tara-struyk">Tara Struyk</a> of <a href="http://www.wisebread.com/canada-and-us-retirement-showdown-which-offers-more-for-retirees">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-6"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/choosing-a-retirement-account-whats-available-and-what-s-best-for-you">Choosing a Retirement Account: What&#039;s Available, and What’s Best for You?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-start-saving-for-retirement-at-40">How to Start Saving for Retirement at 40+</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-things-millennials-should-do-today-to-prepare-for-retirement">4 Things Millennials Should Do Today to Prepare for Retirement</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-thoughts-everyone-has-their-first-day-of-retirement">6 Thoughts Everyone Has Their First Day of Retirement</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-ways-to-avoid-running-out-of-money-in-retirement">6 Ways to Avoid Running Out of Money in Retirement</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement Canada health care IRAs retirement planning Fri, 15 Mar 2013 11:24:37 +0000 Tara Struyk 969768 at http://www.wisebread.com Choosing a Retirement Account: What's Available, and What’s Best for You? http://www.wisebread.com/choosing-a-retirement-account-whats-available-and-what-s-best-for-you <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/choosing-a-retirement-account-whats-available-and-what-s-best-for-you" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/6669056165_6b372449b9_z.jpg" alt="A pair of unoccopied green Adirondack chairs on the beach." title="lounge chairs at beach" class="imagecache imagecache-250w" width="250" height="159" /></a> </div> </div> </div> <p>You know you need to save for retirement, no matter how many years away retirement is for you. But understanding your choices and picking the right account may seem daunting.</p> <p>The most popular and talked about retirement accounts are the 401(k) and the Roth IRA. Both of these have well-deserved, mostly positive reputations. Many financial advisors recommend that you participate in your employer's 401(k) plan so you can:</p> <ul> <li>Receive matching contributions from your employer, boosting your retirement savings with no extra effort on your part<br /> &nbsp;</li> <li>Reduce your taxable income by the amount of your plan contributions (also known as &quot;elective deferrals&quot;), which lowers your tax liability<br /> &nbsp;</li> <li>Enroll in automatic payroll deductions to fund your account, making the entire process after the set-up mindless</li> </ul> <p>The Roth IRA is touted for different reasons. By contributing to this account, you can:</p> <ul> <li>Receive tax-free distributions in retirement (you'll pay ordinary income taxes on distributions from traditional accounts)<br /> &nbsp;</li> <li>Access funds with fewer restrictions and tax consequences compared to other retirement plans (see article on <a href="http://cashmoneylife.com/roth-ira-withdrawal-rules/" target="_blank">Roth IRA withdrawals</a> and <a href="http://www.irs.gov/publications/p590/ch02.html#en_US_2011_publink1000231061" target="_blank">IRS rules</a>)</li> </ul> <p>The downsides to these choices are that you have limited investment options and potentially high fees with the 401(k) plan while you don't get a tax deduction right now with the Roth IRA.</p> <p>But wait, there are even more nuances to consider.</p> <p>For example, your employer may not offer matching contributions or even have a 401(k) plan, or you may earn too much for a Roth IRA. So, you should figure out what types of accounts are available to you, sort through their features, and then pick the one (or ones) that are best for you. Let's get started! (See also:&nbsp;<a href="http://www.wisebread.com/6-ways-to-avoid-running-out-of-money-in-retirement">6 Ways to&nbsp;Avoid Running Out of Money in&nbsp;Retirement</a>)</p> <h2>Retirement Accounts and Their Features</h2> <p>There are various ways of categorizing the universe of retirement account options. An account may be employer sponsored or independent of your workplace.&nbsp;Contributions may be tax deductible when you fund the account (traditional) or distributions may be tax free in retirement (Roth).&nbsp;Your account may be characterized by defined contributions (such as an IRA with rules about the amount you can put in the account during your working years) or defined benefits (such as a pension plan with a specified payment stream in retirement).</p> <p>Features that you should evaluate before choosing an account include:</p> <ul> <li><strong>Contributions</strong>: Do you contribute to the account, does your employer, or both? Are there income or other eligibility restrictions to participate and make contributions?<br /> &nbsp;</li> <li><strong>Tax Benefits</strong>: What are the tax benefits of the account? Are these benefits restricted based on income or other requirements?<br /> &nbsp;</li> <li><strong>Investment Choices</strong>: Are you responsible for making investment decisions, and what are your investment choices?<br /> &nbsp;</li> <li><strong>Fees</strong>: What are the fees associated with the account?<br /> &nbsp;</li> <li><strong>Ownership and Access</strong>: Do you have full rights to the assets in the account immediately, and, if not, what is the <a href="http://retireplan.about.com/lw/Business-Finance/Personal-finance/What-Are-Vesting-Schedules-.htm" target="_blank">vesting schedule</a>? Can you access funds through a participant loan or withdrawal before retirement?</li> </ul> <p>To get the complete story on your account options, you'll need to read documents associated with plans sponsored by your employer, look at the types of accounts and investment selections offered by your financial institution, and consult with a financial and/or tax advisor.</p> <p>But, in general, the following retirement accounts have common characteristics.</p> <p><strong>Traditional 401(k) Plan</strong></p> <p>Many employers offer a traditional <a href="http://www.irs.gov/Retirement-Plans/401(k)-Plans" target="_blank">401(k) plan</a> that allows employees to save money for retirement. Funds are deducted from your paycheck and deposited in a <a href="http://retireplan.about.com/lw/Business-Finance/Personal-finance/Retirement-Plan-Custodians.htm" target="_blank">retirement account held in your name</a>.</p> <ul> <li><strong>Contributions</strong>: As an employee, you can contribute up to $17,500 per year. Your employer may also make a matching contribution. Combined annual contributions are capped at $51,000 or 100% of the employee's compensation. Catch-up contributions of up to $5,500 for those 50 or older can also be made. (Note that IRS restrictions may change based on cost-of-living adjustments.)<br /> &nbsp;</li> <li><strong>Tax Benefits</strong>: Your contributions reduce your taxable income when you fund the account. Earnings are tax deferred.<br /> &nbsp;</li> <li><strong>Investment Choices</strong>: You choose from a list of investment selections offered by your employer, the plan sponsor. Typically, these choices include mutual funds.<br /> &nbsp;</li> <li><strong>Fees</strong>: Expenses include 1) plan administrative fees; 2) investment fees, which may include sales commissions for mutual funds; and 3) fees incurred on specific transactions, such as borrowing from the account.<br /> &nbsp;</li> <li><strong>Ownership and Access</strong>: You own the funds you contributed to the account, but your employer&rsquo;s contributions may not be 100% available until you are fully vested. Borrowing is generally permitted but loan provisions are dictated by the plan's design. Distributions may be taken prior to retirement if you qualify for a <a href="http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/401(k)-Resource-Guide---Plan-Participants---General-Distribution-Rules">financial hardship</a>.</li> </ul> <p><em>Retirement Accounts Similar to the Traditional 401(k) Plan:</em></p> <ul> <li>The <a href="http://www.irs.gov/Retirement-Plans/IRC-457(b)-Deferred-Compensation-Plans" target="_blank">457(b) Plan</a> may be offered to employees and independent contractors of state and local governments and non-profit organizations.<br /> &nbsp;</li> <li>The <a href="https://www.tsp.gov/index.shtml" target="_blank">Thrift Savings Plan</a> is offered to federal government employees and members of uniformed services. Qualifying employees may receive <a href="https://www.tsp.gov/planparticipation/benefits/benefitsSummary.shtml" target="_blank">matching contributions</a> from their agencies.<br /> &nbsp;</li> <li>The <a href="http://www.irs.gov/publications/p571/ch01.html" target="_blank">403(b) Plan</a> may be available to employees of public schools, certain non-profit organizations, and others. However, <a href="http://www.403bwise.com/faqs/" target="_blank">investment options may consist of annuities</a> in addition to mutual funds.<br /> &nbsp;</li> <li>The <a href="http://www.retirementplans.irs.gov/choose-a-plan/401k-and-profit-sharing-plans/safe-harbor-401k/" target="_blank">Safe Harbor 401(k) Plan</a> is nearly identical to the 401(k) plan from an employee&rsquo;s perspective. However, funds contributed by employers are always fully vested.<br /> &nbsp;</li> <li>The Individual or <a href="http://www.irs.gov/Retirement-Plans/One-Participant-401(k)-Plans" target="_blank">One-Participant 401(k)</a> is available to the self-employed. You can contribute the lesser of 25% of your income or $51,000 annually.<br /> &nbsp;</li> <li><a href="http://www.irs.gov/Retirement-Plans/Designated-Roth-Accounts" target="_blank">Roth 401(k)s are designated Roth accounts held inside of a 401(k)</a>. However, contributions are not tax deductible. <a href="http://www.smartmoney.com/retirement/planning/understanding-the-roth-401k-17679/" target="_blank">Qualified distributions are excluded from income in retirement</a>.</li> </ul> <p><strong>Traditional IRA</strong></p> <p>An Individual Retirement Arrangement (IRA) gives you a vehicle to save money for retirement in a way that is not tied to an employer or specific job.</p> <ul> <li><strong>Contributions</strong>: All contributions are made by you and <a href="http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics-IRA-Contribution-Limits" target="_blank">are limited to $5,500 per year (or $6,500 per year for those who are 50 and older)</a>.<br /> &nbsp;</li> <li><strong>Tax Benefits</strong>: You may be able to take a tax deduction for contributions, and earnings are tax deferred. Deductions are limited or eliminated for higher earners depending on your income, tax filing status, and availability of a retirement plan at work. (See tables to determine eligibility for those <a href="http://www.irs.gov/Retirement-Plans/2013-IRA-Deduction-Limits-Effect-of-Modified-AGI-on-Deduction-if-You-Are-Covered-by-a-Retirement-Plan-at-Work" target="_blank">covered</a> and <a href="http://www.irs.gov/Retirement-Plans/2013-IRA-Deduction-Limits-Effect-of-Modified-AGI-on-Deduction-if-You-Are-NOT-Covered-by-a-Retirement-Plan-at-Work" target="_blank">not covered by a retirement plan at work</a>.)<br /> &nbsp;</li> <li><strong>Investment Choices</strong>: You can choose from investment options offered by your bank, brokerage firm, or other financial institution. These might include mutual funds, ETFs, individual stocks, and CDs. <a href="http://online.wsj.com/article/SB118947843631423511.html" target="_blank">Real estate can also be held in an IRA</a>.<br /> &nbsp;</li> <li><strong>Fees</strong>: You may incur account opening or maintenance fees, although <a href="http://www.wisebread.com/a-guide-to-online-brokers-for-investing-newbies-and-beyond" target="_blank">many online brokers have no-fee IRAs</a>. Investment costs may include stock trading fees as well as costs to purchase and redeem mutual funds.<br /> &nbsp;</li> <li><strong>Ownership and Access</strong>: You own the account, and all the money is yours. Participant loans are not permitted. Withdrawals prior to retirement can be made but are subject to a 10% penalty in addition to ordinary taxes associated with the distribution. There are <a href="http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics---Tax-on-Early-Distributions" target="_blank">exceptions</a> that allow you to avoid the penalty.</li> </ul> <p><em>Retirement accounts similar to the Traditional IRA:</em></p> <ul> <li>The <a href="http://www.irs.gov/Retirement-Plans/Choosing-a-Retirement-Plan:--Payroll-Deduction-IRA" target="_blank">Payroll Deduction IRA</a> is a regular IRA but involves setting up a payroll deduction with your employer to fund the account.<br /> &nbsp;</li> <li>The <a href="http://www.irs.gov/Retirement-Plans/Choosing-a-Retirement-Plan:-SEP" target="_blank">SEP-IRA</a> is available to those who have self-employment income or work for a small business that offers the SEP as its retirement plan. Annual contributions can be made by the business owner only, generally up to $51,000 or 25% of your annual income, whichever is less.<br /> &nbsp;</li> <li>A <a href="http://www.irs.gov/Retirement-Plans/Plan-Sponsor/SIMPLE-IRA-Plan" target="_blank">SIMPLE IRA</a> allows both you and your employer to contribute to your IRA. You can contribute up to $12,000 each year plus $2,500 for catch-up contributions for those 50 and older. Employer contributions are typically 3% but may vary by plan.<br /> &nbsp;</li> <li><a href="http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics---Rollovers-of-Retirement-Plan-Distributions" target="_blank">Rollover IRAs</a> are accounts that have been created by transferring funds from 401(k) or similar plans to an IRA. (See also: <a href="http://www.wisebread.com/step-by-step-guide-to-rolling-over-your-old-401k" target="_blank">Step-by-Step Guide to Rolling Over Your Old 401(k)</a>)<br /> &nbsp;</li> <li>The <a href="http://www.irs.gov/Retirement-Plans/Roth-IRAs" target="_blank">Roth IRA</a> has many of the traditional IRA features. However, contributions are not tax deductible and qualified distributions are not subject to taxation. Also, you may not be able to contribute if your income is too high. (See table to <a href="http://www.irs.gov/Retirement-Plans/Amount-of-Roth-IRA-Contributions-That-You-Can-Make-For-2013" target="_blank">determine the amount of Roth IRA contributions you can make</a>.)</li> </ul> <p><strong>Pension Plan</strong></p> <p>A pension plan is a commonly recognized <a href="http://www.irs.gov/Retirement-Plans/Choosing-a-Retirement-Plan:-Defined-Benefit-Plan" target="_blank">defined benefit plan</a>, which specifies the benefit you receive in retirement. Benefits are determined by a formula usually based on years of service and earnings while employed.</p> <ul> <li><strong>Contributions</strong>: The employer typically makes contributions on behalf of employee participants. Contributions from employees may be required or voluntary. Plan administrators make sure that contributions support the benefit that is promised to employees upon their retirement.<br /> &nbsp;</li> <li><strong>Tax Benefits</strong>: There are no special tax benefits for employees.<br /> &nbsp;</li> <li><strong>Investment Choices</strong>: The employer chooses the investments. Investment risk is largely borne by the employer, which must ensure that funds are available to provide employees with a specific amount of money.<br /> &nbsp;</li> <li><strong>Fees</strong>: Expenses are paid by the employer.<br /> &nbsp;</li> <li><strong>Ownership and Access</strong>: Your rights are dictated by the plan's design. Typically, you must work for the sponsoring employer for a certain number of years before becoming fully eligible to receive benefits in retirement. Participant loans may be permitted; in-service withdrawals are not allowed.</li> </ul> <p><em>Retirement Accounts Similar to the Pension Plan:</em></p> <ul> <li>A <a href="http://www.dol.gov/ebsa/FAQs/faq_consumer_cashbalanceplans.html" target="_blank">Cash Balance Plan</a> offers a defined benefit. However, this benefit is reported in terms of account balances (rather than a monthly payment) for each employee. Upon retirement, the employee can typically opt for an annuity or a lump-sum payment.</li> </ul> <h2>More Employer-Sponsored Plans</h2> <p>There are many more types of retirement plans that you may encounter during your career.</p> <ul> <li>A <a href="http://www.irs.gov/Retirement-Plans/Choosing-a-Retirement-Plan:-Money-Purchase-Plan" target="_blank">Money Purchase Plan</a> requires that your employer contribute a set percentage of your annual income each year to the retirement account. This contribution cannot exceed 25% of your income or $51,000. As an employee, you may be able to make non-deductible contributions to the plan. Participant loans are permitted but in-service withdrawals are not allowed.<br /> &nbsp;</li> <li>The <a href="http://www.irs.gov/Retirement-Plans/Choosing-a-Retirement-Plan:-Profit-Sharing-Plan" target="_blank">Profit-Sharing Plan</a> is similar to the Money Purchase Plan but does not have mandated contributions and employees cannot make contributions. The annual contribution amount may vary but must follow a formula so that profits are equitably distributed to all employees. In-service withdrawals are permitted.<br /> &nbsp;</li> <li>The <a href="http://www.esopassociation.org/explore/how-esops-work" target="_blank">Employee Stock Ownership Plan or ESOP</a> allows employers to contribute company stock to a retirement plan on behalf of its employees. Over time, employees become vested in the plan; that is, you take full ownership of the stock given to you.</li> </ul> <h2>Choosing a Retirement Account</h2> <p>Figuring out where to stash your money could start with a review of the retirement accounts offered by your employer. Look at the benefits, if any, offered without your contribution such as a pension plan or ESOP. Research the quality of your 401(k) or 403(b) by looking at plan reports and using online evaluation tools such as <a href="http://www.brightscope.com/">Bright Scope</a>; note the employer match in particular.</p> <p>Additional factors in your decision may include:</p> <ul> <li>Comfort in choosing investments and managing your own portfolio<br /> &nbsp;</li> <li>Uncertainty about future employment, particularly if you want to change jobs, return to school, <a href="http://www.wisebread.com/how-to-make-money-while-traveling-the-world" target="_blank">travel</a>, or stay at home with children<br /> &nbsp;</li> <li>Sources and amounts of annual income</li> </ul> <p>For general guidance, look at your current situation, state of mind, and plans for the future.</p> <p>If you are&hellip;</p> <ul> <li><strong>Really Busy</strong>: Use payroll deduction to participate in your employer's 401(k) or similar plan, particularly if you receive a match. Open an IRA when you have more time.<br /> &nbsp;</li> <li><strong>Controlling</strong>: Sock away money in an IRA so that you can invest at your discretion. A Roth IRA will give you better-than-average control over funds if you need access later, plus allow you to take distributions at your discretion and avoid taxes in retirement. <br /> &nbsp;</li> <li><strong>Eager</strong>: Open, fund, and manage as many accounts as you can, recognizing that contribution limits are combined for various types of 401(k) and similar plans as well as IRAs.<br /> &nbsp;</li> <li><strong>Transient</strong>: If you know that you will be changing jobs soon, invest in an IRA so that you can avoid the hassle of doing a Rollover IRA. Plus, you may have to forgo some or part of the company matches anyway if you leave before becoming fully vested.<br /> &nbsp;</li> <li><strong>Uncertain</strong>: Put enough in the 401(k) or similar plan to get a company match, and designate half of your money to a Roth within the plan if possible. Split your IRA contribution into Traditional and Roth accounts.<br /> &nbsp;</li> <li><strong>Self-Employed</strong>: Start a One-Participant 401(k) plan or SEP-IRA to save self-employment and/or business earnings. </li> <li><strong>High Earning</strong>: Set aside money in a designated Roth account within a 401(k), especially if you are a high earner who would otherwise not qualify for a Roth IRA. You can afford to pay taxes now in order to avoid them later. </li> </ul> <p>The best place to put your retirement dollars may vary from year to year and change as your retirement portfolio and other assets grow. By understanding the features of various retirement accounts, you can decide what works for you.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/julie-rains">Julie Rains</a> of <a href="http://www.wisebread.com/choosing-a-retirement-account-whats-available-and-what-s-best-for-you">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-7"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-start-saving-for-retirement-at-40">How to Start Saving for Retirement at 40+</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/canada-and-us-retirement-showdown-which-offers-more-for-retirees">Canada and U.S. Retirement Showdown: Which Offers More for Retirees?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-enjoy-retirement-if-you-havent-saved-enough">How to Enjoy Retirement If You Haven&#039;t Saved Enough</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-ways-to-keep-your-retirement-funds-from-disappearing">7 Ways to Keep Your Retirement Funds From Disappearing</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-ways-to-boost-your-401k-returns">4 Ways to Boost Your 401(k) Returns</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401(k) IRAs retirement accounts retirement planning Roth IRAs Fri, 15 Feb 2013 10:48:56 +0000 Julie Rains 967563 at http://www.wisebread.com A Guide to Online Brokers for Investing Newbies (and Beyond) http://www.wisebread.com/a-guide-to-online-brokers-for-investing-newbies-and-beyond <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/a-guide-to-online-brokers-for-investing-newbies-and-beyond" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/6829406809_d2386c4aa7_z.jpg" alt="online brokers" title="online brokers" class="imagecache imagecache-250w" width="250" height="141" /></a> </div> </div> </div> <p>Online brokers are known for cheap commissions on stock trades, along with low-cost account management services. These firms provide a place to start, grow, and maintain financial investments through regular brokerage accounts, retirement accounts, and more. Investment products available to fund these accounts may include stocks, ETFs (exchange-traded funds), and mutual funds.</p> <p>Although online brokerage services were originally started as DIY alternatives to pricey traditional brokers (think Merrill Lynch in &quot;Mad Men&quot; days), they now offer a full range of services. Most have educational resources on investing along with tools for selecting and evaluating specific stocks. Many provide financial advisory and portfolio management services. (See also: <a href="http://www.wisebread.com/5-killer-free-investment-tools">5 Killer Free Investment Tools</a>)</p> <h2>Background</h2> <p>To understand and appreciate the services offered by online brokers, knowing the background of brokerage houses can be helpful.</p> <p>In the 1980s and earlier, investors typically had few choices when purchasing publicly-traded stocks and mutual funds. They could:</p> <ul type="disc"> <li>Buy and sell stocks using a full-service brokerage firm, paying commissions that typically exceeded $100 per transaction<br /> &nbsp;</li> <li>Invest in a specific company that offered a <a target="_blank" href="http://www.wisebread.com/slow-drip-into-investing">DRIP (dividend reinvestment plan)</a> by purchasing shares on a monthly or quarterly basis<br /> &nbsp;</li> <li>Purchase shares of mutual funds directly from the fund family, which involved paying sales and redemption charges on load funds while avoiding commissions on no-load funds</li> </ul> <p>Trading fees at full-service firms were steep, as they covered sales commissions of stockbrokers. Ideally, the stockbroker recommended trades that were suitable for and benefited the growth of your investment portfolio based on proprietary market research of the brokerage firm.</p> <p>But even if you didn&rsquo;t need or want advice from the stockbroker, you still had to pay a sales commission. Discounted brokerage services were made possible when the SEC mandated negotiated rates in 1975, eliminating fixed commissions. In the 1990s, these discount brokers introduced web-based services so that customers could make online trades rather than giving orders to a phone representative.</p> <p>Online brokers have continued to evolve. Product offerings now include options and foreign stocks. Just as significantly, many serve more than the DIY market through financial advisory and money management services.</p> <h2>Ways to Evaluate Brokers</h2> <p>There are many ways that you can evaluate and choose an online broker. The cost of a standard online stock trade, account minimums, and account maintenance fees are the features most often touted. (See downloadable spreadsheet: <a href="http://static1.killeraces.com/files/fruganomics/Basic Guide to Online Brokers.xls">Basic Guide to Online Brokers</a>, comparing various brokers.)</p> <p>Those factors are relevant, but there are also additional elements to consider in selecting a broker (or brokers).</p> <p><strong>Stock and ETF Trading Costs</strong></p> <p>The most prominent measure of an online broker is the cost of an online stock and ETF trade. Typically, these are flat fees regardless of the number of shares bought or sold.</p> <p>Note the standard fees for online trades (as of December 2012):</p> <ul> <li><a target="_blank" href="https://www.schwab.com/">Charles Schwab</a>: $8.95</li> <li><a target="_blank" href="https://us.etrade.com/home">E*Trade</a>: $9.99</li> <li><a target="_blank" href="https://www.fidelity.com/">Fidelity</a>: $7.95</li> <li><a target="_blank" href="https://www.merrilledge.com/">Merrill Edge</a>: $6.95</li> <li><a target="_blank" href="http://www.scottrade.com/">Scottrade</a>: $7.00</li> <li><a target="_blank" href="https://www.tdameritrade.com/home.page">TD Ameritrade</a>: $9.99</li> <li><a target="_blank" href="https://www.tradeking.com/">TradeKing</a>: $4.95</li> <li><a target="_blank" href="https://individual.troweprice.com/public/Retail">T. Rowe Price</a>: $19.95</li> <li><a target="_blank" href="https://investor.vanguard.com/corporate-portal">Vanguard</a>: $20.00</li> <li><a target="_blank" href="https://www.wellsfargo.com/investing/styles/wt/">WellsTrade</a>: $8.95</li> </ul> <p>Some brokers trade certain <a target="_blank" href="http://www.wisebread.com/commission-free-etfs-a-great-option-for-cost-conscious-investors">ETFs commission-free</a>. On the other hand, fees for trading penny stocks (generally defined as equities with share values of $2 or less) may be higher and include charges related to the number of shares in the transaction.</p> <p>Also, if you need to make the trade via an automated phone line or with the assistance of a broker, then you&rsquo;ll typically pay either a higher flat fee or an added service charge. These fees may run up to $44.99, cheaper than traditional brokers but not nearly as inexpensive as standard online rates. However, you should be able to engage a phone rep in walking you through the mechanics of a trade that you initiate and complete online without an extra charge.</p> <p><strong>Account Minimums</strong></p> <p>If you are just getting started in investing, the minimum amount to open an account is of particular importance. This number often varies on the type of account. A regular brokerage account generally has a higher minimum than a retirement account, such as a traditional, Roth, or SEP-IRA.</p> <p>Minimums to open a regular account are:</p> <ul> <li>Charles Schwab: $1,000</li> <li>E*Trade: $500</li> <li>Fidelity: $2,500</li> <li>Merrill Edge: $0</li> <li>Scottrade: $500</li> <li>TD Ameritrade: $0</li> <li>TradeKing: $0</li> <li>T. Rowe Price: $2,500</li> <li>Vanguard: $3,000</li> <li>WellsTrade: $1,000</li> </ul> <p>When talking with broker representatives, I learned that account minimums can be flexible. For example, a phone rep at Schwab said that the account minimums on its website are &quot;suggested&quot; rather than required. Similarly, a Fidelity rep told me that there is no minimum to open a brokerage account, but mutual funds generally have $2,500 minimums. E*Trade accounts can be opened for $0 and then funded over a period of two months. Some minimums can be waived if you opt to make automated monthly contributions.</p> <p><strong>Account Fees</strong></p> <p>Many online brokers boast the absence of annual maintenance fees. And, thankfully, the majority of firms do not charge to hold your account.</p> <p>Still, it&rsquo;s a good idea to ask about fees. These could include account opening fees, account closing fees, or quirky fees such as TradeKing&rsquo;s inactivity charge or low-balance fees charged by Fidelity and T. Rowe Price. Some fees can be waived by meeting certain conditions that could include choosing paperless delivery of monthly statements or maintaining a certain dollar value of assets.</p> <p><strong>Mutual Funds</strong></p> <p>Online brokers vary greatly in their scope of mutual fund offerings and associated fees.</p> <p>However, nearly all distinguish between no-transaction-fee (NTF) mutual funds and transaction-fee mutual funds. Put simply, you pay no fee for an NTF purchase or redemption but pay a flat fee for buying or selling transaction-fee funds. (Note that an NTF fund may or may not be a <a href="http://www.investopedia.com/terms/n/no-loadfund.asp">no-load fund</a>. For example, some brokers charge no commission for load funds, presumably earning a sales commission from the fund company rather than charging the individual investor. Some charge a commission for no-load funds.)</p> <p>A few brokers have designed mutual fund networks or programs allowing commission-free purchases and redemptions. These programs may contain proprietary funds (created and sold by the brokerage firm) and/or selected mutual funds from outside fund families. For example, you can purchase Fidelity funds for free at Fidelity but pay a $75 commission for non-Fidelity funds. Similarly, an investment in one of the funds associated with the Schwab OneSource Program is free; purchases outside of this program are $76.</p> <p>In addition to the commissions and fees charged by brokers, a mutual fund company may have fees distinct from the purchase or sales transaction; discussion of these fees can be found in the fund prospectus. Further, many brokers charge an early redemption fee for funds sold within a designated time frame after a purchase (generally 90 days or less).</p> <p>Some investors favor online brokerage services with historical roots as mutual fund companies. For example, Mike Piper, a CPA who writes about low-maintenance investing at the <a target="_blank" href="http://www.obliviousinvestor.com/">Oblivious Investor</a>, likes Vanguard and Fidelity because of the breadth of mutual fund offerings available commission-free, particularly for tax-advantaged accounts such as Traditional IRAs, <a href="http://www.wisebread.com/7-surprising-facts-about-roth-iras">Roth IRAs</a>, and SEP-IRAs.</p> <p><strong>Customer Service</strong></p> <p><a href="http://www.wisebread.com/how-to-get-what-you-want-on-customer-service-calls">Customer service</a> is delivered through toll-free phone calls, live chats, email, secure messaging systems requiring account log-in, and face-to-face consultations at branch offices. The responsiveness, availability, and expertise of service representatives will depend on your choice of online broker.</p> <p>Even if you expect to handle transactions exclusively online, you may occasionally need help in these areas:</p> <ul> <li>Responses to general inquiries about fees, opening an account, etc.</li> <li>Assistance with account-specific concerns relating to trades, account balances, etc.</li> <li>Financial advice pertinent to your goals and risk tolerance.</li> </ul> <p>General guidance is typically free, but more expert direction can cost you.</p> <p><strong>Investing Resources</strong></p> <p>Most online brokers offer investor education for DIY investors that is particularly useful for newbies. Some provide more sophisticated tools and expanded services to advanced investors and those with large investment portfolios.</p> <p>The types of resources:</p> <ul> <li>Market news, insights, and commentary</li> <li>Education on products and types of investment accounts</li> <li>Investment planning tools</li> <li>Trading and analysis tools (including real-time, streaming quotes)</li> <li>Financial planning services</li> <li>Portfolio management services</li> </ul> <p>Certain services are ideal for those who enjoy the value-consciousness of an online brokerage firm but are willing to pay for expert financial advice. This group of investors can tap the knowledge of a financial advisor for specific concerns, locate and fund a pre-fab investment portfolio that matches their risk tolerance, or enlist the services of a money manager.</p> <p><strong>Deals</strong></p> <p>Most brokers have deals for new or active customers. These generally include:</p> <ul> <li>Cash bonuses for opening an account or adding to its balance</li> <li>Free trades for referring a friend or maintaining a high account balance</li> </ul> <p>Note that qualifying amounts for bonuses can be very high though the average investor can typically qualify for free trades.</p> <h2>How to Choose an Online Broker</h2> <p>When reviewing the price structures and services of online brokers, notice the strengths that are most closely aligned with your needs. Start with identifying your needs now and those you anticipate having in the future. Ask yourself questions like these:</p> <ul> <li>What type of account do I want to open?</li> <li>What types of investments do I prefer?</li> <li>How much do I have to invest now?</li> <li>What is my level of comfort with independent investing?</li> <li>Would I like to have assistance in managing my money?</li> </ul> <p>Also, determine if you have special needs. Your responses will guide your decision as you choose an online broker.</p> <p>For example, if you are most interested in investing in mutual funds, then a firm with a wide variety of no-transaction fee funds is ideal.</p> <p>If you hope to grow your account balances to a level that will qualify you for specialized services, then the firms with full-service features at a relatively low cost may be perfect for you.</p> <p>If you want to invest in IPOs, <a target="_blank" href="http://www.kiplinger.com/magazine/archives/the-best-of-the-online-brokers-for-2011.html">Kiplinger mentions that Schwab, Fidelity, and TD Ameritrade can provide client access to initial public offerings</a>.</p> <p>If you want to open a Roth IRA for your child, Doug Nordman, a military veteran who writes about early retirement and financial independence, tells me that <a target="_blank" href="http://the-military-guide.com/2012/03/26/starting-your-kids-roth-ira/">certain brokers will allow minors to have a Roth IRA while others don't provide such services</a>.</p> <p>If you have a variety of needs, you may want to open more than one account. Using this approach, you'll forgo some benefits associated with high-dollar balances but may be able to save on fees for certain types of investments and transactions. Whatever you decide, don't be afraid to ask for specialized services at no cost or a reduced fee.</p> <p><em>What fees, account features, and services do you consider most important when evaluating an online broker? </em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/julie-rains">Julie Rains</a> of <a href="http://www.wisebread.com/a-guide-to-online-brokers-for-investing-newbies-and-beyond">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-8"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/build-a-cable-to-control-your-android-phone-while-you-drive">Build a Cable to Control Your Android Phone While You Drive</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-ways-to-invest-in-biotech-without-getting-burned">7 Ways to Invest in Biotech Without Getting Burned</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-easy-ways-to-start-green-investing">5 Easy Ways to Start Green Investing</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-ways-etfs-can-put-more-money-in-your-pocket-than-mutual-funds">8 Ways ETFs Can Put More Money in Your Pocket Than Mutual Funds</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-refill-an-ink-cartridge-with-a-small-piece-of-tape">How to refill an ink cartridge with a small piece of tape</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> DIY Investment Technology ETF Investing IRAs mutual funds online brokers stock investing Thu, 03 Jan 2013 11:36:31 +0000 Julie Rains 959885 at http://www.wisebread.com Step-By-Step Guide to Rolling Over Your Old 401(k) http://www.wisebread.com/step-by-step-guide-to-rolling-over-your-old-401k <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/step-by-step-guide-to-rolling-over-your-old-401k" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/6087387101_b593dd86cc_z.jpg" alt="401k" title="401k" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Last year, I left my job at a bank holding company in the Midwest, packed my things, and headed to law school on the East Coast. There&rsquo;s one thing I forgot, though &mdash; my 401(k). Well, I didn&rsquo;t exactly <em>forget</em> it; I just left it hanging for the past year. But no more! It&rsquo;s summertime, I&rsquo;m out of school, and I&rsquo;m ready to get my finances in order. It&rsquo;s time to roll over my 401(k) &mdash; and tell you how you can, too. (See also: <a href="http://www.wisebread.com/4-reasons-why-a-roth-ira-may-be-better-than-your-401k">4&nbsp;Reasons Why a Roth IRA May Be Better Than Your 401(k)</a>)</p> <p>Before we get into the step-by-step guide of rolling over a 401(k), though, let&rsquo;s go over some basics.</p> <h3>What Is a 401(k)?</h3> <p>Sure, you probably know that a 401(k) is a retirement investment vehicle that allows you to put away pre-tax money, and that your contributions are often matched (if not dollar-for-dollar, then at least at some proportion) by your employer. You may not know, however, that there&rsquo;s generally a waiting period before new employees are allowed to invest in the funds (ours was two months). You might also be unaware that while employers may offer matching funds, they also often require you to remain with the company for a certain number of years before you&rsquo;re eligible to receive those funds. At my company, that period was five years. If you move on earlier than that, you forfeited all employer contributions to your 401(k).</p> <h3>Why You Should (Almost Always) Roll Over Your 401(k)</h3> <p>Why should I roll over my 401(k) in the first place, you ask? Well, here&rsquo;s a post we did a while back covering the considerations you might look at in <a href="http://www.wisebread.com/left-a-job-do-a-rollover">deciding whether to roll over your 401(k)</a>. In general, it is a good idea to move your 401(k) because plan administrators charge a fee for managing the account. While the fee is worth it when you&rsquo;re receiving employer contributions and contributing with pre-tax money, that benefit goes away as soon as your employment ends. What&rsquo;s more, if your 401(k) balance is less than $5,000, you&rsquo;re <a href="http://money.msn.com/retirement-investment/5-things-to-know-about-your-401k-smartmoney.aspx">required to cash out or roll over your account</a> upon leaving the company.</p> <h3>What Exactly a 401(k) Rollover Is</h3> <p>When you leave a job, you have several options regarding your 401(k):</p> <ol> <li>Leave it where it is (if it&rsquo;s over $5,000)</li> <li>Cash it out</li> <li>Roll the account into your new employer&rsquo;s plan</li> <li>Roll the account into an IRA or a Roth IRA</li> </ol> <p>The fourth option, rolling over your account into an IRA or Roth IRA, is what is traditional meant by a 401(k) &ldquo;rollover.&rdquo;</p> <p>We&rsquo;ve already established that it&rsquo;s rarely a good idea to leave your 401(k) with your former employer. It&rsquo;s also generally a very bad idea to cash out your 401(k) (you&rsquo;ll end up paying 30% or more in taxes &mdash; check out <a href="https://www.wellsfargo.com/investing/retirement/tools/401k-early-withdrawal-calculator-results">Wells Fargo&rsquo;s 401(k) Early Withdrawal Costs Calculator</a> to find out exactly how much you&rsquo;ll be paying). There&rsquo;s also no real benefit to rolling over your old 401(k) to your new employer. Your investment options are limited, there are other limitations that don&rsquo;t exist with IRAs, and your employer doesn&rsquo;t match those old funds in any way. The bottom line is this &mdash; if you&rsquo;ve left your job and you&rsquo;re not in dire financial straits, roll over your 401(k).</p> <h3>Choosing a Traditional or Roth IRA</h3> <p>Characteristics of a <a href="http://www.investopedia.com/terms/t/traditionalira.asp#axzz1zDR9Xx87">traditional IRA</a> are:</p> <ul> <li>Individuals can contribute pre-tax money to investments that grows tax-free</li> <li>Distributions taken after retirement are taxed as ordinary income</li> <li>There are no income limits</li> <li>Individuals must start taking minimum distributions by age 70&frac12;</li> </ul> <p>Characteristics of a <a href="http://www.investopedia.com/terms/r/rothira.asp#axzz1zDR9Xx87">Roth IRA</a>, on the other hand, are:</p> <ul> <li>Individuals cannot contribute pre-tax money (i.e., you pay with after-tax income)</li> <li>Qualified distributions taken after retirement are tax free</li> <li>There are income limits (you can&rsquo;t contribute if you make over $105,000 per year if single or $167,000 if married filing jointly)</li> <li>Individuals do not need to start taking minimum distributions at any point</li> </ul> <p>In general, if you&rsquo;re eligible for both a traditional and Roth IRA, you should go for the Roth <em>unless</em> you expect to be in a lower tax bracket when you retire. It can also be smart to go the route of diversifying and have one of each type of account. If you&rsquo;re like me (eligible for both but expecting to be ineligible for a Roth IRA as my income rises), you&rsquo;ll stick with the Roth for now and open a traditional IRA later. Check out CNNMoney&rsquo;s guide on <a href="http://money.cnn.com/retirement/guide/IRA_Roth.moneymag/index7.htm?iid=EL">which type of account is right for you</a> for more guidance.</p> <p>Importantly, note that if you&rsquo;re moving your money from a 401(k) (funded with your <em>before-tax</em> contributions) to a Roth IRA (funded with <em>after-tax</em> contributions), you will owe taxes at the time of conversion. After 2011, though, you can spread this over two years. For me, the benefit letting my money grow tax-free in a Roth IRA account outweighs the relatively small amount I&rsquo;ll owe in taxes.</p> <p>Last note &mdash; prior to 2010, if you wanted to convert your 401(k) to a Roth IRA, you had to go through an irritating two-step process of rolling over your 401(k) to a traditional IRA and immediately converting it to a Roth IRA. After 2010, all plans are <em>supposed</em> to offer the direct-to-Roth IRA option. Be aware, however, that some still do not offer this.</p> <h3>And Now, A Step-By-Step Guide to Rolling Over Your 401(k)</h3> <p>Once you&rsquo;ve decided that you should roll over your 401(k), there are four basic steps you&rsquo;ll need to take to actually move your money.</p> <p><strong>1. Open Your IRA or Roth IRA</strong></p> <p>Find and open an IRA/. Check out <a href="http://www.kiplinger.com/basics/archives/2002/03/story28.html">this article from Kiplinger</a> or <a href="http://www.getrichslowly.org/blog/2007/06/07/how-to-start-a-roth-ira-and-where-to-do-it/">this article from Get Rich Slowly</a> on how to choose the right Roth IRA for you.</p> <p><strong>2. Contact Your Old 401(k) Plan Administrator</strong></p> <p>For me, this one involves digging around in my records to find the retirement plan website and login information. From there, I can find the forms I&rsquo;ll need to fill out to make the transfer. Then I&rsquo;ll just need to fill them out and submit them.</p> <p><strong>3. Confirm That Your New IRA Is Able to Receive Your 401(k) Funds</strong></p> <p>Just in case, you&rsquo;ll want to confirm with your new IRA account provider that everything is in place to receive a direct transfer from your old 401(k).</p> <p><strong>4. Confirm Direct Transfer From Your 401(k)</strong></p> <p>While filling out paperwork and verifying transfers, make sure you go with the direct transfer option &mdash; that way, your old plan simply sends your money to your new IRA account. Your other option is to have your 401(k) plan cut you a check, which will be for 80% of the fund balance (20% is temporarily withheld for taxes). You&rsquo;ll need to deposit the full 100% old balance in your new IRA, though, (meaning you&rsquo;ll need to make up that withheld 20% from personal funds) within 60 days. If you do deposit the full amount, you&rsquo;ll get the 20% withheld when you file your taxes the following year. If not, you&rsquo;ll be subject to <a href="http://www.wisebread.com/tax-penalties-for-early-retirement-withdrawals">early withdrawal fees</a>.</p> <p>So there you have it &mdash; the guide to rolling over your 401(k), and how I&rsquo;m planning on rolling mine over in the next few weeks. Good luck!</p> <p><em>Had any experience with rolling over your 401(k) or thoughts on the matter? Share your thoughts in the comments!</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/janey-osterlind">Janey Osterlind</a> of <a href="http://www.wisebread.com/step-by-step-guide-to-rolling-over-your-old-401k">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-9"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-surprising-facts-about-roth-iras">7 Surprising Facts About Roth IRAs</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-reasons-why-a-roth-ira-may-be-better-than-your-401k">4 Reasons Why a Roth IRA May be Better Than Your 401(k)</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-set-up-an-ira-to-build-wealth">How to Set Up an IRA to Build Wealth</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-valid-reasons-not-to-contribute-to-your-401k">6 Valid Reasons Not to Contribute to Your 401(k)</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/this-one-thing-will-get-you-to-1-million-tax-free">This One Thing Will Get You to $1 Million (Tax-Free!)</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment Retirement 401k rollover changing jobs IRAs Roth IRA Wed, 25 Jul 2012 10:24:37 +0000 Janey Osterlind 942736 at http://www.wisebread.com Retirement accounts and money to spend http://www.wisebread.com/retirement-accounts-and-money-to-spend <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/retirement-accounts-and-money-to-spend" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/athena-with-owl.jpg" alt="Statue of Athena with an Owl in Chicago&#039;s Union Station" title="Athena with Owl" class="imagecache imagecache-250w" width="250" height="394" /></a> </div> </div> </div> <p>Everybody knows that retirement accounts like 401(k)s and IRAs offer great tax advantages (and once upon a time--and maybe again someday--a corporate match). But people who have plans to spend the money before they reach retirement age worry about the restrictions on early withdrawals that come with the various retirement plans. Here's a cheat-sheet for working the angles.</p> <p>There are two different points where you need to do your considering: when you're making your <strong>saving and investing decisions</strong> and are thinking about where to put the money, and then again when you're making the <strong>spending decisions</strong> and are thinking about where to take the money from.</p> <p>Start your thinking by dividing your goals for the savings (other than retirement at full retirement age) into three categories: major purchases, emergency funds, and early retirement.</p> <h2>Major purchases</h2> <p>Your retirement accounts are generally a poor choice for money that you're planning to spend on things like buying a house or a car, sending the kids to college, or taking a lavish vacation.</p> <p>You can borrow from your 401(k) for the down payment on a house, but you're combining the big problem with such borrowings (losing your job means you have to pay the money back in 60 days or owe taxes and penalties) with a big bite out of your retirement savings.</p> <p>Better is to <strong>save for these goals outside your retirement plan</strong>. In some cases (such as college savings) there are other tax-advantaged plans that are better suited for the purpose.</p> <p>One special case is funding <strong>your own college expenses</strong>. You don't have to pay the 10% penalty on money that you withdraw from an IRA to pay your own college expenses, so an IRA is a perfect place to save money if you're planning to go back to college.</p> <h2>Emergency funds</h2> <p>Money in your retirement account is available to handle emergencies to a very limited extent. Generally, it's available two different ways. You can borrow against your 401(k) and you can withdraw your contributions (but not your earnings) from a Roth IRA once the plan has been established for 5 years.</p> <p>Making use of either of these options is generally a bad idea--but in an emergency, sometimes it's a matter of bad versus worse.</p> <p>You ought to have an emergency fund that's <strong>not</strong> in retirement accounts. But it's worth understanding that the money isn't completely unavailable, especially if that makes it easier for you to put a bit more aside.</p> <h2>Early retirement</h2> <p>Here's where way too much brainpower has been wasted by people who plan to retire early and worry about coming up with cash to fill the gap between the date they retire and the date they can start taking money out of their 401(k) or IRA.</p> <p>First of all, if you're really retiring, you <strong>can</strong> take money out of your retirement account. There are rules to follow--you have to arrange to take a series of payments calculated to last the rest of your life--but that's exactly what you'd want to do if you were actually planning on living on the money.</p> <p>Second, if your goal is to retire early, you're almost certainly going to be hitting the maximums on your retirement accounts and having to save some after-tax money anyway.</p> <p>The upshot is that maximizing your retirement savings is entirely compatible with early retirement. It probably won't be <strong>enough</strong> for early retirement, but maxing out every retirement savings option you've got is a great start.</p> <p>I wrote a while back out <a href="http://www.wisebread.com/when-not-to-put-money-in-your-401-k">what order to max the accounts out</a> in.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/philip-brewer">Philip Brewer</a> of <a href="http://www.wisebread.com/retirement-accounts-and-money-to-spend">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-10"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/dont-despair-over-small-retirement-savings">Don&#039;t Despair Over Small Retirement Savings</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/left-a-job-do-a-rollover">Left a job? Do a rollover.</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/optimize-your-ira-and-401k">Optimize Your IRA and 401(k)</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-start-saving-for-retirement-at-40">How to Start Saving for Retirement at 40+</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/should-you-choose-a-roth-401k-or-a-regular-401k">Should You Choose a Roth 401k or a Regular 401k?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Retirement 401(k) 401k IRA IRAs retire save savings spend spending Wed, 08 Apr 2009 17:54:54 +0000 Philip Brewer 3022 at http://www.wisebread.com Certainties: Death, Taxes, And Change http://www.wisebread.com/certainties-death-taxes-and-change <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/certainties-death-taxes-and-change" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/field and sky.jpg" alt="clouds moving and weather changing" title="clouds moving and weather changing" class="imagecache imagecache-250w" width="250" height="172" /></a> </div> </div> </div> <p>My best tax advice: keep up with tax laws. You don’t have to become a tax expert but learn enough to 1) plan your strategies and 2) ask the right questions of your CPA if you choose to hire one. Don’t let current tax laws rule your planning decisions (<em>why? because they’ll change</em>) but be aware of tax implications for generating income and taking deductions. </p> <p>When my youngest son was born in early 1997 (before the <a href="http://www.doleta.gov/OMBCN/WOTC/PL_105_34.pdf" title="http://www.doleta.gov/OMBCN/WOTC/PL_105_34.pdf">Taxpayer Relief Act of 1997</a> - PDF), the tax-advantaged way to save for his college education was through a UTMA/UGMA account. Did caring for a baby and tending to his older brother distract me from keeping up with changes in IRS legislation? Yes! Meanwhile, before my child finished elementary school, tax laws relating to college education savings changed three times! </p> <h4>College Education Savings</h4> <p><strong>My Plan A: UTMA/UGMA</strong> (Uniform Transfer to Minors Act/Uniform Gifts to Minors Act). I set up an account in my son’s name so that unearned income (capital gains on investments) would be taxed at his rate, which typically would be lower than mine. The upside to this arrangement was the lower tax liability; the downside was that UTMA/UGMA investments would be classified as his assets when he applied for financial aid. (Note: assets in these accounts are to be used for the child but not necessarily designated for education.)</p> <p><strong>My Plan B: Coverdell Education Savings Account</strong> formerly known as Education IRA. The Education IRA (now <a href="http://www.irs.gov/publications/p970/ch07.html#d0e8332" title="http://www.irs.gov/publications/p970/ch07.html#d0e8332">Coverdell ESA</a>) and Qualified Tuition Programs (generally called 529 plans in reference to the section of IRS code referring to these programs) were introduced in late 1997. The Coverdell allows me to set aside money for my children’s education and receive a tax deduction of up to $2,000 per year (note: there are income restrictions and contribution caps on this savings mechanism). Capital gains on investments held are not taxed and distributions for qualifying expenses are tax-free. Depending on the classification of the account when opened, a Coverdell may be treated as a parental asset or a child’s asset when he applies for financial aid. </p> <p><strong>My Plan C to complement Plan B: Qualified Tuition Programs</strong> commonly known as <a href="/529-plans-for-college-expenses-what-s-cool-and-what-s-quirky" title="http://www.wisebread.com/529-plans-for-college-expenses-what-s-cool-and-what-s-quirky">529 Plans</a>. These have been around a while but just recently (January 2007), tax advantages associated with the plans have been made permanent through The Pension Protection Act of 2006. No tax deduction is available with these accounts though annual contribution limits (without incurring gift taxes) are much higher and there are no income restrictions. No taxes are incurred on investment gains and money can be taken out tax free to pay for allowable educational expenses. Accounts can be owned by children, parents, and even grandparents with varying financial aid implications.</p> <h4>Retirement Savings</h4> <p>According to the <a href="http://www.cbo.gov/OnlineTaxGuide/Page_2A.htm" title="http://www.cbo.gov/OnlineTaxGuide/Page_2A.htm">Legislative History of IRAs</a>, the tax law allowing Individual Retirement Accounts (IRAs) were introduced in 1974. Actually, I thought that President Reagan had created them in 1981 though really what happened was they became available to a bigger group of people. I found it odd that the same administration that allowed taxpayers to contribute to IRAs then added restrictions. Here’s a rundown on some of the legislative changes: </p> <ul> <li>1974 – Those not covered by a qualified employer-based retirement plan can contribute to (and receive a tax deduction for) a traditional IRA by up to $1,500.</li> <li>1978 – SEP-IRA (Simplified Employee Pension Plan-IRA) is introduced for small businesses (primarily) and the self-employed.</li> <li>1981 – All taxpayers and those employed under 70½ years old can contribute to (and receive a tax deduction for) a traditional IRA by up to $2,000 and put in $250 for a nonworking spouse.</li> <li>1986 – Tax deduction on traditional IRAs is phased out for higher-earning workers covered by an employment-based retirement plan or whose spouse is covered.</li> <li>1997 – Roth IRA is introduced that allows taxpayers (under certain income restrictions) to save for retirement while avoiding capital gains on investment trades and avoiding taxes on withdrawals.</li> <li>2000s – Contribution limits and income restrictions keep changing!</li> </ul> <h4>Interest Deductions</h4> <p>Interest on consumer loans (credit cards, auto loans) used to be tax deductible but those deductions were phased out in the 1980s. Mortgage-based loans retained the interest deduction and, based on my observations, home equity loans and home equity lines of credit became more and more popular. For an entertaining, informative look at interest deductions, specifically the public policy behind mortgage interest deductions, see <a href="http://www.nytimes.com/2006/03/05/magazine/305deduction.1.html?pagewanted=print" title="http://www.nytimes.com/2006/03/05/magazine/305deduction.1.html?pagewanted=print">“Who Needs the Mortgage-Interest Deduction?”</a> (<em>New York Times</em>) by Roger Lowenstein. </p> <h4>Capital Gains on Primary Residences</h4> <p>Once upon a time, homeowners could avoid capital gains tax on the sale of their primary residence <strong>one time in a lifetime,</strong> unless they plowed those profits right back into another home purchase. Now, homeowners can get this deduction as many times as they&#39;d like (with no capital gains tax due on profits $250,000 and less) according to a Bankrate.com article on <a href="http://www.bankrate.com/brm/news/real-estate/20041018a1.asp" title="http://www.bankrate.com/brm/news/real-estate/20041018a1.asp">Capital Gains Home Sale Tax Break</a>. </p> <h4>Section 179 Deduction for Business Owners</h4> <p>When I first started my business, I was thrilled to be savvy enough about tax laws in general and the Section 179 deduction in particular to know that I could expense, rather than depreciate, the cost of fixed assets (my computer for example). </p> <p>To illustrate the changes in tax law, at one time, the Section 179 deduction had a cap of a few thousand dollars (that is if you bought a computer for $2,000 and the Sec. 179 cap was $5,000, then you could take a full deduction for the cost of the computer rather than spreading its cost over 5 years and taking $400 deductions each year). For more on this fascinating topic, see <a href="http://www.gaebler.com/Section-179-Tax-Deductions.htm" title="http://www.gaebler.com/Section-179-Tax-Deductions.htm">Section 179 Tax Deductions</a>. </p> <p>A few weeks ago, I was reading a personal finance article and the topic of Section 179 deductions was mentioned. When I saw the dollar amount that the author said you could deduct, I was sure it was a misprint, most likely a misplaced comma. I did some research and discovered that in 2008, a business owner can make a capital investment of $125,000 and deduct the full amount. Amazing! Apparently, <a href="http://www.bankrate.com/brm/itax/Edit/tips/Stories/sec179_deduction.asp" title="http://www.bankrate.com/brm/itax/Edit/tips/Stories/sec179_deduction.asp">a major increase in the deduction took place in 2003</a>, when the limit was raised from $25,000 to $100,000. It looks like this generous deduction is available through 2009. </p> <h4>Long-Term Capital Gains on Investments</h4> <p>The tax rate on long-term capital gains is typically lower than ordinary income rates, varying from 5% to 28% depending on income levels for the past several years. In 2008, however, <a href="http://www.bankrate.com/brm/itax/tips/20010305a.asp?caret=1d" title="http://www.bankrate.com/brm/itax/tips/20010305a.asp?caret=1d">lower-earning taxpayers will be exempt from capital gains taxes</a> (that&#39;s <strong>ZERO</strong> on long-term assets such as equity investments but not counting collectibles and small business stock). According to Bankrate.com, &quot;To qualify for the zero rate in 2008, a married couple must make no more than $65,100 in taxable income; single filers earning $32,550 or less will pay no tax on their sales of assets they&#39;ve owned for more than a year.&quot; This deal is available until 2010 unless, of course, tax laws change again. (Warning: long-term capital gains generated by the sale of investments are included in taxable income). </p> <p>Coasting along with financial vehicles and investment strategies aligned with outdated tax laws may be dangerous. Stir in frequent changes to your personal circumstances and you’ll cook up some not-so-great decisions. </p> <p><em>Note: I am not a tax expert or CPA, so please consult the IRS or a tax professional in regard to tax questions. I hope this post has helped you figure out what some of those questions should be.</em></p> <p><em>This post is a part of the <a href="http://www.moneyblognetwork.com/blog/mbn-group-writing-project-best-tax-advice/">MoneyBlogNetwork Group Writing Project</a> focusing on taxes.  Check out other great tax articles from MBN: </em></p> <ul> <li>Consumerism Commentary: <a href="http://www.consumerismcommentary.com/2008/03/03/is-it-better-to-receive-a-tax-refund-or-owe-the-irs/">Is it Better to Receive a Tax Refund or Owe the IRS?</a></li> <li>Five Cent Nickel: <a href="http://www.fivecentnickel.com/2008/03/03/the-value-of-doing-your-own-taxes/">The Value of Doing Your Own Taxes</a></li> <li>Free Money Finance: <a href="http://www.freemoneyfinance.com/2008/03/my-best-piece-o.html">My Best Piece of Tax Advice</a></li> <li>Get Rich Slowly: <a href="http://www.getrichslowly.org/blog/2008/03/03/mr-lawyer-and-mr-accountant-chat-about-taxes/">Mr. Lawyer and Mr. Accountant Chat About Taxes </a></li> <li>Mighty Bargain Hunter: <a href="http://www.mightybargainhunter.com/2008/03/03/a-tax-tip-from-my-pastor/">A tax tip from my pastor</a></li> <li>No Credit Needed: <a href="http://www.ncnblog.com/2008/03/03/a-taxing-situation-my-biggest-financial-regret/">A Taxing Situation - My Biggest Financial Regret </a></li> </ul> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/julie-rains">Julie Rains</a> of <a href="http://www.wisebread.com/certainties-death-taxes-and-change">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-11"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-ways-your-ira-beats-your-savings-account">4 Ways Your IRA Beats Your Savings Account</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/top-three-tax-facts-to-know-for-2016">Top Three Tax Facts to Know for 2016</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/did-your-parents-give-you-a-whole-life-insurance-policy-heres-what-to-do-with-it">Did Your Parents Give You a Whole Life Insurance Policy? Here&#039;s What to Do With It.</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/101-tax-deductions-for-bloggers-and-freelancers">101 Tax deductions for bloggers and freelancers</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-great-places-to-get-free-tax-advice">6 Great Places to Get Free Tax Advice</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Taxes capital gain on primary residence college education savings interest deductions IRAs tax law changes Mon, 03 Mar 2008 14:50:13 +0000 Julie Rains 1872 at http://www.wisebread.com Your 401(k) is not an investment http://www.wisebread.com/your-401-k-is-not-an-investment <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/your-401-k-is-not-an-investment" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/compartments.jpg" alt="" title="" class="imagecache imagecache-250w" width="250" height="182" /></a> </div> </div> </div> <p>Your 401(k) is not an investment. Neither is your IRA. Those are <strong>legal compartments</strong> for holding investments. Your investments are the mutual funds, stocks, bonds, and so on that you&#39;ve bought. The compartments are where you keep your investments.</p> <p>The distinction makes a difference. When you decide where to invest your money--what investments to buy--you should ignore the compartments. Deciding what compartment to use for each individual investment should come later.</p> <h2>Asset allocation</h2> <p>Investment advisors use the term &quot;asset allocation&quot; to mean where your money goes. You can get a lot of advice on asset allocation from advisors, books, web pages, and so on. There&#39;s a general consensus nowadays that most people should invest heavily in stocks, especially early in their career, and then shift very gradually into bonds--probably keeping a good percentage in stocks even after retirement. There are people who disagree, though--see my review of <a href="/book-review-your-money-or-your-life">Your Money or Your Life</a> , for a view on putting your money into long-term treasury bonds.</p> <h2>Compartments</h2> <p>The compartments change how your ownership of the investment is treated legally. The most important distinction among the compartments (but not the only one) is the tax treatment. Both 401(k)s and IRAs let you invest money that you earn without paying taxes on it--that lets you put more of your money to work, and gives you a huge edge in getting started investing. Roth IRAs take after-tax money, but you don&#39;t need to pay any taxes on the gains you make inside the Roth. (All that is only true if you follow certain rules, mostly having to do with leaving the money in the compartment until you reach retirement.)</p> <h2>Putting them together</h2> <p>There&#39;s an inclination to match investments to compartments based on the goal of the compartment: People think of their 401(k) as being for retirement, so they want to put investments in it that are suitable for retirement--long-term, but reasonably safe. At the same time, they might have a brokerage account that&#39;s not a retirement asset, where they feel free to make short-term trades with the hope of a big killing. That&#39;s not the right way to look at compartments.</p> <p>You only have one asset allocation, and it covers all the compartments. Let&#39;s say (purely as an example, and not recommended for anyone in particular) that you decide that you should have 60% stocks, 30% bonds, and 10% cash. That&#39;s one decision. Having decided that, you then need to decide which compartments should hold those investments. That&#39;s a separate decision.</p> <h2>The compartment decision</h2> <p>The main reason to pick one compartment over another is for tax efficiency. As rules-of-thumb: </p> <ul> <li>Investments that produce <strong>interest income</strong> should go into a tax-deferred account such as a 401(k) or an IRA. Otherwise, you need to pay taxes on the income every year. </li> <li>Investments with <strong>frequent turnover</strong> should go into a tax deferred account. If you make trades in your ordinary brokerage account, you need to pay taxes on any profits you make every year. In a 401(k) or IRA, you can postpone all those taxes until you take the money out.</li> <li>Investments that produces<strong> long-term capital gains </strong>or<strong> dividend income</strong> should probably <strong>not</strong> be in a tax-deferred account. Capital gains and most dividends are taxed at a reduced rate. If they&#39;re earned in a tax-deferred account, though, all the money that you withdraw will be taxed as ordinary income when it is withdrawn, losing the investment&#39;s tax advantage.</li> </ul> <p>Of course, you&#39;re limited to the investments available in your 401(k). Fortunately, most 401(k)s offer a pretty good range of choices nowadays. Even if your 401(k) has only one or two good choices, though, you&#39;re still okay. Buy the best investments your 401(k) offers, then buy other investments outside your 401(k) to achieve your desired overall asset allocation.</p> <p>No individual compartment needs diversification--only your overall portfolio does. </p> <h2>Company match</h2> <p>Probably the most important factor for your medium-term investment success has nothing to do with your asset allocation or the tax issues of your compartment selection. It&#39;s your company match.</p> <p>If your employer offers a match on the money you put into your 401(k), you should almost certainly take it. Whether the match is 100 cents on the dollar or 50 cents on the dollar, it is still much more than you&#39;re likely to earn on any investment and much more than you&#39;re likely to be paying on your debts. As long as funding your 401(k) to the extent of getting the full employer match doesn&#39;t make you miss payments on your debts, you&#39;re probably better off funding the 401(k) even if it delays paying off credit cards. The match is that big. (If getting a 50% match meant delaying paying off a debt for, say, 3 years, you&#39;ll still come out ahead if the debt is at less than 16%.)</p> <h2>Protected compartments</h2> <p>One other advantage that most of these special compartments such as IRAs and 401(k)s have is that your funds within them are largely protected against being taken in a lawsuit or bankruptcy. No one is without risk of a lawsuit, so that&#39;s all the more reason to fully fund your 401(k) or IRA.</p> <p>Retirement accounts are not protected against <strong>all</strong> risks. A divorce court will likely take retirement assets into account when making a property settlement. The government may also be able invade them for things like tax debts and student loan debts. Against most other debts, though, your retirement accounts are safe. The rules for each different compartment are slightly different, which means it makes good sense to divide your money up a bit, just in case one particular compartment is vulnerable to one particular hazard.</p> <h2>Recap</h2> <p>Wise use of compartments can protect you from taxes and many other things. Just don&#39;t confuse the compartments with the investments they contain. </p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/philip-brewer">Philip Brewer</a> of <a href="http://www.wisebread.com/your-401-k-is-not-an-investment">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-12"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-crucial-things-you-should-know-about-bonds">5 Crucial Things You Should Know About Bonds</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-start-saving-for-retirement-at-40">How to Start Saving for Retirement at 40+</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-safe-investments-that-arent-bonds">9 Safe Investments That Aren&#039;t Bonds</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-times-you-shouldnt-invest-in-stocks">10 Times You Shouldn&#039;t Invest in Stocks</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-easy-ways-to-start-green-investing">5 Easy Ways to Start Green Investing</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment 401(k) asset allocation bonds IRAs stocks Wed, 15 Aug 2007 11:21:38 +0000 Philip Brewer 998 at http://www.wisebread.com