taxes http://www.wisebread.com/taxonomy/term/24/all en-US 8 Ways Retirees Can Spring Clean Their Finances http://www.wisebread.com/8-ways-retirees-can-spring-clean-their-finances <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/8-ways-retirees-can-spring-clean-their-finances" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/senior_couple_paying_bills_online_at_home.jpg" alt="Senior couple paying bills online at home" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>So you've finally made the jump out of the working world and into blissful retirement. Congratulations! If you've been careful in your financial planning, you should have plenty of money to sustain yourself for a long time and have a happy post-work life. But even the most well-off retirees could benefit from re-examining their financial situation.</p> <p>Here are a few ways retirees can get their finances spic and span this spring.</p> <h2>1. Check your spending</h2> <p>After you've spent a large portion of your life amassing a large retirement fund, you may feel like your days of watching every dollar are over. But it's still important to make sure your expenses aren't higher than what your savings can afford. Now that you are home instead of heading to the office every day, you may be spending more on utilities. You may have unreimbursed expenses relating to caring for your grandchildren. That African safari trip may have cost you more than expected.</p> <p>If you have an annuity or are making regular withdrawals in retirement, it's important to avoid spending more than those payments. Otherwise, you may find yourself lacking in funds down the road. You may be fortunate to live for many more years, but you don't want to go broke along the way. (See also: <a href="http://www.wisebread.com/6-ways-you-can-cut-costs-right-before-you-retire-0?ref=seealso" target="_blank">6 Ways You Can Cut Costs Right Before You Retire</a>)</p> <h2>2. Meet with a financial adviser</h2> <p>Even retirees who have plenty of money and a good financial plan can benefit from a checkup with an adviser. A good financial planner can help you assess whether your retirement savings are still on track to last and if there are any necessary tweaks. An adviser can also help walk you through any changes to tax laws and explain any changes to the investment landscape. Once you retire, don't just put your head in the sand and assume your money will last as long as you do. A periodic financial check-in with an expert can be hugely valuable to anyone seeking the best retirement possible. (See also: <a href="http://www.wisebread.com/3-reasons-to-be-picky-when-hiring-a-financial-planner?ref=seealso" target="_blank">3 Reasons to Be Picky When Hiring a Financial Planner</a>)</p> <h2>3. Assess your withdrawals</h2> <p>Once you reach age 70 &frac12;, you may be required to make minimum withdrawals from your retirement accounts. The ultimate size of these withdrawals &mdash; and whether you decide to start withdrawing sooner &mdash; will determine how much you have to live on, and how much you'll have left in your accounts. If you are taking withdrawals already, take some time to determine whether the amount taken out each month is sufficient or too much. (See also: <a href="http://www.wisebread.com/3-financial-penalties-every-retiree-should-avoid?ref=seealso" target="_blank">3 Financial Penalties Every Retiree Should Avoid</a>)</p> <h2>4. Re-examine your will</h2> <p>You remember filling out a will many years ago, but do you remember what it says? Do you still agree with the directives regarding who gets your assets when you pass? These aren't pleasant things to think about, but your family will appreciate it if your wishes are made clear. It may even make sense to discuss this with your children and other family members so there are no surprises or acrimony later. (See also: <a href="http://www.wisebread.com/6-times-you-need-to-update-your-will?ref=seealso" target="_blank">6 Times You Need to Update Your Will</a>)</p> <h2>5. Rebalance your portfolio</h2> <p>If you are retired, your investment portfolio should be geared more toward preserving income than growing it. It's OK to own some stocks, but it makes sense to also mix in some bonds, cash, and other more conservative investments. You may think your portfolio is optimized for retirement, but there's a chance it may have gotten out of balance. This is especially true over the last few years when stocks have performed very well.</p> <p>Everyone, not just retirees, is encouraged to rebalance their portfolios every year. If you haven't taken a hard look at your investments in a while, take the time to see if some smart buying and selling will get you back on the right track. (See also: <a href="http://www.wisebread.com/7-reasons-to-invest-in-stocks-past-age-50?ref=seealso" target="_blank">7 Reasons to Invest in Stocks Past Age 50</a>)</p> <h2>6. Do a deep dive into your charitable giving</h2> <p>You may finally be in a position to be generous with your money. But are you being smart and strategic about how you are giving to charity?</p> <p>Charitable donations are not only a wonderful thing to do, they can help you financially by saving you on taxes. If you itemize tax deductions, charitable donations can reduce your tax bill. Donating shares of stock to a charity can help you avoid capital gains taxes. If you are considering donating to charity, come up with a smart plan to support the causes you love as part of a broader tax savings strategy. (See also: <a href="http://www.wisebread.com/5-ways-giving-to-charity-is-good-for-you?ref=seealso" target="_blank">5 Ways Giving to Charity Is Good for You</a>)</p> <h2>7. Assess your health insurance situation</h2> <p>Older Americans can benefit from Medicare, but you may not be eligible if you retire early. And even if you do get Medicare, that doesn't cover every medical expense. Most retirees find that they need to purchase a Medicare supplement plan, as well as additional insurance for eyeglasses, hearing aids, dental work, and other health needs. You'll also need to consider whether long-term care insurance is right for you. Don't assume you are properly insured just because you are eligible for Medicare. (See also: <a href="http://www.wisebread.com/how-to-make-sense-of-the-different-parts-of-medicare?ref=seealso" target="_blank">How to Make Sense of the Different Parts of Medicare</a>)</p> <h2>8. Hit the gym and eat better</h2> <p>Exercising may not seem like a financial decision, but in many ways it is. Getting and staying healthy will not only help you enjoy retirement more, but it could help reduce medical bills that may not be covered by insurance. Work to lose weight, lower your blood pressure, and make better lifestyle choices. You may find yourself not only healthier, but wealthier too. (See also: <a href="http://www.wisebread.com/7-smart-ways-to-invest-in-your-health?ref=seealso" target="_blank">7 Smart Ways to Invest in Your Health</a>)</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F8-ways-retirees-can-spring-clean-their-finances&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F8%2520Ways%2520Retirees%2520Can%2520Spring%2520Clean%2520Their%2520Finances.jpg&amp;description=8%20Ways%20Retirees%20Can%20Spring%20Clean%20Their%20Finances"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/8%20Ways%20Retirees%20Can%20Spring%20Clean%20Their%20Finances.jpg" alt="8 Ways Retirees Can Spring Clean Their Finances" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/8-ways-retirees-can-spring-clean-their-finances">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/8-questions-financial-advisers-hear-most-often">8 Questions Financial Advisers Hear Most Often</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/9-costly-mistakes-diy-investors-make">9 Costly Mistakes DIY Investors Make</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-retirement-struggles-nobody-talks-about-and-how-to-beat-them">5 Retirement Struggles Nobody Talks About — And How to Beat Them</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/new-job-dont-make-these-7-mistakes-with-your-benefits">New Job? Don&#039;t Make These 7 Mistakes With Your Benefits</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/if-youre-lucky-enough-to-receive-a-pension-here-are-6-things-you-need-to-do">If You&#039;re Lucky Enough to Receive a Pension, Here Are 6 Things You Need to Do</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement charity financial advisers financial planning health care money moves rebalancing spending spring cleaning taxes Wed, 28 Mar 2018 09:00:07 +0000 Tim Lemke 2119356 at http://www.wisebread.com How to Research a Home's Location Before You Buy http://www.wisebread.com/how-to-research-a-homes-location-before-you-buy <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-research-a-homes-location-before-you-buy" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/paper_house_under_a_magnifying_lens_1.jpg" alt="Paper house under a magnifying lens" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>When searching for the best qualities in a new a home, you've probably heard that location is everything. There's a reason for that. You can change nearly everything about a house except for where it's located.</p> <p>To make sure you're going to love where you're located, you'd best research the heck out of your future block, neighborhood, city, and region. Here are the criteria to use when evaluating home locations.</p> <h2>1. The home market</h2> <p>You need to look at current home prices in a neighborhood to figure out not only whether you can afford to buy a house there, but also whether a particular house is priced fairly. In addition to current prices, look at the direction prices have moved over the past five years. Are you buying on the upswing or the downswing?</p> <p>Realtor.com warns that neighborhoods with a number of houses lingering on the market for years, despite multiple price decreases, might be a warning sign of a bad investment. A good tool for researching an area's market history is <a href="https://www.zillow.com/home-values/" target="_blank">Zillow's Home Value Index</a>. Enter the ZIP code and get summaries of the price changes for the past five years, and a forecast for the next year. (See also: <a href="http://www.wisebread.com/how-to-learn-about-your-homes-history?ref=seealso" target="_blank">How to Learn About Your Home's History</a>)</p> <h2>2. Crime</h2> <p>If you ask around, you'll get a wide variety of subjective impressions about whether a neighborhood is safe. But there is data out there that can give you a more realistic picture.</p> <p><a href="https://www.trulia.com/local-info/cities" target="_blank">Trulia's City Guides</a> include crime statistics and neighborhood crime maps for some of the biggest cities. Many city police departments have created their own crime data maps. <a href="https://www.crimereports.com/" target="_blank">CrimeReports</a> has consolidated data from 1,000 different departments, searchable by ZIP code.</p> <p>You can also plug an address into the <a href="https://www.nsopw.gov/" target="_blank">U.S. Department of Justice's sex offender database</a> to find out how many registered sex offenders live nearby.</p> <h2>3. Walkability</h2> <p>Whenever my family drives through a beautiful (and often expensive) mountainous neighborhood in Marin County, California, I shake my head and say, &quot;I could never live here.&quot; Why? Because I like to be able to walk out my front door to run my errands, without getting in the car or worrying about being run down on the edge of the road.</p> <p>If you're like me, check your future neighborhood's <a href="https://www.walkscore.com/cities-and-neighborhoods/" target="_blank">Walk Score</a>, which rates the proportion of your errands that can be accomplished on foot. Highly walkable cities such as New York score in the high 80s, while certain neighborhoods, such as San Francisco's Chinatown (Walk Score: 100), qualify as a &quot;Walker's Paradise.&quot; (See also: <a href="http://www.wisebread.com/how-to-evaluate-a-neighborhood-before-you-buy?ref=seealso" target="_blank">How to Evaluate a Neighborhood Before You Buy</a>)</p> <h2>4. Public transit</h2> <p>The Walk Score website also ranks ZIP codes by the <a href="https://www.walkscore.com/transit-score-methodology.shtml" target="_blank">availability of public transit</a>, a consideration that not nearly enough people consider when buying a house. Besides checking the score, look into how a neighborhood's transit would work for you. Does it go to your work? Would you be able to walk or bike to the train or bus, or would you have to drive there? And if you have to drive, how's the parking situation? Is there a backup form of transit if the main system is down or delayed? Get this information by looking up the websites of the local transit systems, asking locals, and &mdash; this is important &mdash; trying the commute before you commit.</p> <h2>5. Schools</h2> <p>Since I have three children, the quality of public schools has been a major factor both times we have relocated. For every house I've considered, I've looked up the local school on Zillow, and checked <a href="https://www.greatschools.org/" target="_blank">GreatSchools</a>, which provides data on test scores, student progress, equity, and disciplinary issues, as well as reviews.</p> <p>But schools are much more than just numbers. So if we got serious about a house, I'd dig deeper, researching the school by searching local parent bulletin boards and social media, asking local contacts about the school, and finally, touring the school.</p> <p>Besides the general quality of a school, you should look at whether the school offers programs that are important for your family &mdash; for instance, foreign language instruction or a gifted and talented program. Another question to look into: Are there public charter or magnet schools your child could attend if the neighborhood school doesn't work for you?</p> <p>Often, being in a better school district can explain why one house costs more than a similar house just a few blocks away. Some families may opt to take the cheaper house and use the money they save to send their kids to private school. It's all part of the equation.</p> <h2>6. Climate</h2> <p>My family once considered a move from Chicago to Montreal for a job. My husband and I figured that, having grown up in Wisconsin, we were used to snow and cold. But one statistic gave me pause: Montreal receives an average 82 inches of snow per year. That's more than twice Chicago's annual total. I realized that, while living in Chicago, not once had I wished for twice as much snow. We moved to California instead.</p> <p>If you are considering a move to another geographical region, make sure you have a realistic idea of what the weather will be like year round and how that might impact you. How will it affect your utility bills? You might have loved the weather in Florida while you vacationed at the beach, but would you love having to run the air conditioner year round if you lived there?</p> <p>One place to research weather is <a href="https://www.usclimatedata.com/" target="_blank">U.S. Climate Data</a>, which will give you the average high and low for each month of the year, as well as the average sunshine and precipitation totals.</p> <p>In this era of climate change, it's also worth considering not just the past, but the future. Check with <a href="https://msc.fema.gov/portal/search" target="_blank">FEMA's Flood Map</a> to figure out if you'll need flood insurance. And if you are anywhere near the East Coast or Gulf of Mexico, check the national <a href="https://www.nhc.noaa.gov/nationalsurge/" target="_blank">hurricane storm surge maps</a>. Also read up on natural disasters in the area in the past few years. Have there been floods? Wildfires? Ask yourself if you are prepared to deal with more intense versions of those incidents in the future. (See also: <a href="http://www.wisebread.com/7-other-kinds-of-insurance-you-may-need-to-buy-for-your-home?ref=seealso" target="_blank">7 Other Kinds of Insurance You May Need to Buy for Your Home</a>)</p> <h2>7. Seismic risk</h2> <p>Surprisingly few people seem to consider earthquake risk when buying a home. My own home sits precariously close to the Hayward fault in the San Francisco Bay Area, which some scientists say is overdue for a major earthquake. It didn't dissuade my family from buying, but we did decide to invest heavily in seismic retrofitting, shoring up our old house's foundation and certain walls to help it survive the Big One when it comes.</p> <p>If you decide to buy in a quake-prone area, you will need to decide whether to purchase earthquake insurance. You may want an engineer to conduct a seismic inspection to see what has been or could be done to strengthen the structure.</p> <p>Another consideration in seismic activity zones is the type of earth your home sits on. When my husband and I bought our first San Francisco condo, we found out after the fact that it was in a &quot;liquefaction zone&quot; &mdash; an area where the ground could act like a liquid during intense shaking. These homes are built on loose sand or landfill, and are much more susceptible to damage than homes built on more solid ground. You can investigate an area's liquefaction risk on <a href="https://geomaps.wr.usgs.gov/sfgeo/liquefaction/maps.html" target="_blank">U.S. Geographical Survey maps</a>.</p> <h2>8. Taxes</h2> <p>Property taxes and sales taxes vary widely from one region to another &mdash; even from one suburb to another. States levy different amounts of income tax, and some (like Florida) have no income tax at all; check your <a href="https://taxfoundation.org/state-individual-income-tax-rates-brackets-2017/" target="_blank">income tax rate</a> at The Tax Foundation. Sales tax is (literally) all over the map; you can <a href="https://taxfoundation.org/state-and-local-sales-tax-rates-2018/" target="_blank">look up sales tax rate</a> at The Tax Foundation as well.</p> <h2>9. Homeowners' association</h2> <p>If you are buying a condo or a townhome, or even a stand-alone house in some communities, you may fall under the rule of a homeowners' association, or HOA. If you've never lived in one before, you might be surprised at the amount of power the HOA has over your choices as a homeowner. For instance, certain types of landscaping or pets might be banned, or you might be required to repaint your house even if you think it looks OK. If there are shared amenities, such as a community pool, there will be monthly dues to pay as well.</p> <p>It's not enough to ask the listing agent if there is an HOA and how much the dues are. Experts recommend you request and review the past two years of meeting minutes; this is where you'll find out if the current homeowners are considering levying a big assessment for deferred maintenance, for example. You should also investigate whether the HOA's reserves are adequate. (See also: <a href="http://www.wisebread.com/what-you-need-to-know-about-homeowners-associations?ref=seealso" target="_blank">What You Need to Know About Homeowners' Associations</a>)</p> <h2>10. Fun</h2> <p>Researching the location isn't all boring adulting. You'll also want to take a turn in the local downtown or arts district to see what's fun to do. Besides an in-person investigation, you can check a website such as <a href="https://nabewise.com/" target="_blank">NabeWise</a>, which describes individual neighborhoods in select cities, listing their top attributes and areas in which they're weak. Also look at <a href="https://www.yelp.com/" target="_blank">Yelp</a>, which can give you the lowdown on local restaurants and other businesses.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fhow-to-research-a-homes-location-before-you-buy&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FHow%2520to%2520Research%2520a%2520Home%2527s%2520Location%2520Before%2520You%2520Buy.jpg&amp;description=How%20to%20Research%20a%20Home's%20Location%20Before%20You%20Buy"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/How%20to%20Research%20a%20Home%27s%20Location%20Before%20You%20Buy.jpg" alt="How to Research a Home's Location Before You Buy" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/carrie-kirby">Carrie Kirby</a> of <a href="http://www.wisebread.com/how-to-research-a-homes-location-before-you-buy">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/5-best-neighborhood-features-for-new-families">5 Best Neighborhood Features for New Families</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-learn-about-your-homes-history">How to Learn About Your Home&#039;s History</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/8-questions-real-estate-agents-hear-most-often">8 Questions Real Estate Agents Hear Most Often</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/14-things-youll-hate-about-your-next-house">14 Things You&#039;ll Hate About Your Next House</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-times-buying-a-home-with-cash-is-bad-for-your-budget">5 Times Buying a Home With Cash Is Bad for Your Budget</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing climate community crime statistics home buying location neighborhoods new home research school districts taxes transportation Mon, 26 Mar 2018 09:30:19 +0000 Carrie Kirby 2119239 at http://www.wisebread.com 9 Surprising Ways Marriage Can Make You Richer http://www.wisebread.com/9-surprising-ways-marriage-can-make-you-richer <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/9-surprising-ways-marriage-can-make-you-richer" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/groom_and_bride_are_under_viel_together.jpg" alt="Groom and bride are under viel together" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Marriage can be a wonderful thing, and not just because of the potential for lifelong companionship. Tying the knot can be a great financial decision, too.</p> <p>When you get married, you'll be eligible for some key tax breaks, and there are a number of other advantages that will ultimately help you build wealth. Take a look at these examples of how marriage can make you richer.</p> <h2>1. There's a larger standard tax deduction</h2> <p>Under the 2018 tax law, every married couple filing jointly is eligible for a standard deduction of $24,000. That's nearly double from the previous law and exactly twice the standard deduction for single people. This standard deduction is more important than ever, as the new tax law does not allow for as much itemizing of deductions. (See also: <a href="http://www.wisebread.com/12-things-you-should-know-about-the-new-tax-law?ref=seealso" target="_blank">12 Things You Should Know About the New Tax Law</a>)</p> <h2>2. You may save on taxes if filing jointly</h2> <p>Much has been said about the so-called &quot;marriage penalty&quot; in which couples could face a higher tax rate if they file jointly. But in truth, this was not an issue for most people, and the new tax law makes it even less likely that married couples will be penalized.</p> <p>In fact, in most cases under the 2018 tax law, there won't be much difference between your taxes if you file separately or jointly. But it could be very advantageous for couples to file jointly if one spouse makes considerably more than the other.</p> <p>To illustrate this, let's say you earn $37,000 in taxable income. Under the 2018 tax law, you'd be in the 12 percent tax bracket and pay $4,440 in tax if filing separately. Now let's say your spouse earns $190,000 per year and pays $60,080, based on the 32 percent tax bracket, also filing separately. If you file jointly instead, you'd report a combined income of $227,000 and would be in the 24 percent tax bracket. You would pay $54,480 in tax, a savings of nearly $10,000.</p> <h2>3. You have more buying power</h2> <p>When you get married, you are pooling financial resources. If both of you have assets and income, then you have greater ability to make purchases. It means you may be more likely to afford a down payment on a home, and have more ability to handle the monthly mortgage. It means you may become more attractive to lenders, though it is worth noting that you will still each have separate credit scores.</p> <h2>4. You can contribute to an IRA even if you don't work</h2> <p>If you want to contribute to an individual retirement account (IRA), you must have earned income. But there are exceptions, most notably in the form of a spousal IRA. With a spousal IRA, each spouse can have their own IRA, as long as one of the spouses has earned income. For most people, the limit of contributions on each account is $5,500 annually, so the total contributions allowed for married couples doubles to $11,000. The only catch to a spousal IRA is that couples must file their taxes jointly. (See also: <a href="http://www.wisebread.com/4-ways-couples-are-shortchanging-their-retirement-savings?ref=seealso" target="_blank">4 Ways Couples Are Shortchanging Their Retirement Savings</a>)</p> <h2>5. You can receive Social Security spousal benefits</h2> <p>When you file for Social Security benefits, you can file for your own benefits or under your spouse's. Even if you did not earn any income during your life, you can receive benefits through your spouse. Usually, spousal benefits are up to half your spouse's normal Social Security benefit. You'll also be able to receive spousal benefits even after your spouse passes on.</p> <h2>6. You may spend less on health care</h2> <p>There is considerable evidence that being married can make you healthier. Married couples look out for one another. They keep each other on track regarding diet and exercise, and a spouse is often the first person to notice when you appear unwell.</p> <p>The Harvard Health blog reported in 2016 that married people tend to live longer, are less likely to be depressed, and have fewer strokes and heart attacks. The report also cites studies showing that married people have better immune systems. This potentially means that your health care expenses could be less than if you remained single.</p> <h2>7. You can get health insurance through your spouse</h2> <p>If one spouse has access to health insurance through his or her employer, they can add a spouse to their plan. This is very helpful when one spouse is not employed or is not offered health insurance through their job. In most cases, family plans offer savings over plans for individuals.</p> <h2>8. Auto insurance is cheaper</h2> <p>Generally speaking, auto insurance companies will charge less to married couples than single people. That's because they tend to see marriage as something a more mature person does. Of course, it helps if both drivers have good driving records; if your spouse has a worse driving record than you, you may not see any savings.</p> <p>An analysis from Carinsurance.com revealed that married couples can typically see savings of 10 to 15 percent in most states. It's worth noting that insurance companies will offer discounts for multiple cars, as well.</p> <h2>9. You can inherit assets from your spouse without a will</h2> <p>To be clear, no one is suggesting you should celebrate when your spouse passes away. But it's worth noting that when you are married, you are usually entitled to inherit their assets, even if you don't have a formal will drawn up. Note: Crafting a will is still a very good idea. (See also: <a href="http://www.wisebread.com/heres-what-happens-if-you-dont-leave-a-will?ref=seealso" target="_blank">Here's What Happens If You Don't Leave a Will</a>)</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F9-surprising-ways-marriage-can-make-you-richer&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F9%2520Surprising%2520Ways%2520Marriage%2520Can%2520Make%2520You%2520Richer.jpg&amp;description=9%20Surprising%20Ways%20Marriage%20Can%20Make%20You%20Richer"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/9%20Surprising%20Ways%20Marriage%20Can%20Make%20You%20Richer.jpg" alt="9 Surprising Ways Marriage Can Make You Richer" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/9-surprising-ways-marriage-can-make-you-richer">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/how-to-protect-yourself-financially-during-a-divorce-or-separation">How to Protect Yourself Financially During a Divorce or Separation</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/what-you-should-ask-your-financial-adviser-at-your-annual-meeting">What You Should Ask Your Financial Adviser at Your Annual Meeting</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-ways-to-safeguard-your-financial-future-with-just-200">5 Ways to Safeguard Your Financial Future With Just $200</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-make-sense-of-the-different-parts-of-medicare">How to Make Sense of the Different Parts of Medicare</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-kinds-of-insurance-every-retiree-should-consider">5 Kinds of Insurance Every Retiree Should Consider</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance advantages assets auto insurance health care health insurance inheritance marriage retirement social security spousal ira taxes Mon, 19 Mar 2018 09:00:06 +0000 Tim Lemke 2114664 at http://www.wisebread.com 7 Liabilities That Will Ruin Your Net Worth http://www.wisebread.com/7-liabilities-that-will-ruin-your-net-worth <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/7-liabilities-that-will-ruin-your-net-worth" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/businessman_standing_upset_and_column_diagram_with_a_dollar_sign.jpg" alt="Businessman standing upset and column diagram with a dollar sign" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>If you're passionate about personal finance, you know about the importance of building net worth. This means accumulating things that will grow in value, while reducing your liabilities. A person with no debt, a home that they own free and clear, and a sizable retirement account likely has a high net worth. A person with thousands of dollars in credit card debt, a burdensome mortgage, and no cash savings has a low or even negative net worth.</p> <p>Building net worth is about accumulating money and assets, but it's also about reducing liabilities. In short, it's about making sure debt isn't hurting your ability to achieve your financial goals. Here are some big liabilities that can hurt your chances to build a high net worth. (See also: <a href="http://www.wisebread.com/6-money-moves-to-make-if-your-net-worth-is-negative?ref=seealso" target="_blank">6 Money Moves to Make If Your Net Worth Is Negative</a>)</p> <h2>1. Credit card debt</h2> <p>Credit cards can be poison to those looking to generate wealth. Interest rates on credit cards are so high that it rarely makes sense to carry a heavy balance on them. The average household with credit card debt owes more than $15,000 on their cards. It's no wonder Americans are, in general, fairly lousy at building net worth.</p> <p>Having a lot of credit card debt can hurt your credit score, thus making it more expensive to borrow for mortgages and auto loans. This leads to a nasty spiral that virtually guarantees your liabilities will be larger than your assets. If you have credit card debt, start paying it off as soon as possible. Aggressively reduce your expenses, learn to invest rather than spend, and get out from under the pressure of those crippling cards. (See also: <a href="http://www.wisebread.com/fastest-way-to-pay-off-10000-in-credit-card-debt?ref=seealso" target="_blank">The Fastest Way to Pay Off $10,000 in Credit Card Debt</a>)</p> <h2>2. Car loans</h2> <p>Many people live with car payments as a permanent part of their lives. Financing the purchase of a vehicle is a common practice, but is also an easy way to add to your liabilities while adding very little to your net worth (cars almost always decline in value).</p> <p>Vehicles aren't cheap, but if you can avoid making car payments over the course of several years, you'll be better off financially. Work to save toward the purchase of a vehicle so payments are minimal or nonexistent. Resist the urge to purchase a new car until the one you have is no longer viable. Avoiding several hundred dollars a month in car payments will free up cash to invest and accumulate assets rather than see your net worth stagnate. (See also: <a href="http://www.wisebread.com/cutting-your-car-payment-is-easier-than-you-think?ref=seealso" target="_blank">Cutting Your Car Payment Is Easier Than You Think</a>)</p> <h2>3. Unpaid taxes</h2> <p>Yeah, taxes are a pain. No one really feels like paying them. But if you don't pay them, they turn into liabilities that can grow as a result of penalties and fines. Failure-to-file penalties only add to your tax bill, and keep increasing the longer you avoid paying.</p> <p>If you are employed, most of your taxes are taken from your paycheck, but you still may find that you owe some money on your tax return. Self-employed people must be extra diligent to ensure they are paying taxes on any income they receive. It's also important to make sure you are paying proper real estate taxes on your home, as well as taxes for income gained from your investments. (See also: <a href="http://www.wisebread.com/8-tax-return-mistakes-even-smart-people-make?ref=seealso" target="_blank">8 Tax Return Mistakes Even Smart People Make</a>)</p> <h2>4. Medical bills</h2> <p>There will come a time when you or a family member gets hurt or injured. The expense of hospital stays, surgeries, or ongoing care can be devastating. It's driven many families into bankruptcy and can crush any attempts to boost your net worth.</p> <p>It may not be possible to avoid medical emergencies, but you can protect yourself by being properly insured. If your employer subsidizes the cost of health insurance, take advantage. If you are self-employed, seek to find a reasonably priced plan through a state or federal health exchange. Insurance isn't always cheap, but it will prevent you from taking on costly medical bills that destroy your financial well-being. (See also: <a href="http://www.wisebread.com/how-to-handle-a-massive-medical-bill?ref=seealso" target="_blank">How to Handle a Massive Medical Bill</a>)</p> <h2>5. Student loan debt</h2> <p>We often view student loans as investments in our financial future because an education can help us earn more in our career. But until they are paid off, student loans are only liabilities. If you are still in school, you have some time before you have to start making payments; but once you graduate, those loans can become awfully burdensome. Heavy student loans can force you to take on additional debt just to make ends meet, in turn sinking your net worth even further.</p> <p>To avoid this, it's important for you and your family to save as much money for college as possible in advance. Take cost and value into consideration when making your college choice, and think about getting a job while in school to help pay for tuition. This may require some tough choices, but avoiding student loan debt will help you get on track for building your net worth much sooner. (See also: <a href="http://www.wisebread.com/6-questions-to-ask-before-taking-out-student-loans?ref=seealso" target="_blank">6 Questions to Ask Before Taking Out Student Loans</a>)</p> <h2>6. Your mortgage</h2> <p>Owning a home can be a great way to build your net worth, but that may not be the case if you have a bad mortgage. If your payments are so high that you are unable to save money and invest, it's preventing you from boosting your net worth in other ways.</p> <p>Borrowing money to buy a home is perfectly normal and has helped countless people get on the path to financial freedom. But it's important to have a mortgage that helps you more than hurts you. Put as much money down as you can so the loan itself is not too large. Get a loan with a low, fixed interest rate with a relatively short term (30-year mortgages are OK, 15-year mortgages are even better).</p> <p>When you begin paying off your mortgage, you may not be paying off much of the principal of the loan at first. But soon, you'll be making a good dent and building real equity. And that's the path to building net worth. (See also: <a href="http://www.wisebread.com/8-signs-youre-paying-too-much-for-your-mortgage?ref=seealso" target="_blank">8 Signs You're Paying Too Much for Your Mortgage</a>)</p> <h2>7. Home equity loans</h2> <p>It's not uncommon for people to borrow money from the equity of their home to pay for major expenses. There are a variety of reasons why this may make sense. But it's important to be careful when doing this. When you are borrowing from your home equity, you are essentially turning an asset &mdash; the equity of your home &mdash; into a liability. In essence, you are taking away something that adds to your net worth.</p> <p>In the long run, borrowing from home equity can help build wealth if you make the right financial choices. For example, you could use money from the equity of your home to make repairs or expand the home, thus boosting its value. And when interest rates are low and market returns are high, it may make sense to borrow for major purchases and use your available cash to invest instead. Just be sure to weigh the risks and rewards before borrowing heavily against the equity in your home. (See also: <a href="http://www.wisebread.com/4-smartest-ways-to-use-a-home-equity-loan?ref=seealso" target="_blank">4 Smartest Ways to Use a Home-Equity Loan</a>)</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F7-liabilities-that-will-ruin-your-net-worth&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F7%2520Liabilities%2520That%2520Will%2520Ruin%2520Your%2520Net%2520Worth.jpg&amp;description=7%20Liabilities%20That%20Will%20Ruin%20Your%20Net%20Worth"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/7%20Liabilities%20That%20Will%20Ruin%20Your%20Net%20Worth.jpg" alt="7 Liabilities That Will Ruin Your Net Worth" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/7-liabilities-that-will-ruin-your-net-worth">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/does-your-net-worth-even-matter">Does Your Net Worth Even Matter?</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-biggest-ways-procrastination-hurts-your-finances">7 Biggest Ways Procrastination Hurts Your Finances</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/7-easy-ways-to-build-an-emergency-fund-from-0">7 Easy Ways to Build an Emergency Fund From $0</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-to-build-your-financial-self-esteem">8 Ways to Build Your Financial Self Esteem</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/why-saving-money-is-harder-today">Why Saving Money Is Harder Today</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance assets bills borrowing debt income investing liabilities loans net worth saving money taxes Thu, 15 Mar 2018 09:30:17 +0000 Tim Lemke 2114611 at http://www.wisebread.com 11 Basic Questions About Retirement Saving Everyone Should Ask http://www.wisebread.com/11-basic-questions-about-retirement-saving-everyone-should-ask <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/11-basic-questions-about-retirement-saving-everyone-should-ask" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/investing_money_for_retirement_in_piggy_bank_0.jpg" alt="Investing money for retirement in piggy bank" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Saving for retirement is critically important &mdash; we all know that. But sometimes, the confusing details can throw us off course or prevent us from doing all we can to properly grow our nest egg.</p> <p>Education is the best tool when it comes to most matters of personal finance. And for retirement planning, there are some facts everyone should know. It's time to ask yourself these questions and brush up on the basics of retirement savings.</p> <h2>1. When can I start contributing to a retirement account?</h2> <p>With a traditional or Roth IRA, you can generally start contributing funds as soon as the account has been set up. However, rules can vary for employer-sponsored 401(k) plans. Some 401(k) plans may have a waiting period ranging from six to 12 months to make your first contribution, while others may allow you to contribute immediately. It's a good practice to check all applicable rules for your workplace retirement plan at the time of sign-up and again during every open enrollment period. (See also: <a href="http://www.wisebread.com/8-critical-401k-questions-you-need-to-ask-your-employer?ref=seealso" target="_blank">8 Critical 401(k) Questions You Need to Ask Your Employer</a>)</p> <h2>2. How much can I save in each type of account?</h2> <p>You can sock away the most money per year in a 401(k). In 2018, you can contribute up to $18,500 to a 401(k), and an additional $6,000 in catch-up contributions if you're over age 50. By comparison, you can only contribute up to $5,550 to an IRA ($6,500 if over age 50). Due to its higher contribution limits, a 401(k) is a very beneficial account for those trying to make up for low savings in previous years or those close to retirement age. However, if possible, having both types of accounts is the even better option. (See also: <a href="http://www.wisebread.com/401k-or-ira-you-need-both?ref=seealso" target="_blank">401(k) or IRA? You Need Both</a>)</p> <h2>3. Am I taking advantage of the company match?</h2> <p>If you're offered a company match, you <em>must </em>take advantage of it. And since 94 percent of Vanguard 401(k) plans provide employer contributions, chances are that you have access to a workplace savings plan with a matching formula.</p> <p>A common formula for matching is $0.50 per dollar that you contribute up to 6 percent of your annual pay. This means that a worker making $50,000 per year could receive an extra $3,000 in employer matching contributions by contributing $6,000 of their annual salary into a 401(k). Some might say there's no such thing as a free lunch, but an employer match on your 401(k) truly is a freebie. (See also: <a href="http://www.wisebread.com/7-things-you-should-know-about-your-401k-match?ref=seealso" target="_blank">7 Things You Should Know About Your 401(k) Match</a>)</p> <h2>4. What happens if I change jobs?</h2> <p>From the date that you separate from your employer, you should aim to decide what to do with your 401(k) balance within 60 days. The reason for 60 days is that this is the deadline to complete an indirect rollover into a new retirement account (if your employer were to cash out your entire balance and hand you a check) and pay back any outstanding loans on your 401(k) (if not paid, they become taxable income and may even trigger penalties).</p> <p>Under most scenarios, you have six rollover options for your total vested account balance:</p> <ul> <li> <p>Keep your account.</p> </li> <li> <p>Rollover account into a new or existing IRA.</p> </li> <li> <p>Rollover account into a new or existing qualified plan.</p> </li> <li> <p>Do an indirect rollover.</p> </li> <li> <p>Request a full cash-out of your account.</p> </li> <li> <p>Do a mix of the above five options.</p> </li> </ul> <p>(See also: <a href="http://www.wisebread.com/a-simple-guide-to-rolling-over-all-of-your-401ks-and-iras?ref=seealso" target="_blank">A Simple Guide to Rolling Over All of Your 401Ks and IRAs</a>)</p> <h2>5. Is it better to contribute after-tax or pretax dollars?</h2> <p>There is no right or wrong answer here, as either way offers a benefit. Contributing with pretax dollars (traditional IRA, 401(k)) allows you to reduce your taxable income by deferring income taxes until retirement, at which point you're more likely to be in a lower tax bracket. So, if you're expecting to be making more money now than you will be in retirement, you should contribute pretax money. This is the majority of American workers.</p> <p>Workers just beginning their careers, workers in professions with a high upside income potential, and individuals expecting a large windfall, such as a family trust or inheritance, can greatly benefit from contributing after-tax dollars to a Roth IRA or Roth 401(k).</p> <h2>6. Can I withdraw money early from my accounts?</h2> <p>Early distribution rules vary per type of plan.</p> <h3>401(k)</h3> <p>Generally, you can only take money from a 401(k) plan early due to a hardship or extreme situation, such as avoiding a foreclosure, making a first-time home purchase, or an unexpected medical expense. However, rules vary per plan: Some plans may only offer you the option to take out a loan, while other plans won't allow you to withdraw money early at all. If you take a distribution from a 401(k) before age 59 &frac12;, you become liable for applicable income taxes and penalties.</p> <h3>Traditional IRA</h3> <p>There are several instances in which you can take an early distribution from a traditional IRA without incurring a penalty. This includes unreimbursed medical expenses, health insurance premiums during unemployment, the purchase of a first home, higher education expenses, and others. (See also: <a href="http://www.wisebread.com/7-penalty-free-ways-to-withdraw-money-from-your-retirement-account?ref=seealso" target="_blank">7 Penalty-Free Ways to Withdraw Money From Your Retirement Account</a>)</p> <h3>Roth IRA</h3> <p>Early withdrawals on <em>contributions</em> from a Roth IRA can be made at any time without incurring taxes and penalties, since you have already paid taxes on the money. Withdrawing any amount that exceeds your contributions counts as <em>earnings</em>, and is therefore subject to tax and penalties. In order to avoid those taxes and penalties, your Roth IRA must be at least five years old and withdrawals must be used for a qualified expense, such as the purchase of a new home or a disability. Higher education costs are also exempt from penalties, but you must pay income tax on the withdrawals.</p> <h2>7. What are required minimum distributions?</h2> <p>Eventually, the IRS wants its money in the form of taxes on your retirement distributions. When you reach age 70 &frac12;, you must begin taking required minimum distributions (RMDs) from your retirement plans. These rules apply to traditional and Roth 401(k) plans, as well as 403(b) plans, 457(b) plans, and traditional IRA-based plans such as SEPs, SARSEPs, and SIMPLE IRAs. If you fail to take your RMD, the IRS will take 50 percent of the amount you should have withdrawn as a penalty.</p> <p>The exception to the RMD rule is the Roth IRA, which is funded with post-tax dollars. (See also: <a href="http://www.wisebread.com/which-of-these-9-retirement-accounts-is-right-for-you?ref=seealso" target="_blank">Which of These 9 Retirement Accounts Is Right for You?</a>)</p> <h2>8. Are there any tax credits for retirement contributions?</h2> <p>Come tax time, eligible workers can claim the Retirement Savings Contributions Credit, better known as the Saver's Credit. Depending on your adjusted gross income (AGI), you can claim 50, 20, or 10 percent of your retirement plan contributions, up to $2,000 for single filers and $4,000 for married filing jointly. For example, a married couple with an AGI between $41,001 and $63,000 can claim 10 percent of their eligible contributions for the Saver's Credit in 2018. (See also: <a href="http://www.wisebread.com/5-dumb-401k-mistakes-smart-people-make?ref=seealso" target="_blank">Dumb 401(k) Mistakes Smart People Make</a>)</p> <h2>9. What is the recommended 401(k) portfolio allocation?</h2> <p>Here's some advice from one of the most successful investors of all time, Warren Buffett: Put 90 percent of your 401(k) balance in a very low-cost S&amp;P 500 index fund, and the remaining 10 percent in short-term government bonds. Keeping true to his word, he has included this very same advice in his will. (See also: <a href="http://www.wisebread.com/bookmark-this-a-step-by-step-guide-to-choosing-401k-investments?ref=seealso" target="_blank">Bookmark This: A Step-by-Step Guide to Choosing 401(k) Investments</a>)</p> <h2>10. What is an HSA?</h2> <p>Those with a high deductible health plan (HDHP) are eligible for a health savings account (HSA), which is a way to make pretax contributions to save for medical expenses. Many HSA providers offer the option to put money in an investment account with several fund options, including mutual funds and low-cost index funds.</p> <p>The main benefit of saving for medical expenses using an HSA is that you won't have to pay any income taxes on withdrawals used for qualifying medical expenses (even before retirement age). And when you do hit age 65, your HSA will basically become a traditional IRA. You can withdraw funds for any reason penalty-free, only paying income tax on the distributions. (See also: <a href="http://www.wisebread.com/how-an-hsa-could-help-your-retirement?ref=seealso" target="_blank">How an HSA Could Help Your Retirement</a>)</p> <h2>11. Does my plan offer financial advice services?</h2> <p>More and more plans are jumping on the bandwagon of offering a robo-adviser (an automated service suggesting or performing certain types of transactions on your behalf). The range of trades that a robo-adviser can perform ranges from periodically rebalancing your portfolio to selling securities.</p> <p>Fees can range, too: Some robo-advisers charge about 0.15 percent of your account balance or a flat monthly fee. Some plans may also offer you a-la-carte paid options to add a standard robo-adviser service. (See also: <a href="http://www.wisebread.com/9-questions-you-should-ask-before-hiring-a-robo-adviser?ref=seealso" target="_blank">9 Questions You Should Ask Before Hiring a Robo-Adviser</a>)</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F11-basic-questions-about-retirement-saving-everyone-should-ask&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F11%2520Basic%2520Questions%2520About%2520Retirement%2520Saving%2520Everyone%2520Should%2520Ask.jpg&amp;description=11%20Basic%20Questions%20About%20Retirement%20Saving%20Everyone%20Should%20Ask"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/11%20Basic%20Questions%20About%20Retirement%20Saving%20Everyone%20Should%20Ask.jpg" alt="11 Basic Questions About Retirement Saving Everyone Should Ask" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/damian-davila">Damian Davila</a> of <a href="http://www.wisebread.com/11-basic-questions-about-retirement-saving-everyone-should-ask">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/8-critical-401k-questions-you-need-to-ask-your-employer">8 Critical 401(k) Questions You Need to Ask Your Employer</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/6-age-milestones-that-impact-your-retirement">6 Age Milestones That Impact Your 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/which-of-these-9-retirement-accounts-is-right-for-you">Which of These 9 Retirement Accounts Is Right for You?</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/what-every-retirement-saver-should-know-about-required-minimum-distributions">What Every Retirement Saver Should Know About Required Minimum Distributions</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/where-to-invest-your-money-after-youve-maxed-out-your-retirement-account">Where to Invest Your Money After You&#039;ve Maxed Out Your Retirement Account</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401(k) basics contributions early withdrawals employer match health savings accounts IRA penalties questions tax credits taxes Tue, 13 Mar 2018 10:00:06 +0000 Damian Davila 2115991 at http://www.wisebread.com 9 Times to Hire a Lawyer Immediately http://www.wisebread.com/9-times-to-hire-a-lawyer-immediately <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/9-times-to-hire-a-lawyer-immediately" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/attorney_working_in_courtroom.jpg" alt="Attorney working in courtroom" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Lawyers have a bad reputation in this country. And while hiring a lawyer can certainly be expensive, it doesn't mean they aren't a worthwhile investment. To be sure, most legal professionals get into the business to see that justice is done and people get the representation they need. If you have been putting off calling a lawyer for any of the following situations, rethink your actions. A good lawyer is well worth the money.</p> <h2>1. A messy or complicated divorce</h2> <p>Divorce is extremely common these days. Research shows that in the United States alone, one divorce occurs every 13 seconds. Even more sobering, an estimated 80 percent of couples are headed toward divorce within the first four to five years of marriage. If your marriage fails, you will hopefully be able to come to terms amicably using a mediator. But if that's not the case, and you are both butting heads over the separation of property, custody, and money issues, you need to lawyer up as soon as possible.</p> <p>The terms you agree upon during the divorce are binding, and can only be changed by going back to court. To avoid this, and even more legal fees later on, find a great lawyer as soon as things look bleak. A lawyer can also help with a restraining order if things get really out of hand. (See also: <a href="http://www.wisebread.com/how-to-protect-yourself-financially-during-a-divorce-or-separation?ref=seealso" target="_blank">How to Protect Yourself Financially During a Divorce or Separation</a>)</p> <h2>2. You're being sued</h2> <p>For most of us, a lawsuit is something we see in movies and on TV, and that's about as close as we want to get. For the unlucky few, a lawsuit can bring the whole world crumbling down. Lawsuits can be frivolous, like patent trolls or blatant cases of opportunism, but sometimes they can be frighteningly serious. If you find yourself being sued, don't hesitate to call several lawyers and find the one best suited to your specific case. Many offer a free 30-minute consultation.</p> <h2>3. An injury resulting from an automobile accident</h2> <p>Whether you're injured, or someone else is (including a driver or pedestrian), you should get yourself a lawyer as soon as possible. For the most part, insurance companies want to get this all wrapped up quickly and efficiently, and that will mean a lowball settlement that could leave you seriously out of pocket due to medical expenses.</p> <p>Again, talk to a lawyer that specializes in these kinds of cases. They will know the going rate for any injury you have sustained, and will fight to make sure you get what you're owed. Some of these lawyers won't even charge a fee upfront, but if they win, expect them to take a significant chunk of your payout. (See also: <a href="http://www.wisebread.com/10-steps-you-must-take-if-youve-been-in-a-car-accident?ref=seealso" target="_blank">10 Steps You Must Take If You've Been in a Car Accident</a>)</p> <h2>4. An unjust workplace termination</h2> <p>This covers the gamut. You may have been let go due to a misunderstanding, or some kind of corporate political maneuver. Perhaps you were wrongly accused of theft, harassment, or any other kind of &quot;termination with cause.&quot; You may have been laid off and are left hanging without the severance package you feel you are owed. Whatever the reason, if you feel you were unfairly dismissed, get yourself a lawyer and fight the decision. In most cases, you'll be much better off fighting this with an expert than on your own.</p> <h2>5. Starting a significant business venture</h2> <p>If you're just incorporating yourself for an Etsy store or some freelance writing, you'll probably do fine using an online service like LegalZoom. However, if you're entering into a partnership, have plans for rapid expansion, or see potential issues with copyrights and patents, you need to get a lawyer on board as soon as possible. There are lawyers out there that specialize in this kind of legal representation, and they know the business world inside-out. Spending a little money upfront can save you a fortune later on, especially if you hit a massive roadblock with a competitor or have a falling out with a partner.</p> <h2>6. Legal issues as either a tenant or a landlord</h2> <p>Whether you're renting out your own place, or you're renting as a tenant, you can get into some tricky and expensive waters. If you're a landlord and have awful tenants who are damaging property and not paying rent, get a lawyer. If you have a landlord that is ignoring serious issues with the property, including safety hazards and potentially life-threatening problems, get a lawyer. A skilled attorney that knows this area of the law can quickly help you resolve the problems. (See also: <a href="http://www.wisebread.com/what-happens-to-your-apartment-when-your-landlord-gets-the-boot?ref=seealso" target="_blank">What Happens to Your Apartment When Your Landlord Gets the Boot</a>)</p> <h2>7. Preparing an estate plan</h2> <p>No one likes to think about their own death, but creating a will, trust, power of attorney, or a complete estate plan is the only way you can guarantee that your final wishes are carried out. There are plenty of websites offering this kind of service &mdash; all automated, of course &mdash; but this can be a minefield that you may have trouble navigating. If you have some complex wishes for your estate, and a large family that will be depending on the assets you leave behind, you should bring in a professional attorney to help you create a plan that is buttoned up. Otherwise, you could leave a massive legal mess behind that could take years for your loved ones to battle in court. (See also: <a href="http://www.wisebread.com/heres-what-happens-if-you-dont-leave-a-will?ref=seealso" target="_blank">Here's What Happens If You Don't Leave a Will</a>)</p> <h2>8. Declaring bankruptcy</h2> <p>Filing for chapter 7 bankruptcy (or chapter 11 if you own a business) is a scary proposition. It's also something you should not do without the help of a legal professional. You'll need to undergo credit counseling, pass a means test, and file all the required paperwork that will restructure your debts and get your creditors off your back. One wrong move can lead to the whole case being thrown out, so find a good attorney as soon as you realize you have to declare bankruptcy. (See also: <a href="http://www.wisebread.com/11-steps-to-take-when-bankruptcy-is-your-only-option?ref=seealso" target="_blank">11 Steps to Take When Bankruptcy Is Your Only Option</a>)</p> <h2>9. Trouble with the IRS</h2> <p>Make no mistake, if you have any kind of issue with the IRS, get help and get it fast. Very few people escape the vast and powerful reach of the Internal Revenue Service. Whether it's unpaid back taxes, major tax debts, oversights on your returns, or anything else that brings the IRS breathing down your neck, only a skilled tax lawyer will do. (See also: <a href="http://www.wisebread.com/10-reasons-you-should-really-fear-an-irs-audit?ref=seealso" target="_blank">10 Reasons You Should Really Fear an IRS Audit</a>)</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F9-times-to-hire-a-lawyer-immediately&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F9%2520Times%2520to%2520Hire%2520a%2520Lawyer%2520Immediately.jpg&amp;description=9%20Times%20to%20Hire%20a%20Lawyer%20Immediately"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/9%20Times%20to%20Hire%20a%20Lawyer%20Immediately.jpg" alt="9 Times to Hire a Lawyer Immediately" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/paul-michael">Paul Michael</a> of <a href="http://www.wisebread.com/9-times-to-hire-a-lawyer-immediately">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/what-to-do-when-a-creditor-sues">What to Do When a Creditor Sues</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-things-you-should-know-about-debt-relief-lawyers">5 Things You Should Know About Debt Relief Lawyers</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/7-tough-questions-about-debt-answered">7 Tough Questions About Debt, Answered</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/could-a-divorce-improve-your-finances">Could a Divorce Improve Your Finances?</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-protect-yourself-financially-during-a-divorce-or-separation">How to Protect Yourself Financially During a Divorce or Separation</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance accidents bankruptcy court divorce landlords lawsuits lawyers legal counsel sued taxes termination Tue, 13 Mar 2018 09:30:19 +0000 Paul Michael 2116588 at http://www.wisebread.com Here's What to Do If Your Wages Are Garnished http://www.wisebread.com/heres-what-to-do-if-your-wages-are-garnished <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/heres-what-to-do-if-your-wages-are-garnished" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/chain_and_padlock_around_dollar_bundle.jpg" alt="Chain And Padlock Around Dollar Bundle" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>The concept of wage garnishment is frightening. And while having your wages taken to pay off a creditor is considered an extreme &quot;last resort&quot; to collect on a debt, it is more common than you may think.</p> <p>A 2013 report by ADP Research Institute found that approximately 7 percent of the 13 million employees assessed in their survey had experienced wage garnishment that year, the majority of which were workers aged 35 to 44. The most common reasons for this drastic form of collection were unpaid taxes, child support, consumer debts, and student loans.</p> <p>If you have fallen behind repaying what you owe, and creditors are threatening to or have already garnished your wages, here are the things you should do. (See also: <a href="http://www.wisebread.com/be-careful-who-you-owe-heres-who-can-garnish-your-wages?ref=seealso" target="_blank">Be Careful Who You Owe: Here's Who Can Garnish Your Wages</a>)</p> <h2>Understand what wage garnishment means</h2> <p>First, it is important to understand what wage garnishment is and how it works. In a wage garnishment, creditors have sued and won a judgment against you. A court issues an order requiring your employer to withhold a portion of your paycheck. This is done until your debt is paid in full. Different garnishment rules apply to different types of debt and each state sets its own legal limits on how much of your paycheck can be garnished.</p> <p>Nonwage garnishment, which is also known as a bank levy, is a legal action that allows creditors to tap directly into your bank account. Typically, the funds in your account are frozen, and the bank is ordered to remove the necessary funds to satisfy the debt.</p> <p>Once a judgment is entered against you, the person or entity that won the lawsuit gains access to a portion of your wages by providing a copy of the court order to local law enforcement. Law enforcement sends the court order to your employer. Your employer must notify you of the garnishment and begin withholding part of your wages. Your employer is also responsible for ensuring the garnished funds are sent to your creditor. (See also: <a href="http://www.wisebread.com/what-really-happens-when-you-dont-pay-your-student-loans?ref=seealso" target="_blank">What Really Happens When You Don't Pay Your Student Loans</a>)</p> <h2>Know your rights</h2> <p>If you have defaulted on a loan, stopped paying your credit card bill, or have incurred massive amounts of medical expenses, creditors can't just take money from your paycheck. There is a process that must be followed.</p> <ul> <li> <p>You have to be sued.</p> </li> <li> <p>A judgment must be entered against you.</p> </li> <li> <p>A court ordered wage garnishment must be issued.</p> </li> <li> <p>You have to be notified of the court order (by your employer, and most times the creditor).</p> </li> <li> <p>You have the right to appeal the decision.</p> </li> </ul> <p>It is also important to note that federal law places limits on how much creditors can take from your paycheck. The amount that can be garnished is capped at 25 percent of your net income or the amount by which your weekly wages exceed 30 times the minimum wage, whichever is the lowest. Some states set lower garnishment limits so it is important to know the laws that apply to your particular situation.</p> <h2>Know the exceptions to the rules</h2> <p>While the above rules govern most cases of wage garnishment, there are a few exceptions. For example, when it comes to child support, half your net earnings can be taken without a court order. If you don't have a spouse or other children whom you support, a whopping 60 percent can be taken. And an additional 5 percent can be tacked on if you are more than 12 weeks in arrears.</p> <p>If you owe money to the IRS, tread carefully. It can take a big bite out of your wages, without a court order. The amount it can take depends on the number of dependents you have and your standard deductible amount. However, before snatching your money, the IRS must notify you of their intent first. They are required to send a wage levy notice to your employer, who is required to supply you with a copy. (See also: <a href="http://www.wisebread.com/10-reasons-you-should-really-fear-an-irs-audit?ref=seealso" target="_blank">10 Reasons You Should Really Fear an IRS Audit</a>)</p> <p>State and local tax agencies can also garnish your wages without a court order. Most states have laws limiting how much they can take. The information concerning the rules and limits is available at your state's department of labor.</p> <p>The bottom line is unless you owe child support, back taxes, or student loans, your creditors cannot garnish your wages without going through the appropriate steps and obtaining a court order.</p> <h2>If possible, avoid the process altogether</h2> <p>When facing a situation where you know you can't pay a debt &mdash; of any kind, but especially child support &mdash; the best course of action is to be proactive. Contact your creditors (or petition family court) and try to reach a restructured payment arrangement.</p> <p>If you don't show up to court or you lose your case, the creditor automatically wins a judgment against you to garnish your wages or bank account.</p> <h2>Try to settle the debt</h2> <p>If you know a creditor is considering taking legal action, see if you can settle the debt. This is especially effective with credit card companies. Often times, most creditors (including the IRS) are willing to accept a settlement &mdash; which is a partial payment of the total amount due &mdash; in lieu of going to court. This allows you to avoid a lawsuit, wage garnishment, and even more damage to your credit. (See also: <a href="http://www.wisebread.com/4-ways-to-negotiate-credit-card-debt?ref=seealso" target="_blank">4 Ways to Negotiate Credit Card Debt</a>)</p> <h2>Understand the court order</h2> <p>If a judgment is issued against you, carefully review the court documents. Make sure all the information is accurate. Creditors can make mistakes. Check to ensure the outstanding amount is correct and it's not something you've already paid. Also, examine the debt carefully to be sure that it is indeed your debt. We live in an era of security breaches and identity theft. It is important to ensure that you are not being sued for someone else's fraud.</p> <p>It is also important to know that in some circumstances, some states provide protection for a portion of your wages &mdash; these are called exemptions. When you receive the garnishment notice, research the laws in your state and find out if and how much wage protection you are entitled. File a petition in state court requesting the exemption.</p> <h2>Challenge the judgment</h2> <p>When a judgment is issued against you, you have the right to appeal it. If you believe the judgment is flawed, is unreasonable, will cause undue financial harm, or is being improperly executed, you can contest the court's ruling. You will be notified of the ruling and of the process to appeal. Pay attention to rules governing the appeal and file immediately &mdash; in some cases, you may have as little as five business days to voice your objection. If you fail to show up in court, the creditor automatically wins a judgment against you.</p> <h2>Accept the judgment</h2> <p>Accepting the judgment isn't necessarily a bad thing. You are forced to face and remedy a situation that has probably caused you copious amounts of stress. You can simply allow your wages to be garnished and make your payments that way.</p> <h2>Don't file for bankruptcy or quit your job</h2> <p>Bankruptcy immediately stops garnishment proceedings, however it is ill-advisable to file just for this reason. Bankruptcy carries with it a litany of consequences and implications and shouldn't be considered lightly. Filing bankruptcy to avoid wage garnishment would be akin to extinguishing a match with a fire-hose. Always consult a professional before you take any drastic measure that can have detrimental and long-term consequences.</p> <p>Quitting your job is equally ill-advisable. You're doing nothing but prolonging and complicating the process. If you fear retaliation from your employer, understand that under federal law, you cannot be fired if your wages are garnished to pay off one debt. These protections lessen, however, if more than one creditor has garnished your wages.</p> <p>It's also important to note that becoming unemployed doesn't negate the judgment. The judgment will be enacted on the next job you get and is still part of your credit history. Continuously trying to skirt payment could result in the court taking more aggressive action which could include serving jail time.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fheres-what-to-do-if-your-wages-are-garnished&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FHeres%2520What%2520to%2520Do%2520If%2520Your%2520Wages%2520Are%2520Garnished.jpg&amp;description=Heres%20What%20to%20Do%20If%20Your%20Wages%20Are%20Garnished"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/Heres%20What%20to%20Do%20If%20Your%20Wages%20Are%20Garnished.jpg" alt="Here's What to Do If Your Wages Are Garnished" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/denise-hill">Denise Hill</a> of <a href="http://www.wisebread.com/heres-what-to-do-if-your-wages-are-garnished">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/be-careful-who-you-owe-heres-who-can-garnish-your-wages">Be Careful Who You Owe: Here&#039;s Who Can Garnish Your Wages</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/what-you-need-to-know-about-the-statute-of-limitations-on-debts">What You Need to Know About the Statute of Limitations on Debts</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-easy-ways-to-get-richer-in-2018">4 Easy Ways to Get Richer In 2018</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/9-times-to-hire-a-lawyer-immediately">9 Times to Hire a Lawyer Immediately</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/what-to-do-when-a-creditor-sues">What to Do When a Creditor Sues</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance bank levy credit card debt Creditors IRS judgment paychecks student loans sued taxes unpaid debds wages garnished Tue, 27 Feb 2018 09:00:08 +0000 Denise Hill 2110071 at http://www.wisebread.com Why a Deferred Annuity May Be a Smarter Buy Than Long-Term Care Insurance http://www.wisebread.com/why-a-deferred-annuity-may-be-a-smarter-buy-than-long-term-care-insurance <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/why-a-deferred-annuity-may-be-a-smarter-buy-than-long-term-care-insurance" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/miniature_people_looking_future_with_stack_coin.jpg" alt="Miniature people looking future with stack coin" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Many people look forward to the latter years of their life. Most expect to retire and live at a relaxed pace that allows them to savor moments they may have missed while living as a worker-bee.</p> <p>For this reason alone, many people take time to plan every aspect of their retirement &mdash; from savings, to housing, and even long-term care. The only problem is that some of this planning is made on <em>assumptions</em>. And many of these assumptions change over time. For instance, premiums for long-term care insurance have been increasing steadily. So much so, that many insureds are wondering if they should keep their policies in place or bail and look for other options.</p> <p>Dawn-Marie Joseph, founder of Estate Planning &amp; Preservation in Williamston, Michigan, explains the problem many people face. &quot;Back in 2000, the cost of long-term care policies doubled, if not tripled, for many policyholders,&quot; she says. &quot;This forced many people to cancel their policies and lose the money that they had paid premiums with.&quot;</p> <p>Fast forward almost 20 years later, and many retirees are still in a bind without long-term care options. The worst part is that it seems like there aren't that many alternatives to paying rising premiums for long-term care. Aside from dropping the insurance altogether, or accepting reduced benefits at the same premium, many policyholders feel stuck.</p> <p>There may be one other alternative to these policies if the circumstances are right: a deferred annuity. (See also: <a href="http://www.wisebread.com/how-to-make-sure-you-dont-run-out-of-money-in-retirement?ref=seealso" target="_blank">How to Make Sure You Don't Run Out of Money in Retirement</a>)</p> <h2>What is a deferred annuity?</h2> <p>A deferred annuity is an insurance product that acts as a savings vehicle. It is simply a way to receive consistent payments from an investment over a period of time, rather than all at once. Annuities help many people cover expenses in retirement, such as long-term care costs.</p> <p>A deferred annuity differs from an immediate annuity in that you contribute to the account over time or put in one lump sum and wait for it to grow through investment gains. Gains are not taxed until your monthly payouts begin.</p> <p>Before we get into how the deferred annuity works, it's helpful to know about the different types of deferred annuities: fixed and variable.</p> <h3>Fixed annuities</h3> <p>These are more like bank CDs. You deposit a certain amount of money, and the insurer will pay you a guaranteed amount of interest over a specific period of time. With a fixed annuity, taxes are deferred until the contract moves into the payout phase in which the accumulated funds are annuitized for monthly payments. At that point, earnings are taxed as ordinary income.</p> <p>With a fixed annuity, you are locked into a certain interest rate. The investment yields returns like a bond or other lower-interest investment. This option would be better for you if you don't mind a lower rate of return in exchange for the security of knowing your return is guaranteed.</p> <h3>Variable annuities</h3> <p>Variable annuities are more like mutual funds. You typically get to choose from a variety of investments like stocks, ETFs, or money markets. There's more potential to earn higher yields as the stock market does well, but you'll also be exposed to market volatility.</p> <p>The insurance component makes it so that annuity investors will get at least a return of their principal, in case their chosen investments don't perform well. Contributions grow tax-deferred and, like fixed annuities, are taxed at withdrawal.</p> <p>If you have an appetite for risk, there's more of an upside potential with a variable annuity. Your monthly payouts could be higher if the investments in your annuity do well. However, if you are more interested in getting a guaranteed minimum monthly payment, as opposed to higher returns on your investment, a fixed annuity would be a better fit.</p> <p>With both products, withdrawals taken before age 59&frac12; will be subjected to a 10 percent tax penalty.</p> <h2>What are the advantages of a deferred annuity?</h2> <p>In general, many people use this savings strategy when all other retirement accounts have been maxed out. A big advantage to saving money in a deferred annuity is the ability to defer taxes. As money grows in this account, the compound interest effect is not slowed down by tax payments that cut into the principal deposit.</p> <p>Another advantage of an annuity is that income is guaranteed. At minimum, there is a promise to return your principal investment. And if you die before using your annuity, most include a death benefit component that allows your beneficiaries to receive at least your principal investment plus any gains (this would be taxed as ordinary income).</p> <h2>Deferred annuity versus long-term care insurance</h2> <p>A deferred annuity is not for everyone, but it can be an option for some people. For example, if you plan to self-insure for potential long-term care needs, this product could help.</p> <p>As mentioned earlier, many people are finding the cost of rising long-term care insurance premiums unbearable, so it might make more sense to divert that premium money into a product with better prospects of delivering benefits without breaking the bank.</p> <p>Another reason for choosing a deferred annuity may be out of necessity. Emily Stroud, a financial adviser, recommends &quot;purchasing a deferred annuity instead of long-term care insurance, if the applicant is not likely to be approved for insurance after going through medical underwriting.&quot;</p> <p>She goes on to explain, &quot;I have had clients in the past who had pre-existing health conditions who were denied coverage because the insurer thought they were too risky to insure.&quot; (See also: <a href="http://www.wisebread.com/is-long-term-care-insurance-worth-it?ref=seealso" target="_blank">Is Long-Term Care Insurance Worth It?</a>)</p> <p>Unlike long-term health care insurance, deferred annuities may be used for long-term health care needs or for anything else money can buy. For example, if the owner of the annuity doesn't ultimately need long-term care, they could either drawn down their money or leave the annuity proceeds to a beneficiary.</p> <p>Additionally, there are hybrid policies that let you choose various riders that allow you to customize the benefits that make sense for your particular situation.</p> <h2>What are the downsides of a tax deferred annuity?</h2> <p>The biggest downside is that this product typically requires a large sum of money to make the initial deposit. Furthermore, it has to be an amount of money that you won't actually need for the length of time the deferred annuity requires. Sometimes, this can be five, 10, or even 20 years. Withdrawing funds early often comes with steep penalties.</p> <p>Another issue is that the guaranteed interest rate may not keep pace with higher market returns. Though you'll get regular payments from an annuity to cover living costs, you could miss out on better returns if you had invested in stocks instead.</p> <p>Annuities, in general, have a bad reputation for being costly due to commissions and fees passed on to the annuitant. But not only is it possible to find low-cost annuity products, but one could also argue that the high premiums for long-term care insurance are just as costly or even more so.</p> <h2>Who would benefit most from a deferred annuity?</h2> <p>Still not sure if a deferred annuity is for you? Here's a list of situations in which you might benefit from a deferred annuity:</p> <ul> <li> <p>You've got a lump sum of money you can invest or deposit for five, 10, or 20 years.</p> </li> <li> <p>You are not eligible for long-term care insurance or life insurance in general.</p> </li> <li> <p>Long-term care insurance is too expensive for the benefits it would offer to you.</p> </li> <li> <p>You don't need payments from your annuity right away.</p> </li> <li> <p>You don't mind the additional fees that you could incur with an annuity policy.</p> </li> <li> <p>You'd like a predictable stream of income.</p> </li> </ul> <p>If you answered yes to one or more of these questions, it might be a good idea to sit down with your financial adviser to find out if a deferred annuity would be better for you than long-term care insurance.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fwhy-a-deferred-annuity-may-be-a-smarter-buy-than-long-term-care-insurance&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FWhy%2520a%2520Deferred%2520Annuity%2520May%2520Be%2520a%2520Smarter%2520Buy%2520Than%2520Long-Term%2520Care%2520Insurance.jpg&amp;description=Why%20a%20Deferred%20Annuity%20May%20Be%20a%20Smarter%20Buy%20Than%20Long-Term%20Care%20Insurance"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/Why%20a%20Deferred%20Annuity%20May%20Be%20a%20Smarter%20Buy%20Than%20Long-Term%20Care%20Insurance.jpg" alt="Why a Deferred Annuity May Be a Smarter Buy Than Long-Term Care Insurance" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/aja-mcclanahan">Aja McClanahan</a> of <a href="http://www.wisebread.com/why-a-deferred-annuity-may-be-a-smarter-buy-than-long-term-care-insurance">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/8-ways-retirees-can-spring-clean-their-finances">8 Ways Retirees Can Spring Clean Their Finances</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/8-things-millennials-can-do-right-now-for-an-early-retirement">8 Things Millennials Can Do Right Now for an Early 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/11-basic-questions-about-retirement-saving-everyone-should-ask">11 Basic Questions About Retirement Saving Everyone Should Ask</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/9-things-to-know-before-retiring-abroad">9 Things to Know Before Retiring Abroad</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-ways-longevity-is-changing-retirement-planning-and-what-to-do-about-it">5 Ways Longevity Is Changing Retirement Planning (And What to Do About It)</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement deferred annuities fixed annuities insurance long-term care lump sum retirement costs taxes variable annuities Mon, 19 Feb 2018 09:30:14 +0000 Aja McClanahan 2104314 at http://www.wisebread.com 8 Ways to Profit Off Your Cabin Fever http://www.wisebread.com/8-ways-to-profit-off-your-cabin-fever <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/8-ways-to-profit-off-your-cabin-fever" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_sitting_near_windows.jpg" alt="Woman sitting near windows" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Winter can be the pits. The weather's cold, and getting outside can be tough. You've got cabin fever, and you can't wait for spring.</p> <p>But perhaps you can use the time stuck inside to your advantage. Now may be the time to get a handle on your finances and perhaps even make a little extra money while you're cooped up.</p> <p>Consider these ways to improve your finances during the long, cold winter.</p> <h2>1. Optimize your investments</h2> <p>You may have spent much of the last year simply watching your investments do their thing, and thankfully they've probably done well. Every portfolio is due for a review now and again, so consider taking a look at your investments to ensure you're set up for maximum returns.</p> <p>This may mean rebalancing your stocks and mutual funds so you aren't disproportionately invested in one area. It may mean selling some investments that have underperformed, or doing the same for stocks that may be due for a sharp fall. Making some good choices now could allow you to enjoy another year of worry-free investing. (See also: <a href="http://www.wisebread.com/how-an-exit-strategy-can-make-you-a-better-investor?ref=seealso" target="_blank">How an Exit Strategy Can Make You a Better Investor</a>)</p> <h2>2. Get your taxes in order</h2> <p>Your tax returns will be due in mid-April. It's always wise to avoid waiting until the last second to file, and you should consider using this winter time to research the best ways to avoid paying too much at tax time.</p> <p>Perhaps there are tax credits and deductions you never knew you could take advantage of. Maybe you have time to make IRA contributions or make other moves to reduce your tax liability. Or maybe you need time to dig up those receipts from charities you donated to in 2017. Doing taxes may not seem like fun, but it can be interesting, especially if you do the work to maximize your savings. (See also: <a href="http://www.wisebread.com/7-surprising-tax-deductions-you-might-miss?ref=seealso" target="_blank">7 Surprising Tax Deductions You Might Miss</a>)</p> <h2>3. Put together a pitch for a raise</h2> <p>Now may be the time of year when you can focus on advancing your career. Maybe you've been seeking a raise or promotion for a while, but haven't had the time to build your case. With a little time on your hands, now you may have the ability to develop a solid pitch to your supervisor. This may mean collecting examples of goals you've achieved, or ways in which you've helped the company. It may mean collecting data on salaries and how yours compares to the industry average. Take the time to find the right tone, make the right arguments, and go for it. (See also: <a href="http://www.wisebread.com/5-times-you-should-demand-a-raise?ref=seealso" target="_blank">5 Times You Should Demand a Raise</a>)</p> <h2>4. Look for a new job</h2> <p>What if you don't want a promotion or raise, because you can't stand your job to begin with? What if you feel like the only way to make more money is to switch companies or careers? Well, use the winter months to look for a new one. If you're stuck inside, take the time to update your resume, get active on LinkedIn, and reach out to your online network.</p> <p>There are many employers that post new jobs at the start of the year, because they may have received the budget approval to hire. The caveat to this is that many people look for new jobs as part of their New Year's resolutions, so you may face some stiff competition. But if you want a new job and know what you're looking for, take advantage of the time to search for a new career in a thoughtful and deliberate way. (See also: <a href="http://www.wisebread.com/8-signs-you-should-quit-your-job?ref=seealso" target="_blank">8 Signs You Should Quit Your Job</a>)</p> <h2>5. Develop a side hustle</h2> <p>Perhaps a raise or a new job isn't yet in the cards. That's OK, you can still boost your income by finding other ways to make money on the side. Maybe now is the time to develop that pottery hobby into something revenue producing. Perhaps all this time inside the house will lead you to start a profitable blog or podcast. Whatever it is, you have the ability to make some extra cash just by leveraging your current talents. And who knows? Maybe the side hustle can eventually become your main hustle. (See also: <a href="http://www.wisebread.com/14-best-side-jobs-for-fast-cash?ref=seealso" target="_blank">14 Best Side Jobs For Fast Cash</a>)</p> <h2>6. Create budgets</h2> <p>Why not use the start of a new year to get smarter about spending less money than you earn? Now is the time to take a look at your spending and develop real limits on what you're buying and how much you are paying.</p> <p>Ideally, you should have numerous budgets for things like eating out, entertainment, housing costs, automotive expenses, and even gifts. These budgets should be attainable but allow you to save money at the end of each month. Sticking to budgets can be hard, but even if you lose discipline during the year, you may succeed in reducing expenses in some areas and making progress in reducing debt or boosting your savings. (See also: <a href="http://www.wisebread.com/build-your-first-budget-in-5-easy-steps?ref=seealso" target="_blank">Build Your First Budget in 5 Easy Steps</a>)</p> <h2>7. Review your insurance policies</h2> <p>Oh yeah, everyone loves looking at insurance policies in their spare time. Exciting stuff, huh? It's true that this does not seem like fun, but a periodic review of your policies related to auto insurance, homeowners insurance, health insurance, and life insurance &mdash; as well as the rates you are paying &mdash; is a good financial move.</p> <p>During this process, you may find that you are underinsured and placing yourself at risk, or that you are paying too much for insurance for someone in your situation. If you do a little rate shopping, you may find you can save significant money by switching providers. (See also: <a href="http://www.wisebread.com/7-times-to-update-your-homeowners-insurance?ref=seealso" target="_blank">7 Times to Update Your Homeowners Insurance</a>)</p> <h2>8. Put on a sweater</h2> <p>When you're inside during the winter, you'll be tempted to crank that thermostat for maximum comfort. Consider instead keeping the house temperature lower and simply wearing more layers. While you may feel like you need the thermostat set to 72, you could probably get used to having it below 68.</p> <p>Last year, my family's main heater broke during a snowstorm, and our house temperature fell into the 50s. Guess what? We threw on some extra sweatshirts, cuddled under some more blankets, and survived fine. Every few degrees of temperature on the thermostat could add up to hundreds of degrees &mdash; and dollars &mdash; annually, so dial it back and save. (See also: <a href="http://www.wisebread.com/5-big-winter-expenses-that-could-freeze-your-budget?ref=seealso" target="_blank">5 Big Winter Expenses That Could Freeze Your Budget</a>)</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F8-ways-to-profit-off-your-cabin-fever&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F8%2520Ways%2520to%2520Profit%2520Off%2520Your%2520Cabin%2520Fever.jpg&amp;description=8%20Ways%20to%20Profit%20Off%20Your%20Cabin%20Fever"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/8%20Ways%20to%20Profit%20Off%20Your%20Cabin%20Fever.jpg" alt="8 Ways to Profit Off Your Cabin Fever" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/8-ways-to-profit-off-your-cabin-fever">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/7-biggest-ways-procrastination-hurts-your-finances">7 Biggest Ways Procrastination Hurts Your Finances</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/8-money-moves-to-make-the-moment-you-get-a-promotion">8 Money Moves to Make the Moment You Get a Promotion</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/7-money-software-tools-worth-the-price">7 Money Software Tools Worth the Price</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/the-retirement-latte">The Retirement Latte</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/the-financial-perks-of-being-in-your-20s">The Financial Perks of Being in Your 20s</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance budgeting cabin fever deductions investing job hunting making money promotions raises rebalancing side gigs side hustle taxes Fri, 09 Feb 2018 10:00:05 +0000 Tim Lemke 2100157 at http://www.wisebread.com 4 Worst Reasons to Buy a House http://www.wisebread.com/4-worst-reasons-to-buy-a-house <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/4-worst-reasons-to-buy-a-house" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/little_house_with_defocused_street.jpg" alt="Little house with defocused street" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Each month you send a rent check to your landlord. Meanwhile, every homeowner you know insists that you're wasting that money. They say that you should buy a home and that owning is a smarter financial move.</p> <p>But are they right? Not necessarily.</p> <p>There are good reasons to buy a home: You get a place to call your own and raise your family. You get more space. You'll gain more &mdash; but not complete &mdash; control over your monthly housing payments.</p> <p>This doesn't mean, though, that owning is always the better financial choice. In fact, there are many myths about homeownership that could persuade you to buy for the wrong reasons. Here are four of them.</p> <h2>1. Owning a home is a great investment</h2> <p>It might seem that purchasing a home, holding onto it for years, and then selling it for a profit is a great reason to buy. But the truth is, homes aren't good investments for most owners.</p> <p>Robert Shiller, a Yale economist, has long studied the housing industry, and ranks as a true expert when it comes to real estate and economics. Speaking to <em>The Motley Fool</em> in 2014, Shiller unveiled the numbers proving that housing historically has not been a good investment.</p> <p>Shiller found that from 1890 through 2012, home prices when adjusted for inflation did not grow one cent. Homeowners would have made significantly more money by investing in the stock market during this same time. Shiller reported that the value of the S&amp;P 500 increased more than 2,000 times from 1890 through 2012. Shiller also found that from 1890 through 1980, the real value of home prices actually fell by about 10 percent.</p> <p>Don't buy a home thinking that it's a smart financial investment. It's not. A home is a place to raise your family and retreat to at the end of a long day. It's not supposed to be a moneymaker. (See also: <a href="http://www.wisebread.com/heres-why-your-house-is-not-an-investment?ref=seealso" target="_blank">Stop Thinking of Your House as an Investment</a>)</p> <h2>2. You're tired of throwing away your money on rent</h2> <p>Advocates of homeownership often tell you that you're throwing away your money every time you pay a rent check. What they don't say is that this doesn't change much after you buy a house &mdash; at least not initially.</p> <p>Most of us take out a mortgage loan to finance the purchase of a house. The bank behind your mortgage will technically own most of your house after you close on it. And in the earlier years of owning a home, the vast majority of the money you send toward the bank goes toward paying off interest. Only a small amount of each monthly payment goes toward paying down the principal of your balance.</p> <p>So, you're still throwing your money at someone with nothing concrete to show for it. You're just throwing it at your bank instead of your landlord. And if you don't hold onto your house long enough &mdash; say, more than seven years &mdash; you'll have paid far more in interest than in reducing your principal balance by the time you sell. (See also: <a href="http://www.wisebread.com/why-i-choose-to-rent-instead-of-buy?ref=seealso" target="_blank">Why I Choose to Rent Instead of Buy</a>)</p> <h2>3. You can build equity</h2> <p>Earning equity is one of the most popular reasons for people to buy a home. Say you owe $150,000 on your mortgage and your home is worth $220,000. You now have $70,000 worth of equity. You can borrow against that in the form of a home-equity loan or home equity line of credit to pay for everything from a child's college education, to major home improvements, to reducing credit card debt. (See also: <a href="http://www.wisebread.com/4-smartest-ways-to-use-a-home-equity-loan?ref=seealso" target="_blank">4 Smartest Ways to Use a Home Equity Loan</a>)</p> <p>You earn equity in two ways: First, every time you make a payment, you are reducing your mortgage amount. Second, if your home increases in value, your equity will grow automatically.</p> <p>The problem is that home values can fall, and building equity when that happens is a true challenge. Say after three years of owning your home, you've reduced your mortgage amount to $200,000. If home values have fallen since you purchased your residence and your home is now worth just $190,000, you don't have any equity. Instead, you are underwater &mdash; meaning that you owe more on your mortgage than what your home is worth. (See also: <a href="http://www.wisebread.com/6-times-its-actually-okay-to-be-underwater-on-your-home?ref=seealso" target="_blank">6 Times It's Actually OK to Be Underwater on Your Home</a>)</p> <p>You can't control whether the value of your home falls or rises. Millions of homeowners discovered this in 2007 and 2008, when home values across the country plummeted. Many of the owners who bought in 2005 and 2006 still owe more on their mortgages than what their homes are worth. Building equity isn't a guarantee.</p> <h2>4. Owning a house comes with big rewards at tax time</h2> <p>Advocates of buying a home point to the deductions that owners can take come tax time: Owners can deduct the interest they pay on their mortgages, as well as their property taxes.</p> <p>But these deductions are becoming less valuable to some people. First, the new tax reform law says that owners will only be able to deduct the interest on their mortgage loans up to $750,000, rather than the $1 million that it was previously. Federal tax reform will also limit the amount that taxpayers can deduct in state and local property and income taxes on their federal returns to a maximum of $10,000.</p> <p>The biggest change, though, might be the new standard deduction. Taxpayers filing their federal returns can either itemize their deductions or take the standard deduction. Tax reform will boost the standard deduction from $6,350 to $12,000 for individuals. It will increase the standard deduction for couples filing jointly from $12,700 to $24,000.</p> <p>There is no financial reason for taxpayers to itemize their deductions if they aren't greater than the standard deduction. As the standard deduction increases, a greater number of taxpayers will take it instead of itemizing. This means we'll see fewer homeowners taking advantage of the property tax and mortgage interest deductions.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F4-worst-reasons-to-buy-a-house&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F4%2520Worst%2520Reasons%2520to%2520Buy%2520a%2520House.jpg&amp;description=4%20Worst%20Reasons%20to%20Buy%20a%20House"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/4%20Worst%20Reasons%20to%20Buy%20a%20House.jpg" alt="4 Worst Reasons to Buy a House" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/4-worst-reasons-to-buy-a-house">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-worst-reasons-not-to-buy-a-house">7 Worst Reasons NOT to Buy a House</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/stop-believing-these-5-home-refinance-myths">Stop Believing These 5 Home Refinance Myths</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-build-equity-in-your-home">How to Build Equity in Your Home</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/why-you-should-be-saving-big-with-bi-weekly-mortgage-payments">Why You Should Be Saving Big With Bi-Weekly Mortgage Payments</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/rent-your-home-or-buy-heres-how-to-decide">Rent Your Home or Buy? Here&#039;s How to Decide</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing buying a house deductions equity homeownership investments mortgages myths renting taxes wasting money Wed, 31 Jan 2018 09:30:09 +0000 Dan Rafter 2086754 at http://www.wisebread.com 15+ Important Financial Dates to Mark on Your Calendar http://www.wisebread.com/15-important-financial-dates-to-mark-on-your-calendar <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/15-important-financial-dates-to-mark-on-your-calendar" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/tax_day_for_2016_returns_is_april_18_2017.jpg" alt="Tax day for 2016 returns is April 18, 2017" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Improving your finances is not a sprint, it's a marathon. To help you succeed in 2018, here is an at-a-glance finance calendar with key dates to effectively plan your money moves this year. You got this!</p> <h2>January 1</h2> <ul> <li> <p>This is the very first day to fund traditional and Roth IRAs and Simplified Employee Pension Plan (SEP) IRAs for the current year.</p> </li> <li> <p>If you don't enroll in Medicare during the initial enrollment period around your 65th birthday, you can sign up starting today through March 31 to start coverage on July 1. A late enrollment fee may apply.</p> </li> </ul> <h2>January 16</h2> <ul> <li> <p>This is the due date for quarterly estimated taxes for the fourth quarter of 2017 (Sept. 1&ndash;Dec. 31). Use the 2017 IRS Form 1040 ES to pay your estimated tax.</p> </li> </ul> <h2>January 29</h2> <ul> <li> <p>The IRS starts accepting tax returns. (See also: <a href="http://www.wisebread.com/8-reasons-you-should-file-your-taxes-as-soon-as-possible?ref=seealso" target="_blank">8 Reasons You Should File Your Taxes as Soon as Possible</a>)</p> </li> </ul> <h2>March 31</h2> <ul> <li> <p>Many flexible spending account (FSA) plans with a use-it-or-lose-it rollover rule set today as the deadline to submit claims for eligible medical expenses completed by December 31 of the previous year.</p> </li> <li> <p>Last day to enroll in Medicare to start coverage on July 1. A late enrollment fee may apply.</p> </li> </ul> <h2>April 1</h2> <ul> <li> <p>Following the calendar year in which you turn 70&frac12;, this is the date you must start taking required minimum distributions (RMDs) from your traditional IRA, 401(k), 403(b), or other applicable retirement savings plans. (See also: <a href="http://www.wisebread.com/what-every-retirement-saver-should-know-about-required-minimum-distributions?ref=seealso" target="_blank">What Every Retirement Saver Should Know About Required Minimum Distributions</a>)</p> </li> </ul> <h2>April 15</h2> <ul> <li> <p>Deadline to contribute to a Coverdell Education Savings Account (ESA).</p> </li> </ul> <h2>April 17</h2> <ul> <li> <p>Tax Day 2018 falls two days later than usual because April 15 falls on a Sunday, and Emancipation Day falls on April 16, giving IRS workers a holiday.</p> </li> <li> <p>Deadline to file for an extension on you tax return. (Note: There is an automatic two-month extension for taxpayers living abroad).</p> </li> <li> <p>Last day to fund last year's traditional or Roth IRAs.</p> </li> <li> <p>Deadline to fund a health savings account (HSA) for the prior year. (See also: <a href="http://www.wisebread.com/how-an-hsa-could-help-your-retirement?ref=seealso" target="_blank">How an HSA Could Help Your Retirement</a>)</p> </li> </ul> <h2>April 18</h2> <ul> <li> <p>Deadline to submit an estimated tax payment for next year's taxes using first payment voucher from 2018's Form 1040-ES.</p> </li> </ul> <h2>June 15</h2> <ul> <li> <p>Make an estimated tax payment for tax year 2018 using second payment voucher from Form 1040-ES.</p> </li> <li> <p>Two-month filing extension deadline for federal taxes. (See also: <a href="http://www.wisebread.com/filed-an-extension-heres-what-you-need-to-know?ref=seealso" target="_blank">Filed an Extension? Here's What You Need to Know</a>)</p> </li> </ul> <h2>June 30</h2> <ul> <li> <p>To receive federal student aid for the 2017&ndash;2018 school year, submit your FAFSA application by June 30, 2018.</p> </li> </ul> <h2>September 15</h2> <ul> <li> <p>Make an estimated tax payment for tax year 2018 using third payment voucher from Form 1040-ES.</p> </li> </ul> <h2>Sometime between October 1 and November 1</h2> <ul> <li> <p>Your employer will start announcing the upcoming open enrollment period to choose your workplace benefits for the next year.</p> </li> </ul> <h2>October 1</h2> <ul> <li> <p>To receive federal student aid for the 2019&ndash;2020 school year, you can start filing your FAFSA application today, making sure it's submitted by June 30, 2019.</p> </li> </ul> <h2>October 15</h2> <ul> <li> <p>Six-month filing extension deadline for federal taxes.</p> </li> <li> <p>Last day to undo a 2017 Roth IRA conversion (if you converted a traditional IRA to a Roth IRA during 2017 and paid applicable tax on the conversion with your 2016 return).</p> </li> </ul> <h2>November 1</h2> <ul> <li> <p>Start of enrollment for health insurance through <a href="http://www.healthcare.gov" target="_blank">Healthcare.gov</a>.</p> </li> </ul> <h2>December 31</h2> <ul> <li> <p>Deadline to take RMDs from your IRA, 401(k), and inherited IRAs.</p> </li> <li> <p>Deadline to set up most types of retirement accounts so that eligible contributions count toward the current year.</p> </li> </ul> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F15-important-financial-dates-to-mark-on-your-calendar&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F15%252B%2520Important%2520Financial%2520Dates%2520to%2520Mark%2520on%2520Your%2520Calendar_0.jpg&amp;description=How%20to%20Build%20a%20Side%20Business%20While%20Keeping%20Your%20Day%20Job"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/15%2B%20Important%20Financial%20Dates%20to%20Mark%20on%20Your%20Calendar_0.jpg" alt="15+ Important Financial Dates to Mark on Your Calendar" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/damian-davila">Damian Davila</a> of <a href="http://www.wisebread.com/15-important-financial-dates-to-mark-on-your-calendar">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/10-year-end-financial-moves-you-must-make-now">10 Year-End Financial Moves You Must Make Now</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/9-surprising-ways-marriage-can-make-you-richer">9 Surprising Ways Marriage Can Make You Richer</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-retirement-struggles-nobody-talks-about-and-how-to-beat-them">5 Retirement Struggles Nobody Talks About — And How to Beat Them</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-easy-ways-to-build-an-emergency-fund-from-0">7 Easy Ways to Build an Emergency Fund From $0</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/investment-gains-taxes-increase-the-worst-tax-policy-ever">Investment Gains Taxes Increase - The Worst Tax Policy Ever?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance calendar dates deadlines due dates extensions FAFSA health care open enrollment required minimum distributions retirement accounts taxes Mon, 29 Jan 2018 10:00:06 +0000 Damian Davila 2093958 at http://www.wisebread.com How to Claim Social Security Benefits While Living Abroad http://www.wisebread.com/how-to-claim-social-security-benefits-while-living-abroad <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-claim-social-security-benefits-while-living-abroad" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/senior_happy_couple_taking_selfie.jpg" alt="Senior happy couple taking selfie" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>The benefits of being an American do not stop at the border, which is excellent news for retirees looking to live abroad. In particular, expatriates are free to collect their Social Security benefits while living abroad in an adopted country. (See also: <a href="http://www.wisebread.com/13-financial-steps-to-take-before-retiring-abroad?ref=seealso" target="_blank">13 Financial Steps to Take Before Retiring Abroad</a>)</p> <p>While Uncle Sam will forward your Social Security benefit checks to whatever sunny beach on a foreign shore that you choose to retire to, it is important for you to understand just what you'll have to do to make sure the claiming process goes smoothly. Here's everything you need to know about claiming your Social Security benefits while living the retired life abroad.</p> <h2>You can't take Medicare with you</h2> <p>Let's start with the bad news: Medicare does not pay for any care you receive abroad. That's because Medicare coverage is specific to American medical providers and does not cover service outside of the United States.</p> <p>Many retirees living abroad may still choose to enroll in Medicare so that they can return to America in case of a serious medical issue. There are severe financial penalties for enrolling in Medicare after the initial enrollment period (the three months before, the month of, and the three months after you turn 65), which means it may be worth your while to enroll in Medicare if there is any possibility you will return to the U.S.</p> <p>That being said, it's quite possible that you will be eligible for low-cost, high-quality health care coverage in your adopted home. Many countries extend their health care services to foreign residents, and one of the potential benefits of retiring abroad is the possibility of cheaper and better health care. (See also: <a href="http://www.wisebread.com/4-affordable-retirement-spots-with-world-class-health-care?ref=seealso" target="_blank">4 Affordable Retirement Spots With World-Class Health Care</a>)</p> <h2>But Social Security benefits are pretty portable</h2> <p>All Social Security recipients are now required to accept their benefits electronically, which is quite a boon to retirees living abroad. This means you can either have your benefits directly deposited into a foreign bank account based in your new home, or you can have the money deposited into an American bank account that you have maintained while abroad.</p> <p>Some countries require foreign residents to open a local bank account and have a regular direct deposit into that account. Social Security benefits offer an ideal method for fulfilling this obligation.</p> <p>If you live in a country without such a requirement, you may choose to simply maintain your U.S. based bank, in part because many retirement destinations are all about paying in cash. Everyone from utility providers to grocers to dentists only accept cash, which makes maintaining your home bank much simpler. As long as you can withdraw funds from an ATM or banking office in your new home, there's no need to set up a new bank account or have your Social Security benefits routed elsewhere.</p> <h2>Restrictions apply to certain countries</h2> <p>There are two countries in the world that Uncle Sam will not send your Social Security benefits to: North Korea and Cuba. The United States Department of the Treasury has imposed sanctions on these countries which makes it impossible for American expats to receive their benefits while living there. The Social Security Administration will withhold your benefits payments while you are living in either of these two countries, but you can access your withheld money as soon as you move to a country where the U.S. will send payments.</p> <p>You will also generally not be able to access your Social Security benefits while living in Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, Ukraine, and Uzbekistan. The Social Security Administration may be able to make exceptions for certain eligible beneficiaries who make their homes in these countries (such as appearing in person at a U.S. Embassy or U.S. Consulate every six months).</p> <h2>Rules are different if you're not a U.S. citizen</h2> <p>American citizens are always eligible to receive their Social Security benefits while living abroad. However, non-U.S. citizens who are eligible to receive Social Security benefits (because they paid into the system or are dependents of someone who paid into the system) have a limit to the amount of time they may receive their benefits while away from American soil. Noncitizens will receive their benefits for six months while living abroad, after which point the Social Security Administration will stop payments. Payments will be reinstated after the noncitizen has returned to the U.S. and stayed there for a full calendar month.</p> <p>There are some exceptions to these rules, which is why the Social Security Administration has created a <a href="https://www.ssa.gov/international/payments_outsideUS.html" target="_blank">Payments Abroad Screening Tool</a> to help you figure out if you will continue to receive your Social Security benefits while living abroad.</p> <h2>Don't forget about the tax man</h2> <p>Just because you're living abroad doesn't mean you can forget about paying the tax man. This is especially important for retirees who are receiving Social Security benefits, since your benefits can be garnished to pay taxes you owe. American expatriates need to understand their tax requirements so they don't accidentally cause themselves a major financial problem.</p> <p>To start, in addition to the 1040 form that every American has to fill out each year, expats living abroad may also need to complete Form 2555 to declare foreign earned income (income you receive from a job), Form 1116 to declare a foreign tax credit, and Form 8938 to declare specified foreign financial assets (such as assets you hold in foreign bank accounts, brokerage accounts, mutual funds, and unit trusts).</p> <p>The reporting threshold to the IRS for specified foreign financial assets is $200,000 for single filers living abroad, and $400,000 for married couples. However, you are also required to report foreign assets greater than $10,000 to the Department of the Treasury, using FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR). Failure to file with the Department of the Treasury can result in stiff penalties of up to 50 percent of the balance of the account, and possible criminal charges.</p> <p>You may also owe taxes to your adopted country, so be sure to understand the tax laws of your new home and file taxes accordingly. (See also: <a href="http://www.wisebread.com/9-things-to-know-before-retiring-abroad?ref=seealso" target="_blank">9 Things to Know Before Retiring Abroad</a>)</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fhow-to-claim-social-security-benefits-while-living-abroad&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FHow%2520to%2520Claim%2520Social%2520Security%2520Benefits%2520While%2520Living%2520Abroad.jpg&amp;description=How%20to%20Claim%20Social%20Security%20Benefits%20While%20Living%20Abroad"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/How%20to%20Claim%20Social%20Security%20Benefits%20While%20Living%20Abroad.jpg" alt="How to Claim Social Security Benefits While Living Abroad" width="250" height="374" /></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/how-to-claim-social-security-benefits-while-living-abroad">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/9-things-to-know-before-retiring-abroad">9 Things to Know Before Retiring Abroad</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-i-saved-enough-for-a-down-payment-while-working-in-china">How I Saved Enough for a Down Payment While Working in China</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/retire-for-half-the-cost-in-these-5-countries">Retire for Half the Cost in These 5 Countries</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/9-ways-expats-can-maintain-their-credit-scores">9 Ways Expats Can Maintain Their Credit Scores</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-sobering-facts-about-social-security-you-shouldnt-panic-over">5 Sobering Facts About Social Security You Shouldn&#039;t Panic Over</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement Travel americans benefits citizens expats living abroad overseas regulations rules social security taxes Wed, 24 Jan 2018 09:30:08 +0000 Emily Guy Birken 2090875 at http://www.wisebread.com Which of These 9 Retirement Accounts Is Right for You? http://www.wisebread.com/which-of-these-9-retirement-accounts-is-right-for-you <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/which-of-these-9-retirement-accounts-is-right-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/time_to_invest_for_retirement.jpg" alt="Time to invest for retirement" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>You might think that the simplest way to put away money for retirement would be to save or invest your money as you see fit &mdash; without reporting your contributions to anyone, and without following any special rules. The problem with following a freestyle retirement plan like this is taxes. You would pay full income taxes on the money that goes into your account, and you would pay capital gains taxes as your investment grows.</p> <p>Fortunately, there are many retirement savings plans out there that can reduce your tax burden now and in the future, all while avoiding capital gains tax. And while there are many types of retirement accounts, you can &mdash; and should! &mdash; contribute to more than one. The 2018 contribution limit for traditional and Roth IRAs is $5,500 ($6,500 if you're age 50 or older). For 401(k) plans, the current contribution limit is $18,500 (plus an additional catch-up contribution of $6,000 if over age 50). (See also: <a href="http://www.wisebread.com/which-retirement-account-is-right-for-you?ref=seealso" target="_blank">Which Retirement Account Is Right for You?</a>)</p> <p>Here are some of the most popular tax-advantaged retirement plan options.</p> <h2>1. Traditional IRA</h2> <p>Contributions made to a traditional IRA are tax-deductible, which can reduce your current year income tax bill. However, you will have to pay income tax when you withdraw funds starting at age 59&frac12;. If your income is high now and you will be in a lower tax bracket after retirement, contributing to a traditional IRA may be a good move.</p> <h2>2. Roth IRA</h2> <p>Contributions to a Roth IRA are post-tax, so contributing to one of these accounts won't reduce your tax bill upfront. But when you withdraw the funds in the future, you won't have to pay income tax. A Roth IRA can be favorable if you are a young investor in a low tax bracket now. Also, if you are concerned that tax rates could go up in the future, contributing to a Roth IRA allows you to pay a known tax now versus a potentially higher tax in the future when you withdraw funds. (See also: <a href="http://www.wisebread.com/6-reasons-every-millennial-needs-a-roth-ira?ref=seealso" target="_blank">6 Reasons Every Millennial Needs a Roth IRA</a>)</p> <h2>3. Traditional 401(k)</h2> <p>Employees can contribute wages to a 401(k) investment account as elective salary deferrals. The traditional 401(k) account works much like a traditional IRA where income can be contributed before taxes, but you will have to pay income tax on future withdrawals. Some employers provide matching contributions to 401(k) plans, and if you are not participating enough to obtain that match, you are leaving free money on the table. Keep in mind, however, that employer plans have fewer investment options than traditional IRAs, and that there may be limits on whether you can withdraw employer contributions early in, for example, a hardship distribution. (See also: <a href="http://www.wisebread.com/401k-or-ira-you-need-both?ref=seealso" target="_blank">401K or IRA? You Need Both</a>)</p> <h2>4. Roth 401(k)</h2> <p>The Roth 401(k) is an alternate 401(k) plan where employees can contribute after-tax funds. As with a Roth IRA, the Roth 401(k) allows you to pay a known tax <em>today</em> at your current tax bracket instead of an unknown tax rate in the future. A Roth 401(k) is also an attractive option to younger workers who are in a lower tax bracket now and who have a lot of time for funds to grow. If your employer offers matching funds, again, try to contribute at least the minimum required amount to receive the match. (See also: <a href="http://www.wisebread.com/7-things-you-should-know-about-your-401k-match?ref=seealso" target="_blank">Things You Should Know About Your 401(k) Match</a>)</p> <h2>5. SEP IRA</h2> <p>An SEP (Simplified Employee Pension) plan allows business owners &mdash; often the self-employed &mdash; to contribute to traditional IRAs on behalf of themselves and any employees they have. An SEP IRA has many of the same rules as a traditional IRA, but the employer is required to make all contributions to the SEP IRA, and employees can't make any.</p> <p>An SEP IRA allows employers to adjust how much they contribute to an employee's account depending on the company's cash flow that year. Contributions cannot exceed the lesser of 25 percent of the employee's compensation, or $55,000, in 2018.</p> <p>Money contributed to an SEP IRA is tax-deductible for the current year, and is subject to income tax when withdrawn in retirement. (See also: <a href="http://www.wisebread.com/the-sep-ira-is-how-the-self-employed-do-retirement-like-a-boss?ref=seealso" target="_blank">The SEP-IRA Is How the Self-Employed Do Retirement Like a BOSS</a>)</p> <h2>6. SIMPLE IRA</h2> <p>A SIMPLE (Savings Incentive Match Plan for Employee) IRA is a retirement savings plan for businesses of any size, although it is still aimed at small businesses. A SIMPLE IRA allows employees to invest in their own accounts, in addition to receiving employer contributions of 1-3 percent of the employee's compensation. An employee may contribute up to $12,500 to a SIMPLE IRA in 2018.</p> <p>Contributions made to a SIMPLE IRA (by both the employer and employee) are tax-deductible upfront and subject to income tax rates upon withdrawal.</p> <h2>7. 403(b) plans</h2> <p>A 403(b) plan, also known as a tax-sheltered annuity or TSA plan, is similar to a 401(k) &mdash; but is offered by public schools and 501(c)(3) tax-exempt organizations. Like 401(k) plans, 403(b) plans may be offered in either a traditional tax-advantaged or after-tax Roth version. (See also: <a href="http://www.wisebread.com/403b-vs-401k-how-are-they-different?ref=seealso" target="_blank">403(b) vs. 401(k): How Are They Different?</a>)</p> <h2>8. Payroll deduction IRAs</h2> <p>Payroll deduction IRAs allow employees or even self-employed workers to automatically contribute to a traditional or Roth IRA through payroll deductions. The employees set up the account and then let the employer know how much they'd like to contribute from each paycheck. This is perhaps the simplest retirement program that a business can establish for its employees.</p> <h2>9. HSA &quot;IRA&quot;</h2> <p>A HSA (health savings account) is available to those who are enrolled in a high-deductible health plan (HDHP). An HSA allows you to contribute pretax funds into a savings or investment account, and you can withdraw funds tax-free at any time for qualified health expenses. Once you reach age 65, money left in an HSA basically acts like a traditional IRA &mdash; there is no restriction that the funds must be spent on health expenses, but they will be subject to income tax upon withdrawal. (See also: <a href="http://www.wisebread.com/how-an-hsa-could-help-your-retirement?ref=seealso" target="_blank">How an HSA Could Help Your Retirement</a>)</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fwhich-of-these-9-retirement-accounts-is-right-for-you&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FWhich%2520of%2520These%25209%2520Retirement%2520Accounts%2520Is%2520Right%2520for%2520You_.jpg&amp;description=Which%20of%20These%209%20Retirement%20Accounts%20Is%20Right%20for%20You%3F"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/Which%20of%20These%209%20Retirement%20Accounts%20Is%20Right%20for%20You_.jpg" alt="Which of These 9 Retirement Accounts Is Right for You?" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dr-penny-pincher">Dr Penny Pincher</a> of <a href="http://www.wisebread.com/which-of-these-9-retirement-accounts-is-right-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-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/11-basic-questions-about-retirement-saving-everyone-should-ask">11 Basic Questions About Retirement Saving Everyone Should Ask</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-easiest-ways-to-catch-up-on-retirement-savings-later-in-life">7 Easiest Ways to Catch Up on Retirement Savings Later in Life</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/15-retirement-terms-every-new-investor-needs-to-know">15 Retirement Terms Every New Investor Needs to Know</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/5-important-things-to-know-about-your-401k-and-ira-in-2016">5 Important Things to Know About Your 401K and IRA in 2016</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/where-to-invest-your-money-after-youve-maxed-out-your-retirement-account">Where to Invest Your Money After You&#039;ve Maxed Out Your Retirement Account</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401(k) 403(b) company match contributions health savings account HSA IRA retirement plans Roth tax advantaged taxes Wed, 24 Jan 2018 09:00:06 +0000 Dr Penny Pincher 2090876 at http://www.wisebread.com 7 Things You Need to Know About 401(k) Hardship Withdrawals http://www.wisebread.com/7-things-you-need-to-know-about-401k-hardship-withdrawals <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/7-things-you-need-to-know-about-401k-hardship-withdrawals" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_holding_coins_under_401k_nest_egg.jpg" alt="Woman holding coins under 401k nest egg" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>You know it's a bad idea to take money out of your retirement plan before you turn 59 &frac12; years old. Not only will you face hefty financial penalties, you're risking your financial stability in the future. But what if you're facing an economic hardship and you're in dire need of the money?</p> <p>If you have a traditional IRA or Roth account, you can take an early withdrawal at any time. In some cases, you can even avoid the withdrawal penalty, if you meet certain criteria. It's harder, however, to withdraw money early from your current employer-sponsored 401(k) plan. You'll need to check if your plan allows for an early withdrawal. Some plans will only allow contributors to take out what are known as <em>hardship withdrawals</em> before you hit age 59 &frac12;.</p> <p>The bad news is there aren't many situations in which you can qualify for these hardship withdrawals. And of course, taking money out of your 401(k) plan early is never an ideal financial move. (See also: <a href="http://www.wisebread.com/5-dumb-401k-mistakes-smart-people-make?ref=seealso" target="_blank">5 Dumb 401(k) Mistakes Smart People Make</a>)</p> <p>Here are a few key things you need to know about hardship withdrawals.</p> <h2>1. &quot;Hardships&quot; have set definitions</h2> <p>IRS rules spell out a narrow list of circumstances in which you can qualify for a hardship withdrawal. If you want to use your money for anything other than these special cases, you're out of luck.</p> <p>For all scenarios, there must be an immediate and heavy financial need to take an early 401(k) withdrawal. Acceptable scenarios include unexpected medical expenses, tuition and educational fees, and burial or funeral expenses. You can also qualify for a hardship withdrawal for costs related to purchasing a home, if your home is damaged and you need to pay for repairs, and to keep yourself from being evicted or foreclosed on.</p> <h2>2. Hardship withdrawals come with big penalties</h2> <p>If you do need cash quickly, your 401(k) plan might seem like a logical place. After all, the money in your plan is <em>yours</em>. But a 401(k) plan is supposed to force you to save for your retirement, not be a source of emergency funds. That's why most plans won't allow you to take money out of them until employment with your company ends.</p> <p>Hardship withdrawals are the exception to this. But if you use this exemption to take money out of a 401(K) plan before you turn 59 &frac12;, you'll be hit with penalties. First, these early withdrawals are taxed as ordinary income. Even worse, your early withdrawal will also be hit with a 10 percent federal tax penalty.</p> <p>This makes withdrawing 401(k) funds early, even for a financial hardship, painful. If you have an alternative way to get the money you need, you should take advantage of it. (See also: <a href="http://www.wisebread.com/how-to-come-up-with-1000-in-the-next-30-days?ref=seealso" target="_blank">How to Come Up With $1,000 in the Next 30 Days</a>)</p> <h2>3. There can be penalty exceptions</h2> <p>That 10 percent penalty is harsh, but there are circumstances in which you might not be hit with it. You might be able to avoid that penalty if you are disabled or if your medical debt is higher than 7.5 percent of your adjusted gross income. You might also avoid the penalty if a court has ordered you to give the money from a hardship withdrawal to a former spouse, a child, or a dependent.</p> <h2>4. Not all plans allow for hardship withdrawals</h2> <p>Not all 401(k) plans have the option to take hardship withdrawals. Your employer decided whether it wanted to offer such withdrawals when it set up its plan. There is no requirement from the IRS that employers offer such an option.</p> <p>To determine if your plan allows for these withdrawals, contact your plan administrator. In most companies, this will be someone in your human resources department.</p> <h2>5. There are limits to your withdrawal</h2> <p>Even if you quality for a hardship withdrawal, you can't take out an unlimited amount of money. IRS rules state that you can only take money from your 401(k) account if you have no other funds to cover your hardship. And then, you can only withdraw enough funds to cover the costs of your financial emergency. You can't take extra dollars for a financial cushion.</p> <h2>6. You may need proof of your hardship</h2> <p>Your plan administrator may require proof that you need to take the hardship withdrawal. This might mean you'll have to provide your administrator with copies of medical bills, repair bills, or an eviction notice. You might also need to provide copies of your bank account statements proving that you don't have other funds available to cover your financial emergency.</p> <h2>7. When the money is gone, it's gone</h2> <p>After you take a hardship withdrawal, you are typically forbidden to make any deposits into your 401(k) account for six months. Once that six-month period ends, you are allowed to start depositing money back into your 401(k) account as you had been doing before.</p> <p>This brings up what might be the biggest negative to hardship withdrawals: The money you take out of your 401(k) plan is gone forever. It is not a loan. You aren't simply borrowing it and putting it back. This could really hurt come retirement time.</p> <p>This is why you should search for other means to cover your financial emergency. Turn to hardship withdrawals only as an absolute last resort. (See also: <a href="http://www.wisebread.com/3-sources-of-fast-cash-besides-your-401k?ref=seealso" target="_blank">3 Sources of Fast Cash Besides Your 401(k)</a>)</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F7-things-you-need-to-know-about-401k-hardship-withdrawals&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F7%2520Things%2520You%2520Need%2520to%2520Know%2520About%2520401%2528k%2529%2520Hardship%2520Withdrawals.jpg&amp;description=7%20Things%20You%20Need%20to%20Know%20About%20401(k)%20Hardship%20Withdrawals"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/7%20Things%20You%20Need%20to%20Know%20About%20401%28k%29%20Hardship%20Withdrawals.jpg" alt="7 Things You Need to Know About 401(k) Hardship Withdrawals" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/7-things-you-need-to-know-about-401k-hardship-withdrawals">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/what-every-retirement-saver-should-know-about-required-minimum-distributions">What Every Retirement Saver Should Know About Required Minimum Distributions</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-easy-ways-to-get-richer-in-2018">4 Easy Ways to Get Richer In 2018</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/why-saving-too-much-money-for-a-college-fund-is-a-bad-idea">Why Saving Too Much Money for a College Fund Is a Bad Idea</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/11-basic-questions-about-retirement-saving-everyone-should-ask">11 Basic Questions About Retirement Saving Everyone Should Ask</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-age-milestones-that-impact-your-retirement">6 Age Milestones That Impact Your Retirement</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance 401(k) education costs emergencies hardship withdrawals housing costs IRS medical bills penalties taxes Tue, 23 Jan 2018 09:30:09 +0000 Dan Rafter 2091490 at http://www.wisebread.com What Every Retirement Saver Should Know About Required Minimum Distributions http://www.wisebread.com/what-every-retirement-saver-should-know-about-required-minimum-distributions <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/what-every-retirement-saver-should-know-about-required-minimum-distributions" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/money_and_time_background.jpg" alt="Money and Time Background" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>You may be aware of the fact that contributing money to a tax-deferred retirement account, like a traditional IRA or a 401(k), means you get to put money aside before it is taxed. This reduces your current tax burden and gives you a great incentive to save for retirement.</p> <p>Unfortunately, Uncle Sam will eventually want his cut of that money. That's where required minimum distributions (RMDs) come in.</p> <p>The good news is that you have until age 70&frac12; before you have to worry about RMDs. But it's still important to understand how RMDs work and what to expect before you get to that age milestone.</p> <h2>What is a required minimum distribution?</h2> <p>Deferring taxes is great for the taxpayer, but the IRS can't afford for taxpayers to defer their taxes indefinitely. Individuals with tax-deferred retirement accounts have to actually withdraw money &mdash; and thereby pay taxes &mdash; or else those taxes will never get paid.</p> <p>Everyone holding a 401(k) or IRA account (with the exception of Roth IRAs) must begin withdrawing money from those accounts during the year they reach age 70&frac12;. This ensures that account holders have enough time to allow their money to grow without permanently sheltering their money from federal taxes.</p> <p>The IRS has established minimums that you must withdraw each year after reaching age 70&frac12;. If you fail to withdraw the proper RMD, you face a stiff penalty: The IRS will take 50 percent of the amount you should have withdrawn.</p> <h2>Calculating your RMD</h2> <p>It's also important to note that you are responsible for calculating and withdrawing the correct RMD each year &mdash; and the calculations aren't necessarily easy. Even if the custodian of your IRA or 401(k) does the math and paperwork for you, you are the responsible party in the IRS's eyes.</p> <p>So how do you figure out your RMD? You need to start with three pieces of information:</p> <ol> <li> <p>Your date of birth.</p> </li> <li> <p>The balance of each tax-deferred account as of Dec. 31 of the year <em>before </em>the year in which you turn 70&frac12;.</p> </li> <li> <p><a href="https://www.irs.gov/pub/irs-tege/uniform_rmd_wksht.pdf" target="_blank">The IRS distribution table</a>.</p> </li> </ol> <p>This IRS distribution table calculates your life expectancy based on your age. The table gives you a number that corresponds to the number of years the IRS expects you to live.</p> <p>For instance, let's say a retiree was born on February 4, 1948, and will turn 70 in the first half of 2018. This retiree has a single IRA, with a balance of $250,000 at the end of 2017 (the calendar year before the year in which she turns 70&frac12;). To calculate her RMD, she'd look up her age (70) on the IRS distribution table to find the distribution period, which in this case is 27.4. She would then divide her IRA balance by the distribution period for her 2018 RMD:</p> <p style="text-align: center;">IRA balance / Distribution Period = RMD</p> <p style="text-align: center;">$250,000 / 27.4 = $9,214</p> <p>To keep on the right side of Uncle Sam, she will need to withdraw a minimum of $9,214 from her $250,000 IRA in 2018. But remember, the operative word is &quot;minimum.&quot; Account holders can always take more than their RMD if they choose to do so.</p> <h2>Why am I celebrating my 70&frac12; birthday?</h2> <p>While 70&frac12; may seem like an arbitrary number, there is a lot of thought put into this milestone age. The IRS makes a distinction between people born in the first half of the year, and those born in the second half. If your birthday falls between July 1 and Dec. 31, you don't officially have to take an RMD until the year you turn 71.</p> <p>This means that those with birthdays in the first half of the year take their first RMD the year they turn 70, and those with the later birthday take their first RMD the year they turn 71 &mdash; which averages out to 70&frac12;. (See also: <a href="http://www.wisebread.com/6-age-milestones-that-impact-your-retirement?ref=seealso" target="_blank">6 Age Milestones That Impact Your Retirement</a>)</p> <h2>Required beginning dates</h2> <p>To offer retirees a little more time to get their ducks in a row, the IRS does not require account holders to take their first RMD until April 1 of the year <em>following</em> the one in which you reach age 70&frac12;. That April 1 deadline is known as the required beginning date. The year in which that date falls depends on whether you have a birthday in the first or second half of the year.</p> <p>So, our Aquarian born Feb. 4, 1948 will turn 70&frac12; on Aug. 4, 2018. But remember, those born in the first half of the year calculate their RMD based on the year <em>before </em>they turn 70. So while she can wait to take her first RMD until April 1, 2019, at that point she'll calculate that RMD based on her age of 70 (which was her age as of Dec. 31, 2017), as well as her account balance as of Dec. 31, 2017.</p> <p>The first year following the year in which you reach 70&frac12; you will usually have <em>two </em>required distribution dates. Besides the April 1 date we just discussed, you'll also have to take another withdrawal by Dec. 31 of that same year. For our Aquarian, that means she will have to take a second RMD by Dec. 31, 2019. This RMD will be calculated based on her 2019 age of 71 and her account balance as of Dec. 31, 2018. This distribution catches her up on her requirements, and during all subsequent years, she is only required to take one RMD.</p> <p>The required beginning date is similar for anyone with later birthdays. Let's say you're a Virgo with an Aug. 31, 1948 birthday. You'll turn 70&frac12; on Feb. 28, 2019, which means you won't have to take your first RMD until April 1, 2020, and you'll calculate the amount based on your age of 71 (which is your age as of Dec. 31, 2018) as well as your account balance as of Dec. 31, 2018 &mdash; the year before you turned 70&frac12;. In addition to the April 1, 2020 distribution you will also have to take your 2020 RMD by Dec. 31, 2020, which you will calculate based on your age then of 72, and your account balance on Dec. 31, 2019.</p> <h2>Figuring out your required beginning date</h2> <table> <tbody> <tr> <td> <p><strong>If your birthday falls between Jan. 1 and June 30</strong></p> </td> <td> <p><strong>If your birthday falls between July 1 and Dec. 31</strong></p> </td> </tr> <tr> <td> <p>Your required beginning date is April 1 of the calendar year you turn 71.</p> </td> <td> <p>Your required beginning date is April 1 of the calendar year you turn 72.</p> </td> </tr> <tr> <td> <p>You will use the age of 70 to calculate your first RMD amount.</p> </td> <td> <p>You will use the age of 71 to calculate your first RMD amount.</p> </td> </tr> <tr> <td> <p>Your second RMD is due by Dec. 31 of the calendar year you turn 71.</p> </td> <td> <p>Your second RMD is due by Dec. 31 of the calendar year you turn 72.</p> </td> </tr> </tbody> </table> <h2>How your RMDs are taxed</h2> <p>Since the entire exercise of taking RMDs is about making sure you pay the income taxes you owe, it's important to understand how your distributions will be taxed.</p> <p>Your RMDs will be taxed as regular income at your applicable federal tax rate for the tax year for which you are making the withdrawal. This, in fact, may be the easiest-to-understand aspect of RMDs.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fwhat-every-retirement-saver-should-know-about-required-minimum-distributions&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FWhat%2520Every%2520Retirement%2520Saver%2520Should%2520Know%2520About%2520Required%2520Minimum%2520Distributions.jpg&amp;description=What%20Every%20Retirement%20Saver%20Should%20Know%20About%20Required%20Minimum%20Distributions"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;">&nbsp;<img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/What%20Every%20Retirement%20Saver%20Should%20Know%20About%20Required%20Minimum%20Distributions.jpg" alt="What Every Retirement Saver Should Know About Required Minimum Distributions" width="250" height="374" /></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/what-every-retirement-saver-should-know-about-required-minimum-distributions">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/6-age-milestones-that-impact-your-retirement">6 Age Milestones That Impact Your Retirement</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/11-basic-questions-about-retirement-saving-everyone-should-ask">11 Basic Questions About Retirement Saving Everyone Should Ask</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/7-things-you-need-to-know-about-401k-hardship-withdrawals">7 Things You Need to Know About 401(k) Hardship Withdrawals</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/the-penalty-free-way-to-withdraw-retirement-money-early">The Penalty-Free Way to Withdraw Retirement Money Early</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/three-of-the-toughest-decisions-youll-face-in-retirement">Three of the Toughest Decisions You&#039;ll Face in Retirement</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401(k) age 70 ½ IRA IRS penalties required minimum distributions rmds taxes Wed, 10 Jan 2018 09:30:11 +0000 Emily Guy Birken 2084542 at http://www.wisebread.com