taxes http://www.wisebread.com/taxonomy/term/24/all en-US 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> <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-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-2 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-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/dont-know-what-annuities-are-you-might-be-missing-out">Don&#039;t Know What Annuities Are? You Might Be Missing Out</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-age-milestones-that-impact-your-retirement">6 Age Milestones That Impact Your Retirement</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/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> <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-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-money-software-tools-worth-the-price">7 Money Software Tools Worth the Price</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-biggest-ways-procrastination-hurts-your-finances">7 Biggest Ways Procrastination Hurts Your Finances</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-little-ways-to-boost-your-savings-account-every-day">9 Little Ways to Boost Your Savings Account Every Day</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/stop-believing-these-5-home-refinance-myths">Stop Believing These 5 Home Refinance Myths</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-build-equity-in-your-home">How to Build Equity in Your Home</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-home-buying-habits-we-can-learn-from-millennials">4 Home-Buying Habits We Can Learn From Millennials</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/heres-why-your-house-is-not-an-investment">Stop Thinking of Your House as an Investment</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/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-2 views-row-even"> <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-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-ways-to-profit-off-your-cabin-fever">8 Ways to Profit Off Your Cabin Fever</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-signs-youre-financially-ready-to-start-a-family">7 Signs You&#039;re Financially Ready to Start a Family</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-ways-workaholism-is-costing-you-money">6 Ways Workaholism Is Costing You Money</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/dont-let-these-expenses-spoil-your-retirement-abroad">Don&#039;t Let These Expenses Spoil Your Retirement 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/13-financial-steps-to-take-before-retiring-abroad">13 Financial Steps to Take Before Retiring Abroad</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-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-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-2 views-row-even"> <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-3 views-row-odd"> <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-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-reasons-every-millennial-needs-a-roth-ira">6 Reasons Every Millennial Needs a Roth IRA</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/8-signs-youre-making-all-the-right-moves-for-retirement">8 Signs You&#039;re Making All the Right Moves for Retirement</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/optimize-your-ira-and-401k">Optimize Your IRA and 401(k)</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-cost-of-finding-a-treasure-chest-full-of-gold">The Cost of Finding a Treasure Chest Full of Gold</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-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/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/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-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-tax-day-is-april-15-and-other-weird-financial-deadlines">Why Tax Day Is April 15 and Other Weird Financial Deadlines</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/if-you-want-your-401k-to-grow-stop-doing-these-6-things">If You Want Your 401K to Grow, Stop Doing These 6 Things</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/3-common-retirement-regrets-you-can-avoid">3 Common Retirement Regrets You Can Avoid</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 4 Easy Ways to Get Richer In 2018 http://www.wisebread.com/4-easy-ways-to-get-richer-in-2018 <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/4-easy-ways-to-get-richer-in-2018" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/smiling_woman_posing_with_piggy_bank.jpg" alt="Smiling woman posing with piggy bank" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>The new year is a great time to start practicing better financial habits. Implementing good money habits on January 1 and committing to keeping them up throughout the year will make you richer by the end of 2018 than you were at the start.</p> <p>Read on to learn just how much adopting these habits can enrich you throughout 2018.</p> <h2>1. Increase your 401(k) contribution by 1 percent: End 2018 with nearly $1,000 more</h2> <p>You are certainly aware of the importance of saving for retirement. Putting money aside when you are young will allow compound interest to do its magic and provide you with a comfortable retirement. In addition, if your employer matches some of your contributions to your retirement account, you can increase your retirement nest egg that much faster.</p> <p>But if you already feel financially squeezed, you might assume that it's not worth the trouble to put aside the little bit extra. That is simply untrue. With just a 1 percent additional contribution to your 401(k), you could end 2018 almost $1,000 richer than if you'd instead blown that money on something frivolous.</p> <p>Here's how. The average full-time wage and salary worker in the U.S. currently earns $44,668 per year, according to the Bureau of Labor Statistics. Let's say that's your salary. That means increasing your savings rate by 1 percent would add $446 more per year to your retirement account. And since $446 over 12 months is only going to result in $18.60 deducted from your bimonthly paychecks, it's unlikely you'll even notice the difference.</p> <p>If your employer matches your contribution and you have not yet maxed out the matching amount, that $446 will magically become $892.</p> <p>The average rate of return for 401(k) plans ranges between 5 and 8 percent per year. If we assume an 8 percent return on the investment of $892, that's $71.36 in growth for 2018 alone. So for a mere $18.60 per paycheck, you might end the year $963.36 richer.</p> <p>And even if you are not lucky enough to have employer matching &mdash; or you've already maxed it out &mdash; you could get the same result by increasing your 401(k) contribution by 2 percent. That would still only &quot;cost&quot; you $37.22 per bimonthly paycheck, and result in nearly $1,000 in additional wealth by the end of the year. (See also: <a href="http://www.wisebread.com/5-simple-ways-to-boost-an-underperforming-401k?Ref=seealso" target="_blank">5 Simple Ways to Boost an Underperforming 401(k)</a>)</p> <h2>2. Reduce how often you dine out: End 2018 with $900 more</h2> <p>According to a 2016 Zagat survey on American dining, the average person eats a restaurant- or commercially-prepared meal 4.5 times a week. All that dining out adds up. The Bureau of Labor Statistics found the average American household spent $3,154 on restaurant dining in 2016.</p> <p>If you cut out one restaurant meal per week in 2018, you can end the year $455 richer. Cut out two meals per week, and you'll have $911 more in your pocket.</p> <p>Here's the math. The Bureau of Labor Statistics calculates that the average American household spent $4,049 in 2016 on groceries. Assuming those households are dining out 4.5 times per week or for 234 meals per year &mdash; we can figure out exactly how much you save by brown bagging your lunch or eating at home.</p> <p>Presuming you eat three meals a day, seven days a week, 52 weeks of the year, there are a total of 1,092 meals to account for in the year. If you're eating 234 of those meals at restaurants, you are spending $4,049 per year on 858 meals at home (1,092 meals total - 234 restaurant meals = 858 meals at home). Now, $4,049 divided by 858 meals comes to an average cost of $4.71 per meal.</p> <p>If you're spending $3,154 on 234 restaurant meals per year, you're spending an average $13.47 per meal ($3,154 / 234 meals = $13.47). That means you're saving $8.76 per meal whenever you eat at home rather than at a restaurant ($13.47 - $4.71 = $8.76).</p> <p>Let's say you reduce your dining out by one meal per week, or 52 meals total. That will save you $455.52 total ($8.76 x 52 = $455.52). Reduce your dining out by two meals per week, or 104 meals total for the year, and you'll save about $911.04 ($8.76 x 104 = $911.04). (See also: <a href="http://www.wisebread.com/are-you-eating-the-10-most-over-priced-restaurant-menu-items?Ref=seealso" target="_blank">Are You Eating the 10 Most Over-Priced Restaurant Menu Items?</a>)</p> <h2>3. Send an extra $100 to your credit card each month: Save more than $1,000 in interest</h2> <p>According to ValuePenguin, the average indebted household carrying credit card debt owes $10,955. According to CreditCards.com, the average APR is 16.15 percent, which works out to 0.013 percent per day. This means the average household will pay $3,675 in interest over the life of the loan if they make the minimum payment of 3 percent (or $329) per month, and it will take 45 months (that is, from January 2018 all the way through to October 2021) to reach the payoff date.</p> <p>But if you send just $100 more to your credit card per month, you'll save $1,117 in interest, and cut a full 13 months off your repayment schedule. You can achieve this by simply putting an additional $50 from each bimonthly paycheck toward debt repayment. That would also help you reach debt freedom a year earlier. (See also: <a href="http://www.wisebread.com/the-fastest-method-to-eliminate-credit-card-debt?ref=seealso" target="_blank">The Fastest Method to Eliminate Credit Card Debt</a>)</p> <h2>4. Do more with your tax refund: End 2018 with nearly $6,500 more</h2> <p>If you're like the average American, your tax refund in 2017 was around $3,050. But too many people fritter that money away. While it's certainly exciting to get a payday from Uncle Sam every tax season, you could be doing much more with your money than blowing it as soon as the IRS check clears.</p> <p>Let's say you file your return in April and get your refund in May. If you put that $3,050 into an index fund by June and it earns 8 percent interest, you'll have $3,195 by the end of the year. That's $145 in earnings.</p> <p>In addition to that, you decide to change your withholding in January 2018 so you're not giving the IRS an interest-free loan. You keep $254 more from each paycheck ($3,050/12 = $254), and invest it in that 8 percent index fund. By the end of the year, you'll have earned $135 in interest, for a total of $3,183.</p> <p>All together, your savings and interest add up to $6,378 for 2018. That's a hefty boost to your long-term financial security in exchange for saving the tax windfall you would have otherwise spent.</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-easy-ways-to-get-richer-in-2018&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F4%2520Easy%2520Ways%2520to%2520Get%2520Richer%2520In%25202018.jpg&amp;description=4%20Easy%20Ways%20to%20Get%20Richer%20In%202018"></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%20Easy%20Ways%20to%20Get%20Richer%20In%202018.jpg" alt="4 Easy Ways to Get Richer In 2018" 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/4-easy-ways-to-get-richer-in-2018">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-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-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-come-up-with-1000-in-the-next-30-days">How to Come Up With $1,000 in the Next 30 Days</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-ways-you-can-cut-costs-right-before-you-retire-0">6 Ways You Can Cut Costs Right Before You Retire</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/youve-been-saving-money-all-wrong-heres-why">You&#039;ve Been Saving Money All Wrong. Here&#039;s Why</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-millennials-with-kids-may-become-the-richest-retirees-yet">How Millennials With Kids May Become the Richest Retirees Yet</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Extra Income 401(k) contributions credit card debt cutting costs expenses restaurants richer saving money taxes withholdings Mon, 01 Jan 2018 09:00:07 +0000 Emily Guy Birken 2074908 at http://www.wisebread.com 5 Retirement Struggles Nobody Talks About — And How to Beat Them http://www.wisebread.com/5-retirement-struggles-nobody-talks-about-and-how-to-beat-them <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-retirement-struggles-nobody-talks-about-and-how-to-beat-them" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/retired_woman_laptop_520055262.jpg" alt="Woman beating common retirement struggles" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>If you have ever sat down with a financial planner, you know that one of the main questions that comes up is, &quot;How much income do you think you'll need when you retire?&quot;</p> <p>When I was asked this question, the first answer that popped into my head was, &quot;Hardly any!&quot; In the retirement scenario in my mind, my kids were independent and my home was paid off, leaving few financial obligations. When pressed, I acknowledged that I might need some money for taking fun vacations with all that free time I'll have, and for buying gifts for my grandchildren.</p> <p>While it's true that a lot of the big expenses of our working lives have ideally been paid off by retirement, retirees still face a lot of financial obligations. Retirement is not all learning to paint or strolling on the beach &mdash; despite what prescription drug ads may lead you to believe. A 2016 study by the U.S. General Accounting Office found that retirees on average spend 77 percent of what they spent while they were working, with spending declining decade by decade as retirees age. (See also: <a href="http://www.wisebread.com/9-unexpected-expenses-for-retirees-and-how-to-manage-them?ref=seealso" target="_blank">9 Unexpected Expenses for Retirees &mdash; And How to Manage Them</a>)</p> <p>Let's go through some of the retirement expenses you may not have accounted for, and how to deal with them.</p> <h2>1. Health care</h2> <p>While other expenses shrink after retirement, medical care spending increases. In the present day, the increase is modest. The same U.S. General Accounting Office report found that retirees ages 65 to 79 spend an average $5,000 a year on health care, compared to $3,900 for workers aged 50 to 64. But predictions for future health care expenses in retirement are dire.</p> <p>HealthView Services' 2017 Retirement Health Care Costs Data Report predicts that medical costs will rise 5.47 percent per year for the foreseeable future &mdash; meaning that today's 65-year-old may be spending $10,000 or more per year on health care by age 75, on top of Medicare coverage.</p> <p>&quot;Health care will be one of the most significant retirement expenditures; however, the savings required to cover this expense may be modest &mdash; especially if one has been utilizing an income replacement ratio (IRR) of 75% to 85%,&quot; warns the report.</p> <p>HealthView recommends talking to your planner not just about income replacement, but also about what you expect medical expenses to be based on your current health. Look at optimizing your retirement portfolio to address those needs. For example, some advisers recommend saving for retirement medical expenses using a health savings account &mdash; although these are only available to workers who have high-deductible health plans. (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> <p>Managing health conditions proactively can also make a big difference in expenses over a lifetime.</p> <p>&quot;A 50-year-old male with type II diabetes can save (an average of) $5,000 per year in pre-retirement health expenses by shifting from Poorly Managed to Well Managed care,&quot; the report says.</p> <h2>2. Taxes</h2> <p>You might expect your income tax to disappear or decline steeply when you retire, but remember that withdrawals from 401(k) plans and traditional individual retirement accounts are taxable, as are most pensions and some Social Security benefits. If your retirement plan involves collecting rent on properties you own, well, that's taxable too. And if you have paid off your mortgage before retiring, remember that you just lost a big tax deduction in the form of mortgage interest payments.</p> <p>The problem of taxes during retirement is the reason many workers also invest in a Roth IRA or Roth 401(k) plan. Unlike a regular retirement account, which you fill with untaxed income, only paying taxes on withdrawals, a Roth takes income you already paid taxes on, and withdrawals are tax free. Since no one knows how tax rates when you retire will compare to tax rates today, many advisers recommend spreading investments across both kinds of accounts to hedge your bets. (See also: <a href="http://www.wisebread.com/heres-how-your-taxes-will-change-when-you-retire?ref=seealso" target="_blank">Here's How Your Taxes Will Change When You Retire</a>)</p> <p>Another thing to consider when retired is whether you plan to make charitable donations part of your estate plan. If you were going to give away thousands of dollars to charities in your will, for example, discuss with an accountant setting up a schedule of giving while you're alive, instead, so that you could take annual tax deductions that could reduce or eliminate taxes you owe.</p> <h2>3. Inflation</h2> <p>In recent years, inflation has been low, but the long term average annual rate of price increases is 3.22 percent. That means that if you retire with benefits and savings designed to cover 80 percent of your current income, those same benefits will cover a smaller portion of your current spending each year, if not invested to grow at a rate faster than inflation. This is why financial planners never advise keeping your life savings in cash, stuffed in a mattress.</p> <p>Of course in retirement you don't want to take on big risks with investments, since you can't earn more money to replace what you lose. But you also can't be too conservative or you risk having inflation shrink your savings each year. With interest rates as low as they are, you can't count on earnings from certificates of deposit to surpass inflation. For most retirees, that means you must have some money in stocks, bonds, or other investments. And you must stick to your investment plan, even if the market gets rocky. (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>4. End of life</h2> <p>When you plan your retirement, you're likely thinking more about all the golf you want to play or the traveling you want to do, not so much about spending your final years in a nursing home or planning your funeral. Unfortunately, those less fun expenses must also be planned for.</p> <p>Take a realistic look at how much assisted living and nursing homes cost. If you are still young enough to get it, look into long-term care insurance. Discuss with your family whether they expect you to move in with them if you need more care later in life, or if they would prefer you plan for nursing home care or assisted living. If long-term care needs seem imminent, meet with an attorney who specializes in making Title XIX plans; they can help you learn what assets can be shielded from being liquidated to pay for care. (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>Medical expenses tend to jump in the final years, costing about $7,000 to $8,000 more per year in the last two years of life, according to HealthView Services.</p> <p>Consider prepaying funeral expenses so that it's not a cost hanging over your head as you enjoy retirement. And certainly meet with an estate planner as part of your retirement planning to make provisions for the distribution of wealth after you are gone. (See also: <a href="http://www.wisebread.com/9-end-of-life-cost-savings-your-survivors-will-thank-you-for?ref=seealso" target="_blank">9 End-of-Life Cost Savings Your Survivors Will Thank You For</a>)</p> <h2>5. Mandatory withdrawals</h2> <p>The moment you turn age 70 and a half, you are required to take minimum distributions from your IRA, 401(k), and other retirement accounts on a schedule set by the IRS. This doesn't sound like a problem &mdash; after all, this is what you saved all that money for. But what if you don't need to spend the required distribution this year? Unfortunately, you still have to withdraw it, and pay taxes on it, or the IRS will confiscate 50 percent of the money you were supposed to withdraw in the form of a tax penalty.</p> <p>While you can't change the IRS's schedule for required withdrawals, and you can't roll the distribution into a different tax-deferred account, you can plan for this requirement and schedule income and spending around it. For instance, you can avoid selling real estate or other investments, or scale back work hours if you are still working, and allow the income you are getting from your retirement account to replace other income. And of course, you can always invest your distribution outside of retirement accounts, if you don't need to spend it.</p> <p>Another way to conquer the mandatory distribution is to plan for it while saving for retirement, for example by putting some income into a Roth IRA, which doesn't have required distributions. As you approach retirement, if your IRA distributions look like they will be too large for you to use, you may also talk to a planner about converting a traditional account into a Roth.</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%2F5-retirement-struggles-nobody-talks-about-and-how-to-beat-them&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F5%2520Retirement%2520Struggles%2520Nobody%2520Talks%2520About%2520%25E2%2580%2594%2520And%2520How%2520to%2520Beat%2520Them.jpg&amp;description=5%20Retirement%20Struggles%20Nobody%20Talks%20About%20%E2%80%94%20And%20How%20to%20Beat%20Them"></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/u5180/5%20Retirement%20Struggles%20Nobody%20Talks%20About%20%E2%80%94%20And%20How%20to%20Beat%20Them.jpg" alt="5 Retirement Struggles Nobody Talks About &mdash; And How to Beat Them" 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/5-retirement-struggles-nobody-talks-about-and-how-to-beat-them">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-expensive-mistakes-of-the-newly-retired">9 Expensive Mistakes of the Newly Retired</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-signs-its-time-to-retire">8 Signs It&#039;s Time to Retire</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-overcome-these-4-common-retirement-fears">How to Overcome These 4 Common Retirement Fears</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-age-milestones-that-impact-your-retirement">6 Age Milestones That Impact Your Retirement</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-questions-financial-advisers-hear-most-often">8 Questions Financial Advisers Hear Most Often</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement end of life costs expenses health care hidden costs inflation investments long term care required minimum distributions social security taxes Mon, 04 Dec 2017 09:00:07 +0000 Carrie Kirby 2065326 at http://www.wisebread.com 8 Signs You're a "Helicopter Investor" (And How to Stop) http://www.wisebread.com/8-signs-youre-a-helicopter-investor-and-how-to-stop <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/8-signs-youre-a-helicopter-investor-and-how-to-stop" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/man_with_newspaper.jpg" alt="Man with newspaper" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>We're all familiar with the term &quot;helicopter parent&quot; in reference to the mom or dad that hovers over every aspect of their child's life. Do you have a similar approach to investing? Do you obsess over every detail of your portfolio? Are you constantly checking in, even when it's clear your stocks are handling things pretty well on their own?</p> <p>If so, you may be a &quot;helicopter investor,&quot; and it may be costing you money as well as your peace of mind. Watch out for these warning signs. (See also: <a href="http://www.wisebread.com/11-investment-mistakes-we-all-make?ref=seealso" target="_blank">11 Investment Mistakes We All Make</a>)</p> <h2>1. You check your portfolio every day</h2> <p>How often do you log in to see your investment account? Are you checking in every day, or even multiple times a day? Monitoring your investments is important, but there's no real need to check in on them that frequently. Most people can get away with looking at things once a week, and could probably go months without a check-in as long as they are paying attention to broader market movements.</p> <p>Checking your investments frequently might tempt you to fiddle with them. You might sell or buy stocks based on emotion. You'll get angry when investments go down slightly, and irrationally happy when they go up.</p> <p>Consider setting a personal policy of checking your investments once a week (or even less) at a certain time, and have a plan for what you want to accomplish when you do. (See also: <a href="http://www.wisebread.com/5-essentials-for-building-a-profitable-portfolio?ref=seealso" target="_blank">5 Essentials for Building a Profitable Portfolio</a>)</p> <h2>2. You watch a lot of financial news programs</h2> <p>Any smart investor should follow the news and be aware of market trends, but tuning in constantly to CNBC or another financial channel is completely unnecessary. If you want to tune in once to see where the market closes, fine. But you never want to find yourself watching for hours a day, reacting to every stock tip and piece of advice from a talking head.</p> <p>Proper retirement investing requires time and patience. Watching too much financial news can lead you to think that every business event is more significant than it actually is. Unless you are a day trader or professionally manage a fund, you can do without the information overload. (See also: <a href="http://www.wisebread.com/want-your-investments-to-do-better-stop-watching-the-news?ref=seealso" target="_blank">Want Your Investments to Do Better? Stop Watching the News</a>)</p> <h2>3. You subscribe to too many financial publications</h2> <p>There are many great financial publications out there that can help you hone your investing prowess, but many of them also have similar content. Subscribing to one or two publications is useful, but subscribing to a half dozen or more or is overkill. This is especially true today, when there is a lot of solid advice available online for free.</p> <p>Consider subscribing to one or two well-respected financial news sources to stay on top of the latest trends and market performance. Chances are, you'll make out just fine.</p> <h2>4. You have alerts on your phone</h2> <p>Smartphone apps have certainly made it easier to track and trade investments. I draw the line, however, in setting up alerts to tell you about the activity of specific investments. The average investor does not need to know, for example, that Amazon's stock just hit $180 per share, or that the market fell 1 percent on the day.</p> <p>Ideally, your investments are working behind the scenes to make you money while you live your life. Turn off any notifications that would encourage you to check your investments more often than necessary. In fact, consider getting rid of the smartphone investing apps altogether.</p> <h2>5. You panic when investments decline</h2> <p>Guess what? Sometimes your investments lose money. They are not guaranteed to go up day after day. If this bothers you, and you find yourself buying and selling stocks while in the midst of emotional meltdowns, you may be a helicopter investor.</p> <p>No one wants to see stocks decline, but if you are invested in the long term, you should be able to overcome a blip in the market. And any money you need within a few years shouldn't be tied up in the markets anyway.</p> <p>If you're getting emotional every time you see stocks go down, do yourself a favor and back away from your computer screen. Breathe. Go do something else. Your portfolio will be fine, and you won't have to deal with the shame of making a bad situation worse by reacting in the moment.</p> <h2>6. You obsess over rebalancing</h2> <p>It's always a good idea to check your portfolio to make sure it's not out of whack. You don't want to wake up one morning and find that you're 85 percent invested in volatile tech stocks, for example. A properly balanced portfolio will be well-diversified and will match your risk tolerance.</p> <p>However, most portfolios don't need to be rebalanced all that often. Remember that every time you rebalance, you are likely to incur transaction fees for every trade, and there may be tax implications as well. There's a cost to rebalancing too frequently. Once a year or once every six months for a rebalancing check-in should usually do the trick.</p> <h2>7. You're constantly going after the hottest thing</h2> <p>So you heard some buzz about Bitcoin, and now you want in. You saw Facebook's shares rise 5 percent in a week, so you jump. You're paying such close attention to your investments and the market that you're going after short-term hits rather than maintaining a long-term, disciplined approach.</p> <p>Going after the hot thing often results in you buying high and selling low, which is the opposite of the ideal investing approach. It's fine to be generally aware of what's hot in the markets, but don't be like the cat going after the shiny toy.</p> <h2>8. Transaction fees and taxes are cutting into your gains</h2> <p>Buying and selling stocks has gotten cheaper in recent years, but most discount brokerages will still charge you at least $4.95 for every trade. So if you are constantly checking your portfolio and constantly buying and selling, this can add up. Consider that if you buy 10 shares of a stock at $50 a share, you've automatically given away 1 percent of your investment. If you are buying and selling smaller lots, that's an even higher percentage.</p> <p>Additionally, selling stocks can come with tax implications if you are trading in a taxable brokerage account. If you sell a stock soon after buying it, you may pay a short-term capital gains rate, which can be as high as 39.6 percent.</p> <p>Buying and selling stocks can be enjoyable, but if you do it too frequently, there's a cost involved. Hovering over your portfolio and constantly looking to trade can actually make a dent in your earnings over time. (See also: <a href="http://www.wisebread.com/4-sneaky-investment-fees-to-watch-for?ref=seealso" target="_blank">4 Sneaky Investment Fees to Watch For</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-signs-youre-a-helicopter-investor-and-how-to-stop&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F8%2520Signs%2520You%2527re%2520a%2520_Helicopter%2520Investor_%2520%2528And%2520How%2520to%2520Stop%2529.jpg&amp;description=8%20Signs%20You're%20a%20%22Helicopter%20Investor%22%20(And%20How%20to%20Stop)"></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%20Signs%20You%27re%20a%20_Helicopter%20Investor_%20%28And%20How%20to%20Stop%29.jpg" alt="8 Signs You're a &quot;Helicopter Investor&quot; (And How to Stop)" 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-signs-youre-a-helicopter-investor-and-how-to-stop">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-costly-mistakes-diy-investors-make">9 Costly Mistakes DIY Investors Make</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-surprising-ways-confidence-can-hurt-your-investments">8 Surprising Ways Confidence Can Hurt Your Investments</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-the-risk-averse-can-get-into-the-stock-market">How the Risk Averse Can Get Into the Stock Market</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-things-you-need-to-know-about-investing-in-company-stock">7 Things You Need to Know About Investing in Company Stock</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-too-much-investment-diversity-can-cost-you">How Too Much Investment Diversity Can Cost You</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment emotional investing financial news helicopter investing hovering obsessing rebalancing stock market taxes trading Fri, 01 Dec 2017 10:00:06 +0000 Tim Lemke 2063287 at http://www.wisebread.com 6 Ways Meeting the 2018 401(k) Contribution Limits Will Brighten Your Future http://www.wisebread.com/6-ways-meeting-the-2018-401k-contribution-limits-will-brighten-your-future <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-ways-meeting-the-2018-401k-contribution-limits-will-brighten-your-future" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/piggy_bank_with_retirement_formula.jpg" alt="Piggy Bank with retirement formula" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Starting next year, investors will be allowed to contribute more money into their 401(k)s. In 2018, the limit on annual contributions to a 401(k) plan will rise from $18,000 to $18,500.</p> <p>That additional $500 may not seem like a lot, but you should try and hit the new maximum if you can. Maxing out your 401(k) is often the best way to accumulate a healthy sum for retirement, and there are great tax benefits as well.</p> <p>If you're on the fence about whether you need to direct another $500 into your 401(k), consider these arguments.</p> <h2>1. It could net you tens of thousands of dollars</h2> <p>It's not easy to contribute $18,500 annually into a retirement account. But if you can do it, that extra $500 each year can really pay off. Let's say you're 30 years old and plan to retire at age 65. Assuming a conservative 7 percent return, that extra $500 annually could mean an additional $74,000 overall. If you start contributing that extra $500 starting at age 25, and keep doing it for 40 years, the difference is $106,000 over time &mdash; more than an entire year's worth of living expenses for many people.</p> <h2>2. It's more money for you and less to taxes</h2> <p>If you have $500 in income available, that's money that the IRS will get a share of, unless you place it in a 401(k) plan or traditional IRA. Any money you contribute to these retirement accounts is deducted from your taxable income. If you are in a high tax bracket, that $500 could actually just represent about $300 in your paycheck. If Uncle Sam would take that much anyway, why not invest the whole amount instead?</p> <h2>3. You can find $42 a month</h2> <p>If you are at the maximum contribution now, you can find a way to hit the new ceiling. Eat out less. Ditch the morning coffee. Quit that gym you never go to. If you break down $500 over the course of a year, it comes out to less than $42 a month &mdash; or barely $10 a week. That's the cost of a mediocre lunch out. Even the smallest amount of belt-tightening can help you hit this goal, and it's probably not money you'll notice. But you'll notice it later at retirement time.</p> <h2>4. You may have already maxed out your IRA</h2> <p>If you've been placing money in an individual retirement account (IRA), you may be aware that contribution limits are lower than 401(k) plans. People under age 50 are permitted to contribute only $5,500 each year to an IRA, and it's not uncommon for people to hit that maximum. If your IRA is maxed out, having permission to place an additional $500 in a 401(k) is a huge bonus.</p> <h2>5. The limit might be decreased in the future</h2> <p>We should be thankful that in 2018, the 401(k) contribution limit is rising. That's because some members of Congress have suggested that the limit could be drastically reduced in the future as part of tax reform. Thankfully, it seems like discussion of such changes has been tabled, but there's no guarantee the idea won't be resurrected in the future. In the meantime, it's a good idea to contribute as much as you can.</p> <h2>6. Where else are you going to put your money?</h2> <p>If you have $500 a year to spare, the stock market may be the smartest place to put it. Interest rates are still very low, so placing it into the bank would only result in a few bucks each year. And very few other investments offer the same kinds of consistent returns as stocks. Unless you plan to use the money to purchase a home or start a business, you likely won't do much better on a consistent basis than &mdash; or get the same tax advantages of &mdash; investing in stocks in a 401(k).</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%2F6-ways-meeting-the-2018-401k-contribution-limits-will-brighten-your-future&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F6%2520Ways%2520Meeting%2520the%25202018%2520401%2528k%2529%2520Contribution%2520Limits%2520Will%2520Brighten%2520Your%2520Future.jpg&amp;description=6%20Ways%20Meeting%20the%202018%20401(k)%20Contribution%20Limits%20Will%20Brighten%20Your%20Future"></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/u5180/6%20Ways%20Meeting%20the%202018%20401%28k%29%20Contribution%20Limits%20Will%20Brighten%20Your%20Future.jpg" alt="6 Ways Meeting the 2018 401(k) Contribution Limits Will Brighten Your Future" 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/6-ways-meeting-the-2018-401k-contribution-limits-will-brighten-your-future">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/should-you-choose-a-roth-401k-or-a-regular-401k">Should You Choose a Roth 401k or a Regular 401k?</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-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-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-only-8-rules-of-investing-you-need-to-know">The Only 8 Rules of Investing You Need 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/3-common-retirement-regrets-you-can-avoid">3 Common Retirement Regrets You Can Avoid</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-reasons-why-you-must-open-a-roth-ira-before-april-15">4 Reasons Why You Must Open a Roth IRA Before April 15</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment Retirement 401(k) limits government investing IRA mutual funds stocks taxes Wed, 29 Nov 2017 09:00:07 +0000 Tim Lemke 2058941 at http://www.wisebread.com The Cost of Finding a Treasure Chest Full of Gold http://www.wisebread.com/the-cost-of-finding-a-treasure-chest-full-of-gold <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/the-cost-of-finding-a-treasure-chest-full-of-gold" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/open_treasure_chest_on_the_beach.jpg" alt="Open treasure chest on the beach" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Most of us have had the fantasy of discovering hidden treasure. Maybe it's digging in the backyard and unearthing a chest of gold, or it washes up on the beach. However it happens in your mind, finding treasure and living happily ever after is the end of the story. But what about the costs and legalities involved? How much of that treasure would you actually get to keep?</p> <h2>First, can you legally keep the treasure?</h2> <p>&quot;Finders keepers, losers weepers.&quot; Is that an accurate description of the law when it comes to treasure, or finding anything of value? Well, yes and no. United States common law dictates that a treasure trove belongs to the finder. However, there are discrepancies to this in some states.</p> <p>For example, Texas does not recognize the common law regarding treasure troves. In Louisiana, found treasure must be split between the finder and the property owner. In Tennessee and Idaho, the treasure belongs to the landowner.</p> <p>In other states, you are required to make a reasonable effort to return found treasure to the rightful owner, which includes first taking it to the local police. If no one claims the find after a certain time period, it's yours. If you find treasure and do <em>not</em> report it or make efforts to return it to a rightful owner, you can be found guilty of theft. What's more, if the gold you find was due to criminal activity, it could well be claimed by the state if the rightful owner cannot be found.</p> <p>So, make sure you are free and clear in the eyes of the law before you think of spending a cent from that chest of gold.</p> <h2>How much of the treasure will be yours to own?</h2> <p>Again, this is going to vary depending on what you found and where you found it. Look at the example of the Schmitt family and the <a href="https://www.cbsnews.com/news/300-year-old-treasure-gold-found-schmitt-family-off-coast-florida/" target="_blank">treasure chest they found on a shipwreck</a> in 2015.</p> <p>Filled with gold and coins valued at over $1 million, it would seem they hit the jackpot. However, the haul was discovered on a wreck off the coast of Florida. By law, the state collected 20 percent of that $1 million, and as the wreck was owned by a company called Queens Jewels, LLC, the remaining gold had to be split 50-50 between that company and the Schmitts. That reduced their $1 million find to $400,000.</p> <p>You may get lucky and find your treasure on a piece of land not owned by anyone, and live in a state that abides by the treasure trove law. But guess what? You still have to pay Uncle Sam ...</p> <h2>That treasure chest's value must be reported to the IRS</h2> <p>Taxes: It's a dirty word at the best of times, but it can really cast a dark cloud over your haul. IRS code section 61 states that &quot;gross income means all income from whatever source derived.&quot; While the tax code does not specifically call out buried treasure, it has been left broad enough to collect taxes on whatever the IRS deems to be income. And you can bet a find of valuable gold coins or jewels will make the IRS sit up and take notice. You can look for legal deductions to reduce your tax burden, but don't avoid paying it altogether. If you are living a Champagne lifestyle on a beer budget, the IRS will become suspicious. (See also: <a href="http://www.wisebread.com/35-bizarre-things-you-can-be-taxed-on?ref=seealso" target="_blank">35 Bizarre Things You Can Be Taxed On</a>)</p> <h2>Know what you're selling, and how to sell it</h2> <p>So, you've gone through all the steps, and the treasure chest is yours. It's time to sell the gold and pocket the cash, and you know you will have to report that money to the IRS. What are your options?</p> <p>For a start, you need to know exactly what it is that you're selling. Not all gold coins and jewelry are made alike. In some instances, you may have a very valuable artifact that has historical significance, or was made by a highly-prized designer. In that case, the object will be worth much more than the going rate for an ounce of gold. If you have these items appraised, and they are indeed collector's pieces, you will most likely have to put the object up for auction. In that case, the auction house will take a percentage of the final value.</p> <p>If, on the other hand, it's simply a bunch of gold that is worth the going market price, you should find legitimate sales avenues. The first place to go is a reputable jeweler in your area. Their main source of income comes from selling jewels, not trading in gold, and they will be less likely to rip you off. Avoid those &quot;cash for gold&quot; places; they will try to give you the least possible amount of money for your trade. The same is true of pawn stores. The owners aren't knowledgeable in what you have, and just want to buy low and sell high. Also, do your homework. What kind of gold do you have? If it's 24 carat gold, it will get the highest value.</p> <p>A box of treasure is a lucky find however you slice it &mdash; but you will not get to keep the whole amount unless you're intent on breaking the law and accepting the consequences.</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%2Fthe-cost-of-finding-a-treasure-chest-full-of-gold&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FThe%2520Cost%2520of%2520Finding%2520a%2520Treasure%2520Chest%2520Full%2520of%2520Gold.jpg&amp;description=The%20Cost%20of%20Finding%20a%20Treasure%20Chest%20Full%20of%20Gold"></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/The%20Cost%20of%20Finding%20a%20Treasure%20Chest%20Full%20of%20Gold.jpg" alt="The Cost of Finding a Treasure Chest Full of Gold" 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/the-cost-of-finding-a-treasure-chest-full-of-gold">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-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-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/cross-your-fingers-and-hope-you-re-not-caught-by-alternative-minimum-tax-amt-this-year">Cross your fingers and hope you’re not caught by Alternative Minimum Tax (AMT) this year.</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/what-can-you-do-if-you-cannot-afford-to-pay-your-taxes">What can you do if you cannot afford to pay your taxes</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-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-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-ways-to-profit-off-your-cabin-fever">8 Ways to Profit Off Your Cabin Fever</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Entertainment buried treasure common law gold hidden costs IRS taxes treasure chest valuables Tue, 28 Nov 2017 09:00:06 +0000 Paul Michael 2057737 at http://www.wisebread.com 8 Tips for Going Back to School as an Adult http://www.wisebread.com/8-tips-for-going-back-to-school-as-an-adult <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/8-tips-for-going-back-to-school-as-an-adult" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/african_woman_sitting_at_an_exam_in_college.jpg" alt="African woman sitting at an exam in college" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Whether you have never been to college, have some college credits from many years ago, or simply need to retool your education for a career change, there is much to be gained from going back to school. However, adult learners face a lot of risk factors that lead to dropping out before finishing a degree; things such as family obligations, financial shortcomings, and a tendency to attend school part time.</p> <p>With college costs steadily growing, the stakes are high; attending school without finishing a degree program could mean dealing with a mountain of debt and no job to help pay it off. Before diving into a degree or certificate program, do your homework to give yourself the best chance of success as an adult learner.</p> <h2>1. Choose a school that accommodates adult learners</h2> <p>One challenge adult learners face is feeling like they don't fit in with the much younger students on campus. Some find that the counseling services the school offers do not make sense for their situation in life. To avoid this problem, seek out a school that actively recruits older students.</p> <p>LendEdu ranks the <a href="https://lendedu.com/blog/colleges-for-adult-learners/" target="_blank">25 best colleges for adult learners</a>, taking into account factors such as on-campus child care, weekend classes and flexibility, and affordability. Its most recent list gives the top-ranking position to Delaware's Wilmington University, a private college that offers a wide range of professional certificate programs in addition to degrees.</p> <h2>2. Consider credit transferability when choosing a school</h2> <p>Another way the best schools accommodate nontraditional students is by accepting credits from other institutions. If you have earned prior credits from an educational institution, get an idea of how many would be accepted toward your new degree. Figure this out before enrolling, because the more credits that will transfer, the faster and cheaper your degree will be.</p> <h2>3. Choose a major that will help you reach your goals</h2> <p>Some 18-year-olds are OK with spending a couple of years in college finding themselves before focusing on a major that will lead to a specific career. Adults, not so much.</p> <p>A recent report from the University of Texas showed that the choice of academic major was the biggest factor in determining how much graduates from UT earned. In fact, your major appears to matter more than how good a school you get into, the report says.</p> <p>&quot;[G]raduates who majored in architecture and engineering at a UT System open-access college have median earnings that are higher than 61 percent of all UT System graduates at selective colleges,&quot; the report reads. After architecture and engineering, the highest earning major categories for UT students were computers, statistics, and mathematics; followed by health, then business. The lowest-earning majors were in the arts, psychology and social work, and biology and life sciences.</p> <p>Of course, you can't just blindly choose a major based on how much money graduates make. It also has to be a good match for you. Take an online assessment or work with a career consultant to figure out what field best matches your strengths.</p> <h2>4. Tap a range of funding sources</h2> <p>Don't assume that because you're an adult, you won't qualify for aid. In fact, there is no age limit for receiving federal student aid in the form of grants, loans, and work-study programs. There are also scholarships for adult learners, such as the Jeannette Rankin Foundation Scholarship, reserved for students age 35 or older. If you are or have been in the military, there are a host of <a href="https://studentaid.ed.gov/sa/types/grants-scholarships/military" target="_blank">student financial aid programs for veterans and military personnel</a>. Also, find out if your employer pays for continuing education; many workplaces will fund entire degrees for employees. (See also: <a href="http://www.wisebread.com/these-17-companies-will-help-you-repay-your-student-loan?ref=seealso" target="_blank">These 17 Companies Will Help You Repay Your Student Loan</a>)</p> <p>Once you have exhausted every avenue for funds you don't have to pay back, look into using your own assets for school as well. Although you should always proceed with caution when tapping into retirement accounts, it is possible in some circumstances to withdraw money from retirement accounts to pay educational expenses penalty free. (See also: <a href="http://www.wisebread.com/yes-you-can-pay-for-education-with-an-ira?Ref=seealso" target="_blank">Yes, You Can Pay for Education With an IRA</a>)</p> <h2>5. Investigate online or hybrid programs</h2> <p>Going to school around a busy schedule of work and family makes online college a popular choice. You can often watch lectures on your own schedule and avoid wasting time traveling to and from a campus. You can try many online courses for free &mdash; usually without credit &mdash; to see if online learning works for you. Check the <a href="https://www.edx.org/" target="_blank">courses listed at edX</a>, for example.</p> <p>A growing program type that appeals to many nontraditional students is the hybrid model, which combines online lectures with some classroom time for discussion. For instance, Northwestern University offers hybrid graduate programs aimed at professionals, which combines online lectures with a limited number of on-campus seminars.</p> <h2>6. Take your exams early</h2> <p>If you need to take the LSAT for law school, the GRE for graduate school, the GMAT for business school, or even the SAT, sit for it well in advance of school application deadlines. This takes a bit of the pressure off; when you know you have time to retake the test if necessary, you can relax and do your best.</p> <h2>7. Make a plan to balance life, work, and school</h2> <p>It could be that many adult learners end up dropping out because they mistakenly assumed they would somehow &quot;find time&quot; for coursework. Even if you start slow, going to school is like a part-time job, and you must allocate the hours to make it happen. Finding the hours might mean cutting back on work, eliminating a pleasurable activity such as watching TV, or dropping out of organized activities such as a sports team. One activity you cannot borrow hours from without negative consequences is sleep.</p> <p>It's also important to make sure family members, friends, and even coworkers and bosses know and respect that you need time and space to complete your coursework. You may have to say no when someone asks you to work overtime or pass up on volunteering for organizations you may have helped in the past.</p> <p>Research shows that when we work with interruptions, not only does it take time to get back on task, but we feel more stressed and frustrated. To avoid wanting to quit, it's important to carve out space for yourself to work uninterrupted. Build child care costs into your college budget if necessary, and make sure you have a quiet place to work away from the bustle of household life.</p> <h2>8. Know the tax benefits</h2> <p>Make sure you don't miss out on tax breaks available for returning students, such as the American Opportunity Tax Credit, the Lifetime Learning Credit, and tax deductions on interest on student loans. (See also: <a href="http://www.wisebread.com/dont-skip-these-8-tax-breaks-for-students?Ref=seealso" target="_blank">Don't Skip These 8 Tax Breaks for Students</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-tips-for-going-back-to-school-as-an-adult&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F8%2520Tips%2520for%2520Going%2520Back%2520to%2520School%2520as%2520an%2520Adult.jpg&amp;description=8%20Tips%20for%20Going%20Back%20to%20School%20as%20an%20Adult"></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%20Tips%20for%20Going%20Back%20to%20School%20as%20an%20Adult.jpg" alt="8 Tips for Going Back to School as an Adult" 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/8-tips-for-going-back-to-school-as-an-adult">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/how-your-child-can-earn-college-credits-in-high-school-for-cheap">How Your Child Can Earn College Credits in High School (For Cheap)</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-apply-to-lots-of-colleges-without-going-broke">How to Apply to Lots of Colleges Without Going Broke</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/12-surprising-ways-to-get-more-college-financial-aid">12 Surprising Ways to Get More College Financial Aid</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-questions-to-ask-before-taking-out-student-loans">6 Questions to Ask Before Taking Out Student Loans</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/8-tax-tricks-to-try-if-youre-stuck-with-student-loans">8 Tax Tricks to Try if You&#039;re Stuck With Student Loans</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Career Building Education & Training adult learners college continuing education credits majors online courses student aid taxes tuition Mon, 27 Nov 2017 09:30:10 +0000 Carrie Kirby 2057597 at http://www.wisebread.com 5 Details Your Financial Adviser May Be Ignoring http://www.wisebread.com/5-details-your-financial-adviser-may-be-ignoring <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-details-your-financial-adviser-may-be-ignoring" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/mature_couple_meeting_with_financial_advisor.jpg" alt="Mature Couple Meeting with Financial Advisor" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>All financial advisers are not created equal. And all financial advice &mdash; including advice recommended by top economists and financial experts &mdash; may not be the best advice for you.</p> <p>Your financial plan should encompass your complete financial picture, including your goals and priorities. It should include planning for your children, your spouse, aging parents, long-term care, death, loss of income, and so much more. But just because these things <em>should</em> be included in your plan doesn't mean your adviser is automatically doing so.</p> <p>Here are five key things your financial adviser may ignore or omit telling you.</p> <h2>1. He or she is not a financial fiduciary</h2> <p>The term financial adviser is becoming increasingly ambiguous. Due to the complex rules that determine who can call themselves a &quot;financial adviser,&quot; many professionals who are unqualified to give financial advice are unfairly operating under this label.</p> <p>Benjamin Brandt, a North Dakota financial adviser and host of the podcast <em>Retirement Starts Today Radio</em>, recommends that you only take advice from and follow a financial plan created by a qualified fee-only financial fiduciary. Fee-only fiduciaries are paid a flat fee that ensures they don't earn commissions on investment sales. Since they don't depend on commissions from sales, you won't have to question whether a fiduciary adviser is operating with your best interest at heart.</p> <p>To ensure you are working with a true financial fiduciary, Brandt recommends checking the adviser's credentials using the Paladin Registry, which offers a <a href="http://www.paladinregistry.com/research/credentials-financial-certifications" target="_blank">database of financial adviser designations</a> that can help determine if the adviser holds a professional designation (CFP, CPA, ChFC, and CFA) versus one they may have purchased online. (See also: <a href="http://www.wisebread.com/investment-advice-you-should-never-hear-from-your-financial-advisor?ref=seealso" target="_blank">Investment Advice You Should Never Hear From Your Financial Adviser</a>)</p> <h2>2. Your complete financial picture</h2> <p>Understanding your complete financial picture &mdash; including where you are currently and your future aspirations &mdash; is key in developing a true financial plan that is beneficial.</p> <p>According to Brandt, if a financial adviser shows you a glossy sales brochure and offers you investment products before ever looking at your budget, net worth statement, or written financial goals, you are not working with a fiduciary and should ignore his or her financial advice.</p> <p>Before sitting down with an adviser, it helps to take a good look at your finances. Things like calculating your net worth, setting your financial goals, and creating an informal budget before your first visit with an adviser can help you start off on the right foot.</p> <p>And while your calculations and budget may not be entirely accurate (hence the need for a financial adviser), you will have a better idea of where you are and what you have. It will provide your adviser with a more comprehensive financial picture. It will also allow you to discuss your liabilities and other investments that may not be profitable, as well as help to avoid duplicate investments. (See also: <a href="http://www.wisebread.com/11-secrets-you-need-to-tell-your-financial-adviser?ref=seealso" target="_blank">11 Secrets You Need to Tell Your Financial Adviser</a>)</p> <h2>3. Your personal and financial goals</h2> <p>A financial adviser who fails to ask about your financial goals as it relates to your children, your spouse, and your lifestyle is doing you an injustice. An adviser who merely wants to sell and manage your investments can actually set you up to lose more money long-term than if they include your financial priorities in the plan up front.</p> <p>Take, for example, a parent who wants to send their children to school without student loans. That parent would need to explore options that help in saving specifically for college. This could be done through traditional methods or less conventional saving vehicles such as a 529 plan. There are many factors that can shape that decision and a good financial adviser should work with that parent to determine the best savings vehicle to suit the needs of that family.</p> <p>Your financial adviser should understand and respect your financial goals and find the best avenues to help you achieve those goals. Things they should know and consider are:</p> <ul> <li> <p>If you are working to reduce or eliminate debt.</p> </li> <li> <p>Your plans for one-time expenses such as paying for a wedding or taking a large vacation.</p> </li> <li> <p>Education planning for you or your children (private school, college, continuing education programs, or advanced degrees).</p> </li> <li> <p>A possible career change by you or your spouse.</p> </li> <li> <p>If you are planning to start a business.</p> </li> </ul> <h2>4. Preparations for long-term care</h2> <p>According to LongTermCare.gov, 70 percent of people turning 65 will require long-term care services sometime in their lives. And of that number, the U.S. Department of Health and Human Services found that 18 percent will have to live in a long-term care facility.</p> <p>According to insurance firm Genworth, the average annual cost of a stay in an assisted living facility is $45,000, while a stay in a nursing home with a private room costs an average $97,455 per year. And avoiding a stay in a facility isn't necessarily the answer to saving money on long-term care; an individual receiving 44 hours of in-home health care weekly can expect to pay close to $50,000 per year.</p> <p>Long-term care services come with significant costs that often impact retirement plans, savings and assets, and the level of care one receives. If your adviser doesn't account for these expenses in your financial plan, they are putting you at risk of financial turmoil later in life.</p> <p>This means that for some, considering their age, family history, and potential health risks, a health savings account (HSA) may make more sense than a traditional IRA. With a traditional IRA, you contribute pretax dollars to the plan and the money grows tax-deferred. You pay taxes when you withdraw the money when you retire.</p> <p>To enroll in an HSA, you must have a high-deductible health insurance plan (HDHP). With an HSA, you get the same pretax contribution benefit, but the difference is that when you withdraw money to pay for qualified health insurance premiums or medical expenses (including nursing home stays and in-home care), it comes out tax-free. And the funds rollover from year to year, so you don't lose what you don't spend.</p> <p>But again, the decision on whether or not to invest in an HSA can only be determined on a case-by-case basis. What may make sense for one situation could be detrimental in another. (See also: <a href="http://www.wisebread.com/10-reasons-an-hsa-is-actually-worth-having?ref=seealso" target="_blank">10 Reasons an HSA Is Actually Worth Having</a>)</p> <h2>5. Tax efficiency</h2> <p>Unfortunately, a lot of financial advisers fail to take the time to comb through your tax returns to check for tax efficiency. And tax efficiency is one area where a good financial adviser can be the most helpful.</p> <p>An adviser who only focuses on managing your portfolio may not have the expertise to accurately analyze your tax situation and understand how to maximize your income assets. A financial adviser who holds a CPA or CFP designation, on the other hand, would most likely be qualified to provide sound tax advice.</p> <p>Financial planner Charles Scott recently told <em>USA Today</em> that if the only tax advice your adviser gives is to put your money in tax-deferred investments such as an IRA or 401(k), you may want to get a second opinion. Because even though you'll be in a lower tax bracket when you retire than you are currently, there are so many other factors that must be considered. He advises that you diversify your tax load now <em>and </em>in the future.</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%2F5-details-your-financial-adviser-may-be-ignoring&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F5%2520Details%2520Your%2520Financial%2520Adviser%2520May%2520Be%2520Ignoring.jpg&amp;description=5%20Details%20Your%20Financial%20Adviser%20May%20Be%20Ignoring"></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/u5180/5%20Details%20Your%20Financial%20Adviser%20May%20Be%20Ignoring.jpg" alt="5 Details Your Financial Adviser May Be Ignoring" 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/5-details-your-financial-adviser-may-be-ignoring">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/3-reasons-to-be-picky-when-hiring-a-financial-planner">3 Reasons to Be Picky When Hiring a Financial Planner</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-questions-your-financial-adviser-should-ask-you">5 Questions Your Financial Adviser Should Ask You</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/do-you-need-a-financial-planner">Do You Need a Financial Planner?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-times-you-need-to-update-your-will">6 Times You Need to Update Your Will</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-things-your-financial-planner-isnt-telling-you-about-retirement">5 Things Your Financial Planner Isn&#039;t Telling You About Retirement</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance children dependents fiduciary financial advisers financial goals financial planners ignoring investments long term care retirement taxes Fri, 17 Nov 2017 09:30:10 +0000 Denise Hill 2055199 at http://www.wisebread.com