401(k) http://www.wisebread.com/taxonomy/term/3831/all en-US 5 Common Habits of Retirement-Savvy Savers http://www.wisebread.com/5-common-habits-of-retirement-savvy-savers <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-common-habits-of-retirement-savvy-savers" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_saving_in_a_jar_0.jpg" alt="Woman saving in a jar" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Here's some good news for anyone behind on retirement savings: Being a smart saver isn't difficult. There's no magic secret to getting it right. Once you understand the rules of the game, you'll know exactly what you need to do to manage your money wisely as you navigate through life.</p> <p>Here are some standard practices that every retirement-savvy saver lives by. Let them inspire and guide you during your own phase of accumulating wealth.</p> <h2>1. They never pass up free money</h2> <p>Whenever you have access to a workplace retirement plan, always check to see if there is a company match on contributions. If there is, make sure you contribute at least enough to earn the match. This is one of the easiest and fastest ways to jump-start your savings &mdash; and, of course, it's free money. Not taking advantage of a company match is one of the biggest missteps you could take with your 401(k). (See also: <a href="http://www.wisebread.com/7-things-you-should-know-about-your-401k-match?ref=seealso" target="_blank">7 Things You Should Know About Your 401(k) Match</a>)</p> <h2>2. They always know where their money is</h2> <p>There is something to be said for having organization among your financial accounts. Having multiple old workplace retirement plans can lead to higher fees (paying multiple plan management and fund fees) and an undiversified portfolio (not realizing that all of your retirement accounts represent one portfolio and should be invested as a whole). Each time you leave a job, consider rolling your old plan over into either an IRA, or if allowed, into your new company's retirement plan. (See also: <a href="http://www.wisebread.com/a-simple-guide-to-rolling-over-all-of-your-401ks-and-iras?ref=seealso" target="_blank">A Simple Guide to Rolling Over All of Your 401(k)s and IRAs</a>)</p> <h2>3. They keep retirement savings for retirement</h2> <p>While most early withdrawals of retirement funds will result in a tax bill and a penalty fee, there are a few <em>penalty-free</em> exceptions for certain accounts, including a first-time home purchase or paying for some higher education costs. But these are financial goals that should be saved for separately, regardless of the fact that the government allows you to touch your retirement savings for them. Once you earmark money for retirement, don't factor it into any of your other financial obligations. The best thing you can do for your retirement accounts is to let them grow. (See also: <a href="http://www.wisebread.com/5-questions-to-ask-before-you-borrow-from-your-retirement-account?ref=seealso" target="_blank">5 Questions to Ask Before You Borrow From Your Retirement Account</a>)</p> <h2>4. They pay themselves first</h2> <p>For most people, their first financial priority each month is covering their non-discretionary living expenses, like housing, utilities, and food. But serious retirement savers know that paying their retirement account every single month as well sets them up for successful saving. Build retirement savings into your budget as a nonnegotiable bill, not as a leftover expense that you may or may not be able to pay at the end of the month. (See also: <a href="http://www.wisebread.com/7-reasons-you-really-need-to-pay-yourself-first-seriously?ref=seealso" target="_blank">7 Reasons You Really Need to Pay Yourself First (Seriously)</a>)</p> <h2>5. They use tax-advantaged accounts</h2> <p>It's in everyone's best interest, including the government's, that we save for our own retirement. That's precisely why there are accounts specifically designed to encourage long-term savings. Whether you use a tax-deferred account, which allows your money to compound for decades before any taxes are due, or a tax-exempt account, which allows your after-tax money to grow tax-free and qualified distributions remain untaxed, or a combination of both &mdash; a strategic saver makes use of all available saving tools. (See also: <a href="http://www.wisebread.com/401k-or-ira-you-need-both?ref=seealso" target="_blank">401(k) or IRA? You Need Both</a>)</p> <p>Being a retirement-savvy saver doesn't mean having or saving more money than everyone else. It's about knowing what moves can make a difference in your savings goals and being an active and purposeful retirement saver.</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-common-habits-of-retirement-savvy-savers&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F5%2520Common%2520Habits%2520of%2520Retirement-Savvy%2520Savers.jpg&amp;description=5%20Common%20Habits%20of%20Retirement-Savvy%20Savers"></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%20Common%20Habits%20of%20Retirement-Savvy%20Savers.jpg" alt="5 Common Habits of Retirement-Savvy Savers" 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/alicia-rose-hudnett">Alicia Rose Hudnett</a> of <a href="http://www.wisebread.com/5-common-habits-of-retirement-savvy-savers">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-6"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/11-basic-questions-about-retirement-saving-everyone-should-ask">11 Basic Questions About Retirement Saving Everyone Should Ask</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/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/8-critical-401k-questions-you-need-to-ask-your-employer">8 Critical 401(k) Questions You Need to Ask Your Employer</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-job-hoppers-can-keep-up-with-their-retirement-savings">How Job-Hoppers Can Keep Up With Their Retirement Savings</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-step-by-step-guide-to-rolling-over-your-401k">The Step-by-Step Guide to Rolling Over Your 401(k)</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401(k) employer match IRA pay yourself first rollover tax advantaged work sponsored retirement plans Wed, 13 Jun 2018 08:00:27 +0000 Alicia Rose Hudnett 2148275 at http://www.wisebread.com The Right Way to Withdraw Money From Your Retirement Accounts During Retirement http://www.wisebread.com/the-right-way-to-withdraw-money-from-your-retirement-accounts-during-retirement <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/the-right-way-to-withdraw-money-from-your-retirement-accounts-during-retirement" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/hand_putting_coins_in_glass_jar_with_retro_alarm_clock.jpg" alt="Hand putting coins in glass jar with retro alarm clock" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>If you've been a diligent saver, you've probably recognized the importance of having a mix of retirement accounts: a tax-deferred IRA or workplace retirement account like a 401(k), a tax-free Roth 401(k) or Roth IRA, and maybe even a taxable brokerage account. And you probably already know that one way the government &quot;persuades&quot; you to keep your money in your IRA and 401(k) accounts is by imposing a penalty on most withdrawals before age 59&frac12;, at which time you can begin taking penalty-free distributions.</p> <p>When you're finally ready to retire and start taking your distributions, you may wonder how to do it and which accounts you should draw from first. While avoiding taxes shouldn't be your only focus &mdash; after all, you've already spent years sheltering your retirement savings &mdash; here are some basic tax strategies that can guide you during the drawdown process.</p> <h2>Tax-deferred savings</h2> <p>One of the most popular ways to save for retirement is through the use of a tax-deferred retirement account, such as a traditional 401(k) or traditional IRA. You may have the majority of your savings in these accounts. Contributions to these accounts are made on a pretax basis. This allows you to keep more of your money during the saving and investing years, with the idea being that, although you will eventually be taxed on your withdrawals, you may be in a lower tax bracket than when you contributed the money.</p> <p>At age 70&frac12;, the government requires you to begin withdrawing money from these accounts and to begin paying ordinary income taxes on any untaxed contributions and earnings that you withdraw. This can create a cycle of withdrawing your required minimum distribution (or RMD) or your own determined income need, and then having to withdraw more money to cover the income taxes due, and then having to pay even more taxes on the money you withdrew to cover the taxes due. Anyone inheriting a tax-deferred retirement account will owe taxes on the money as well. (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> <h2>Tax-free savings</h2> <p>Another popular retirement account is a Roth IRA or Roth 401(k), and while there are some significant differences between these two accounts, the fundamental structure of how they work is the same. You contribute after-tax money to the account and, assuming you follow all the rules, your money will grow tax-free and remain tax-free even when you begin qualified withdrawals.</p> <p>Unlike a traditional IRA, there are no required minimum distributions you must take from a Roth IRA at a particular age. However, a Roth 401(k) <em>does</em> come with RMDs, so it's worth considering rolling this money over to a Roth IRA in retirement, where it will lose the RMD requirement. (Be sure to do this <em>before</em> your RMDs begin because you cannot roll over any amount already required to be withdrawn in the year you're in. So, if you have $10,000 in a Roth 401(k), and are already supposed to take $1,000 as an RMD in 2018, you can roll over $9,000 into a Roth IRA, but will have to take the $1,000 RMD this year.) Because of its tax-exempt and RMD-free status, a Roth IRA can be left untouched to build completely tax-free income for yourself or your heirs for as long as you like. (See also: <a href="http://www.wisebread.com/3-financial-penalties-every-retiree-should-avoid?ref=seealso" target="_blank">3 Financial Penalties Every Retiree Should Avoid</a>)</p> <h2>Taxable savings</h2> <p>To round out your retirement accounts, you may have used a regular taxable brokerage account to invest above yearly retirement contribution limits. When you sell investments in a brokerage account, you may still owe taxes on your earnings. If you sell investments that you've held for more than one year, earnings will be subject to long-term capital gains tax. That rate depends on your tax bracket, but is 15 percent for most taxpayers.</p> <p>By contrast, when you sell investments that you've held for less than a year, any earnings are considered short-term capital gains and will be taxed at ordinary income tax rates. If your investments have lost money, you may be able to claim those losses on your tax return.</p> <p>Even though funds withdrawn from your regular investment accounts are taxable, they're still valuable during your retirement years to cover any large expenses or even to pay the income taxes due on RMDs from your other retirement accounts. (See also: <a href="http://www.wisebread.com/where-to-invest-your-money-after-youve-maxed-out-your-retirement-account?ref=seealso" target="_blank">Where to Invest Your Money After You've Maxed Out Your Retirement Account</a>)</p> <h2>The years between age 59&frac12; and age 70&frac12;</h2> <p>The years between when you turn 59&frac12; and when you turn 70&frac12; can be crucial to your retirement plan. This is the time when qualified distributions are penalty-free, yet it's before you're actually <em>required</em> to take any distributions. If you've left the workforce for full retirement or are working part-time and are now in a lower tax bracket, consider taking distributions from your tax-deferred accounts to both live on and possibly to roll over into a Roth IRA, an account that <em>does not</em> require RMDs.</p> <p>With little to no income coming in, you can withdraw from your tax-deferred and taxable accounts and pay the ordinary income taxes due at a lower tax rate, or convert some of your 401(k) or traditional IRA funds, which will also be taxable at the time of conversion, to a Roth IRA for further tax-free investment growth. Doing so can help prevent you from being in a position where you have an outsized tax-deferred portfolio from which you have to take those RMDs (or risk paying a 50 percent penalty), whether you need the money or not. (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> <p>Note that while you can convert a tax-deferred account to a Roth IRA if you're not working, you cannot contribute to a Roth IRA outright unless you or your spouse are earning income from a job.</p> <p>Figuring out how to spend your retirement savings can be trickier and more complicated than it was saving all of that money, but understanding the different tax implications of your various accounts can assist you in finding the strategy that works best for your situation.</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-right-way-to-withdraw-money-from-your-retirement-accounts-during-retirement&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FThe%2520Right%2520Way%2520to%2520Withdraw%2520Money%2520From%2520Your%2520Retirement%2520Accounts%2520During%2520Retirement.jpg&amp;description=The%20Right%20Way%20to%20Withdraw%20Money%20From%20Your%20Retirement%20Accounts%20During%20Retirement"></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%20Right%20Way%20to%20Withdraw%20Money%20From%20Your%20Retirement%20Accounts%20During%20Retirement.jpg" alt="The Right Way to Withdraw Money From Your Retirement Accounts During Retirement" 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/alicia-rose-hudnett">Alicia Rose Hudnett</a> of <a href="http://www.wisebread.com/the-right-way-to-withdraw-money-from-your-retirement-accounts-during-retirement">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-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/11-basic-questions-about-retirement-saving-everyone-should-ask">11 Basic Questions About Retirement Saving Everyone Should Ask</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/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/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-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/where-to-invest-your-money-after-youve-maxed-out-your-retirement-account">Where to Invest Your Money After You&#039;ve Maxed Out Your Retirement Account</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401(k) contributions conversions drawdown gains income IRA pretax strategies tax deferred taxes withdrawals Mon, 11 Jun 2018 08:00:17 +0000 Alicia Rose Hudnett 2147484 at http://www.wisebread.com How to Solve These 6 Problems Your Heirs Could Have With Your Estate http://www.wisebread.com/how-to-solve-these-6-problems-your-heirs-could-have-with-your-estate <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-solve-these-6-problems-your-heirs-could-have-with-your-estate" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/blue_ballpoint_pen_and_a_last_will_and_testament_0.jpg" alt="Blue ballpoint pen and a last will and testament" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Fifty-eight percent of Americans have no will, according to a 2017 Caring.com survey. That means state laws, rather than the wishes of their loved ones, will determine what happens to the property and assets of the deceased.</p> <p>But before the 42 percent of Americans who <em>do</em> have a will start congratulating themselves on helping their heirs avoid such challenging situations, it's important to remember that even well-planned estates can cause problems for those who inherit. Here are the potential issues your heirs may face, and how you can make sure your final wishes are followed.</p> <h2>1. Your heirs don't know where to find your estate plan</h2> <p>You may have very specific wishes regarding everything from your burial instructions to who will get your mint condition Cal Ripken rookie baseball card &mdash; but those intentions can't be followed if your heirs don't know where to find your will and other estate planning paperwork.</p> <p>Unfortunately, this is a relatively common situation, since many people consider talking about inheritance to be taboo or uncomfortable. Even if your heirs know that you have a safety deposit box in the bank, they may not know which bank, or which branch, or where to find the key.</p> <p>This is why it's important to discuss your estate plan with your family. Introduce your kids to your attorney so they know whom to call in the event of your death. It's also a good idea to create an &quot;in case of emergency&quot; folder that provides your loved ones with the information they will need about where to find your estate documents, as well as the information necessary to handle your banking, taxes, bills, and other issues if you become incapacitated or pass away. (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>2. Your will is too vague</h2> <p>There are number of ways that a vaguely-written will can cause your heirs problems. The classic example would be if the deceased simply states that her jewelry is to be divided among her children. This kind of imprecise language can end up causing a rift among siblings if more than one wants the same brooch &mdash; or if anyone feels slighted as to how the jewels are distributed. It is best to make sure valuable items are specifically distributed in your will to ensure that your wishes are followed without causing family strife.</p> <p>But a vague will can have bigger consequences than hurt feelings for heirs. For instance, sometimes a will specifies that one family member is to inherit all of the money because the deceased had a verbal agreement with that heir to share the money with another family member. (You may remember this as the beginning of the plot of <em>Sense and Sensibility</em>.) Without specific language in place, there is no guarantee that your heir will do what you asked.</p> <p>These sorts of informal agreements are often created in order to protect assets for minors or other individuals who cannot directly inherit &mdash; such as special needs adults who rely on government assistance and would lose it if they were to come into a large sum of money. Since a verbal arrangement can be disregarded, it is far preferable to create a trust to ensure the money goes to the person you want it to. There are a number of different types of trusts that can make sure your wishes are followed, can protect the government assistance of the family member in question, and will allow for no confusion or misunderstanding. (See also: <a href="http://www.wisebread.com/the-fair-way-to-split-up-your-familys-estate?ref=seealso" target="_blank">The Fair Way to Split Up Your Family's Estate</a>)</p> <h2>3. Your beneficiaries don't match your will</h2> <p>If you put together a well thought out estate plan in your will, but forget to update your beneficiaries on your assets, then it doesn't matter how detailed your estate plan may be &mdash; your assets will be distributed according to the beneficiary designation rather than your will.</p> <p>This is a common issue for many estates, since relationships often change and account holders don't think to update their beneficiary designations. Everyone should review their beneficiary designations every few years to make sure they are not leaving unintended money to ex-spouses, estranged siblings, or other family members who have drifted out of their lives.</p> <h2>4. You name the estate as a beneficiary</h2> <p>A common error in estate planning is if you name your estate as the beneficiary of your IRA, 401(k), or life insurance. If instead you name a person as your beneficiary on these sorts of products, the assets can pass to your beneficiary without having to go through probate. That means the individual beneficiary will receive their money, no matter how many creditors have claims on your estate. But if your whole estate is your beneficiary, the money must go through probate &mdash; and your heirs will get only what is left after creditors have been paid.</p> <p>In addition, if your estate is the beneficiary of your IRA or 401(k), your heirs must liquidate the investments within five years of your death, and pay the required taxes. If instead an heir is named as a direct beneficiary, they may have the option of delaying the required minimum distributions until they reach age 70&frac12;, allowing the money to grow tax-free until then. (See also: <a href="http://www.wisebread.com/6-times-you-need-to-update-your-will?ref=seealso" target="_blank">6 Times You Need to Update Your Will</a>)</p> <h2>5. Your non-spouse heir cannot roll over a retirement account</h2> <p>Even if you name an individual as the beneficiary of your IRA or 401(k), if the beneficiary is anyone other than your spouse, there are still some pretty big tax pitfalls that could affect your heir's inheritance. Non-spouse beneficiaries of tax-deferred retirement accounts cannot roll IRA or 401(k) money directly into their own retirement accounts without triggering a major tax bill. That's because a rollover would cause the entire amount to be considered taxable income. For that reason, it's preferable for non-spouse heirs of IRA and 401(k) accounts to take the money as required minimum distributions (RMDs) over a lifetime to minimize the tax bite. This is known as the &quot;stretch&quot; option.</p> <p>Unfortunately, stretch RMDs are not without pitfalls. If your heirs do not take the correct required amount, there is a tax penalty of 50 percent of whatever they were supposed to take, plus whatever their ordinary income tax rate would be on the amount. To avoid this problem, you can direct your IRA or 401(k) custodian to administer inherited IRAs and automatically take care of any required minimum distributions.</p> <h2>6. Your annuity can push your heirs into a higher tax bracket</h2> <p>Passing on an annuity can be a good way of providing regular income to your heirs after you die. However, annuities also come with a potential tax problem since these products are also tax-deferred. An inherited annuity has untaxed growth, and the insurance company holding your policy will issue a Form 1099 for that untaxed growth to your heir, which means it will be included in the heir's gross income for the year. Depending how much growth there is, this could push your heir into a higher tax bracket, and the annuity payments they receive during the first year may end up being swallowed up by the increase in that year's taxes.</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-solve-these-6-problems-your-heirs-could-have-with-your-estate&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FHow%2520to%2520Solve%2520These%25206%2520Problems%2520Your%2520Heirs%2520Could%2520Have%2520With%2520Your%2520Estate.jpg&amp;description=How%20to%20Solve%20These%206%20Problems%20Your%20Heirs%20Could%20Have%20With%20Your%20Estate"></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%20Solve%20These%206%20Problems%20Your%20Heirs%20Could%20Have%20With%20Your%20Estate.jpg" alt="How to Solve These 6 Problems Your Heirs Could Have With Your Estate" 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-solve-these-6-problems-your-heirs-could-have-with-your-estate">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-set-up-a-trust-for-your-child">Should You Set Up a Trust for Your Child?</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/heres-what-happens-if-you-dont-leave-a-will">Here&#039;s What Happens If You Don&#039;t Leave a Will</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-fair-way-to-split-up-your-familys-estate">The Fair Way to Split Up Your Family&#039;s Estate</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/left-a-job-do-a-rollover">Left a job? Do a rollover.</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-times-you-need-to-update-your-will">6 Times You Need to Update Your Will</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance 401(k) annuities beneficiaries estate planning heirs IRA probate retirement accounts rollovers Wed, 23 May 2018 08:30:40 +0000 Emily Guy Birken 2142707 at http://www.wisebread.com 5 Ways to Build Retirement Stability in Your 50s http://www.wisebread.com/5-ways-to-build-retirement-stability-in-your-50s <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-ways-to-build-retirement-stability-in-your-50s" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/mature_woman_in_back_yard_garden.jpg" alt="Mature Woman In Back Yard Garden" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>If retirement planning hasn't been at the top of your to-do list, your 50s are the time to make it your first priority. Wait 10 more years, and your only choice of retirement options may just be to keep working. Here's how you can prevent that from happening.</p> <h2>1. Take advantage of catch-up contributions</h2> <p>Whether you've been a responsible saver or not, this may be your last chance to really build up your nest egg. Beginning the year you turn 50, you can contribute $6,500 to an IRA (that's an additional $1,000 for 2018) and $24,500 to most workplace retirement plans (that's $6,000 more than the standard allowable amount for 2018). (See also: <a href="http://www.wisebread.com/6-ways-meeting-the-2018-401k-contribution-limits-will-brighten-your-future?ref=seealso" target="_blank">6 Ways Meeting the 2018 401(k) Contribution Limits Will Brighten Your Future</a>)</p> <h2>2. Get an HSA</h2> <p>If you have a high-deductible health plan (HDHP), you can open a health savings account, or HSA. Contributions to an HSA are made on a pretax basis and remain tax-free if used for qualified health care expenses. For the 2018 tax year, if you have an individual plan, you can contribute up to $3,450, and if you have family coverage, you can contribute up to $6,900. If you are age 55 or older, you can contribute an additional $1,000.</p> <p>A health savings account is similar to other tax-advantaged retirement accounts: Once you establish an account, you don't need to use up the funds each year, and you may be able to invest the money within the HSA, allowing the account to grow. And even if you've established the account through your job, you can take the account with you if you leave.</p> <p>Before age 65, if you take a distribution from your HSA for non-qualified medical expenses, you may owe income taxes and a 20 percent penalty. But after age 65, non-qualified distributions are penalty-free (but not income-tax free), making it structured like a traditional IRA. Qualified health care expenses are always tax-free at any age. (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>3. Check your Social Security benefit</h2> <p>This is the time to begin thinking about how you will establish a base foundation of guaranteed monthly income that will cover your necessary living expenses. And for many individuals, your Social Security benefit will be the first part of that foundation.</p> <p>If you haven't already done so, you can start by creating a &quot;my Social Security&quot; account on the Social Security Administration's website, where you can check your work history and benefit summary. This can give you a good idea of how much other savings you will most likely need in order to cover the shortfall between your living expenses and your Social Security check each month.</p> <p>You can receive Social Security benefits as early as age 62, with one major caveat: You will receive 70 percent of your full earned benefit. To receive 100 percent of your retirement benefit, you must wait until your full retirement age, as determined by the Social Security Administration. For anyone born in 1960 or after, that age is 67.</p> <p>So if you think that your Social Security benefit is going to play a substantial role in your retirement equation, it's worth waiting until at least your full benefit is available. Each year you delay, up until age 70, your benefit may increase 8 percent. (See also: <a href="http://www.wisebread.com/5-questions-to-ask-before-you-start-claiming-your-social-security-benefits?ref=seealso" target="_blank">5 Questions to Ask Before You Start Claiming Your Social Security Benefits</a>)</p> <h2>4. Sit with a financial planner</h2> <p>Now is the perfect time to sit with a financial planner who can help you look at what retirement will realistically look like for you. You can go over your expenses, which is the first step to figuring out how much monthly retirement income you will need. That, in turn, will indicate how big of a retirement portfolio you will need to generate that income.</p> <p>A financial planner can also evaluate your investments and make recommendations that can make a huge impact on the growth of your retirement savings. After all, despite the fact that you may be retiring within the next 10 or 15 years, your investment time horizon is still 30 to 40 years, so it's critical that your portfolio reflects that. (See also: <a href="http://www.wisebread.com/7-occasions-when-you-should-definitely-hire-a-financial-advisor?ref=seealso" target="_blank">7 Occasions When You Should Definitely Hire a Financial Adviser</a>)</p> <h2>5. Consider long-term care</h2> <p>When people hear &quot;long-term care,&quot; they often think it has to do with an insurance policy. But it's a more pressing matter than that. This is the age when you should start reviewing long-term care insurance policies (which cover expenses that Medicare doesn't) and evaluate your own assets to see if you have the ability to effectively self-insure should you need assisted living. If not, a long-term care insurance policy may be a good idea. (See also: <a href="http://www.wisebread.com/the-best-age-to-buy-long-term-care-insurance?ref=seealso" target="_blank">The Best Age to Buy Long-Term Care Insurance</a>)</p> <p>Your 50s are as much about increasing your net worth as they are about properly managing and protecting your current assets. This may be your last chance to get it right.</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-ways-to-build-retirement-stability-in-your-50s&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F5%2520Ways%2520to%2520Build%2520Retirement%2520Stability%2520in%2520Your%252050s.jpg&amp;description=5%20Ways%20to%20Build%20Retirement%20Stability%20in%20Your%2050s"></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%20Ways%20to%20Build%20Retirement%20Stability%20in%20Your%2050s.jpg" alt="5 Ways to Build Retirement Stability in Your 50s" 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/alicia-rose-hudnett">Alicia Rose Hudnett</a> of <a href="http://www.wisebread.com/5-ways-to-build-retirement-stability-in-your-50s">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/heres-how-you-should-budget-your-social-security-checks">Here&#039;s How You Should Budget Your Social Security Checks</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-an-hsa-saves-you-money">How an HSA Saves You Money</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-face-these-7-scary-facts-about-retirement-saving">How to Face These 7 Scary Facts About Retirement Saving</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-an-hsa-could-help-your-retirement">How an HSA Could Help Your Retirement</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Retirement 401(k) 50s benefits catch up contributions financial planner health care health savings account HSA long-term care social security Tue, 22 May 2018 09:00:31 +0000 Alicia Rose Hudnett 2142435 at http://www.wisebread.com Here's What It Means to Be Vested in Your 401(k) http://www.wisebread.com/heres-what-it-means-to-be-vested-in-your-401k <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/heres-what-it-means-to-be-vested-in-your-401k" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/retirement_savings_golden_nest_egg_in_businessman_hand.jpg" alt="Retirement savings golden nest egg in businessman hand" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>One of the biggest advantages to a 401(k) plan is having an employer that offers a match on your contributions. This is fairly common practice; in a review of 4.4 million retirement plan participants, Vanguard found that 94 percent of plans offered employer contributions.</p> <p>Knowing that your employer is contributing or matching your contributions to your workplace retirement plan is awesome (who doesn't like free money?). Still, it's important to be aware that sometimes part of those contributions aren't fully yours until some conditions are met. That's called vesting.</p> <h2>What's vesting?</h2> <p>Let's get one thing clear: All of the money that <em>you</em> personally contribute to your retirement account always becomes immediately yours. When you have full ownership of funds in your 401(k), it means that you're fully vested (or 100 percent vested) on those funds.</p> <p>On the other hand, employer contributions and matching contributions may be subject to some restrictions before they can become fully vested. Nearly half all employer-sponsored 401(k) holders are in plans with some type of vesting requirement for employer and matching contributions. All vesting schedules can be categorized as <em>cliff </em>or <em>graded </em>vesting. (See also: <a href="http://www.wisebread.com/7-things-you-should-know-about-your-401k-match?ref=seealso" target="_blank">7 Things You Should Know About Your 401(k) Match</a>)</p> <h3>Graded vesting</h3> <p>Graded vesting is the most common way for employers to delay ownership of employer or matching contributions. Through graded vesting, you gradually gain ownership of employer or matching contributions over time. Around 30 percent of 401(k) plans with employer-matching contributions use a five- or six-year graded vesting schedule. For example, an employer could grant you 20 percent ownership over a five-year period. Assuming a $1,000 matching contribution, you would be fully vested to $200 (plus applicable capital gains) at the end of every year over a five-year period.</p> <p>However, there are shorter (and longer!) graded vesting schedules. For example, an estimated 5 percent and 3 percent of 401(k) holders are in a plan with a three- and four-year graded vesting rule for employer matching contributions, respectively.</p> <h3>Cliff vesting</h3> <p>Unlike graded vesting, cliff vesting grants you full ownership of employer contributions to your account right away. The catch is that you have to wait a certain amount of time to gain that right. In 2016, 12 percent, 5 percent, and 8 percent of 401(k) plans followed a three-year, two-year and one-year cliff vesting schedule for employer contributions, respectively.</p> <h2>5 FAQs about vesting</h2> <p>Now that you know what it means to be vested in your 401(k), let's address some frequently asked questions about vesting.</p> <h3>1. Why do companies use vesting in 401(k) plans?</h3> <p>Workplace plans offer matching 401(k) contributions to attract top talent. In order to retain that talent, employers can use vesting to discourage leaving the company too soon. For example, with a three-year cliff vesting schedule, a worker would have to work that many years before becoming fully vested in all employer contributions from their first year of employment.</p> <p>However, more and more plans are opting to provide immediate vesting: 45 percent of 401(k) plans provided immediate vesting of employer contributions in 2016. (See also: <a href="http://www.wisebread.com/8-critical-401k-questions-you-need-to-ask-your-employer?ref=seealso" target="_blank">8 Critical 401(k) Questions You Need to Ask Your Employer</a>)</p> <h3>2. What happens with nonvested funds at the time of a rollover?</h3> <p>Once you leave your employer, you'll lose nonvested funds in your 401(k). This is why knowing the applicable vesting schedule is essential to know how much of your 401(k) you'd keep if you were to separate from your employer at any point in time.</p> <p>When you separate from your employer, nonvested funds in your 401(k) return to your employer. So, keep an eye on when employer contributions become fully vested to appropriately time turning in your two-week notice. (See also: <a href="http://www.wisebread.com/a-simple-guide-to-rolling-over-all-of-your-401ks-and-iras?ref=seealso" target="_blank">A Simple Guide to Rolling Over All of Your 401(k)s and IRAs</a>)</p> <h3>3. What happens to nonvested funds when I retire?</h3> <p>There is some good news and some bad news. The good news is that according to the IRS, it is required that employees are 100 percent vested of all 401(k) employer contributions by the time they attain normal retirement age. The bad news is that the normal retirement age is determined by the plan administrator.</p> <h3>4. What happens to nonvested funds if my company disappears?</h3> <p>When a company goes kaput, it's just a matter of time until its 401(k) goes away as well. When a company terminates its 401(k) plan, it must offer 100 percent vesting of all funds, according to the IRS.</p> <h3>5. If vesting exists, why should I bother trying to get an employer match?</h3> <p>Getting those employer contributions is absolutely worth it because they don't count toward your annual contribution limit ($18,500 in 2018). You can't be 100 percent sure when you'll leave an employer, but you'll surely be happy if you can leave with a couple hundred or thousand dollars extra in your 401(k). Regardless of vesting rules, this is why pursuing a job that offers matching contributions is worth it.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fheres-what-it-means-to-be-vested-in-your-401k&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FHere%2527s%2520What%2520It%2520Means%2520to%2520Be%2520Vested%2520in%2520Your%2520401%2528k%2529.jpg&amp;description=Here's%20What%20It%20Means%20to%20Be%20Vested%20in%20Your%20401(k)"></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/Here%27s%20What%20It%20Means%20to%20Be%20Vested%20in%20Your%20401%28k%29.jpg" alt="Here's What It Means to Be Vested in Your 401(k)" 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/heres-what-it-means-to-be-vested-in-your-401k">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-things-you-should-know-about-your-401k-match">7 Things You Should Know About Your 401(k) Match</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/how-job-hoppers-can-keep-up-with-their-retirement-savings">How Job-Hoppers Can Keep Up With Their Retirement Savings</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/new-job-dont-make-these-7-mistakes-with-your-benefits">New Job? Don&#039;t Make These 7 Mistakes With Your Benefits</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/left-a-job-do-a-rollover">Left a job? Do a rollover.</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401(k) cliff company match employer contributions employer sponsored retirement plans employers graded rollovers vesting workplace retirement plans Wed, 02 May 2018 08:30:10 +0000 Damian Davila 2133904 at http://www.wisebread.com What Job Hunters Should Really Look for in a Job Offer http://www.wisebread.com/what-job-hunters-should-really-look-for-in-a-job-offer <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/what-job-hunters-should-really-look-for-in-a-job-offer" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/meeting_with_accountant_for_tax_planning.jpg" alt="Meeting with accountant for tax planning" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>I've come across a lot of job listings that play up perks like they are advertising a trip to Disneyland. It makes sense considering that many companies are trying to attract millennial talent, and millennials just happen to be the group that look for and change jobs most often. But should new job hunters really be excited about perks like unlimited vacation, social events, and well-stocked snack rooms?</p> <p>While these are certainly all nice, they aren't the most important job perks you should seek out. Instead, look for a job with these benefits.</p> <h2>1. Retirement match</h2> <p>It is never too early to get serious about retirement. Don't get hung up on the fact that you aren't in your dream job or that you don't think you have enough money yet to set aside. When evaluating potential job offers, look for a company that offers a defined contribution plan like a 401(k), or a 403(b) or 457(b) plan for employees in specialized fields.</p> <p>If you can find an employer that offers a company match on retirement contributions, even better. A match is basically free money, so long as you contribute enough to take advantage of it. The boost this perk can have to your retirement fund is huge.</p> <p>For example, let's say you land a position that pays $65,000 a year. Let's also say your employer matches your contributions dollar-for-dollar up to 6 percent of your salary. If you contribute at least 6 percent of your own earnings, your employer match alone would contribute an additional $3,900 to your 401(k); no extra hours at your desk required. (See also: <a href="http://www.wisebread.com/7-things-you-should-know-about-your-401k-match?ref=seealso" target="_blank">7 Things You Should Know About Your 401(k) Match</a>)</p> <h2>2. Tuition reimbursement</h2> <p>The best thing my husband ever did was take a position with the company he works for now instead of finishing his bachelor's degree. The position was entry-level and only required a few years of technology experience rather than a formal degree. Because of this, his work paid for him to finish his bachelor's degree and get his master's degree, along with other expensive professional training. Not only has this saved our family a lot of money and potential debt, but his degrees have also allowed him to continually get promoted in his company and earn almost double than what he started out making.</p> <p>This is not to say to skip college &mdash; but instead, to consider taking a lower-paying position that offers to pay for your higher education. It could save you tens of thousands of dollars overall.</p> <h2>3. Student loan repayment</h2> <p>Many companies are jumping on the bandwagon and offering new employees the opportunity to repay student loan debt as a perk. The most common repayment perk is around $100 a month, though some companies offer more. And while this perk isn't enough to replace a good company retirement match, it is beneficial for employees who want to tackle their education debts faster. (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> <h2>4. Professional development training</h2> <p>Don't forget to ask if professional development training is offered when you are negotiating your new hire contract. This is different from tuition reimbursement and is useful for individuals who already have a degree. Taking advantage of professional development perks allows you to stay current in your skills and knowledge so that if you have to return to job hunting, you won't feel five steps behind. (See also: <a href="http://www.wisebread.com/7-certifications-that-add-big-to-your-salary?ref=seealso" target="_blank">7 Certifications That Add Big $$ to Your Salary</a>)</p> <h2>5. Commuter benefits</h2> <p>What might seem like an unassuming commute can add up quickly in gas, car wear, and other transportation costs. You may wish to negotiate a stipend for commuting before signing your work contract, especially if the company wants you to travel frequently for work. Don't forget to ask about telecommuting, where you can complete essential tasks from the comfort of your home one or several days a week.</p> <p>The company may be leery to grant telecommuting benefits, but if you can prove that your productivity remains the same or even improves when you are out of the office, each day you work from home can save you on commuter expenses. (See also: <a href="http://www.wisebread.com/3-ways-your-commute-is-killing-you-and-what-to-do-about-it?ref=seealso" target="_blank">3 Ways Your Commute Is Killing You &mdash; And What to Do About It</a>)</p> <p>Don't fall for fun perks like &quot;Taco Tuesday&quot; or &quot;Bring Your Pet to Work Day.&quot; While these company add-ons make your work environment more fun, they don't boost your paycheck or your financial situation. Look for substance in your work perks, and you'll be more likely to come out ahead.</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-job-hunters-should-really-look-for-in-a-job-offer&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FWhat%2520Job%2520Hunters%2520Should%2520Really%2520Look%2520for%2520in%2520a%2520Job%2520Offer.jpg&amp;description=What%20Job%20Hunters%20Should%20Really%20Look%20for%20in%20a%20Job%20Offer"></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/What%20Job%20Hunters%20Should%20Really%20Look%20for%20in%20a%20Job%20Offer.jpg" alt="What Job Hunters Should Really Look for in a Job Offer" 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/ashley-eneriz">Ashley Eneriz</a> of <a href="http://www.wisebread.com/what-job-hunters-should-really-look-for-in-a-job-offer">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-11"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-common-habits-of-retirement-savvy-savers">5 Common Habits of Retirement-Savvy Savers</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-big-companies-that-offer-benefits-for-part-time-workers">9 Big Companies That Offer Benefits for Part-Time Workers</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/boost-your-retirement-savings-fast-with-this-6-step-plan">Boost Your Retirement Savings Fast With This 6-Step Plan</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/11-basic-questions-about-retirement-saving-everyone-should-ask">11 Basic Questions About Retirement Saving Everyone Should Ask</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-dumb-401k-mistakes-smart-people-make">5 Dumb 401(k) Mistakes Smart People Make</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Job Hunting 401(k) commuting employee benefits employer match job perks retirement student loan repayment training tuition reimbursement Mon, 30 Apr 2018 08:30:16 +0000 Ashley Eneriz 2132121 at http://www.wisebread.com How Job-Hoppers Can Keep Up With Their Retirement Savings http://www.wisebread.com/how-job-hoppers-can-keep-up-with-their-retirement-savings <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-job-hoppers-can-keep-up-with-their-retirement-savings" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_saving_in_a_jar.jpg" alt="Woman saving in a jar" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>It's very common these days for young people to move from job to job. The days of sticking with a company for decades and earning a big pension are over.</p> <p>Thankfully, 401(k) plans and individual retirement accounts allow workers to switch jobs without losing their retirement savings, but it's still possible for all that job-hopping to disrupt your ability to save. If you do switch jobs regularly, there are some sensible things you can do to ensure that your retirement plan stays on track.</p> <h2>Open a traditional or Roth IRA</h2> <p>If you are between jobs with no access to an employer-sponsored retirement plan, there are still things you can do to save. If you have any earned income at all, you can contribute to an individual retirement account, which allows you to invest with some tax advantages.</p> <p>With a traditional IRA, any money you contribute is deducted from your taxable income. With a Roth IRA, your money is taxed upfront, but you will avoid paying any taxes on investment gains when you withdraw the money when you retire. IRAs can be very powerful tools for retirement savings for self-employed people, part-time workers, or those with irregular incomes. You can maintain and contribute to these accounts even after you get a 401(k) plan from a new employer. (See also: <a href="http://www.wisebread.com/401k-or-ira-you-need-both?ref=seealso" target="_blank">401(k) or IRA? You Need Both</a>)</p> <h2>Roll over your 401(k)</h2> <p>If you had a 401(k) from one employer and switch jobs, you can take the funds from the old account and add it to the new one. This is called a 401(k) rollover. There usually is no penalty if you don't merge the accounts right away, but over time the old 401(k) provider may start to bug you about it. You should consider a rollover if the retirement fund from your new employer offers better investment options, lower fees, or both. If you call the brokerage firm that is managing your old 401(k), they will usually be happy to walk you through the steps to carry out a rollover. (See also: <a href="http://www.wisebread.com/a-simple-guide-to-rolling-over-all-of-your-401ks-and-iras?ref=seealso" target="_blank">A Simple Guide to Rolling Over All of Your 401Ks and IRAs</a>)</p> <h2>Open a rollover IRA</h2> <p>If you no longer have access to a 401(k) or don't like the investment options in your new retirement plan, you can place your investments in a new individual retirement account. This is called a rollover IRA, and it can be better than a 401(k) because you usually will have many more investment options, from mutual funds and ETFs to individual stocks and bonds.</p> <h2>Look into a 401(k)-to-Roth IRA conversion</h2> <p>When you have a 401(k), you will eventually be obligated to pay tax on any gains when you begin withdrawing money in retirement. That's why some investors look into turning their 401(k) and traditional IRA accounts into a Roth IRA, which allows money to grow tax-free.</p> <p>The big catch to making this conversion is that you must pay tax on any gains you've had up until now. That could be a big chunk of change that you may not be in a position to handle right now, but a smart move if you think your tax bracket will be higher in the future. An accountant or financial adviser can help you determine whether converting an old 401(k) to a Roth IRA makes sense for you.</p> <h2>Play catch up</h2> <p>Let's say you left a job and were not able to contribute to retirement accounts for three months. But, you land a new job with a higher salary than before. If this happens, consider bumping up your retirement contributions to make up for that lost time. Any time you get new or unexpected income, consider using that to backfill the retirement accounts you may have been neglecting.</p> <p>Once you make those extra payments, you may find that you have the ability to contribute the higher amount on an ongoing basis. And that's great, because the more you are able to save, the more you'll have in the long run. (See also: <a href="http://www.wisebread.com/6-ways-meeting-the-2018-401k-contribution-limits-will-brighten-your-future?ref=seealso" target="_blank">6 Ways Meeting the 2018 401(k) Contribution Limits Will Brighten Your Future</a>)</p> <h2>Pay close attention to the employer match</h2> <p>Employers can vary greatly in how much they contribute to workers' 401(k) accounts. Some will provide direct contributions while also matching what the employee put in. Some offer a full match on contributions, while others match just a portion. And some don't contribute at all. It's important to remember this when switching companies, especially if you are moving to a company with a retirement plan that's less generous.</p> <p>Ideally, you will want to make sure that the total amount of money going into your 401(k) remains the same or goes up over time. If your new employer is contributing less on a percentage basis, consider bumping up your own contributions to make up the difference. (See also: <a href="http://www.wisebread.com/7-things-you-should-know-about-your-401k-match?ref=seealso" target="_blank">7 Things You Should Know About Your 401(k) Match</a>)</p> <h2>Don't forget about the vesting period</h2> <p>If you work at a company that contributes to your 401(k) plan, it's possible that you may not be able to keep those contributions unless you stay at the company a certain number of years. For example, the company may reclaim any contributions if you leave before two years. This is called the vesting period.</p> <p>To get the full advantage of a company retirement plan, it makes sense to stay through the full vesting period. Some companies offer a tiered vesting schedule, in which employees keep an increasing portion of company contributions each year until they are fully vested.</p> <p>Be sure to read the documentation on your 401(k) plan to understand the vesting policies. If you leave the company before you are fully vested, you may be leaving large sums of money on the table.</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-job-hoppers-can-keep-up-with-their-retirement-savings&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FHow%2520Job-Hoppers%2520Can%2520Keep%2520Up%2520With%2520Their%2520Retirement%2520Savings.jpg&amp;description=How%20Job-Hoppers%20Can%20Keep%20Up%20With%20Their%20Retirement%20Savings"></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%20Job-Hoppers%20Can%20Keep%20Up%20With%20Their%20Retirement%20Savings.jpg" alt="How Job-Hoppers Can Keep Up With Their Retirement Savings" 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/how-job-hoppers-can-keep-up-with-their-retirement-savings">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-common-habits-of-retirement-savvy-savers">5 Common Habits of Retirement-Savvy Savers</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/the-step-by-step-guide-to-rolling-over-your-401k">The Step-by-Step Guide to Rolling Over Your 401(k)</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/intimidated-by-retirement-investing-get-professional-help">Intimidated by Retirement Investing? Get Professional Help!</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/left-a-job-do-a-rollover">Left a job? Do a rollover.</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-right-way-to-withdraw-money-from-your-retirement-accounts-during-retirement">The Right Way to Withdraw Money From Your Retirement Accounts During Retirement</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401(k) IRA job hopping matching rollover Roth IRA switching jobs vesting Mon, 16 Apr 2018 08:30:09 +0000 Tim Lemke 2129298 at http://www.wisebread.com Where to Invest Your Money After You've Maxed Out Your Retirement Account http://www.wisebread.com/where-to-invest-your-money-after-youve-maxed-out-your-retirement-account <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/where-to-invest-your-money-after-youve-maxed-out-your-retirement-account" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/getting_a_fortune.jpg" alt="Getting a fortune" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Are you a super saver? Have you managed to contribute the maximum amounts allowed into your 401(k) or individual retirement accounts? If so, you may now be wondering what to do with any additional money you have. Should you continue to invest? If so, how? Should you spend it on a Picasso painting or give it to your kids?</p> <p>There are many options for people who have maxed out their retirement contributions. Here are some of them.</p> <h2>Taxable brokerage account</h2> <p>I'm a huge fan of the tax-advantaged nature of retirement accounts, but regular taxable brokerage accounts have their good qualities. For one thing, they are more flexible than retirement accounts. There is no limit to what you can invest in a taxable brokerage account, and while you will pay tax on any dividends and capital gains in these accounts, there is no additional penalty for withdrawing money before you retire. If you collect dividends from investments in a taxable brokerage account, they can be a great source of extra income.</p> <h2>Real estate</h2> <p>If you've put as much money into retirement accounts as you can, why not take a look at buying a property or house as a possible investment? Real estate can appreciate in value just like stocks, and you may even be able to draw income from tenants as well.</p> <p>Investing in real estate is obviously different from investing in stocks or bonds. In this case, you are investing in actual property. There may be more costs upfront, and you may face the expense and work associated with managing it. But there are many people who have gotten wealthy by buying and selling properties.</p> <p>It's worth noting that under the new tax law, you can't claim a tax deduction for mortgage interest from a second home. But the potential for real estate to rise in value and generate income is still a powerful thing. (See also: <a href="http://www.wisebread.com/the-only-5-rules-you-need-to-know-about-investing-in-real-estate?ref=seealso" target="_blank">The Only 5 Rules You Need to Know About Investing in Real Estate</a>)</p> <h2>Peer-to-peer lending</h2> <p>Did you know it's possible to make money directly off other people's borrowing? With peer-to-peer lending, an individual can use an online platform to purchase someone else's debt and make money off the interest payments. The money you can earn is based off the riskiness of the loan; more creditworthy borrowers will pay out less than those with worse credit.</p> <p>There is always the risk of borrowers defaulting on loans, but most lenders have found good returns by purchasing a &quot;portfolio&quot; of loans at various risk levels. Lending Club and Prosper are two of the most popular peer-to-peer lending platforms. (See also: <a href="http://www.wisebread.com/how-to-make-money-with-peer-to-peer-lending-service-prosper?ref=seealso" target="_blank">How to Make Money With Peer-to-Peer Lending Service Prosper</a>)</p> <h2>Education savings accounts</h2> <p>If you have children or other relatives that will be going to college, you can help fund their education and receive some tax benefits for yourself. A 529 college savings plan is a popular option, because it allows someone to invest money and withdraw the gains tax free, provided the funds are used to pay for college. In many instances, the contributions are also deducted from your taxable income. The new tax law allows 529 plans to be used for other education expenses, such as private high school, as well. (See also: <a href="http://www.wisebread.com/the-9-best-state-529-college-savings-plans?ref=seealso" target="_blank">The 9 Best State 529 College Savings Plans</a>)</p> <h2>The bank</h2> <p>It may seem silly to just put money in a simple savings account when interest rates are still quite low. But it's possible that, in an effort to max out your retirement accounts, you've been neglecting your cash savings. Having a good amount of cash on hand can give you a nice cushion in the event of an emergency and prevent you from raiding your retirement accounts. If you don't have at least three months' worth of expenses saved, it's a good idea to bolster that savings. Once you hit three months' of expenses saved, go for six. (See also: <a href="http://www.wisebread.com/5-best-online-savings-accounts?ref=seealso" target="_blank">The Best Online Savings Accounts</a>)</p> <p>It's actually not uncommon for people of high net worth to have cash flow problems, because they focus so heavily on investing their money. If you are maxing out your retirement contributions, you're doing great. There's really nothing wrong with having more cash on hand than you may need, and you may find that it gives you some nice peace of mind.</p> <h2>Collectibles</h2> <p>I am personally not a huge fan of collectibles as an investment, but they can be useful as part of a broad portfolio. A savvy, knowledgeable collector can make good money on things like art, antiques, trading cards, or even classic cars. And collecting can be good fun. Just be aware that the returns on collectibles rarely top what you can get in the stock market. (See also: <a href="http://www.wisebread.com/10-collectibles-that-almost-always-become-more-valuable?ref=seealso" target="_blank">10 Collectibles That Almost Always Become More Valuable</a>)</p> <h2>Donations to charity</h2> <p>You may think that once you've maxed out your retirement contributions, there are no more tax breaks to be had. But you can get a tax deduction for donating to most charities. So you can feel good about supporting a worthy cause while helping yourself financially.</p> <p>The one caveat here is that under the new tax law, it may be financially smarter for people to take the standard deduction rather than itemize. This could make donating to charity less advantageous from a tax perspective.</p> <h2>Gift it to family</h2> <p>If you are very wealthy and expect that your children or other family members will inherit your money when you die, it may be a good idea to begin transferring that wealth now to avoid taxes. Under the new tax law, the exemption for gift and estate taxes &mdash; the amount you can give away in your lifetime &mdash; is $11.2 million per individual. Married couples can transfer double that amount, or $22.4 million. It's also possible to make an annual gift of up to $15,000 per person (married couples can gift $30,000 per recipient) without paying taxes.</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%2Fwhere-to-invest-your-money-after-youve-maxed-out-your-retirement-account&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FWhere%2520to%2520Invest%2520Your%2520Money%2520After%2520You%2527ve%2520Maxed%2520Out%2520Your%2520Retirement%2520Account_0.jpg&amp;description=Where%20to%20Invest%20Your%20Money%20After%20You've%20Maxed%20Out%20Your%20Retirement%20Account"></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/Where%20to%20Invest%20Your%20Money%20After%20You%27ve%20Maxed%20Out%20Your%20Retirement%20Account_0.jpg" alt="Where to Invest Your Money After You've Maxed Out Your Retirement Account" 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/where-to-invest-your-money-after-youve-maxed-out-your-retirement-account">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-4"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/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/7-easiest-ways-to-catch-up-on-retirement-savings-later-in-life">7 Easiest Ways to Catch Up on Retirement Savings Later in Life</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/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> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-right-way-to-withdraw-money-from-your-retirement-accounts-during-retirement">The Right Way to Withdraw Money From Your Retirement Accounts During 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/11-basic-questions-about-retirement-saving-everyone-should-ask">11 Basic Questions About Retirement Saving Everyone Should Ask</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401(k) charity contributions gifts IRA maxed out peer to peer lending real estate investing saving money taxable brokerage accounts Tue, 10 Apr 2018 08:00:06 +0000 Tim Lemke 2115368 at http://www.wisebread.com Saving Goals for Every Age http://www.wisebread.com/saving-goals-for-every-age <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/saving-goals-for-every-age" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/meeting_with_the_close_family_is_very_important_for_them.jpg" alt="Meeting with the close family is very important for them" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>It seems that current financial news is laser-focused on the crisis of skyrocketing student loan and credit card debt. While it's easy to focus on what the average American owes, we often forget that there is a savings crisis going on at the same time.</p> <p>According to a 2017 GOBankingRates survey, more than half of Americans (57 percent) have less than $1,000 in their savings accounts. An astounding 39 percent of Americans have no savings whatsoever.</p> <p>Retirement savings aren't faring well, either. According to a 2016 retirement confidence survey, more than a third of workers over age 50, and half the surveyed retirees, had less than $25,000 put away for retirement. Imagine trying to live the decades of your golden years on such a small nest egg.</p> <p>It is time to save more money. Start following these savings goals for every decade of your life, and you won't end up as a sad savings statistic.</p> <h2>In your 20s</h2> <p>Don't waste your 20s thinking you have plenty of time to earn more and save more. Putting away even a small percentage of your income each month can translate into big savings by the time you hit your 50s.</p> <h3>Savings goals</h3> <p>In your 20s, your first goal should be to <a href="http://www.wisebread.com/7-easy-ways-to-build-an-emergency-fund-from-0?ref=internal" target="_blank">start an emergency fund</a> and build it to $1,000. Setting up this emergency fund gives your finances a little cushion so that you can avoid dipping into debt every time something goes awry. Once you hit the $1,000 mark, build up your emergency fund to three to six months' worth of daily living expenses. This will protect your finances even further against expensive emergencies or a job loss.</p> <h3>Retirement goals</h3> <p>Before you leave your 20s, use your gross annual income as the target amount for how much you should have saved for retirement. For example, individuals making $40,000 per year should try to have $40,000 saved in their retirement accounts before turning 30. This goal sounds daunting, but it's achievable, especially if you start earlier rather than later. (See also: <a href="http://www.wisebread.com/5-retirement-accounts-you-dont-need-a-ton-of-money-to-open?ref=seealso" target="_blank">5 Retirement Accounts You Don't Need a Ton of Money to Open</a>)</p> <p>If your company offers automatic deductions from your paycheck into a 401(k) each month, make sure you're enrolled so you won't have to consciously make the sacrifice. If you work for a company that <a href="http://www.wisebread.com/7-things-you-should-know-about-your-401k-match?ref=internal" target="_blank">offers a 401(k) match</a> on a percentage of your contributions, make sure you're contributing enough to get that match. Otherwise, you're leaving free money on the table.</p> <h2>In your 30s</h2> <p>With the growing pains of your 20s out of the way, it's time to step up your personal finance game. During this decade of your life, you'll ideally start earning more money and keep the ball rolling on your savings goals. Remember to steer clear of unnecessary debt: In your 30s, you may be balancing a student loan with a new mortgage payment, so the less additional debt you take on, the easier it will be to reach your money goals.</p> <h3>Savings goals</h3> <p>If you have more expenses or are earning more money than you were in your 20s &mdash; especially if it's a <em>lot </em>more &mdash; you need to grow your emergency fund to a larger cushion. Aim to cover a year's worth of your daily living expenses (payments on your mortgage, student loan, credit cards, utilities, etc.). Once your emergency fund is fully funded, you want to keep that money there. Only dip into it when an emergency happens. After your financial emergency has been dealt with, you should get back to fully funding the account. (See also: <a href="http://www.wisebread.com/8-ways-to-decide-if-its-a-fund-worthy-emergency?ref=seealso" target="_blank">8 Ways to Decide if It's a &quot;Fund-Worthy&quot; Emergency</a>)</p> <h3>Retirement goals</h3> <p>In your 30s, focus on doubling the amount in your retirement accounts to <em>twice </em>that of your annual gross income. Make sure your retirement portfolio is not set to an ultra conservative investment mix. You have several decades before retirement, plenty of time to recover from any market downturns, and you can afford to set your portfolio allocation to a higher risk. This will increase your account's earning potential while it still has a long time to grow. (See also: <a href="http://www.wisebread.com/8-steps-to-starting-a-retirement-plan-in-your-30s?ref=seealso" target="_blank">8 Steps to Starting a Retirement Plan in Your 30s</a>)</p> <h2>In your 40s</h2> <p>Your 40s can feel like an overwhelming financial decade. It's likely you have a lot on your plate; you may be trying to maximize your retirement savings while also putting away money for your kids' college education. Don't get discouraged; it's more important than ever to stay on the ball. (See also: <a href="http://www.wisebread.com/6-personal-finance-rules-to-live-by-in-your-40s?ref=seealso" target="_blank">6 Personal Finance Rules to Live By in Your 40s</a>)</p> <h3>Savings goals</h3> <p>At this point, your emergency fund should still have enough to cover a year's worth of living expenses. Once you've built enough safety savings, your extra dollars would better serve you elsewhere.</p> <p>Your extra money should first go toward your retirement and paying off any high-interest debt. If your retirement accounts are well-funded, and your debt is low, you can then send your dollars to other important savings accounts, like a college fund for your kids, a family vacation fund, or a home renovation fund. Aim to contribute 20 percent of your monthly take-home pay to your desired savings account each month. (See also: <a href="http://www.wisebread.com/5-day-debt-reduction-plan-pay-it-off?ref=seealso" target="_blank">5-Day Debt Reduction Plan: Pay It Off</a>)</p> <h3>Retirement goals</h3> <p>As mentioned above, retirement is a major priority now. It's more important to build your retirement savings than it is to put away money for your kids' college tuition or an unnecessary expense like a family vacation. Your kids will have options when they attend college, whether in the form of student loans, scholarships, or AP credits. You will not have any options if your retirement savings are not enough.</p> <p>Aim to save <em>four times</em> your annual gross income in your retirement accounts before you leave your 40s. You don't have to switch your portfolio asset allocation to low risk, but consider revising your retirement accounts to a more moderate risk level. With your retirement savings looking healthy, don't fall into the temptation of dipping into it for emergencies or to pay your child's college tuition. It is seldom worth it. (See also: <a href="http://www.wisebread.com/are-you-ruining-your-retirement-by-spoiling-your-kids?ref=seealso" target="_blank">Are You Ruining Your Retirement by Spoiling Your Kids?</a>)</p> <h2>In your 50s</h2> <p>As you enter your 50s, retirement is visible on the horizon. You may be facing unique challenges during this decade, such as changes to your health or caring for an elderly parent. This is the time to cover all your bases; accelerate your savings and play catch up where you need to. (See also: <a href="http://www.wisebread.com/6-financial-steps-to-take-when-your-aging-parents-move-in?ref=seealso" target="_blank">6 Financial Steps to Take When Your Aging Parents Move In</a>)</p> <h3>Savings goals</h3> <p>Your emergency fund should still reflect at least a year's worth of living expenses. If you have an aging relative who may need your care, or a health issue that threatens to leave you out of work, you may need to build your emergency savings further.</p> <p>Your 50s are also the time to get serious about debt repayment. At this point, <a href="http://www.wisebread.com/5-ways-to-pay-off-high-interest-credit-card-debt?ref=internal" target="_blank">high-interest credit card debt</a> is a large threat to your financial wellbeing. When you retire, you'll be living on a fixed income. If you didn't save enough money throughout your working life, that income may not be very high. The last thing you'll need to worry about are the bills piling up for your credit cards, car loans, or mortgage payments. Tackle these things as best as you can, now. The less debt you bring into retirement, the better.</p> <h3>Retirement goals</h3> <p>Before you leave your 50s, strive to have <em>six times</em> the amount of your annual salary saved for retirement. Your portfolio should now be managed as fairly low risk, though with people living longer than ever, it may still make sense to own a few higher-risk investments such as stocks.</p> <p>In order to <a href="http://www.wisebread.com/7-easiest-ways-to-catch-up-on-retirement-savings-later-in-life?ref=internal" target="_blank">catch up on retirement savings later in life</a>, take advantage of the additional money you can contribute to your retirement accounts once you hit age 50; in 2018, it's an additional $6,000 per year to your 401(k), and an additional $1,000 per year to an IRA. (See also: <a href="http://www.wisebread.com/5-ways-longevity-is-changing-retirement-planning-and-what-to-do-about-it?ref=seealso" target="_blank">5 Ways Longevity Is Changing Retirement Planning (And What to Do About It)</a>)</p> <h2>In your 60s</h2> <p>You are on the cusp of retirement, but this doesn't mean now is the time to slack off on savings. You should be working extra hard toward your goal of financial stability for your golden years.</p> <h3>Savings goals</h3> <p>The goal is to enter retirement with very little financial worry. You <a href="http://www.wisebread.com/yes-you-still-need-an-emergency-fund-in-retirement?ref=internal" target="_blank">still need an emergency fund in retirement</a>. If you don't have any liquid savings set aside for a crisis, focus on building that up. If your emergency fund is stocked, every extra dollar should go toward contributing the max on your retirement accounts and paying off the rest of your debt.</p> <h3>Retirement goals</h3> <p>Will retirement contributions even make a difference at this point? Yes! Boost your retirement funds as much as possible in the last few years you're still working. It's important to remember that life happens. You may have a plan to retire at 65, but a health issue, caregiving obligation, or even a layoff could <a href="http://www.wisebread.com/how-to-plan-for-a-forced-early-retirement?ref=internal" target="_blank">force you to retire early</a>. In a situation like that, you'll be so glad you continued contributing to your retirement accounts past age 60. (See also: <a href="http://www.wisebread.com/what-to-do-if-youre-laid-off-before-you-retire?ref=seealso" target="_blank">What to Do if You're Laid Off Before You Retire</a>)</p> <p>Even in an ideal scenario, you'll still be relieved when you're ready to officially kick off your retirement with a well-stocked nest egg.</p> <h2>How much do you have saved?</h2> <p>How are you faring for your age group? Do you need to save more or are you right on track? If you are behind, don't get discouraged; now is the time to get your budget under control and accelerate your savings for a financially secure 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%2Fsaving-goals-for-every-age&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FSaving%2520Goals%2520for%2520Every%2520Age.jpg&amp;description=Saving%20Goals%20for%20Every%20Age"></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/Saving%20Goals%20for%20Every%20Age.jpg" alt="Saving Goals for Every Age" 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/ashley-eneriz">Ashley Eneriz</a> of <a href="http://www.wisebread.com/saving-goals-for-every-age">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-critical-money-mistakes-people-make-in-their-40s">7 Critical Money Mistakes People Make in Their 40s</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-signs-your-emergency-fund-is-too-big">4 Signs Your Emergency Fund Is Too Big</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-money-moves-youre-never-too-old-to-make">9 Money Moves You&#039;re Never Too Old to Make</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-money-rules-every-working-adult-should-know">10 Money Rules Every Working Adult Should Know</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/stop-making-these-7-basic-budget-mistakes">Stop Making These 7 Basic Budget Mistakes</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance 401(k) aging college funds decades emergency funds income IRA milestones retirement saving money savings goals Fri, 06 Apr 2018 08:30:09 +0000 Ashley Eneriz 2128558 at http://www.wisebread.com Best Money Tips: Essential Tips to Manage Your 401(k) http://www.wisebread.com/best-money-tips-essential-tips-to-manage-your-401k <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/best-money-tips-essential-tips-to-manage-your-401k" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/401k_piggy_bank_645234372.jpg" alt="Finding ways to manage a 401(k)" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Welcome to Wise Bread's <a href="http://www.wisebread.com/topic/best-money-tips">Best Money Tips</a> Roundup! Today we found articles on tips for managing your 401(k), steps you can take to get your tax refund ASAP, and how to hustle as a new parent.</p> <h2>Top 5 Articles</h2> <p><a href="https://www.moneyunder30.com/essential-tips-to-manage-your-401k">6 Essential Tips to Manage Your 401(k)</a> &mdash; Increase your contribution by 1-5 percent, then set it up to increase by 1 percent annually. You'll hardly notice the difference in your paycheck, but it'll have a big impact on your portfolio down the road. [Money Under 30]</p> <p><a href="https://wallethacks.com/wheres-my-refund-fast/">Where&rsquo;s My Refund? How to Get Your Tax Refund As Quickly As Possible</a> &mdash; When you get your tax refund depends on when you filed, how you filed, and how you asked for your refund. [Wallet Hacks]</p> <p><a href="http://www.moneyaftergraduation.com/2018/03/07/hustle-new-parent/">How to Hustle as a New Parent</a> &mdash;These tips will help you manage that difficult work-life balance with a new baby in tow. [Money After Graduation]</p> <p><a href="https://www.popsugar.com/smart-living/Unclogging-Toilet-Bombs-32903823">Unclog Your Commode With Eco-Friendly Toilet Bombs</a> &mdash; These eco-friendly toilet bombs use the degreasing power of dish soap to bust through tough clogs and clean your commode. [PopSugar Smart Living]</p> <p><a href="https://thetinylife.com/tips-for-getting-started-keeping-chickens/">Getting Started With Chickens</a> &mdash; There are many benefits to keeping chickens beyond the eggs they provide. Learn what it takes to care for these productive birds! [The Tiny Life]</p> <h2>Other Essential Reading</h2> <p><a href="https://bemorewithless.com/air/">How to Land Your Plane: 8 ways to help you feel more grounded</a> &mdash; If your schedule and routines haven been thrown off, don't try to jump back in and expect things to go back to normal right away. Dip into your daily routines, giving yourself time to adjust. [Be More With Less]</p> <p><a href="https://www.theclassysimplelife.com/is-minimalism-right-for-you/">Is Minimalism Right For You?</a> &mdash; The minimalist lifestyle can be hard to maintain. Ask yourself these questions to figure out if minimalism is right for you. [The Classy Life]</p> <p><a href="http://www.pocketyourdollars.com/2018/03/ultimate-list-ways-moms-can-make-money-home/">The Ultimate List of Ways Moms Can Make Money From Home</a> &mdash; The only thing you need to start working from home is the willingness to serve and a product or service that people need. [Pocket Your Dollars]</p> <p><a href="https://thecollegeinvestor.com/21541/different-ways-to-get-student-loan-forgiveness/">80 Different Ways To Get Student Loan Forgiveness</a> &mdash; Need help with your student loan debt? Consider applying for one of these student loan forgiveness programs! [The College Investor]</p> <p><a href="https://www.csmonitor.com/Science/2018/0301/How-to-make-science-experiments-as-common-at-home-as-bedtime-stories">How to make science experiments as common at home as bedtime stories</a> &mdash; A recent study looks into the ways families with preschool-age children incorporate science learning into their lives, and what barriers keep them from doing so more. [The Christian Science Monitor]</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/amy-lu">Amy Lu</a> of <a href="http://www.wisebread.com/best-money-tips-essential-tips-to-manage-your-401k">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-7"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/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/8-startling-facts-that-will-make-you-want-to-invest">8 Startling Facts That Will Make You Want to Invest</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-alternatives-to-a-401k-plan">5 Alternatives to a 401(k) Plan</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/bookmark-this-a-step-by-step-guide-to-choosing-401k-investments">Bookmark This: A Step-by-Step Guide to Choosing 401(k) Investments</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-save-for-retirement-when-you-are-unemployed">How to Save for Retirement When You Are Unemployed</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment Retirement 401(k) best money tips Wed, 14 Mar 2018 09:31:18 +0000 Amy Lu 2118000 at http://www.wisebread.com 8 Startling Facts That Will Make You Want to Invest http://www.wisebread.com/8-startling-facts-that-will-make-you-want-to-invest <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/8-startling-facts-that-will-make-you-want-to-invest" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/retirement_savings_golden_nest_egg.jpg" alt="Retirement savings golden nest egg" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Sometimes you need to be startled into action when it comes to investing. It's easy to come up with excuses not to begin placing money in the markets and saving for retirement. Armed with the right information, however, most people would likely choose to invest rather than stay on the sidelines.</p> <p>Perhaps it's time to digest these eye-opening facts and realize that waiting to invest could be a big mistake.</p> <h2>1. The average retirement savings is measly</h2> <p>According to a 2016 survey from the Transamerica Center for Retirement Studies, baby boomers have an average retirement savings of $147,000. Those from Generation X have an average $69,000, while millennials have $31,000 saved. Those figures have probably risen slightly in the last two years, but are still well shy of the totals necessary for a comfortable retirement.</p> <p>Older people approaching retirement age may have held off investing in their earlier years and are now playing catch up. Younger people have more time to invest and get to where they need to be &mdash; but the longer they wait, the harder it gets. (See also: <a href="http://www.wisebread.com/7-retirement-planning-steps-late-starters-must-make?ref=seealso" target="_blank">7 Retirement Planning Steps Late Starters Must Make</a>)</p> <h2>2. You may be retired longer than you worked</h2> <p>Imagine starting work at 21 and retiring at 60. That's 39 years in the workforce. If you live to 100, that's an additional 40 years &mdash; longer than the time you spent working! People are living longer these days, so it's not uncommon to see retirees still kicking it well into their 90s and beyond. In some cases, retirements are stretching past 40 years. Are you doing all you can to allow your money to last that long? Smart investing may be the only way to accumulate enough cash to support a retirement of that length. (See also: <a href="http://www.wisebread.com/5-ways-longevity-is-changing-retirement-planning-and-what-to-do-about-it?ref=seealso" target="_blank">5 Ways Longevity Is Changing Retirement Planning (And What to Do About It)</a>)</p> <h2>3. Very few people get a pension these days</h2> <p>Defined benefit plans, in which a company guarantees workers a specific amount of money each year in their retirement, have been going away fast. Today, only 13 percent of nonunion private sector workers have access to a defined benefit plan, according to the Bureau of Labor Statistics.</p> <p>Instead, most companies now only offer defined contribution plans, such as a 401(k). With these plans, workers must invest their own money, and companies may offer to match a certain percentage of contributions (some don't). If you're in the workforce, it's likely incumbent upon you to take charge of your own retirement savings. (See also: <a href="http://www.wisebread.com/if-youre-lucky-enough-to-receive-a-pension-here-are-6-things-you-need-to-do?ref=seealso" target="_blank">If You're Lucky Enough to Receive a Pension, Here Are 6 Things You Need to Do</a>)</p> <h2>4. Half of workers say they'll probably work during retirement</h2> <p>Isn't the entire idea of retirement to stop working? For many people, ceasing to work entirely just isn't in the cards. The Transamerica survey revealed that about half of all workers &mdash; including baby boomers, Gen Xers, and millennials &mdash; expect to work at least part-time during retirement. Working is fine if you want to, but if you dread the idea of punching a clock in your old age, invest now.</p> <h2>5. About 20 percent of seniors rely on Social Security for nearly everything</h2> <p>Social Security is certainly better than nothing if you're retired, but it's not a lot of money. The maximum Social Security benefit for 2018 is $2,788 per month, or about $33,500 a year, if you retire at age 66. You could get up to $3,698 monthly if you are willing to wait until age 70 begin accepting payments.</p> <p>You won't starve, but you're not going to be cruising the Mediterranean, either. And yet, roughly one in five Americans over 65 rely on Social Security for 90 percent or more of their income, according to a 2015 study from AARP. There are some states where this figure rises to more than one in three older residents. This is a startling figure when you consider that Social Security is currently running a deficit. Invest now, so that Social Security can be like icing on your retirement cake. (See also: <a href="http://www.wisebread.com/5-questions-to-ask-before-you-start-claiming-your-social-security-benefits?ref=seealso" target="_blank">5 Questions to Ask Before You Start Claiming Your Social Security Benefits</a>)</p> <h2>6. The market rarely has bad years</h2> <p>Everyone remembers when the market crashed about a decade ago during the financial crisis. And there have been some high-profile bad years in the past. But consider this: Since the end of World War II, the S&amp;P 500 has <a href="http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html" target="_blank">recorded a negative annual return</a> just 15 times. That's 15 bad years out of 72. The New York Yankees have won 17 World Series titles during the same period! Only once since World War II &mdash; from 2000 to 2002 &mdash; has the market had three bad years in a row, and there's only one other instance of back-to-back negative annual returns. So even if you had no idea what year it was and still chose not to invest, you'd likely be missing out on positive returns. (See also: <a href="http://www.wisebread.com/how-the-risk-averse-can-get-into-the-stock-market?Ref=seealso" target="_blank">How the Risk Averse Can Get Into the Stock Market</a>)</p> <h2>7. Almost as many people own dogs as stocks</h2> <p>About 54 percent of Americans own stocks, according to research from Gallup. Meanwhile, the American Pet Products Association reports that 48 percent of Americans own dogs. Dogs are nice. Dogs can be enjoyable. Dogs are good to have in retirement as companions, but they won't appreciate in value or help pay the bills as you get older.</p> <p>Invest now, and you can have a comfortable retirement, complete with as many canine friends as you want.</p> <h2>8. If you invested $100 in Amazon 20 years ago, you'd have $50,000</h2> <p>When Amazon went public in 1997, its shares were trading at about $18. As of this writing, the company is now trading at more than $1,300 per share. A simple $100 investment 20 years ago would be worth tens of thousands today. Of course, Amazon's stock returns aren't typical. But it goes to show how even a modest investment over time can prove to be enormously lucrative.</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-startling-facts-that-will-make-you-want-to-invest&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F8%2520Startling%2520Facts%2520That%2520Will%2520Make%2520You%2520Want%2520to%2520Invest.jpg&amp;description=8%20Startling%20Facts%20That%20Will%20Make%20You%20Want%20to%20Invest"></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%20Startling%20Facts%20That%20Will%20Make%20You%20Want%20to%20Invest.jpg" alt="8 Startling Facts That Will Make You Want to Invest" 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-startling-facts-that-will-make-you-want-to-invest">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-8"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-make-sure-you-dont-run-out-of-money-in-retirement">How to Make Sure You Don&#039;t Run Out of Money in 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/7-easiest-ways-to-catch-up-on-retirement-savings-later-in-life">7 Easiest Ways to Catch Up on Retirement Savings Later in Life</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-signs-its-time-to-retire">8 Signs It&#039;s Time to 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/4-foolproof-ways-to-protect-your-money-from-inflation">4 Foolproof Ways to Protect Your Money From Inflation</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-reasons-youre-never-too-old-to-buy-stocks">7 Reasons You&#039;re Never Too Old to Buy Stocks</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment Retirement 401(k) fun facts late retirement pensions returns s&p 500 social security startling facts stocks working Wed, 14 Mar 2018 09:01:08 +0000 Tim Lemke 2106620 at http://www.wisebread.com 11 Basic Questions About Retirement Saving Everyone Should Ask http://www.wisebread.com/11-basic-questions-about-retirement-saving-everyone-should-ask <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/11-basic-questions-about-retirement-saving-everyone-should-ask" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/investing_money_for_retirement_in_piggy_bank_0.jpg" alt="Investing money for retirement in piggy bank" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Saving for retirement is critically important &mdash; we all know that. But sometimes, the confusing details can throw us off course or prevent us from doing all we can to properly grow our nest egg.</p> <p>Education is the best tool when it comes to most matters of personal finance. And for retirement planning, there are some facts everyone should know. It's time to ask yourself these questions and brush up on the basics of retirement savings.</p> <h2>1. When can I start contributing to a retirement account?</h2> <p>With a traditional or Roth IRA, you can generally start contributing funds as soon as the account has been set up. However, rules can vary for employer-sponsored 401(k) plans. Some 401(k) plans may have a waiting period ranging from six to 12 months to make your first contribution, while others may allow you to contribute immediately. It's a good practice to check all applicable rules for your workplace retirement plan at the time of sign-up and again during every open enrollment period. (See also: <a href="http://www.wisebread.com/8-critical-401k-questions-you-need-to-ask-your-employer?ref=seealso" target="_blank">8 Critical 401(k) Questions You Need to Ask Your Employer</a>)</p> <h2>2. How much can I save in each type of account?</h2> <p>You can sock away the most money per year in a 401(k). In 2018, you can contribute up to $18,500 to a 401(k), and an additional $6,000 in catch-up contributions if you're over age 50. By comparison, you can only contribute up to $5,550 to an IRA ($6,500 if over age 50). Due to its higher contribution limits, a 401(k) is a very beneficial account for those trying to make up for low savings in previous years or those close to retirement age. However, if possible, having both types of accounts is the even better option. (See also: <a href="http://www.wisebread.com/401k-or-ira-you-need-both?ref=seealso" target="_blank">401(k) or IRA? You Need Both</a>)</p> <h2>3. Am I taking advantage of the company match?</h2> <p>If you're offered a company match, you <em>must </em>take advantage of it. And since 94 percent of Vanguard 401(k) plans provide employer contributions, chances are that you have access to a workplace savings plan with a matching formula.</p> <p>A common formula for matching is $0.50 per dollar that you contribute up to 6 percent of your annual pay. This means that a worker making $50,000 per year could receive an extra $3,000 in employer matching contributions by contributing $6,000 of their annual salary into a 401(k). Some might say there's no such thing as a free lunch, but an employer match on your 401(k) truly is a freebie. (See also: <a href="http://www.wisebread.com/7-things-you-should-know-about-your-401k-match?ref=seealso" target="_blank">7 Things You Should Know About Your 401(k) Match</a>)</p> <h2>4. What happens if I change jobs?</h2> <p>From the date that you separate from your employer, you should aim to decide what to do with your 401(k) balance within 60 days. The reason for 60 days is that this is the deadline to complete an indirect rollover into a new retirement account (if your employer were to cash out your entire balance and hand you a check) and pay back any outstanding loans on your 401(k) (if not paid, they become taxable income and may even trigger penalties).</p> <p>Under most scenarios, you have six rollover options for your total vested account balance:</p> <ul> <li> <p>Keep your account.</p> </li> <li> <p>Rollover account into a new or existing IRA.</p> </li> <li> <p>Rollover account into a new or existing qualified plan.</p> </li> <li> <p>Do an indirect rollover.</p> </li> <li> <p>Request a full cash-out of your account.</p> </li> <li> <p>Do a mix of the above five options.</p> </li> </ul> <p>(See also: <a href="http://www.wisebread.com/a-simple-guide-to-rolling-over-all-of-your-401ks-and-iras?ref=seealso" target="_blank">A Simple Guide to Rolling Over All of Your 401Ks and IRAs</a>)</p> <h2>5. Is it better to contribute after-tax or pretax dollars?</h2> <p>There is no right or wrong answer here, as either way offers a benefit. Contributing with pretax dollars (traditional IRA, 401(k)) allows you to reduce your taxable income by deferring income taxes until retirement, at which point you're more likely to be in a lower tax bracket. So, if you're expecting to be making more money now than you will be in retirement, you should contribute pretax money. This is the majority of American workers.</p> <p>Workers just beginning their careers, workers in professions with a high upside income potential, and individuals expecting a large windfall, such as a family trust or inheritance, can greatly benefit from contributing after-tax dollars to a Roth IRA or Roth 401(k).</p> <h2>6. Can I withdraw money early from my accounts?</h2> <p>Early distribution rules vary per type of plan.</p> <h3>401(k)</h3> <p>Generally, you can only take money from a 401(k) plan early due to a hardship or extreme situation, such as avoiding a foreclosure, making a first-time home purchase, or an unexpected medical expense. However, rules vary per plan: Some plans may only offer you the option to take out a loan, while other plans won't allow you to withdraw money early at all. If you take a distribution from a 401(k) before age 59 &frac12;, you become liable for applicable income taxes and penalties.</p> <h3>Traditional IRA</h3> <p>There are several instances in which you can take an early distribution from a traditional IRA without incurring a penalty. This includes unreimbursed medical expenses, health insurance premiums during unemployment, the purchase of a first home, higher education expenses, and others. (See also: <a href="http://www.wisebread.com/7-penalty-free-ways-to-withdraw-money-from-your-retirement-account?ref=seealso" target="_blank">7 Penalty-Free Ways to Withdraw Money From Your Retirement Account</a>)</p> <h3>Roth IRA</h3> <p>Early withdrawals on <em>contributions</em> from a Roth IRA can be made at any time without incurring taxes and penalties, since you have already paid taxes on the money. Withdrawing any amount that exceeds your contributions counts as <em>earnings</em>, and is therefore subject to tax and penalties. In order to avoid those taxes and penalties, your Roth IRA must be at least five years old and withdrawals must be used for a qualified expense, such as the purchase of a new home or a disability. Higher education costs are also exempt from penalties, but you must pay income tax on the withdrawals.</p> <h2>7. What are required minimum distributions?</h2> <p>Eventually, the IRS wants its money in the form of taxes on your retirement distributions. When you reach age 70 &frac12;, you must begin taking required minimum distributions (RMDs) from your retirement plans. These rules apply to traditional and Roth 401(k) plans, as well as 403(b) plans, 457(b) plans, and traditional IRA-based plans such as SEPs, SARSEPs, and SIMPLE IRAs. If you fail to take your RMD, the IRS will take 50 percent of the amount you should have withdrawn as a penalty.</p> <p>The exception to the RMD rule is the Roth IRA, which is funded with post-tax dollars. (See also: <a href="http://www.wisebread.com/which-of-these-9-retirement-accounts-is-right-for-you?ref=seealso" target="_blank">Which of These 9 Retirement Accounts Is Right for You?</a>)</p> <h2>8. Are there any tax credits for retirement contributions?</h2> <p>Come tax time, eligible workers can claim the Retirement Savings Contributions Credit, better known as the Saver's Credit. Depending on your adjusted gross income (AGI), you can claim 50, 20, or 10 percent of your retirement plan contributions, up to $2,000 for single filers and $4,000 for married filing jointly. For example, a married couple with an AGI between $41,001 and $63,000 can claim 10 percent of their eligible contributions for the Saver's Credit in 2018. (See also: <a href="http://www.wisebread.com/5-dumb-401k-mistakes-smart-people-make?ref=seealso" target="_blank">Dumb 401(k) Mistakes Smart People Make</a>)</p> <h2>9. What is the recommended 401(k) portfolio allocation?</h2> <p>Here's some advice from one of the most successful investors of all time, Warren Buffett: Put 90 percent of your 401(k) balance in a very low-cost S&amp;P 500 index fund, and the remaining 10 percent in short-term government bonds. Keeping true to his word, he has included this very same advice in his will. (See also: <a href="http://www.wisebread.com/bookmark-this-a-step-by-step-guide-to-choosing-401k-investments?ref=seealso" target="_blank">Bookmark This: A Step-by-Step Guide to Choosing 401(k) Investments</a>)</p> <h2>10. What is an HSA?</h2> <p>Those with a high deductible health plan (HDHP) are eligible for a health savings account (HSA), which is a way to make pretax contributions to save for medical expenses. Many HSA providers offer the option to put money in an investment account with several fund options, including mutual funds and low-cost index funds.</p> <p>The main benefit of saving for medical expenses using an HSA is that you won't have to pay any income taxes on withdrawals used for qualifying medical expenses (even before retirement age). And when you do hit age 65, your HSA will basically become a traditional IRA. You can withdraw funds for any reason penalty-free, only paying income tax on the distributions. (See also: <a href="http://www.wisebread.com/how-an-hsa-could-help-your-retirement?ref=seealso" target="_blank">How an HSA Could Help Your Retirement</a>)</p> <h2>11. Does my plan offer financial advice services?</h2> <p>More and more plans are jumping on the bandwagon of offering a robo-adviser (an automated service suggesting or performing certain types of transactions on your behalf). The range of trades that a robo-adviser can perform ranges from periodically rebalancing your portfolio to selling securities.</p> <p>Fees can range, too: Some robo-advisers charge about 0.15 percent of your account balance or a flat monthly fee. Some plans may also offer you a-la-carte paid options to add a standard robo-adviser service. (See also: <a href="http://www.wisebread.com/9-questions-you-should-ask-before-hiring-a-robo-adviser?ref=seealso" target="_blank">9 Questions You Should Ask Before Hiring a Robo-Adviser</a>)</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F11-basic-questions-about-retirement-saving-everyone-should-ask&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F11%2520Basic%2520Questions%2520About%2520Retirement%2520Saving%2520Everyone%2520Should%2520Ask.jpg&amp;description=11%20Basic%20Questions%20About%20Retirement%20Saving%20Everyone%20Should%20Ask"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/11%20Basic%20Questions%20About%20Retirement%20Saving%20Everyone%20Should%20Ask.jpg" alt="11 Basic Questions About Retirement Saving Everyone Should Ask" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/damian-davila">Damian Davila</a> of <a href="http://www.wisebread.com/11-basic-questions-about-retirement-saving-everyone-should-ask">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-critical-401k-questions-you-need-to-ask-your-employer">8 Critical 401(k) Questions You Need to Ask Your Employer</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-right-way-to-withdraw-money-from-your-retirement-accounts-during-retirement">The Right Way to Withdraw Money From Your Retirement Accounts During Retirement</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/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-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/which-of-these-9-retirement-accounts-is-right-for-you">Which of These 9 Retirement Accounts Is Right for You?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401(k) basics contributions early withdrawals employer match health savings accounts IRA penalties questions tax credits taxes Tue, 13 Mar 2018 10:00:06 +0000 Damian Davila 2115991 at http://www.wisebread.com 6 Questions All Rookie Investors Should Ask http://www.wisebread.com/6-questions-all-rookie-investors-should-ask <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-questions-all-rookie-investors-should-ask" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/young_boy_examines_money_falling_from_sky.jpg" alt="Young Boy Examines Money Falling from Sky" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>The first time you got behind the wheel of a car, you were probably a little intimidated. The same can be true if you're just getting started with investing. Here are some questions that may be on your mind, along with answers designed to help you begin your investing journey with the knowledge you need to succeed.</p> <h2>1. Why should I invest?</h2> <p>Especially if you're young, investing might not seem very urgent. Investment goals, such as retirement, may seem distant and vague.</p> <p>The financial services industry has tried everything to get people to recognize the importance of investing for retirement, even using photo-enhancing software to show young people what they may look like when they're 65 or 70. A 2012 Merrill Edge study actually found the tactic somewhat effective in motivating people to save more for their later years.</p> <p>Assuming you don't have access to such technology, maybe the best way to find the motivation to invest is to consider the cost of waiting. Crunching the numbers just may be the wake-up call you need.</p> <h2>2. What's the harm in holding off a little while?</h2> <p>The sooner you start investing, the less you'll have to invest each month in order to meet your goals.</p> <p>Let's say you're 25 years old, plan to retire at age 70, and want to accumulate $1 million by then. Assuming a 7 percent average annual return, you would need to invest about $275 per month. Even waiting just five years will significantly increase that amount. Starting at age 30, you would need to invest about $361 per month in order to accumulate $1 million by age 70.</p> <p>Here's another way to think about it. If you invested $200 per month from age 25 until age 70 and generated an average annual return of 7 percent, you'd end up with about $733,804. Wait until age 30 to start investing $200 per month, and you'll end up with $512,663.</p> <p>That's amazing, isn't it? By investing for just five fewer years, you will invest just $12,000 less than if you had started at age 25. And yet, because of the power of compounding &mdash; more accurately, because of missing out on five years' worth of the power of compounding &mdash; you'll end up with about $221,000 less. That's a huge penalty for waiting. (See also: <a href="http://www.wisebread.com/11-investing-tips-you-wish-you-could-tell-your-younger-self?ref=seealso" target="_blank">11 Investing Tips You Wish You Could Tell Your Younger Self</a>)</p> <h2>3. How much should I invest?</h2> <p>To get a general sense about how much to invest each month, use the <a href="https://www.fidelity.com/calculators-tools/fidelity-retirement-score-tool" target="_blank">Fidelity Retirement Score</a> calculator. Once you run some initial numbers, you'll be able to see how changing some of your variables, such as how much to invest and when to retire, will impact your how much money you end up with.</p> <h2>4. Should I use my company's 401(k) plan or an IRA?</h2> <p>The key to answering this question is whether your employer offers a match on some of the money you would contribute to its 401(k) plan. If so, start there.</p> <p>In a typical arrangement, an employer will match your contributions up to 6 percent of your salary. If yours will contribute a dollar for every dollar you put in, that's a guaranteed 100 percent return on your money. If it will match 50 cents for every dollar you contribute, that's a guaranteed 50 percent return on your money. Don't miss out.</p> <p>If your employer doesn't offer a match, the decision depends on the investment options it offers. There are still some employers whose plans contain a strange mix of mutual funds with high fees (you should not be limited to funds with &quot;expense ratios&quot; higher than 1 percent). If that's the case with your employer's plan, you may be better off using an IRA. However, even with a solid 401(k) plan at your disposal, don't think an IRA isn't for you. Contributing to both plans can give you a further leg up in your retirement savings strategy. (See also: <a href="http://www.wisebread.com/401k-or-ira-you-need-both?ref=seealso" target="_blank">401(k) or IRA? You Need Both</a>)</p> <h2>5. What should I invest in?</h2> <p>It used to be a lot more complicated and intimidating to figure out what investments to make. Today, target-date funds have simplified the process. By choosing a single mutual fund that has the year of your intended retirement date as part of its name, such as the Fidelity Freedom 2040 Fund, you'll gain a portfolio that's diversified across stocks, bonds, and other asset classes in a way that's appropriate for someone your age. As you get older, the fund will automatically adjust its investment mix, becoming more conservative as you near your target retirement date. (See also: <a href="http://www.wisebread.com/what-you-need-to-know-about-the-easiest-way-to-save-for-retirement?ref=seealso" target="_blank">What You Need to Know About the Easiest Way to Save for Retirement</a>)</p> <h2>6. What can I expect from my investments?</h2> <p>In short, you can expect that the ride will not always be smooth. Last year, the S&amp;P 500 generated a nearly 22 percent return, but in 2008 it <em>fell </em>37 percent.</p> <p>Investing always comes with risk, and there's no way to predict how each year will turn out. A solid approach is to build a diversified portfolio, perhaps through a target-date fund, and commit to staying with it in good years and bad.</p> <p>The longer you stay invested, the better your odds of success. As Morningstar documented in its 2017 Fundamentals for Investors report, from 1926 through 2016, 74 percent of one-year returns from the U.S. stock market were positive, 86 percent of five-year returns were positive, and 100 percent of 15-year returns were positive.</p> <p>As with so many things, the best way to learn about investing is to get started. Taking the steps described above should get you moving in the right direction.</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-questions-all-rookie-investors-should-ask&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F6%2520Questions%2520All%2520Rookie%2520Investors%2520Should%2520Ask%2520%25281%2529.jpg&amp;description=6%20Questions%20All%20Rookie%20Investors%20Should%20Ask"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/6%20Questions%20All%20Rookie%20Investors%20Should%20Ask%20%281%29.jpg" alt="6 Questions All Rookie Investors Should Ask" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/matt-bell">Matt Bell</a> of <a href="http://www.wisebread.com/6-questions-all-rookie-investors-should-ask">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-11"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/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/8-startling-facts-that-will-make-you-want-to-invest">8 Startling Facts That Will Make You Want to Invest</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/11-basic-questions-about-retirement-saving-everyone-should-ask">11 Basic Questions About Retirement Saving Everyone Should Ask</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-critical-401k-questions-you-need-to-ask-your-employer">8 Critical 401(k) Questions You Need to Ask Your Employer</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/three-of-the-toughest-decisions-youll-face-in-retirement">Three of the Toughest Decisions You&#039;ll Face in Retirement</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment 401(k) compound interest IRA new investors questions retirement savings returns rookies Tue, 06 Feb 2018 09:30:08 +0000 Matt Bell 2096590 at http://www.wisebread.com 8 Things Millennials Can Do Right Now for an Early Retirement http://www.wisebread.com/8-things-millennials-can-do-right-now-for-an-early-retirement <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/8-things-millennials-can-do-right-now-for-an-early-retirement" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/this_team_is_built_for_success.jpg" alt="This team is built for success" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>When you're young, it's hard to think of retirement planning as a priority. You have barely entered the workforce; now you have to think about what to do when you've <em>stopped</em> working?</p> <p>But if you are of the millennial generation, the road to a comfortable retirement should begin now. And with the right moves, you may even be able to retire early. Consider these financial moves to supercharge your retirement plan.</p> <h2>1. Develop a net worth mindset</h2> <p>One of the keys to saving for a comfortable retirement is to focus on accumulating things that grow in value while reducing your liabilities.</p> <p>This means earning and saving as much money as possible while eliminating debt. It means investing and watching your money grow, through things like stocks and real estate. It means avoiding spending money on things that will lose financial value or have no value to begin with.</p> <p>This mindset will help you develop a high &quot;net worth,&quot; calculated by how much your assets exceed your liabilities. You can't retire unless you have a high net worth, and you can't get there unless you make the right financial choices &mdash; especially at an early age. (See also: <a href="http://www.wisebread.com/6-money-moves-to-make-if-your-net-worth-is-negative?ref=seealso" target="_blank">6 Money Moves to Make If Your Net Worth Is Negative</a>)</p> <h2>2. Open an IRA</h2> <p>If you have any earned income at all, you can open an individual retirement account (IRA), which allows you to invest in almost anything and enjoy tax savings along the way. With a traditional IRA, any money you invest is deducted from your taxable income. With a Roth IRA, contributions are taxed upfront, but any investment gains can be withdrawn tax-free when you retire. You will pay a penalty and taxes if you withdraw money before you turn 59&frac12;.</p> <p>These retirement accounts can be powerful saving vehicles if you have the discipline to set aside as much money as you can. The earlier you invest, the more time your money has to grow. (See also: <a href="http://www.wisebread.com/5-retirement-accounts-you-dont-need-a-ton-of-money-to-open?ref=seealso" target="_blank">5 Retirement Accounts You Don't Need a Ton of Money to Open</a>)</p> <h2>3. Put money in a 401(k)</h2> <p>If you are employed by a company, there's a good chance that you have access to a 401(k) or similar plan. Don't ignore your human resources representative when they hand you a stack of plan documents urging you to sign up.</p> <p>A 401(k) plan allows you to invest in a variety of mutual funds and other investments, and your company will often match your contributions up to a certain amount. Money you contribute is deducted from your taxable income. You should invest as much as you can into your 401(k), but it's imperative that you at least contribute enough to get the maximum in matching funds. Your contributions, coupled with the matching funds, can add up to millions of dollars by the time you decide to retire. (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. Open a taxable brokerage account</h2> <p>There's no rule that says all your investments need to be in retirement accounts. Regular taxable brokerage accounts don't have the same tax advantages as IRAs or 401(k) plans, but they do offer other perks, chiefly the flexibility to withdraw money whenever you want it. This is especially key for someone looking to retire before age 59.</p> <p>Taxable brokerage accounts can be used to accumulate dividend stocks, bonds, or other investments that provide income that will allow you to retire early. (See also: <a href="http://www.wisebread.com/7-investment-accounts-all-30-somethings-should-have?ref=seealso" target="_blank">7 Investment Accounts All 30-Somethings Should Have</a>)</p> <h2>5. Get a side hustle</h2> <p>To accumulate enough money for an early retirement, you'll need a healthy and steady income. If your day job doesn't quite pay enough, look for other ways to generate cash. This may mean freelance writing or playing guitar at local coffee shops. Maybe it's tutoring math, working as a DJ, or doing ASMR videos on YouTube.</p> <p>If you're young, you have energy and freedom, and the ability to make some cash on the side. Earn it, invest it, and watch it help you retire for good from work at an early age. (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. Learn to budget</h2> <p>It's simple: The only way to invest money is to save it, and the only way to save it is to spend less than you earn. This may be easier said than done, especially if you aren't making a lot of money early in your career. But it needs to happen.</p> <p>Start by tracking your spending so you know precisely where your money is going. Then create buckets for various categories of spending (rent, food, entertainment, etc.). Budgeting requires focus and discipline, but can be fun &mdash; and ultimately rewarding &mdash; when you see your savings grow. (See also: <a href="http://www.wisebread.com/9-ways-staying-on-budget-can-be-fun-really?ref=seealso" target="_blank">9 Ways Staying on Budget Can Be Fun (Really!)</a>)</p> <h2>7. Tackle that debt</h2> <p>You may have student loans. As a result, you may also have credit card debt. If this is weighing you down, it's time to do something about it or an early retirement will be impossible.</p> <p>Begin by going after some of the most onerous debt first &mdash; usually, this is the credit card debt with the highest interest rate. Once the debt is eliminated, you can begin to focus on actually saving and investing, rather than simply making ends meet. (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>8. Get insured</h2> <p>The ability to retire early is as much a product of avoiding disaster as accumulating wealth. It's hard to save and invest aggressively if you find yourself saddled with tens of thousands of dollars in medical bills, or expenses to replace items lost when your apartment flooded.</p> <p>You may think that health insurance is a waste of money because you are young and in good shape. You may think that you're a good driver and don't need comprehensive auto insurance. But if you truly want to gain financial independence and work toward an early retirement, you must be properly insured. Even if you have insurance now, review your policies to make sure you're covered at the right levels. Fail to do this, and you may find a single disaster will send your financial future off track. (See also: <a href="http://www.wisebread.com/15-surprising-insurance-policies-you-might-need?ref=seealso" target="_blank">15 Surprising Insurance Policies You Might Need</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-things-millennials-can-do-right-now-for-an-early-retirement&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F8%2520Things%2520Millennials%2520Can%2520Do%2520Right%2520Now%2520for%2520an%2520Early%2520Retirement.jpg&amp;description=8%20Things%20Millennials%20Can%20Do%20Right%20Now%20for%20an%20Early%20Retirement"></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%20Things%20Millennials%20Can%20Do%20Right%20Now%20for%20an%20Early%20Retirement.jpg" alt="8 Things Millennials Can Do Right Now for an Early Retirement" 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-things-millennials-can-do-right-now-for-an-early-retirement">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-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/where-to-invest-your-money-after-youve-maxed-out-your-retirement-account">Where to Invest Your Money After You&#039;ve Maxed Out Your Retirement Account</a></span> </div> </li> <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-biggest-ways-millennials-risk-their-retirements">5 Biggest Ways Millennials Risk Their Retirements</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-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-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-save-for-retirement-while-caring-for-kids-and-parents">How to Save for Retirement While Caring for Kids and Parents</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> Investment Retirement 401(k) budgeting compound interest extra income insurance IRA millennials net worth saving money side gigs taxable brokerage accounts young adults Wed, 24 Jan 2018 10:00:05 +0000 Tim Lemke 2084738 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-5"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-right-way-to-withdraw-money-from-your-retirement-accounts-during-retirement">The Right Way to Withdraw Money From Your Retirement Accounts During 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/7-easiest-ways-to-catch-up-on-retirement-savings-later-in-life">7 Easiest Ways to Catch Up on Retirement Savings Later in Life</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/11-basic-questions-about-retirement-saving-everyone-should-ask">11 Basic Questions About Retirement Saving Everyone Should Ask</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-important-things-to-know-about-your-401k-and-ira-in-2016">5 Important Things to Know About Your 401K and IRA in 2016</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/15-retirement-terms-every-new-investor-needs-to-know">15 Retirement Terms Every New Investor Needs to Know</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