Retirement http://www.wisebread.com/taxonomy/term/417/all en-US 12 Surprising Things Women Should Know About Retirement Planning http://www.wisebread.com/12-surprising-things-women-should-know-about-retirement-planning <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/12-surprising-things-women-should-know-about-retirement-planning" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/retirement_000014649650.jpg" alt="Woman considering her retirement as homeless person" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>One of my longstanding fears is that my retirement will see me living on the street, homeless and destitute. As it turns out, my fear is far from unique. In fact, it even has a name: Bag Lady Syndrome. According to a poll by Allianz Life Insurance, 49% of American women fear <a href="https://www.allianzlife.com/retirement-and-planning-tools/women-money-and-power/bag-lady">ending up a bag lady</a>, even those who make six figure salaries. In fact, according to a recent survey of workers by the Transamerica Center for Retirement Studies, only 14% of women are very confident in their ability to retire comfortably.</p> <p>Yes. I have heard the news: Women continue to make huge strides in school and in the workplace. But I also know the reality. Women are at a much greater risk of financial insecurity in later life than men for a number of reasons.</p> <h2>1. Longevity Does Not Work in Women's Favor</h2> <p>The women in my family generally live to be close to 100. While most people are impressed by my genetics, I find longevity to be an expensive double-edged sword. How am I going to pay for a 30-year retirement? The average American woman lives six years longer than the average man, which is why 70% of Social Security beneficiaries over age 85 are women. There are <a href="https://www.americanprogress.org/issues/women/report/2008/10/08/5103/the-straight-facts-on-women-in-poverty/">50% more elderly women</a> living in poverty than men.</p> <h2>2. 54% of Women Don't Plan to Retire, Ever</h2> <p>Like Mrs. Hughes on Downton Abbey, over half of all American women plan on working until they drop dead.</p> <h2>3. Almost Half of All Women Plan to Work Through Retirement</h2> <p>Shuffleboard and sensible shoes are not everyone's dream retirement. Roughly 49% of women plan on continuing to work during retirement. While work is pleasurable for many women, and delaying retirement is a great way to shore up savings, the job market for 70- year-olds isn't great. Planning to simply not retire is not a viable retirement strategy.</p> <h2>4. Baby Boomers Are Still Living the Dream</h2> <p>Like every other gen X-er on the planet, I figured out in college that I would spend my life paying for someone else's social security, since it's a benefit that I doubt I will ever enjoy. However, this bitter worldview is generational. To wit: 26% of baby boomers (born 1946-1964) don't have a backup plan if they are <a href="http://money.usnews.com/money/personal-finance/mutual-funds/articles/2013/10/08/boomers-forced-to-retire-face-unexpected-challenges">forced into retirement</a> sooner than expected due to health problems or job loss.</p> <h2>5. Time Off for Caregiving Negatively Impacts Retirement</h2> <p>Millennials, get ready to be poor when you are old. Even if your baby boomer parents put away enough money for retirement, you might still have to supplement their care. A recently published study by the Employment Benefit Research Institute calculates that female baby boomers on the verge of retirement have a <a href="http://www.ebri.org/publications/ib/index.cfm?fa=ibDisp&amp;content_id=5487">savings shortfall</a> of nearly $63,000, while male boomers have a deficit of $34,000.</p> <p>What's worse, 58% of women don't plan to take time out of the workforce to act as a caregiver for a child or an aging parent, which is odd considering that 80% of American women give birth at some point during their child bearing years. In fact, the average woman spends <a href="http://boston.cbslocal.com/2014/09/29/bag-lady-syndrome/">17 years raising children</a> and 18 years caring for aging relatives (including her spouse).</p> <p>Of the 22% of the female population who <em>aren't </em>living in denial of the time suck that is parenting or childcare, 67% believe that taking time off work to care for children or aging parents will hurt their ability to save for retirement. (See also: <a href="http://www.wisebread.com/the-9-people-in-your-life-who-are-keeping-you-poor?ref=seealso">9 People in Your Life Who Are Keeping You Poor</a>)</p> <p>While women who take off time to be caregivers lose out on matching funds and cannot contribute to a 401(k), a survey by the asset management firm BlackRock shows that women can <a href="http://www.cnbc.com/id/102473846#.">close the savings gap</a> when they return to the workforce. However, they miss out on the magic that is compound interest during years spent being caretakers.</p> <h2>6. The Majority of Women Expect to Self-Fund Retirement</h2> <p>Only 5% of women expect a company-funded pension to be the primary source of retirement, because less than a third of women will receive any kind of pension at all. Roughly 27% expect to rely on social security, while 59% of women expect to self-fund their retirement through a 401(k) or other savings and investments.</p> <h2>7. Part-Time Work Is Women's Work</h2> <p>Due to childcare responsibilities, women are much more likely than men to <a href="http://www.nytimes.com/2014/08/21/upshot/how-a-part-time-pay-penalty-hits-working-mothers.html?abt=0002&amp;abg=0">work part-time</a>. Not only does this translate into a much smaller paycheck, most part-time jobs do not include benefits such as health care.</p> <h2>8. Women Are Less Likely to Be Offered a Retirement Plan</h2> <p>Also, because part-time workers of either gender are less likely to be included in 401(k)-style retirement plans through work, fewer women are offered retirement benefits.</p> <p>This is compounded by the fact that women who take time out from their careers to raise children or care for aging relatives are not eligible for retirement plans and miss out on matching contributions.</p> <h2>9. Women's Annual Contributions to 401(k)-Style Plans Lag Behind Men</h2> <p>This falls into the &quot;No Duh&quot; category of financial factoids. Women's annual contributions to retirement plans lag behind men's because women make less money on average, and have to take off more time for childcare.</p> <h2>10. Fewer Women Take Advantage of Retirement Plans Than Men</h2> <p>What is preposterous, however, is that even when women are <a href="https://www.transamericacenter.org/docs/default-source/resources/women-and-retirement/tcrs2015_sr_womens_retirement_outlook.pdf">offered retirement plans</a>, only 77% participate, compared to 82% of men!</p> <h2>11. Women Think They Will Only Need $800,000 to Retire Comfortably</h2> <p>Statistically, women live longer than men, and therefore have a longer retirement. This should correspond with higher estimates for retirement savings needs. However, it does not. The median estimated retirement savings need for women is $800,000, compared to the $1,000,000 median men need to feel financially secure in retirement. Why is there this discrepancy?</p> <h2>12. Women Are Guessing Their Retirement Savings Needs</h2> <p>Alas, the main reason that women are low-balling their savings is because 57% are just <a href="http://womenmoneyandsuccessmag.com/resources/statistics">guessing their retirement needs</a>. Only 8% of women in the Transamerica Study used a calculator to run numbers.</p> <p>While this is depressing news, women of every age can take steps to improve their retirement readiness.</p> <h3>Develop a Retirement Strategy and Put It on Paper</h3> <p>Use a retirement calculator to figure out how much you will need to save each year &mdash; including both employer-sponsored plans and outside savings.</p> <h3>Plan Your Parenthood</h3> <p>Can you actually afford to have children? If you already have children, carefully consider any and all options to help mitigate the impact on your long-term financial security. Can you move in with family to help save on childcare costs?</p> <h3>Seek Retirement Benefits</h3> <p>If you employer doesn't offer you a retirement plan, it doesn't hurt to ask for one or seek out an employer who does.</p> <h3>Participate in Company Plans</h3> <p>Regardless of how little money is left over from each paycheck, workers with 401(k) plans should try to maximize the amount of money they put away, especially if the employer matches funds. Women (and men) who don't participate in matching 401(k) plans are literally refusing free money.</p> <h3>Educate Yourself About Retirement Investing</h3> <p>If you can, seek professional guidance. Learn about ways to stretch savings, including when to withdraw money from retirement accounts with minimal penalties.</p> <h3>Have a Backup Plan</h3> <p>Do you have disability insurance or life insurance? Identify possible cost-cutting or money-making lifestyle changes such as moving into a smaller home or living with roommates.</p> <h3>Actually Do the Math</h3> <p>Use a retirement calculator to estimate your retirement savings needs and do everything in your power to achieve that goal.</p> <h3>Share Your Knowledge and Plans</h3> <p>Talk to your family and close friends about your retirement plans. Managing financial and time expectations should be part of everyone's retirement strategy.</p> <p><em>Are you afraid of becoming a bag lady? What is your strategy to keep this paranoid fantasy from becoming a reality? </em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/max-wong">Max Wong</a> of <a href="http://www.wisebread.com/12-surprising-things-women-should-know-about-retirement-planning">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/when-not-to-put-money-in-your-401-k">When NOT to put money in your 401(k)</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/this-is-why-you-cant-postpone-planning-for-your-retirement-and-how-to-start">This Is Why You Can&#039;t Postpone Planning for Your Retirement (And How to Start)</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/dont-despair-over-small-retirement-savings">Don&#039;t Despair Over Small 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/retirement-accounts-and-money-to-spend">Retirement accounts and money to spend</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-steps-for-a-womans-financial-self-defense">6 Steps for a Woman&#039;s Financial Self-Defense</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401(k) bag lady syndrome poverty savings women Mon, 30 Mar 2015 11:00:08 +0000 Max Wong 1359519 at http://www.wisebread.com The Step-by-Step Guide to Rolling Over Your 401(k) http://www.wisebread.com/the-step-by-step-guide-to-rolling-over-your-401k <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/the-step-by-step-guide-to-rolling-over-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/woman_401k_000020117190.jpg" alt="Woman discussing rolling over her 401(k) with her employer" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>If you've recently switched jobs, you may be wondering what to do with your retirement accounts. First, congratulations on thinking ahead and planning for your future. Rolling over accounts is an important step toward continuing to build your financial future, and we've created this step-by-step plan to help you navigate the process.</p> <p>That said, before you figure out how to rollover your 401(k), it's first important to know what not to do.</p> <h2>Don't Take a Distribution</h2> <p>It's tempting to let your former employer send you a check to cash out your account, but, unless you're over age 59&frac12;, this can be a huge mistake. Your former employer is required to withhold 20% of the distribution. On top of that, the IRS will charge you an additional 10% penalty if you're younger than 59&frac12;.</p> <p>To break it down in dollars and cents, let's assume there's a $10,000 balance in your 401(k) and you're in a 25% tax bracket.</p> <p>$10,0000 &ndash; $2,000 (20% Withholding) &ndash; $1,000 (10% Tax Penalty) = $7,000</p> <p>You've just taken a $3,000 hit on your portfolio. That's a heavy hit to take. Plus, you'll no longer have that money working in the market for you, which means you're more likely to end up like the majority of Americans who fear their retirement funds are lacking.</p> <p>Some people take distributions because they're not sure how to make ends meet between jobs (a valid fear). But taking a 401(k) distribution is one of the most expensive ways to bridge the gap when you're between jobs.</p> <p>But some distributions happen by accident. If you don't know how to conduct a 401(k) rollover, the paperwork can be confusing and it's easy to check the wrong box or make an inaccurate assumption.</p> <p>If your former company has already sent a check directly to you, there is a remedy, if you act fast. You'll have 60 days to get the funds deposited into an IRA. There is a bit of a hitch, though. You'll be directly responsible for making up the 20% that was withheld by your former employer.</p> <h2>So, What Should You Do?</h2> <p>If you're just starting the 401(k) rollover process, you'll have a few options.</p> <h3>Keep Your Funds In the Current 401(k)</h3> <p>If your 401(k) balance is greater than $5,000, you'll have the option to keep the money right where it is. The upside? No paperwork. The downside? Well, there are a few.</p> <ul> <li>It's easy to lose track of your accounts. The average person holds 11 jobs by age 46. That can add up to a lot of retirement accounts, if they're not being rolled over or combined.<br /> &nbsp;</li> <li>Retirement plan quality varies greatly. Not all 401(k)s are created equal. There are drastically different fee structures and varying levels of investment options. Most separated employees would be better off moving their money into an account with a low-fee provider like Vanguard or Fidelity, each of which offers vast investment options for your IRA.</li> </ul> <p>Some employers automatically distribute 401(k) funds for separated employees if the balance is below the $5,000 mark. If this is you, you'll want to get your rollover going immediately.</p> <h3>Roll Your Funds Into Your New Employer's Retirement Plan</h3> <p>It's not a bad idea to keep your retirement funds in the same place, so that you don't lose track of previous accounts. Not all 401(k) plans accept rollovers, so if you want to go this route, check with your new employer first.</p> <p>If rollovers are accepted, ask your new employer for instructions on where your former employer should send your existing 401(k) funds. Once you have these rollover instructions, call your former employer and ask for the forms you'll need to fill out.</p> <p>Once the paperwork is complete, your former employer should send your account balance directly to your new employer's plan. There shouldn't be any taxes withheld or penalties assessed for a direct rollover. (See also: <a href="http://www.wisebread.com/10-easy-ways-to-supercharge-your-retirement?ref=seealso">10 Easy Ways to Supercharge Your Retirement</a>)</p> <h3>Roll Your Funds Into an IRA</h3> <p>This is my favorite option, because low cost mutual fund giants like Vanguard or Fidelity generally offer more investment options than most employer 401(k) plans, and they're usually cheaper, too.</p> <p>The first step is to open a new IRA account with a high-quality, low-fee investment provider (like <a href="https://personal.vanguard.com/us/openaccount?CompLocation=GlobalHeader&amp;Component=OpenAccount">Vanguard</a> or <a href="https://rewards.fidelity.com/offers/iramatch?imm_pid=1&amp;immid=00994&amp;imm_eid=e41730670&amp;buf=999999&amp;gclid=CjwKEAjwoZ-oBRCAjZqs96qCmzgSJADnWCv8IN3h4jALOK1EtX2J45rce9bLEBvEsPyTK_PJF86VXxoCDLLw_wcB">Fidelity</a>). You can open an account online with most investment providers by simply going to their website, selecting the Open An Account option, and looking for an account option for rolling over employer-sponsored retirement plan account. To open the new account, you'll need the following:</p> <ul> <li>Your personal information, like social security number, birth date, email address, and street address;</li> <li>The current balance in the 401(k) account that you're rolling over;</li> <li>Your former employer's name;</li> <li>The name of the investment (usually a mutual fund of exchange traded fund) in which you plan to invest your funds. If you don't know what to choose, a popular option is a target retirement fund, which automatically rebalances your account as you age and get closer to retirement.</li> </ul> <p>Once the rollover account is open, the next step is to call your former employer and ask for their rollover instructions. They will likely have a form that needs to be completed and will likely ask for the name and address of the investment house where the funds are to be sent. They'll also need your new rollover IRA account number.</p> <p>Make sure the check they send goes directly to the investment house where you've opened the new account. The check should be made out to the new investment house, with your name and new account number notated on the check. Do not have the check sent directly to you.</p> <p>To complete the transaction, some employers will require a letter of acceptance. If yours is one that does, you'll need to go back to the investment house where you opened the IRA and make the request. Not all employers require this, but it's not uncommon, either, meaning getting the form together shouldn't be a big deal for your new account holder.</p> <p>Once all the forms are signed and completed, it usually takes about three weeks for a rollover to be complete. The funds should be sent directly from your old employer to your new account holder and you should receive a confirmation either in the mail or email. Again, there shouldn't be any taxes withheld or penalties assessed for a direct rollover. (See also: <a href="http://www.wisebread.com/how-to-set-up-an-ira-to-build-wealth?ref=seealso">How to Set Up An IRA to Build Wealth</a>)</p> <p>The whole thing should take about 10 minutes in paperwork and three weeks in wait time (while your old employer sends the funds to your new account holder). It's a small price to pay for building a secure retirement.</p> <p><em>Have you rolled over your 401(k) recently? Did you hit any snags or was it smooth sailing? Tell us about it in the comments below.</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/alaina-tweddale">Alaina Tweddale</a> of <a href="http://www.wisebread.com/the-step-by-step-guide-to-rolling-over-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/if-you-want-your-401k-to-grow-stop-doing-these-6-things">If You Want Your 401K to Grow, Stop Doing These 6 Things</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/left-a-job-do-a-rollover">Left a job? Do a rollover.</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/this-is-why-you-cant-postpone-planning-for-your-retirement-and-how-to-start">This Is Why You Can&#039;t Postpone Planning for Your Retirement (And How to Start)</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/intimidated-by-retirement-investing-get-professional-help">Intimidated by Retirement Investing? Get Professional Help!</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-ways-investing-sucks-and-why-you-should-do-it-anyway">7 Ways Investing Sucks (and Why You Should Do It Anyway)</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401(k) IRA life hacks personal finance retirement rollover Wed, 25 Mar 2015 13:00:10 +0000 Alaina Tweddale 1356036 at http://www.wisebread.com 7 Ways to Max Out Your IRA Contributions by April 15th http://www.wisebread.com/7-ways-to-max-out-your-ira-contributions-by-april-15th <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/7-ways-to-max-out-your-ira-contributions-by-april-15th" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_piggybank_000013609451.jpg" alt="Woman saving for IRA" title="" class="imagecache imagecache-250w" width="250" height="141" /></a> </div> </div> </div> <p>Did you know that if you make a <a href="https://www.fidelity.com/retirement-ira/contribution-limits-deadlines">personal IRA contribution</a> before April 15th of this year, that amount is deductible on your 2014 taxes? If you have the extra cash on hand, this is a great way to boost your retirement account while reducing your current tax burden. Here are seven creative ways to come up with that extra contribution money in the next month.</p> <h2>1. Don't Dine Out</h2> <p>April 15th is about a month away. What if you could make a promise to yourself not to eat out at all in the intervening weeks? Skip the morning coffee pick-up, bring your lunch to work, and find free ways to spend time with friends. Now, take all of that money you would have spent and deposit it into your IRA account, instead. It may sound like a big sacrifice, but it's only a month long and could add up to a big tax break.</p> <h2>2. Lace up Your Walking Shoes</h2> <p>Transportation is another big expense for many people. Consider when you might be able to use your own two feet, take low-cost or free public transportation, or bike to get you from point A to point B. Then, you can bank that transit money right into your IRA account.</p> <h2>3. Delay Spring Wardrobe and Home Purchases</h2> <p>Once the warm weather arrives, we're anxious for a personal and home makeover. If you can delay making any purchases such as these for the next month, you can use that money to contribute to your IRA. Think of it as giving your future self the gift of more freedom by putting that extra money into your retirement account today.</p> <h2>4. Itemize Your Deductions</h2> <p>Many people don't want to be bothered with itemizing their expenses, because it can take some time and requires additional organization and paperwork. However, if your itemized deductions are greater than the standard deduction, you'll save on taxes you owe, or get a bigger refund. Calculate your potential savings and put away that money in your IRA now to enjoy later.</p> <h2>5. Student Loan Interest Deduction</h2> <p>Many working adults today have student loans. If you make less than $80,000 per year as an individual (or less than $160,000 if filing jointly), you can deduct the interest you've paid on student loans. Use the money you'll save on that deduction to increase your contribution to your IRA.</p> <h2>6. Make Your Vacation a &quot;Staycation&quot;</h2> <p>After the rough winter we've had this year, it's tempting to take advantage of the ever-present travel deals being offered. Resist their offers and turn your spring vacation into a staycation. Chances are your hometown comes back to life once it thaws out from winter, and there are plenty of opportunities to re-discover it through events and activities that will help you <em>feel</em> like a tourist in your own backyard.</p> <h2>7. Delay Big Purchases</h2> <p>My laptop is now over five years old, and it's showing its age a bit with decreased speed. I'm tempted by all the features now available on new laptops, but I've decided that I can deal with a bit of decreased speed for the sake of banking some extra money. When it comes to big purchases like electronics, one thing is certain: In six months there will be a brighter, shinier model that's likely no more expensive than today's top-of-the-line. Get as much value out of your durable goods as possible, and only replace them when it's truly necessary. You'll be glad you did once you see that extra money accruing in your savings account.</p> <p>Maxing out your IRA isn't the sexiest purchase you'll ever make, but it's important to contribute as much as you can <em>as soon as you can</em> to take advantage of the compound interest it will generate.</p> <p><em>What clever tricks are you using this tax season to max out your IRA contributions? </em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/christa-avampato">Christa Avampato</a> of <a href="http://www.wisebread.com/7-ways-to-max-out-your-ira-contributions-by-april-15th">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/is-this-the-end-of-the-back-door-roth-ira-tax-loophole">Is This the End of the Back-Door Roth IRA Tax Loophole?</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/should-you-choose-a-roth-401k-or-a-regular-401k">Should You Choose a Roth 401k or a Regular 401k?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/dont-miss-these-7-great-tax-deductions-for-parents-and-caretakers">Don&#039;t Miss These 7 Great Tax Deductions for Parents and Caretakers</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-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-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/101-tax-deductions-for-bloggers-and-freelancers">101 Tax deductions for bloggers and freelancers</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement Taxes deductions IRA saving money Mon, 23 Mar 2015 11:00:09 +0000 Christa Avampato 1350978 at http://www.wisebread.com Is This the End of the Back-Door Roth IRA Tax Loophole? http://www.wisebread.com/is-this-the-end-of-the-back-door-roth-ira-tax-loophole <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/is-this-the-end-of-the-back-door-roth-ira-tax-loophole" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/president obama speech_0.jpg" alt="president obama speech" title="president obama speech" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>One of America's most beloved tax-trimming strategies may soon be outlawed.</p> <p>Deep inside President Barack Obama's proposed <a href="http://www.whitehouse.gov/sites/default/files/omb/budget/fy2016/assets/budget.pdf">Fiscal Year 2016 budget</a> is a measure &mdash; &quot;Limit Roth conversions to pre-tax dollars&quot; &mdash; that could put the kibosh on a practice used by high earners to dodge the income limits on Roth IRA contributions. The verbiage in the budget proposal is succinct, and therefore unclear. But experts say those six little words could stop high earners from contributing to their Roth by way of the back-door strategy.</p> <h2>What's the Big Deal With Back-Door Roths?</h2> <p>The Roth IRA offers account holders something very valuable: tax-free income in retirement. Since contributions to Roths are made using <em>after-tax dollars</em>, these accounts are not taxed as they grow, and no tax money is due when funds are withdrawn in retirement. The catch is that you can only directly <a href="http://www.wsj.com/video/psstthe-backdoor-route-to-a-roth-ira/09198754-C88E-4767-84F5-1FAD8547EBE9.html">contribute to a Roth IRA</a> if your income is below a certain ceiling. For jointly filing married couples, that limit is $191,000. For single filers, it's $129,000. Folks with income beyond those barriers may instead contribute to a traditional IRA account.</p> <p>But high earners (who value the benefits of these Roth accounts as much as the everyman) have a way of dodging the contribution limits that prevent them from enjoying these tax perks. Using the back-door strategy, high earners can make after-tax contributions to a traditional IRA account, for which there are no income restrictions, and then convert that account into a Roth. This method affords all the benefits of a Roth account with few of the limitations. And it's precisely this practice that Obama budget proposal wants to eradicate.</p> <h2>Uncertainty Around the Proposal</h2> <p>&quot;It seems to me they're saying that was a good workaround, but we don't want you to do it anymore,&quot; IRA expert and CPA Ed Slott told Forbes.</p> <p>But Slott says ending the back-door strategy is not so simple. One issue with Obama's l<a href="http://www.forbes.com/sites/ashleaebeling/2015/02/02/obama-budget-would-prohibit-backdoor-roth-iras/">oophole closure proposal</a> is that it doesn't jibe with the Internal Revenue Service's new rules on <a href="http://www.forbes.com/sites/ashleaebeling/2014/10/15/aftertax-401k-rollovers-advanced-version/">after-tax rollovers</a>, which actually make it easier to convert after-tax dollars into Roth IRA accounts.</p> <p>&quot;They didn't look at the practicality of how it butts heads with the rules that we're working with now,&quot; Slott says.</p> <p>Now, it's important to keep in mind that the president's budget is more of a wishlist than a decree. It's bound to get rewritten, trimmed, and cut as the budget vetting process continues in Congress. But it's an important indicator of what the administration is thinking. And if you're a high earner enjoying the benefits of back-door Roths, it may signal an upcoming change in your retirement planning.</p> <p><em>Do you think back-door Roths should be eradicated? Why or why not?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/brittany-lyte">Brittany Lyte</a> of <a href="http://www.wisebread.com/is-this-the-end-of-the-back-door-roth-ira-tax-loophole">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/7-ways-to-max-out-your-ira-contributions-by-april-15th">7 Ways to Max Out Your IRA Contributions by April 15th</a></span> </div> </li> <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/should-you-choose-a-roth-401k-or-a-regular-401k">Should You Choose a Roth 401k or a Regular 401k?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <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-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-tax-moves-you-need-to-make-right-now">6 Tax Moves You Need to Make Right Now</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-set-up-an-ira-to-build-wealth">How to Set Up an IRA to Build Wealth</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement Taxes IRA Roth tax evasion Thu, 12 Mar 2015 13:00:08 +0000 Brittany Lyte 1333205 at http://www.wisebread.com How Much Should You Have Saved for Retirement by 30? 40? 50? http://www.wisebread.com/how-much-should-you-have-saved-for-retirement-by-30-40-50 <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-much-should-you-have-saved-for-retirement-by-30-40-50" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/money-bills-piggy-bank-saving-Dollarphotoclub_53083976.jpg" alt="money piggy bank" title="money piggy bank" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>How much money should you have put aside for retirement when you hit your milestone birthdays?</p> <p>In a perfect world, financial experts could rattle off a specific number that would be true for the vast majority of workers, and no one would find themselves staring down an underfunded retirement in their later years.</p> <p>Unfortunately, this is not a perfect world, and the answer to the retirement saving question is an unsatisfying &quot;it depends.&quot; Despite the fact that no one can tell you the exact dollar amount that you will need to have set aside each decade, there are rules of thumb for determining if you are on the right track to retirement. (See also: <a href="http://www.wisebread.com/just-saving-isnt-enough-how-cash-flow-allocation-helps-you-retire?ref=seealso">How Cash Flow Allocation Helps Your Retirement</a>)</p> <p>Here is what you need to know about saving for retirement in your 20s, 30s, and 40s to ensure a secure (and dare we say epic?) second act.</p> <h2>Before You Turn 30</h2> <p>As a regular Wise Bread reader, you probably know exactly what you're supposed to do in your 20s to prepare for retirement.</p> <ul> <li>Enroll in your company's 401(k) program on the very day you are hired at age 22.<br /> &nbsp;</li> <li>Contribute at least up to the employer match to your 401(k) each year.<br /> &nbsp;</li> <li>Open an IRA or Roth IRA in addition to your 401(k) and maximize your contribution, which in 2015 is $5,500 per year.<br /> &nbsp;</li> <li>Maximize your 401(k) contribution, which in 2015 is $18,000 per year.</li> </ul> <p>Just looking at the math, it's clear that a perfect 20-something who could afford to maximize retirement contributions starting at age 22 could theoretically have $188,000 set aside by their 30th birthday, not including interest. ($18,000 x 8 = $144,000 and $5,500 x 8 = $44,000.)</p> <p>Sadly, just because we all know what we should be doing does not mean that we are doing it. And few of us earn enough at 22 (or heck, even 29!) to contribute the full $18,000 yearly max to a 401(k). (Full disclosure: I am the daughter of a financial planner, and I did not make a single contribution toward my retirement until I was 27.)</p> <p>So, what is a reasonable goal for us mere mortals? It's a good idea to <a href="http://www.moneyunder30.com/how-much-in-401k-at-30">have one year's salary set aside in a 401(k) or IRA by the time you reach 30</a>. This can be an attainable goal even if you get started late, hit some financial rough patches, or otherwise fail to be a perfect saver. In addition, having a nest egg equal to your annual salary by the time you turn 30 will give you decades of compound interest. And the earlier you get the magic of compound interest started, the more impressive its resulting growth.</p> <h3>How to Save One Year's Salary by Age 30</h3> <p>Assuming an 8% annual rate of return, annual raises of 3%, and a starting salary of $30,000 at age 22, rising to a salary of $38,000 on your 30th birthday:</p> <ul> <li>If you start saving at age 22, you can set aside 10% per year to have one year's salary saved for retirement.<br /> &nbsp;</li> <li>If you start saving at age 25, you will need to set aside 18% per year to reach this goal.<br /> &nbsp;</li> <li>If you start saving at age 27, you will need to set aside 30% per year to reach this goal.</li> </ul> <p>(Here's a <a href="http://www.moneychimp.com/calculator/compound_interest_calculator.htm">compound interest calculator</a> if you want to check my math.)</p> <h2>Before You Turn 40</h2> <p>In some ways, 30-somethings can have the worst of both financial worlds. Often, it can take a few years into your 30s to shake off bad habits, outstanding debts, and other financial problems from your 20s. But your 30s are also prime baby-having years, which means you have the financial responsibilities and challenges of parenthood piled on top of lingering money woes from the previous decade.</p> <p>Taken together, that can mean that it's very tough to pay yourself first when there are student loans and daycare fees competing for your dollars.</p> <p>However, between career advances and starting to get paid what you are worth, your 30s are also a time when you potentially have more income. That means it's generally a good idea to have <a href="https://www.fidelity.com/viewpoints/retirement/8X-retirement-savings">two times your annual salary set aside</a> for retirement by the time you hit the big 4-0.</p> <p>While you will need to maintain a good savings rate in your 30s to achieve this goal, having one year's salary already saved will help you to reach your target more easily, as your interest compounds.</p> <h3>How to Save Two Years' Salary by Age 40</h3> <p>Assuming an 8% annual rate of return, 3% annual raises, and a salary of $38,000 on your 30th birthday, rising to a salary of $51,000 on your 40th birthday:</p> <ul> <li>If you have one year's salary saved by age 30, you will need to set aside 5% per year to have double your salary saved by age 40. (Although it's a <em>great</em> idea to save more than 5%.)<br /> &nbsp;</li> <li>If you have half of a year's salary saved by age 30, you will need to set aside 10% per year to reach this goal.<br /> &nbsp;</li> <li>If you have not started saving as of age 30, you will need to set aside 17% ($6460) per year to reach this goal.</li> </ul> <h2>Before You Turn 50</h2> <p>Many workers don't even start to think about retirement until they reach their 40s. Before those gray hairs start showing up on a regular basis, it can be very difficult to take the idea of retirement seriously. You might know intellectually that you will someday retire from crime-fighting or office work, but it can be hard to wrap your head around it while you're in the midst of making the world a better place one TPS report at a time.</p> <p>So, it can be very disheartening to learn that experts believe you should aim for a nest egg of <a href="https://www.fidelity.com/viewpoints/retirement/8X-retirement-savings">four to five times your annual salary</a> by the time you reach age 50.</p> <p>Again, if you have done any saving at all prior to your 40s, saving that much by age 50 is much easier because of the power of compound interest.</p> <h3>How to Save Four Years' Salary by Age 50</h3> <p>Assuming an 8% annual rate of return, 3% annual raises, and a salary of $51,000 on your 40th birthday, rising to a salary of $68,000 on your 50th birthday:</p> <ul> <li>If you have two years' salary saved by age 40 ($102,000), you will need to set aside 7% per year to reach this goal.<br /> &nbsp;</li> <li>If you have one year's salary saved by age 40, you will need to set aside 20% per year to reach this goal.<br /> &nbsp;</li> <li>If you have no money saved by age 40, you will need to set aside 35% per year to reach this goal.</li> </ul> <h2>Paying Yourself First Should Hurt a Little</h2> <p>You may not be able to squeeze blood from a turnip, but you can probably find more money in your budget to meet these goals. David Weliver from <a href="http://www.moneyunder30.com/how-much-in-401k-at-30">Money Under 30</a> recommends making contributions that are &quot;just large enough to feel uncomfortable.&quot; Once you hit that sweet spot, your money will be working for you, making each decade's goal easier to reach than the last.</p> <p><em>What are your milestone birthday retirement savings goals? Are you reaching them?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/emily-guy-birken">Emily Guy Birken</a> of <a href="http://www.wisebread.com/how-much-should-you-have-saved-for-retirement-by-30-40-50">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/9-things-people-who-retire-early-do">9 Things People Who Retire Early Do</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-exciting-affordable-american-cities-to-retire-in">4 Exciting, Affordable American Cities to Retire In</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-false-allure-of-compound-interest">The False Allure of Compound Interest</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-thoughts-everyone-has-their-first-day-of-retirement">6 Thoughts Everyone Has Their First Day of Retirement</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-ways-to-boost-your-401k-returns">4 Ways to Boost Your 401(k) Returns</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement birthdays investing retiring Mon, 09 Mar 2015 13:00:07 +0000 Emily Guy Birken 1324646 at http://www.wisebread.com 4 Exciting, Affordable American Cities to Retire In http://www.wisebread.com/4-exciting-affordable-american-cities-to-retire-in <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/4-exciting-affordable-american-cities-to-retire-in" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/mature-couple-city-market-Dollarphotoclub_42889174.jpg" alt="mature couple city" title="mature couple city" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Every month, more than a <a href="http://fivethirtyeight.com/features/what-baby-boomers-retirement-means-for-the-u-s-economy/">quarter-million Americans turn 65</a>.</p> <p>This means that either you or someone close to you is getting ready to retire in the near future. However, retiring from work doesn't mean retiring from life. You need to find a place that allows you to truly thrive in your golden years. (See also: <a href="http://www.wisebread.com/x-exciting-world-cities-you-can-afford-to-retire-in">4 Exciting World Cities You Can Afford to Retire In</a>)</p> <p>While there are some great options abroad, there are also plenty of great domestic destinations to choose from. Here are the top four exciting (and affordable) American cities to retire in.</p> <h2>1. Columbus, Ohio</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5123/colombus%20ohio.jpg" width="605" height="340" alt="" /></p> <p>In 2015, Where to Retire Magazine has selected Columbus as the top domestic destination for retirement. This river city is no stranger to top retirement lists, because it topped the lists of most affordable places to retire in <a href="http://www.forbes.com/2008/08/27/retirees-cities-affordable-forbeslife-cx_md_0827realestate.html">2008</a> and <a href="http://money.usnews.com/money/retirement/slideshows/americas-best-affordable-places-to-retire/1">2009</a>, too.</p> <p>On top of providing affordable living standards, Columbus offers a vibrant sports scene with the Columbus Blue Jackets (hockey), Columbus Clippers (baseball), and Ohio State Buckeyes (college football). With so many sports options available year round, it's not a surprise that Columbus is constantly on the top 10 of the <a href="http://www.bestplaces.net/docs/studies/manliest_cities.aspx">U.S. manliest cities</a>.</p> <p>But if sports isn't your thing, don't worry. The city is also known for its many museums, theaters, performing arts venues, and <a href="http://www.columbus.gov/seniors/">50+ fitness and recreation centers</a>. Some of the top events are <a href="http://theactorstheatre.org">Shakespeare in Schiller Park</a>, <a href="http://www.redwhiteandboom.org">Red, White, and Boom! </a>(largest fireworks display in Ohio), and <a href="http://www.columbusoktoberfest.com">Columbus Oktoberfest</a>.</p> <h2>2. Santa Barbara, California</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5123/santa%20barbara%20california.jpg" width="605" height="340" alt="" /></p> <p>If you have done a good job building your nest egg, then why not splurge a bit during retirement in Santa Barbara? Known as the &quot;American Riviera,&quot; the city of Santa Barbara is not only a popular tourist and resort destination, but also has been named a <a href="http://www.independent.com/news/2013/aug/04/santa-barbara-featured-where-retire-magazine/">top retirement destination</a> by Where to Retire Magazine. (See also: <a href="http://www.wisebread.com/7-ways-to-keep-your-retirement-funds-from-disappearing">7 Ways to Keep Your Retirement Funds From Disappearing</a>)</p> <p>This city is blessed with an ideal location along California's coast that provides warmer winters and cooler summers compared to cities farther inland. Santa Barbara is an exciting destination for beach lovers because it has four miles of beaches including East Beach, West Beach, Leadbetter, Shoreline Park, and it is bisected by the historic U.S. Route 101, which provides access to even more beautiful beaches up and down the California coast.</p> <p>Foodies rejoice: Santa Barbara has an eclectic food scene, ranging from <a href="http://www.foodnetwork.com/shows/diners-drive-ins-and-dives/videos/dv1300/scratch-made-classics.0179263.html">Mexican carnitas</a> to <a href="http://www.foodnetwork.com/shows/diners-drive-ins-and-dives/videos/dv1300/global-traditions.0180526.html">British fish and chips</a>. And while you're out, you may run into celebrities, such as Santa Barbara born and raised Katy Perry or TV mogul Oprah Winfrey.</p> <h2>3. Austin, Texas</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5123/austin%20texas.jpg" width="605" height="340" alt="" /></p> <p>With a motto like &quot;Keep Austin Weird,&quot; this city in Texas is for those retirees looking for something off the beaten path. Its vibrant music, tech, and small business scenes all contributed to Kiplinger selecting Austin as the number-one <a href="http://www.kiplinger.com/article/business/T012-C000-S002-best-cities-2010-austin-texas.html">best city for the next decade</a>.</p> <p>A major draw for retirees is the University of Texas at Austin. Retirees enjoy the opportunity to take courses or extend their professional learning through the university's <a href="http://www.utexas.edu/community-engagement/continuing-education">continuing education programs</a>. The university also offers several cultural offerings, such as art exhibitions, open air markets, and live performances. Plus, attending classes at an university is a way for single seniors to <a href="http://money.usnews.com/money/retirement/articles/2010/11/01/the-10-best-places-for-single-seniors-to-retire">meet new people</a> and make friends faster. (See also: <a href="http://www.wisebread.com/want-to-be-more-attractive-work-these-5-magic-words-and-phrases-into-your-vocabulary">Want to Be More Attractive? Work These 5 Magic Words (and Phrases) Into Your Vocabulary</a>)</p> <p>Austin has two strong economic draws for retirees. First, the city (like all others in Texas) has no state income taxes. Second, <a href="http://www.zillow.com/austin-tx/home-values/">Austin's mortgage delinquency</a> is only 1.7%, which is lower than the national average, 6.4%. This shows a healthy housing market and overall strong economic climate.</p> <h2>4. Jacksonville, Florida</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5123/jacksonville%20florida.jpg" width="605" height="340" alt="" /></p> <p>If you talk about retirement, you have to talk about the Sunshine State. There are three strong reasons why retirees flock to Florida:</p> <ul> <li>No state income tax;</li> <li>No estate tax; and</li> <li>No inheritance tax.</li> </ul> <p>Jacksonville stands out from other cities in Florida because it offers the same comfortable winters at much more affordable prices. US News includes Jacksonville as one of the 10 best places to <a href="http://money.usnews.com/money/retirement/articles/2014/10/14/the-10-best-places-to-retire-on-social-security-alone?page=2">retire on Social Security alone</a>, and for good reason: Retirees age 65 and older pay a median monthly rent of only $861.</p> <p>From the <a href="http://www.taxslayerbowl.com/">TaxSlayer.com Bowl</a> in January, to the <a href="http://www.jaxjazzfest.com/">Jacksonville Jazz Festival</a> in May, and the <a href="http://www.coj.net/welcome/upcoming-events/all-events/holiday-at-st-james-(2).aspx">Holiday at St. James at City Hall</a> in December, there is always something exciting happening in Jacksonville. You can get plenty of fresh air in the city's 57,373 acres of parks or 22 miles of sandy beaches.</p> <p>The city's main landmark is the St. John's River. Along the river you'll find the ever-expanding <a href="http://en.wikipedia.org/wiki/Jacksonville_Riverwalk">Northbank Riverwalk</a>, a popular attraction in downtown Jacksonville, and the <a href="http://riversideartsmarket.com/">Riverside Arts Market</a>, a popular event in the <a href="http://www.riversideavondale.org/">Riverside Avondale Historic District.</a></p> <p>Choosing a city to retire in is no easy task &mdash; and you can't just pick based on pure economic reasons. After all, you're going to have a lot of extra time available, so your city needs to offer enough exciting activities to keep you comfortably busy. These four American cities provide the right mix.</p> <p><em>Where are you planning to retire &mdash; and why?</em></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/4-exciting-affordable-american-cities-to-retire-in">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/9-things-people-who-retire-early-do">9 Things People Who Retire Early Do</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-much-should-you-have-saved-for-retirement-by-30-40-50">How Much Should You Have Saved for Retirement by 30? 40? 50?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-thoughts-everyone-has-their-first-day-of-retirement">6 Thoughts Everyone Has Their First Day of Retirement</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-incredible-places-to-retire-abroad-that-anyone-can-afford">5 Incredible Places to Retire Abroad That Anyone Can Afford</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/12-surprising-things-women-should-know-about-retirement-planning">12 Surprising Things Women Should Know About Retirement Planning</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement Travel american cities retiring Fri, 06 Mar 2015 14:00:04 +0000 Damian Davila 1320504 at http://www.wisebread.com 5 Simple Ways to Boost an Underperforming 401(k) http://www.wisebread.com/5-simple-ways-to-boost-an-underperforming-401k <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-simple-ways-to-boost-an-underperforming-401k" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/piggy-bank-chalkboard-retirement-savings-growth-Dollarphotoclub_77966716.jpg" alt="piggy bank retirement savings" title="piggy bank retirement savings" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>There are about 52 million Americans saving up for retirement using a 401(k). While this is an impressive number, it doesn't tell the full picture of the state of U.S. retirement planning. (See also: <a href="http://www.wisebread.com/12-things-you-didnt-know-about-retirement?ref=seealso">12 Things You Didn't Know About Retirement</a>)</p> <p>In 2014, the average U.S. worker had only accumulated in their 401(k) enough for $4,000 annual retirement income, or about $333 monthly. That's an alarmingly low figure.</p> <p>Here are five simple ways to boost those underperforming 401(k) plans.</p> <h2>1. Switch Actively Managed Funds to Index Funds</h2> <p>When allocating the funds in their 401(k), folks often choose accounts that promise high returns. In other words, they look to beat the market.</p> <p>Stop it.</p> <p>Chasing those high returns is eating away your 401(k) contributions. Funds that try to outperform the market, also known as actively managed funds, generally have higher fees than those that seek to simply track market performance, known as index funds.</p> <p>While investing in index funds may sound like a boring investment strategy, consider these three facts:</p> <ul> <li>While the average expense ratio for actively managed U.S. mutual funds is 1.32%, the Vanguard Total Stock Market Index (VTSMX), the largest index mutual fund, charges just 0.17% per year.<br /> &nbsp;</li> <li>Warren Buffett's will stipulates that 90% of his assets be invested in a very low-cost <a href="http://www.berkshirehathaway.com/2013ar/2013ar.pdf">S&amp;P 500 index fund</a>.<br /> &nbsp;</li> <li>Mad Money's Jim Cramer has gone on the record about the benefits of index investing, &quot;After a lifetime of picking stocks, I have to admit that Bogle's arguments in favor of the index fund have me thinking of joining him rather than trying to beat him.&quot; John &quot;Jack&quot; Bogle, the founder of Vanguard, has championed low-cost index investing since the 1970s.</li> </ul> <h2>2. Stop Playing Stock Trader</h2> <p>Would you hire a plumber to fix your car?</p> <p>Definitely not!</p> <p>So, why are you insisting on trading the stocks and accounts in your 401(k)?</p> <p>A nationwide <a href="http://pressroom.aboutschwab.com/press-release/schwab-corporate-retirement-services-news/workers-bank-401k-retirement-need-help-makin">survey of 401(k) participants</a> found that:</p> <ul> <li>52% of American workers find explanations of their 401(k) investments more confusing than explanations of their health care benefits;<br /> &nbsp;</li> <li>46% don't know what their best investment options are; and<br /> &nbsp;</li> <li>34% feel a lot of stress over allocating their 401(k) monies.</li> </ul> <p>If you're still unconvinced about the negatives of actively trading your account, remember that the average actively managed mutual fund has an average <a href="http://www.fool.com/School/MutualFunds/Performance/Record.htm">annual return of 2% less</a> than that of the stock market. A sample of <a href="http://money.usnews.com/money/personal-finance/mutual-funds/articles/2012/06/18/some-401k-plans-let-you-take-the-wheelif-you-dare">self-directed account holders</a> showed that 76% of their account returns underperformed the S&amp;P, and 72% underperformed the core model of their plans.</p> <p>On top of that, some 401(k) plans may charge you additional fees for self-directed brokerage options. Now that's a double whammy for playing stock trader. Instead, request a one-on-one appointment with your plan's administrator (over half of retirement plans offer individual investment advice) to go over your retirement saving strategy, and stick to it. (See also: <a href="http://www.wisebread.com/this-is-the-basic-intro-to-having-a-retirement-fund-that-everyone-needs-to-read?ref=seealso">This Is the Basic Intro to Having a Retirement Fund That Everyone Needs to Read</a>)</p> <h2>3. Consolidate 401(k) Balances</h2> <p>The term &quot;four-year career&quot; has gone from oxymoron to a reality for younger generations. According to data from the Bureau of Labor Statistics, today's average worker stays on the job for <a href="http://www.forbes.com/sites/jeannemeister/2012/08/14/job-hopping-is-the-new-normal-for-millennials-three-ways-to-prevent-a-human-resource-nightmare/">4.4 years</a>. And for younger workers, that time period is cut in half.</p> <p>This means that there are many workers who have several 401(k) plans laying around. Since not all 401(k)s are alike, it's a good idea to consolidate all those balances into a single account. It will simplify your life and make it easier to keep track of your nest egg's performance.</p> <p>While there are several criteria to evaluate plans, there are two that lead the pack:</p> <ul> <li>Choose the plan with the lowest expense ratio. A good rule of thumb is that your total expense ratio should be no more than 1%.<br /> &nbsp;</li> <li>Evaluate the additional perks that may become available for maintaining a larger balance at a single institution.</li> </ul> <h2>4. Maximize Employer Contributions to Your 401(k)</h2> <p>Vanguard reports that the <a href="https://pressroom.vanguard.com/content/nonindexed/How_America_Saves_2014.pdf">most common matching formula</a> for employers is $0.50 on the dollar on the first 6% of pay. This means that an employee with a $50,000 annual salary would receive a $1,500 boost to her 401(k), if she were to maximize her contributions.</p> <p>It's in your best interest to bump up your savings to the full 6% (or the applicable maximum of your plan) of your pay. If you don't use it, you are missing out on <em>free </em>retirement cash.</p> <p>Additionally, ask your plan sponsor about a couple of key plan details: true-up and vesting schedule.</p> <h3>True-Up Feature</h3> <p>Some companies have complicated contribution matching formulas, so a true-up feature helps you maximize the amount of possible matching funds under your 401(k)'s guidelines. This feature is particularly useful for those employees that wait for big bonuses to make a contribution to their retirement accounts.</p> <h3>Vesting Schedule for Employer Contributions</h3> <p>Employer contributions to your 401(k) plan may be subject to a vesting period. If you change jobs before the vesting period, you lose your employer's contributions to your retirement plan.</p> <h2>5. Ask Your Plan Administrator for Lower Fees</h2> <p>If you're using an employer-sponsored 401(k), then ask your plan's sponsor to renegotiate operating expenses. During the 2013-2014 period, <a href="http://www.kiplinger.com/article/investing/T001-C000-S002-employers-trim-401k-fees.html#buTvG5muw7udQ0Hw.99">more than 75% of employers</a> attempted to cut 401(k) expenses, so your request is nothing out of the ordinary.</p> <p>Find out why your plan administrator is choosing the funds that she's choosing. If there is no record of legitimate reasons, then you have ammunition to demand a re-evaluation of current fees and class shares. The lower your plan's fees, the better your returns.</p> <p><em>What have you done to boost an underperforming 401(k)?</em></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/5-simple-ways-to-boost-an-underperforming-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/this-one-thing-will-get-you-to-1-million-tax-free">This One Thing Will Get You to $1 Million (Tax-Free!)</a></span> </div> </li> <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/this-is-why-you-cant-postpone-planning-for-your-retirement-and-how-to-start">This Is Why You Can&#039;t Postpone Planning for Your Retirement (And How to Start)</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-dumb-401k-mistakes-smart-people-make">5 Dumb 401(k) Mistakes Smart People 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/4-ways-to-boost-your-401k-returns">4 Ways to Boost Your 401(k) Returns</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-ways-to-keep-your-retirement-funds-from-disappearing">7 Ways to Keep Your Retirement Funds From Disappearing</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401(k) investing retirement savings saving Tue, 03 Mar 2015 14:00:09 +0000 Damian Davila 1315320 at http://www.wisebread.com 9 Things People Who Retire Early Do http://www.wisebread.com/9-things-people-who-retire-early-do <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/9-things-people-who-retire-early-do" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/happy-loving-senior-couple-Dollarphotoclub_56515946.jpg" alt="happy senior couple" title="happy senior couple" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>We all dream of retiring early (at least I do), but for most of us that's all it is &mdash; a dream. It doesn't necessarily have to be, however, and you don't need to strike it rich to start enjoying the finer things in life well before age 67. (Yep, that's the government-acknowledged age for full retirement &mdash; and it stinks.) To provide some much-needed motivation to kick your hustle into high gear, here are nine things people who retire early do &mdash; and you should, too.</p> <h2>1. Live Relatively Modestly and Save, Save, Save</h2> <p>If you weren't born into one of those famous family dynasties that provided you a trust fund at birth or otherwise have won some sort of lottery, you've got to work hard for your money. If you want to retire early, live modestly and save like your life depends on it. The truth is your life does depend on it &mdash; at least the one you want, anyway.</p> <p>&quot;I'm not retired myself yet, but I do know a couple who managed to retire early,&quot; says Mike Collins, owner of the personal finance blog <a href="http://www.wealthyturtle.com">Wealthy Turtle</a>. &quot;The secret to their success was saving and investing as much as possible when they were young. They worked lots of extra hours and also built up a side income so they could invest more and more. They kept their expenses low and just increased their saving rate whenever they got a raise. Over time their wealth grew and they were both able to retire young.&quot;</p> <h2>2. Build Financial Roadmaps</h2> <p>When we're traveling, we use a map to get where we're going &mdash; and the same principle applies to our professional paths. It's never a bad idea to plan your route so you can achieve your goals with minimal blocks and detours.</p> <p>Elle Kaplan, founder/CEO of LexION Capital, agrees.</p> <p>&quot;People who retire early build financial roadmaps. They have a step-by-step plan in place that details the route to their financial goals,&quot; she says. &quot;They know what a safe spending level would be given their portfolio and any other income they have coming in, from real estate holdings to Social Security. They know what major expenses or windfalls they anticipate, whether that's travel or income from the sale of a home as they downsize or relocate. And they have extra room built in for the bumps in the road that they can't anticipate, taking into account very conservative assumptions: living to 100, and having a plan to address unexpected costs.&quot;</p> <h2>3. Earn Passive Income</h2> <p>You don't have to have an ungodly amount of money in the bank to retire early, but you should absolutely have a continued source of income, if that's not the case.</p> <p>Passive income is an excellent way to continue earning money, even after you slow down or retire. Great sources of passive income include rental properties, a product that people will buy for years to come (could be a book or maybe a new invention), or a brick-and-mortar or online business that you can afford to pay other people to manage for you. The latter comes with a warning, however: It's hard to find help that will treat your business with the level of care and professionalism that you would, so it's wise to prepare accordingly.</p> <h2>4. Make New Investments</h2> <p>If you're able to retire early, chances are you've made some wise investments up to this point &mdash; and you probably have enough dough saved to make some more in the near future. That's how you'll build your passive-income portfolio, and, frankly, if you have excess money in the bank that's not being invested, it's going to waste, anyhow.</p> <p>Consider this anecdote from Ken Barret, owner of K-Bar Inc., a company he founded after retiring early.</p> <p>&quot;I retired from the auto industry in 2009 when I took a buyout and decided I didn't want to work in the corporate world anymore,&quot; he recalls. &quot;I moved to the United States from Canada and purchased three laundromats in seven months. I always considered retirement as being able to do what you want, and that's what I'm doing. Two of my laundromats are unattended and open 24 hours a day, so I can stop by on my own schedule. The other laundromat has three employees and is partially attended. It requires more attention, but still it's my decision when and how much.&quot;</p> <h2>5. Go Back to School and Continue Education</h2> <p>Chances are, you won't be retired for long if you use your newfound freedom to whoop it up like some Hollywood hotshot &mdash; you'll drain your retirement fund eventually and find yourself forced back to the workforce before you know it. One way to prevent that fate is by making constructive use of your free time, such as continued education.</p> <p>Learning should never stop, and if you plan your courses strategically, you can learn new skills that will only improve your business savvy. And if you're not retired yet, additional education can mean a path to increased income, more savings, and an earlier retirement date.The website <a href="http://www.retiredbrains.com">RetiredBrains</a> has excellent resources for retirees &mdash; young and old &mdash; on how to navigate the prospect of going back to class.</p> <h2>6. Focus on Relationships With Friends and Family</h2> <p>One of the more personal benefits of having ample time on your hands is that you get to spend more time with family and friends. Use this very rare opportunity &mdash; not many people get to focus on the important people in their lives with minimal distractions, after all &mdash; to build stronger relationships that will not only enrich your life, but also theirs. And if you're still working toward an early retirement, spending more time with loved ones is not only a terrific way to enhance your wellbeing, but also an essential strategy for saving money.</p> <h2>7. Spend Time Pursuing New Goals and Passions</h2> <p>If you've retired early, it's a safe bet to assume that you've accomplished many of your goals. But that's no reason to stop. In fact there's no better time &mdash; since you now have much more time &mdash; to set new goals and concentrate on pursuing your passions. And if you've yet to retire, these new goals can help motivate you to find new ways of increasing your income and exiting the corporate world sooner.</p> <p>&quot;I retired about two years ago after 30-plus years of corporate life,&quot; says Judy Freedman, author of the blog, <a href="http://www.aboomerslifeafter50.com">A Boomer's Life After 50</a>. &quot;I decided to take early retirement at age 55 to slow down and pursue my passions. After losing my husband when I turned 50 and emptying out my nest when my last child graduated college, I decided that it was time to change up my life and have more time to do things that I only dreamed of doing when I was younger and busy raising and supporting a family. In addition to my writing and blogging, I am pursuing my studies to become a yoga instructor. I'm also doing more traveling to places that I've always wanted to go to, most recently to France and Spain.&quot;</p> <h2>8. Allotting Time to Volunteer or Give to Charity</h2> <p>For 25 years, Stan Goldberg was a professor at San Francisco University. He says his life revolved around academia, but when he was forced to retire at age 57 because of a health issue, he thought his contributions to society had ended. Instead, they had just begun.</p> <p>&quot;Since retiring, I served as a bedside hospice volunteer for eight years, counseled caregivers, <a href="http://www.stangoldbergwriter.com">wrote two internationally award-winning books</a>, and I currently have a series of books on the sharper points of life under review by mainstream publishers,&quot; boasts Goldberg. &quot;Since retiring my life has become fuller and my contributions to society have increased beyond my wildest dreams.&quot;</p> <h2>9. Travel for Life-Enriching Experiences</h2> <p>It's almost a given that you'll want to travel when you retire early &mdash; who doesn't, right? &mdash; but it'll cost you. At least that's the theory, anyway. In reality, you can travel the world very inexpensively if you're resourceful. There are plenty of volunteer programs abroad that will subsidize your trip (this guy pulled off the ultimate coup of <a href="http://www.today.com/video/today/48070573#48070573">paying zero dollars to trek the globe</a>), and there are programs that will let you take house-sitting gigs in the destinations of your choice for the paltry fee of $96 a year.</p> <p>Rachel Martin, co-founder of <a href="http://www.trustedhousesitters.com">TrustedHousesitters.com</a>, explains how you can take advantage of the latter by caring for pets in exchange for lodging in over 130 countries. If you've yet to retire, this can be a cost-effective way of seeing the world (or of making some extra dollars).</p> <p>&quot;From a month in the South Pacific to a couple of weeks in a lodge in Breckenridge, Colorado, it's a simple premise (providing a real win-win: free pet care for free accommodations) and one which is growing in its popularity among retirees who may have time on their hands and are looking for adventure in their 'fun years,'&quot; she says.</p> <p><em>Would you like to retire early? What are some of the things you'd do?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/mikey-rox">Mikey Rox</a> of <a href="http://www.wisebread.com/9-things-people-who-retire-early-do">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/4-exciting-affordable-american-cities-to-retire-in">4 Exciting, Affordable American Cities to Retire In</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-much-should-you-have-saved-for-retirement-by-30-40-50">How Much Should You Have Saved for Retirement by 30? 40? 50?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-thoughts-everyone-has-their-first-day-of-retirement">6 Thoughts Everyone Has Their First Day of Retirement</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/12-surprising-things-women-should-know-about-retirement-planning">12 Surprising Things Women Should Know About Retirement Planning</a></span> </div> </li> <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 retire early retiring second career Mon, 16 Feb 2015 14:00:08 +0000 Mikey Rox 1289632 at http://www.wisebread.com Why Taking Social Security Could Cost You Thousands http://www.wisebread.com/why-taking-social-security-could-cost-you-thousands <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/why-taking-social-security-could-cost-you-thousands" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/social-security-finance-Dollarphotoclub_37675746.jpg" alt="social security" title="social security" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>I recently attended a weekend barbecue with some neighbors, and at one point the conversation shifted from the usual topics &mdash; family updates, local news, sports, and politics &mdash; to retirement. Strangely enough, it was raised by a friend's daughter, Barbara, who is in her early 30s. I was a little surprised (but encouraged) that she was already doing some retirement planning at that age.</p> <p>Barbara is a bright, hard-working human resources manager with a promising future, but after 10 years in a challenging work environment, she said she was beginning to feel a little fatigued. That's certainly understandable. She and another 80 million millennials have had the misfortune of joining a workforce that's experiencing some major disruptions. For most workers, America's recent economic restructuring has led to less job security, lower wages, fewer benefits, and longer hours. That's not exactly a recipe for long-term optimism if you're a thirty-something.</p> <p>With this in mind, it didn't take long for me to realize that Barbara raised the issue of retirement not because she was interested in long term financial planning, but instead out of sheer frustration. Barbara's question was, &quot;What is the earliest age I can begin receiving my Social Security retirement benefit?&quot; Age 62 was the answer. &quot;Then that's when I'll take it,&quot; she said.</p> <p><a href="http://www.socialsecurity.gov/planners/benefitcalculators.htm"><img width="605" height="340" src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5123/Whelan%20Blog%20Table%20-%20Social%20Security%20Benefit%20Reductions.jpg" alt="" /></a></p> <p>What Barbara didn't realize is that by doing so, she'd forfeit 30% of her full benefit amount. If her full amount was, say, $2,000 per month, then she would be giving up $600. So I said to her, &quot;What if you needed $2,000 a month from Social Security just to break even financially? And what if, by taking your Social Security benefit at age 62 instead of age 67, your benefit amount is reduced by $600 a month, to $1,400?&quot; Barbara's reply: &quot;I'd still take the lower amount.&quot;</p> <p>Of course I couldn't just let the issue end there, so I asked a follow-up question: &quot;But that would put you $7,200 in the hole each year. By your mid 70s your debt would add up to $100,000. How would you pay for it?&quot; &quot;I don't care,&quot; she said. &quot;I just want to stop working the moment I first qualify for a monthly retirement check.&quot;</p> <p>At that point I sensed I was stepping on a nerve, so I let it go. But, I'm glad she raised the topic and I give her credit for starting the conversation. Now that the issue has been framed with real numbers and dates, she is in a better position to make a sound decision when the time comes.</p> <p>For some, the loss of $600 each month for the duration of their retirement would be difficult to absorb. For others, it would be less of an issue. And for others still, there might be health-related concerns or other extenuating circumstances that make early distribution a reasonable choice.</p> <p>The point is, before choosing to give away so much of what you earned and accumulated over many decades, be sure to consider the trade-offs. Let reason, not emotion, drive your decision.</p> <p><em>At what age are you planning on taking Social Security?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/keith-whelan">Keith Whelan</a> of <a href="http://www.wisebread.com/why-taking-social-security-could-cost-you-thousands">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-9"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-much-do-i-need-to-retire-how-much-can-i-spend">How much do I need to retire? How much can I spend?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/tiny-nestegg-retire-abroad">Tiny Nestegg? Retire abroad!</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/book-review-early-retirement-extreme">Book Review: Early Retirement Extreme</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/12-things-you-didnt-know-about-retirement">12 Things You Didn&#039;t Know About 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/to-stay-on-financial-track-perfom-a-yearly-earnings-review">To Stay on Financial Track, Perform a Yearly Earnings Review</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement early retirement pension social security Fri, 23 Jan 2015 14:00:06 +0000 Keith Whelan 1282530 at http://www.wisebread.com 5 Reasons to Fire Your Financial Adviser Soon http://www.wisebread.com/5-reasons-to-fire-your-financial-adviser-soon <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-reasons-to-fire-your-financial-adviser-soon" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman-in-charge.jpg" alt="" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>As&nbsp;2014 gives way to 2015, you&rsquo;ll likely be reviewing your investment results for the year, and looking ahead to this year and beyond. So here&rsquo;s a question you may want to ask: Should I fire my&nbsp;<a href="http://www.nextavenue.org/article/2012-08/evaluating-your-financial-advisor">financial adviser</a>?<br /> &nbsp;<br /> That may sound like a nutty question, since the stock market has been gangbusters, with a positive year for the sixth year in a row. That performance doesn&rsquo;t necessarily mean your money pro has delivered enough value to justify your keeping him or her, though.<br /> &nbsp;<br /> Below are five questions you&rsquo;ll want to ask to help you determine whether you should give your adviser the heave-ho sooner rather than later. If you answer &ldquo;yes&rdquo; to any of them, it&rsquo;s time to look for a replacement.</p> <p>(<strong>MORE</strong>:&nbsp;<a href="http://www.nextavenue.org/article/2013-10/how-find-financial-advice-you-can-trust">How to Find Financial Advice You Can Trust</a>)<br /> &nbsp;<br /> <strong>Question 1: Did you receive a year-end performance report?&nbsp;</strong><br /> &nbsp;<br /> No report?&nbsp; Fire your adviser.<br /> &nbsp;<br /> Real advisers provide performance reports. Financial&nbsp;<em>salesmen</em>&nbsp;don&rsquo;t. Their sales licenses do not permit them to provide this type of ongoing reporting.<br /> &nbsp;<br /> <strong>Question 2:</strong>&nbsp;&nbsp;<strong>Did your adviser provide a report that disclosed all the expenses deducted from your investment accounts?</strong><br /> &nbsp;<br /> No? Fire your adviser for withholding information from you. You can&rsquo;t trust an adviser who doesn&rsquo;t display full transparency.</p> <p>(<strong>MORE</strong>:&nbsp;<a href="http://www.nextavenue.org/article/2012-08/evaluating-your-financial-advisor">Evaluating Your Financial Adviser</a>)</p> <p><strong>Question 3. At some point, the stock market will have a correction (less than a 15 percent loss and six months of duration) or turn into a bear market (more than a 15 percent loss and six months of duration). Does your adviser have a strategy for minimizing your risk of large losses?</strong><br /> &nbsp;<br /> No plan? Fire the adviser. Select one who can help you preserve your assets during a market that produces negative returns.<br /> &nbsp;<br /> <strong>Question 4: Has your adviser provided a document certifying that he or she is acting in a fiduciary capacity when providing financial advice and services?</strong><br /> &nbsp;<br /> No document? Fire the adviser.</p> <p>(<strong>MORE</strong>:&nbsp;<a href="http://www.nextavenue.org/article/2012-03/when-your-financial-adviser-guessing">When Your Financial Adviser Is Guessing</a>)<br /> &nbsp;<br /> Fiduciaries are held to the highest ethical standards in the financial service industry. They&rsquo;re&nbsp;<em>required</em>&nbsp;to put your financial interests ahead of their own. Non-fiduciaries are salesmen who are held to lower ethical standards that don&rsquo;t require them to put your interests first.<br /> &nbsp;<br /> <strong>Question 5: The financial services industry is riddled with conflicts of interest. Has your adviser provided a written statement saying that his or her advice is free of any potential conflicts of interest that could damage your financial interests?</strong><br /> &nbsp;<br /> Fire any adviser who refuses to provide this statement. You don&rsquo;t have to know what he or she is hiding or why. You just have to know there&rsquo;s the potential to damage you.<br /> &nbsp;<br /> Conflicts of interest are not obvious or easy to detect. In most cases, they&rsquo;re designed to achieve one goal: maximize the revenue of the seller. They are extremely dangerous because Wall Street&rsquo;s marketing experts know how to package toxic products and convince you that they are safe investments. Some banks and insurers sell inferior products with excessive expenses that maximize their revenues, profits, and share prices.<br /> &nbsp;<br /> The most dangerous conflict is from an unscrupulous, but friendly adviser who develops a personal relationship with you. Once trust is established, such advisers can sell customers the financial products that make them and their firms the most money. The most frequent lament from Bernie Madoff&rsquo;s clients was: &ldquo;I thought he was my friend.&rdquo;<br /> &nbsp;<br /> Always remember: the investment of your assets should be based on a&nbsp;<em>business</em>&nbsp;relationship, not a personal relationship. Fire advisers who want to be judged on their relationship skills, not their results and transparency.</p> <div class="field field-type-text field-field-blog-teaser"> <div class="field-items"> <div class="field-item odd"> Many of Bernie Madoff&#039;s clients said &quot;I thought he was my friend.&quot; Find out if your adviser is a friendly, but unscrupulous salesman and not the ethical adviser he should be. </div> </div> </div> <div class="field field-type-text field-field-guestpost-blurb"> <div class="field-label">Guest Post Blurb:&nbsp;</div> <div class="field-items"> <div class="field-item odd"> <p><em>Jack Waymire spent 28 years in the financial services industry. He is the founder of </em><a href="http://www.paladinregistry.com/"><em>Paladin Research and Registry</em></a><em>, which provides free tools and information to investors who use financial advisers. Follow him on Twitter </em><a href="https://twitter.com/PaladinRegistry"><em>@PaladinRegistry</em></a><em> or connect with him on </em><a href="https://plus.google.com/+JackWaymire/posts"><em>Google+</em></a><em>.&nbsp;<em style="color: rgb(0, 0, 0); font-family: Arial, Helvetica, sans-serif; font-size: 12.7272720336914px; line-height: 1.5;">Check out more great articles from PBS's </em><a href="http://www.nextavenue.org"><em>Next Avenue</em></a>:</em></p> <ul> <li><a href="http://www.nextavenue.org/article/2014-07/27-ways-trick-yourself-saving-money">27 Ways To Tricking Yourself Into Saving Money</a></li> <li><a href="http://www.nextavenue.org/article/2012-07/biggest-retirement-mistake-boomers-make-and-how-avoid-it">The Biggest Retirement Mistakes Boomers Make</a>&nbsp;</li> <li><a href="http://www.nextavenue.org/article/2014-11/3-retirement-rules-thumb-really-work">3 Retirement Rules of Thumb that Really Work</a></li> </ul> </div> </div> </div> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/next-avenue">Next Avenue</a> of <a href="http://www.wisebread.com/5-reasons-to-fire-your-financial-adviser-soon">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-10"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-occasions-when-you-should-definitely-hire-a-financial-advisor">7 Occasions When You Should Definitely Hire a Financial Advisor</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/dont-know-what-annuities-are-you-might-be-missing-out">Don&#039;t Know What Annuities Are? You Might Be Missing Out</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/is-this-hidden-cost-sapping-your-retirement-savings">Is This Hidden Cost Sapping Your 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/intimidated-by-retirement-investing-get-professional-help">Intimidated by Retirement Investing? Get Professional Help!</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> Investment Retirement financial adviser financial planning next avenue retirement Fri, 16 Jan 2015 18:00:08 +0000 Next Avenue 1280353 at http://www.wisebread.com 9 Changes That Will Affect Your Money in 2015 http://www.wisebread.com/9-changes-that-will-affect-your-money-in-2015-0 <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/9-changes-that-will-affect-your-money-in-2015-0" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/looking-to-future.jpg" alt="" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>As we start 2015, I wanted to pass along&nbsp;nine changes that&rsquo;ll affect&nbsp;your money&nbsp;next year so you can factor them into your financial plans:</p> <p><strong>1. You&rsquo;ll be allowed to stash more money into some types of retirement plans.&nbsp;</strong></p> <p>The maximum contribution limit for&nbsp;<a href="http://www.irs.gov/uac/Newsroom/IRS-Announces-2015-Pension-Plan-Limitations;-Taxpayers-May-Contribute-up-to-$18,000-to-their-401%28k%29-plans-in-2015" target="_blank">401(k) and 403(b)</a>&nbsp;employer-sponsored plans will rise by $500 to $18,000 if you&rsquo;ll be under 50 and to $24,000 (a $6,000 catch-up) if you&rsquo;ll be 50 or older. Those&nbsp;<a href="http://www.nextavenue.org/article/2014-01/5-best-money-strategies-boomers">catch-up contribution</a>&nbsp;boosts for people 50+ are overdue; the catch-up amount has been stuck at $5,550 for a few years.<br /> &nbsp;<br /> Similarly, the maximum contribution for a&nbsp;<a href="http://www.irs.gov/Retirement-Plans/Choosing-a-Retirement-Plan:-SIMPLE-401%28k%29-Plan" target="_blank">SIMPLE 401(k)</a>or a&nbsp;<a href="http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics-SIMPLE-IRA-Contribution-Limits" target="_blank">SIMPLE IRA</a>&nbsp;&mdash; the type of plans often used by small companies &mdash; will also go up by $500, to $12,500 for those under 50 and to $15,500 (or a $3,000 catch-up) for those 50 and older.</p> <p>(<strong>MORE</strong>:&nbsp;<a href="http://www.nextavenue.org/article/2014-11/7-smart-year-end-tax-moves-prepare-2015">7 Year-End Tax-Saving Moves</a>)<br /> &nbsp;<br /> The news is better still for the self-employed or small business owners who plan to fund&nbsp;<a href="http://www.irs.gov/Retirement-Plans/Retirement-Plans-FAQs-regarding-SEPs-Contributions" target="_blank">SEP IRAs</a>&nbsp;or&nbsp;<a href="http://www.irs.gov/Retirement-Plans/One-Participant-401%28k%29-Plans" target="_blank">Solo 401(k)s</a>&nbsp;in 2015: they&rsquo;ll be allowed to invest $1,000 more than in 2014. The 2015 limit: a bountiful $53,000.</p> <p>&ldquo;In general, we prefer the SEP IRA to a Solo 401(k), because of its overall simplicity,&rdquo; says Joshua Kadish, of the RPG Life Transition Specialists wealth management firm in Chicago, Ill.<br /> &nbsp;<br /> <strong><strong>2. You might finally be able to save for retirement through the Obama Administration&rsquo;s new&nbsp;<a href="https://myra.treasury.gov/" target="_blank">myRA</a>&nbsp;option</strong>.&nbsp;</strong></p> <p>Remember when the President announced this account (myRA, which rhymes with IRA, is short for &ldquo;my retirement account&rdquo;) in his 2014&nbsp;<a href="http://www.nextavenue.org/blog/state-union-and-older-americans">State of the Union&nbsp;</a>address? Well, it&rsquo;s still not available, but will be &mdash; for some people &mdash; &nbsp;in 2015.</p> <p>(<strong>MORE</strong>:&nbsp;<a href="http://www.nextavenue.org/article/2014-12/5-smart-tax-savers-year-end-charitable-giving">Tax Savers for Year-End Charitable Giving</a>)<br /> &nbsp;<br /> The government is now working with a small group of employers participating in a pilot phase of the program. A U.S. Department of Treasury spokesperson told me: &ldquo;Treasury looks forward to working with these employers to refine myRA before it becomes more broadly available in 2015.&rdquo;<br /> &nbsp;<br /> A myRA will be a no-fee Roth IRA for people whose employers don&rsquo;t currently offer retirement plans. The federal government will guarantee myRA income (through special retirement savings bonds) and employee aftertax contributions will be made through payroll deductions. Contributions won&rsquo;t be tax-deductible, but interest earnings will grow tax-free and withdrawals won&rsquo;t be taxed. MyRAs will be limited to individuals with income below $129,000 and to couples with incomes under $151,000.<br /> &nbsp;<br /> There&rsquo;ll be a $15,000 limit on the amount you can accumulate in a myRA over 30 years; after that, the money must be transferred to a Roth IRA account managed by a financial services firm.</p> <p>(<strong>MORE</strong>:&nbsp;<a href="http://www.nextavenue.org/blog/top-10-medical-innovations-2015" target="_blank">Top 10 Medical Innovations for 2015</a>)<br /> &nbsp;<br /> &ldquo;I&rsquo;m not ready to say that everyone should jump on board for a myRA,&rdquo; says Kadish. &ldquo;There may be a benefit for having a tax deductible IRA instead, if you qualify. With a standard Roth IRA, you have 100 percent control over how the money is invested.&rdquo;</p> <p><strong>3. Beginning in 2015, you&rsquo;ll be limited on the number of&nbsp;<a href="http://www.irs.gov/Retirement-Plans/IRA-One-Rollover-Per-Year-Rule" target="_blank">nontaxable IRA rollovers</a>&nbsp;you can make.&nbsp;</strong></p> <p>The Internal Revenue Service will cap them to one every 12 months. The government is doing this to crack down on the loophole that let people effectively get short-term, interest-free loans by taking money out of their IRAs and then depositing the cash into new retirement accounts.<br /> &nbsp;<br /> <strong>4. The income limit to claim the&nbsp;<a href="http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics-Retirement-Savings-Contributions-Credit-%28Saver%E2%80%99s-Credit%29" target="_blank">Saver&rsquo;s Credit</a>&nbsp;will rise a bit, too</strong>.</p> <p>In 2015, it&rsquo;ll be boosted by $1,000 for married couples filing jointly (to adjusted gross income of $61,000) and by $500 for singles (to $30,500). This&nbsp;<a href="http://www.nextavenue.org/article/2014-12/uncle-sam-may-want-give-you-2000-retirement">little-known credit</a>&nbsp;lets qualifying taxpayers get a tax break for contributing to 401(k)s and IRAs.<br /> &nbsp;<br /> <strong><strong>5. The&nbsp;<a href="http://taxfoundation.org/article/2015-tax-brackets" target="_blank">standard deduction</a>&nbsp;will go up by $100 for singles (to $6,300) and by $200 for married couples filing jointly (to $12,600).</strong>&nbsp;</strong></p> <p>As you likely know, you&rsquo;ll be able to itemize your deductions if they&rsquo;ll exceed the standard deduction.</p> <p><strong><strong>6. There&rsquo;ll be teeny increases in the&nbsp;<a href="http://www.irs.gov/uac/Newsroom/In-2015,-Various-Tax-Benefits-Increase-Due-to-Inflation-Adjustments" target="_blank">personal exemption</a>&nbsp;and the amount you can save in a&nbsp;<a href="http://www.irs.gov/uac/Newsroom/In-2015,-Various-Tax-Benefits-Increase-Due-to-Inflation-Adjustments" target="_blank">Flexible Spending Account</a>&nbsp;(FSA) in 2015.</strong>&nbsp;</strong></p> <p>Both will inch up by $50: The personal exemption will be $4,000 (though it&rsquo;ll phase out for singles whose incomes will be $258,250 or higher and for married couples filing jointly with incomes of $309,900 or more). The FSA limit rises to $2,500 next year.</p> <p><strong><strong>7. The&nbsp;<a href="http://taxfoundation.org/article/2015-tax-brackets" target="_blank">Alternative Minimum Tax exemption</a>&nbsp;will go up by about 1.5 percent next year.</strong></strong></p> <p>The exemption amount will be $53,600 for individuals and $83,400 for married couples filing jointly.</p> <p><strong>8. Social Security payments will nudge up, but so will the amount of income subject to Social Security taxes.&nbsp;</strong></p> <p>Benefits checks for the nation&rsquo;s 58 million Social Security recipients will rise by 1.7 percent in 2015, due to the annual&nbsp;<a href="http://www.ssa.gov/news/press/factsheets/colafacts2015.html" target="_blank">Cost of Living Adjustment</a>. That amounts to roughly $22 a month, on average, according to AARP.<br /> &nbsp;<br /> That 1.7 percent increase is a smidge higher than the coming 1.3 percent rise ($1,500) in the portion of income that&rsquo;ll be subject to Social Security tax in 2015. The income ceiling will be $118,500, up from $117,000 in 2014.<br /> &nbsp;<br /> <strong>9. The Obamacare penalty for not having health insurance in 2015 will more than triple</strong>.</p> <p>In 2014, the&nbsp;<a href="https://www.healthcare.gov/fees-exemptions/fee-for-not-being-covered/" target="_blank">Obamacare penalty</a>&nbsp;was $95 per adult or 1 percent of income, whichever was greater; in 2015, it&rsquo;ll shoot up to $325 per adult or 2 percent of income.</p> <p><strong>What Will Be the Same in 2015</strong><br /> &nbsp;<br /> Two things that won&rsquo;t change: the annual&nbsp;<a href="http://www.forbes.com/sites/ashleaebeling/2014/10/30/irs-announces-2015-estate-and-gift-tax-limits" target="_blank">gift tax exclusion</a>&nbsp;(still $14,000) and the&nbsp;<a href="http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics-IRA-Contribution-Limits" target="_blank">limits for traditional and Roth IRAs</a>&nbsp;(still $5,500 if you&rsquo;re under 50 and $6,500 if you&rsquo;re 50 or older).</p> <p>&ldquo;The lack of an increase in the IRA limits flies in the face of everything we&rsquo;re hearing about people living longer and needing to save more,&rdquo; says Kadish. &ldquo;There&rsquo;s no rhyme or reason to it.&rdquo;</p> <div class="field field-type-text field-field-blog-teaser"> <div class="field-items"> <div class="field-item odd"> Several retirement contribution limits are raised, Obamacare penalty triples, myRA officially launches and many more tax and social security changes. </div> </div> </div> <div class="field field-type-text field-field-guestpost-blurb"> <div class="field-label">Guest Post Blurb:&nbsp;</div> <div class="field-items"> <div class="field-item odd"> <p><em>Richard Eisenberg is the senior Web editor of the Money &amp; Security and Work &amp; Purpose channels of <a href="http://www.nextavenue.org/">Next Avenue</a> and Assistant Managing Editor for the site. Follow him on Twitter </em><a href="http://twitter.com/richeis315"><em>@richeis315</em></a><em>. Check out more great articles from Next Avenue:</em></p> <ul> <li><a href="http://www.nextavenue.org/blog/best-places-retire-abroad-2015">The Best Places to Retire Abroad in 2015</a></li> <li><a href="http://www.nextavenue.org/blog/surprising-secrets-successful-retirees">The Surprising Secrets of Successful Retirees</a></li> <li><a href="http://www.nextavenue.org/article/2015-01/3-health-resolutions-you-can-actually-keep-2015">3 Health Resolutions You Can Actually Keep in 2015</a></li> </ul> </div> </div> </div> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/next-avenue">Next Avenue</a> of <a href="http://www.wisebread.com/9-changes-that-will-affect-your-money-in-2015-0">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/7-ways-to-max-out-your-ira-contributions-by-april-15th">7 Ways to Max Out Your IRA Contributions by April 15th</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-tax-moves-you-need-to-make-right-now">6 Tax Moves You Need to Make Right Now</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/is-this-the-end-of-the-back-door-roth-ira-tax-loophole">Is This the End of the Back-Door Roth IRA Tax Loophole?</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/tax-penalties-for-early-retirement-withdrawals">Tax Penalties for Early Retirement Withdrawals</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/should-you-choose-a-roth-401k-or-a-regular-401k">Should You Choose a Roth 401k or a Regular 401k?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement Taxes Wed, 14 Jan 2015 16:00:10 +0000 Next Avenue 1280157 at http://www.wisebread.com 4 Times Raiding Your Retirement Accounts Early Is Okay http://www.wisebread.com/4-times-raiding-your-retirement-accounts-early-is-okay <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/4-times-raiding-your-retirement-accounts-early-is-okay" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/retired-couple-finances-Dollarphotoclub_46844243.jpg" alt="retired couple finances" title="retired couple finances" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Borrowing from your retirement accounts should rarely be your first choice to cover unexpected expenses. Even if your need is severe, there are often better and cheaper ways that won't narrow your future.</p> <p>But the truth is that there are times when getting a loan from your retirement account isn't the worst choice you can make. If you're in one of the following situations, a loan from your retirement account might actually be a reasonable solution.</p> <h2>1. You're Facing Severe Financial Hardship</h2> <p>By &quot;severe financial hardship,&quot; I'm thinking the extreme of extremes here. If you're not sure you can keep the lights on or feed your family, a retirement loan is probably better than your alternatives.</p> <p>Even in this situation, though, you need to have a plan. Retirement loans must be repaid, and the money usually comes directly out of your paycheck. If you're not getting a regular paycheck, you need to figure out how to repay the money. You will also want to consider whether you want a &quot;hardship&quot; loan or a regular one. If you can prove the hardship, those loans are usually easier and faster but, depending on your company, they may have other drawbacks.</p> <h2>2. It Is Your Low-Cost Option</h2> <p>If you've calculated the costs of all of your loan options, and a loan from your retirement accounts is the cheapest option, then you need to consider taking it. However, it's important to remember that you cannot ever calculate the cost of a retirement loan accurately, because you don't know how much more money your retirement funds would have earned if you had left them in the account the whole time.</p> <p>Both <a href="http://money.usnews.com/money/blogs/alpha-consumer/2011/01/25/why-401k-loans-can-be-a-smart-move">credit card debt</a> and <a href="http://powertochange.com/world/paydayloan/">payday</a> loans are examples of potentially very high interest loans that could potentially be paid off cheaper with a retirement loan. It's often possible, though, to negotiate your credit card payments lower, or even to negotiate a lower amount that you can pay off instead of the total. Try these options before you take out a retirement loan.</p> <h2>3. You Can't Get a Regular Loan</h2> <p>If you have a bankruptcy or even a short sale on your financial record, your credit may be too low to even be able to get a conventional loan. If there's not another way to get the money that you need and you can't put off your need until later, then a loan from your retirement account may be what you need to get you through.</p> <p>Be sure that you're taking the overall tax situation into account when you consider this, though. You'll be charged a penalty for taking the money out, and the money may be taxed as income, too. Then, once it's repaid and you're taking it out for retirement, you may pay taxes on it again. Talk to someone about the specifics of your situation, so you know exactly what you're getting into. Unless your need is so urgent you cannot wait on a regular loan, all of this may be too much to pay!</p> <h2>4. You Are Making the Best Investment&hellip; Ever!</h2> <p>The most-controversial-but-still-probably-ok reason to take money out of your retirement accounts before retirement age is because you're making some kind of insane investment. Are you financing a business or putting yourself through school? Then the loan might be acceptable.</p> <p>As always, calculate the costs of the loan as best you can. While you can't absolutely calculate how much money you will make from a business or how much more you'll make with further education, do your research. If you're not going to improve your situation significantly or you find you can get a low-interest education loan instead, you're probably better off leaving your retirement money where it is.</p> <h2>Considerations Before You Take Out a Retirement Loan</h2> <p>Sure, there are times when a retirement loan is your best option. While it's never a great choice, it's a better choice when the following things are true.</p> <h3>When Your Retirement Is Already Secure</h3> <p>Do you know how much you plan on needing for retirement? Do you already have that, and more? If you know your retirement is secure, then a loan from those accounts that doesn't dip into the money you will need is a better choice than when you're taking money from your future self.</p> <h3>When You Love Your Job</h3> <p>Since retirement loans have to be repaid, it's always better to take one out when you're <a href="http://www.bankrate.com/finance/retirement/4-reasons-to-take-out-a-401k-loan-4.aspx">working a job you love</a> (and believe they plan to keep you there for a quite a while). If you want to quit &mdash; or you think you might get laid off or fired &mdash; a retirement loan is much more risky, since most companies will require you to pay off the entire balance within 60 days of your employment termination.</p> <h3>When You Need Money Fast</h3> <p>As long as you have the proper paperwork in place, you can usually get a loan from your retirement accounts fairly quickly. Since you won't have to apply or be approved, the process is more streamlined than with other loans. Sometimes, you won't have time to research all of your options or wait to hear back from a lender before you need your money, and in this case retirement loans can be your best choice.</p> <h3>When Your Need Is Short Term</h3> <p>If your retirement account loan is longer in duration, the negative effect on your retirement funds only grows. If, on the other hand, you take it out and can repay it in full in a matter of a few months, you've done minimal damage and covered your financial needs. In general, <a href="http://www.forbes.com/sites/learnvest/2014/03/28/the-skinny-on-borrowing-money-from-your-401k/2/">if your financial need will be over in less than a year</a> and you can repay the money quickly at that point, a retirement loan is a better idea than it is if you will have to repay it slowly over years and years.</p> <p><em>Have you ever taken a loan from your retirement accounts? How did it work out for you?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/sarah-winfrey">Sarah Winfrey</a> of <a href="http://www.wisebread.com/4-times-raiding-your-retirement-accounts-early-is-okay">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-12"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/this-one-thing-will-get-you-to-1-million-tax-free">This One Thing Will Get You to $1 Million (Tax-Free!)</a></span> </div> </li> <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/you-may-be-putting-your-retirement-money-in-the-wrong-place">You May Be Putting Your Retirement Money in the Wrong Place</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-dumb-401k-mistakes-smart-people-make">5 Dumb 401(k) Mistakes Smart People 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/5-simple-ways-to-boost-an-underperforming-401k">5 Simple Ways to Boost an Underperforming 401(k)</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-investing-basics-that-can-make-you-rich">5 Investing Basics That Can Make You Rich</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment Retirement 401(k) retirement saving saving Mon, 12 Jan 2015 14:00:09 +0000 Sarah Winfrey 1277863 at http://www.wisebread.com 4 Exciting World Cities You Can Afford to Retire In http://www.wisebread.com/x-exciting-world-cities-you-can-afford-to-retire-in <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/x-exciting-world-cities-you-can-afford-to-retire-in" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/mature-couple-travel-biking-Dollarphotoclub_66958635.jpg" alt="mature couple travel" title="mature couple travel" class="imagecache imagecache-250w" width="250" height="141" /></a> </div> </div> </div> <p>Hello pension, goodbye tension!</p> <p>You've worked hard, so it makes perfect sense to reward yourself in your retirement years. For some people, the easiest way to afford a comfortable retirement is to jump on a plane and go abroad. (See also: <a href="http://www.wisebread.com/this-is-the-basic-intro-to-having-a-retirement-fund-that-everyone-needs-to-read">This Is the Basic Intro to Having a Retirement Fund That Everyone Needs to Read</a>)</p> <p>Living better for less, having access to generous tax breaks, and enjoying beautiful locales and ideal weather conditions are some of the benefits of living abroad. Here are four international cities to consider retiring in.</p> <h2>1. Panama City, Panama</h2> <p><img width="605" height="340" src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5123/panama%20city.jpg" alt="" /></p> <p>When considering retiring abroad, most people think that they have to travel halfway across the world to find the perfect spot. Panama City proves that this is not always the case. Located just a short two and half hour flight from Miami, Panama City has nonstop flight options from four other U.S. cities, such as Atlanta, Denver, Houston, and Newark. In fact, it's such a hot destination for retirees that the <a href="https://hub.united.com/en-us/news/company-operations/pages/united-nonstop-service-den-pty.aspx">Denver flight started in December 2014</a> to accommodate more U.S. travelers.</p> <p>Panama allows U.S. retirees with a Social Security pension of at least $1,000 per month to become permanent residents. <a href="http://internationalliving.com/countries/panama/retire/">Benefits from this visa program</a> include 50% off entertainment (such as movies and sporting events), 25% off airline tickets, 15% off hospital bills, and 50% off closing costs for home loans. Once you qualify for Panama's &quot;pensionado&quot; visa program, you never have to renew your status.</p> <h2>2. Cuenca, Ecuador</h2> <p><img width="605" height="340" src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5123/cuenca%20ecuador.jpg" alt="" /></p> <p>Cuenca offers several advantages to U.S. retirees, including the fact that Ecuador's official currency is the U.S. dollar. This means that you don't have to worry about conversion rates and can have an easier time budgeting expenses.</p> <p>Another major plus is Cuenca's low cost living. English-speaking retired couples in Cuenca report living comfortably for <a href="http://internationalliving.com/2014/01/the-best-places-to-retire-2014/">about $1,500 to $1,800 a month</a>. Some publications report the average monthly rent around $300 to $400. Given the small size of the city, you don't need to buy a car. Traveling by taxi is about $2 to $3 per trip. Plus, retirees can <a href="http://www.josephle.com/blog/how-to-get-your-vat-value-added-tax-refund-in-ecuador-for-foreign-tourists">get back the 12% value added tax</a> on qualifying goods and services purchased in Ecuador.</p> <p>The weather is also great. Cuenca is located in the sierra (highlands) region and maintains an average daytime temperature of 75 degrees Fahrenheit. This spring-like climate minimizes your need for air conditioning and heating, effectively reducing your electricity bill.</p> <p>History and culture buffs love that Cuenca is a <a href="http://whc.unesco.org/en/list/863">UNESCO World Heritage Trust site</a>. Surrounded by Spanish colonial architecture, Cuenca offers rich intellectual and artistic experiences year round. Additionally, there are several opportunities for domestic travel. Ecuador has a very diverse geography and offers beaches (such as Salinas and Manglaralto), islands (the famous Galapagos Islands), rainforests, and much more.</p> <h2>3. Malaga, Spain</h2> <p><img width="605" height="340" src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5123/malaga%20spain.jpg" alt="" /></p> <p>The ongoing economic woes of the European Union have made retiring in the Old World suddenly a more feasible prospect for American retirees. Spain stands out from other European nations because it offers affordable real estate that can compete with prices found in Latin America. For example, you can find a one-bedroom apartment in Malaga's historic center <a href="http://internationalliving.com/2014/12/affordable-coastal-living-in-malaga-enjoy-a-high-quality-of-life-for-less-in-one-of-spains-best-value-cities/">starting at $182,000</a>. Or, you can rent a nice place for <a href="http://www.cbsnews.com/media/worlds-10-best-cities-to-retire-on-a-budget/2/">about $950 per month</a>.</p> <p>Besides its attractive real estate market and <a href="http://www.numbeo.com/cost-of-living/city_result.jsp?country=Spain&amp;city=Malaga">low cost of living</a>, Malaga provides retirees a great balance between big city life and laidback charm. The city is chock-full of art installations and exhibitions &mdash; after all, the world-famous artist Picasso was born there. Malaga is also the gateway to the Costa del Sol (literally, the &quot;Coast of the Sun&quot;), which offers several beaches within driving distance.</p> <p>Malaga's cuisine has Spanish, Jewish, and Arabic influences. This eclectic mix makes eating in Malaga a great experience for foodies. On long summer evenings, you can enjoy great food in outdoor restaurants well past midnight.</p> <h2>4. Penang Island, Malaysia</h2> <p><img width="605" height="340" src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5123/penang%20island.jpg" alt="" /></p> <p>If your idea of retiring abroad involves exotic destinations, then Penang Island in Malaysia may be the right choice for you. Just like Panama, Malaysia offers a visa pension program (known as <a href="http://www.mm2h.gov.my">Malaysia My Second Home</a>, renewable every five to 10 years) that offers several benefits, such as help for importing your car and household items for virtually nothing, transporting your pet, and hiring a live-in housekeeper.</p> <p>English is the official second language of Malaysia, facilitating communication. There are plenty of English-speaking locals and the estimated expat population is above 40,000, according to expat organizations such as the <a href="http://www.klamerican.com">American Association of Malaysia</a>.</p> <p>Hospital facilities in Malaysia have such an excellent reputation that &quot;medical tourism&quot; is a driving economic force. Retirees report that many doctors and dentists are trained in the U.S. or UK and that appointments cost as little as $11.</p> <p>Retiring abroad isn't for everyone. It requires a love for adventure and a passion for the lifestyle of your retirement haven. Before making a permanent move overseas, consider spending at least three to six months visiting. If the benefits keep you charmed during that trial period, you can be confident you're making the right decision.</p> <p><em>Are you planning to retire abroad? Where?</em></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/x-exciting-world-cities-you-can-afford-to-retire-in">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-13"> <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/are-you-on-this-list-of-cushiest-retirement-jobs">Are YOU on This List of Cushiest Retirement Jobs?</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-incredible-places-to-retire-abroad-that-anyone-can-afford">5 Incredible Places to Retire Abroad That Anyone Can Afford</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-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-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-reasons-to-fire-your-financial-adviser-soon">5 Reasons to Fire Your Financial Adviser Soon</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-tax-moves-you-need-to-make-right-now">6 Tax Moves You Need to Make Right Now</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Career and Income Retirement retirement retiring abroad travel Fri, 09 Jan 2015 14:00:07 +0000 Damian Davila 1277447 at http://www.wisebread.com 4 Ways to Boost Your 401(k) Returns http://www.wisebread.com/4-ways-to-boost-your-401k-returns <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/4-ways-to-boost-your-401k-returns" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/businessmen-meeting-handshake-200402197-001-small.jpg" alt="businessmen meeting handshake" title="businessmen meeting handshake" class="imagecache imagecache-250w" width="250" height="141" /></a> </div> </div> </div> <p>Employer-sponsored 401(k) plans are powerful retirement vehicles. Beyond empowering you to take the first (and perhaps most important) step toward retirement savings, 401(k) contributions are also made using pre-tax income, meaning they can reduce your current income tax obligation, too. (See also: <a href="http://www.wisebread.com/if-you-want-your-401k-to-grow-stop-doing-these-6-things?ref=seealso">If You Want Your 401(k) to Grow, Stop Doing These 6 Things</a>)</p> <p>But the benefits of 401(k) plans don't end there &mdash; consider these additional ways to power charge your plan for maximum returns.</p> <h2>1. Get a Full Company Match</h2> <p>The most attractive benefit of 401(k)s is that most corporations match some percentage of your contributions, up to 6% of your salary. Let's say you earn $50,000 per year, and your company matches 100% of your contributions, up to 6% of your salary. That's a $3,000 per year match &mdash; or in other words, it's $3,000 in free money. Of course, not all companies offer such generous matches, but consider contributing as much as your company will match in order to maximize this source of free retirement money.</p> <h2>2. Choose Low-Fee Funds</h2> <p>The fees you pay on your investments can seriously erode your earnings. The SEC notes that even a 1% annual fee paid on a $100,000 portfolio will cost you $28,000 over 20 years. Yikes! That's why keeping your fees low &mdash; by choosing passively managed index funds or ETFs, where possible &mdash; is so important. Not only do you get to keep more of your money, but you also get to enjoy the extra growth on that money, thanks to the effect of compounding. All 401(k) plan offerings are required to disclose their fees; aim to select offerings with fees below 1%.</p> <p>Actively managed mutual funds often have the highest fees, so check the fine print.</p> <h2>3. Diversify</h2> <p>401(k) plans offer hassle-free strategic investing, including the ability to diversify your investments in order to help reduce risk. Often, a major investment firm like TD Ameritrade, Vanguard, or T.Rowe Price manages the plan and has worked with your employer to offer a variety of options which enable you to diversify your investments. But it's up to you to make use of them.</p> <p>If you don't feel comfortable creating your own diversified set of selections, consider choosing a broad index fund or Target-Date Fund. The latter selects investments based on your expected retirement date, automatically adjusting for risk and return profiles over time. This enables you to capture many of the benefits of diversification, without actively selecting several funds.</p> <h2>4. Rollover 401(k) Plans When You Change Employers</h2> <p>Most of us change jobs (and even careers) throughout our lives, but frequent job-switching shouldn't prevent you from participating in a 401(k). And if and when you leave a job, you can rollover your plan's assets into your new company's 401(k). If you're moving to a role that doesn't offer a 401(k) (such as a small company, or self-employment), avoid paying huge early withdrawal fees by rolling over to an IRA within 60-days of cashing out.</p> <p>If you're considering job offers, take into account a company's benefits package. It is one of the most important things to consider next to compensation. Seek an employer that offers a 401(k), and preferably one that offers matched contributions. Without a strong retirement plan, you're likely just extending the number of years you'll need to work, so proceed accordingly.</p> <p><em>What are you doing to supercharge your 401(k)?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/qiana-chavaia">Qiana Chavaia</a> of <a href="http://www.wisebread.com/4-ways-to-boost-your-401k-returns">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-14"> <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-ways-to-keep-your-retirement-funds-from-disappearing">7 Ways to Keep Your Retirement Funds From Disappearing</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/choosing-a-retirement-account-whats-available-and-what-s-best-for-you">Choosing a Retirement Account: What&#039;s Available, and What’s Best for You?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-simple-ways-to-boost-an-underperforming-401k">5 Simple Ways to Boost an Underperforming 401(k)</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/this-one-thing-will-get-you-to-1-million-tax-free">This One Thing Will Get You to $1 Million (Tax-Free!)</a></span> </div> </li> <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/book-review-cash-rich-retirement">Book review: Cash-Rich Retirement</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401(k) investing retirement planning Thu, 04 Dec 2014 15:00:21 +0000 Qiana Chavaia 1263266 at http://www.wisebread.com Don't Choose These 10 Cities If You Want to Retire Comfortably http://www.wisebread.com/dont-choose-these-10-cities-if-you-want-to-retire-comfortably <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/dont-choose-these-10-cities-if-you-want-to-retire-comfortably" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/washington dc.jpg" alt="washington dc" title="washington dc" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Retirement is a time to enjoy hobbies, move a little slower in daily life, travel, and after decades of hard work, just rest. All of which is tough if you pick the wrong retirement city. (See also: <a href="http://www.wisebread.com/10-unexpected-things-you-should-consider-when-picking-where-you-retire?ref=seealso">10 Unexpected Things You Should Consider When Picking Where You Retire</a>)</p> <p>When looking at locations, you'll generally want to weigh six categories: cost of living, housing costs, taxes, the health care system, activities for seniors, and, yes, the weather. And with those in mind, you'll likely want to steer clear of these 10 cities that fall short in one or two or more of those categories.</p> <h2>1. San Francisco, CA</h2> <p><img width="605" height="340" alt="" src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5123/golden%20gate%20bridge.jpg" /></p> <p>The weather is very mild &mdash; it doesn't get hot in the summer and winters are usually rainy. However, the cost of housing in this area is so high that most retirees are not going to be able to find it within their budget. Retirement income is taxed heavily in the state of California, unlike many other states. The cost of living is also very high. In fact, Kiplinger ranked <a href="http://www.kiplinger.com/slideshow/retirement/T006-S001-worst-states-for-retirement/index.html">California as the worst state to retire</a>.</p> <h2>2. Honolulu, HI</h2> <p><img width="605" height="340" alt="" src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5123/honolulu.jpg" /></p> <p>While the location is beautiful and the weather gorgeous year round, Honolulu will require you to have quite a large nest egg. According to a recent <a href="http://wallethub.com/edu/best-places-to-retire/6165/">study done by WalletHub</a>, cost of living in the city are among the highest in the country. It's also very expensive to travel to and from Hawaii, making family gatherings more difficult.</p> <h2>3. Oklahoma City, OK</h2> <p><img width="605" height="340" alt="" src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5123/oklahoma%20city.jpg" /></p> <p>Healthcare is a concern for all seniors, and it will be a real concern if you retire to Oklahoma, which ranks among one of <a href="http://nhqrnet.ahrq.gov/inhqrdr/Oklahoma/snapshot/summary/All_Measures/All_Topics">the worst in the country for health care</a> (trailed only by West Virginia). Crime is also a problem here, with the city <a href="http://os.cqpress.com/citycrime/2013/2014_CityCrimeRankingsbyPopulation.pdf">ranking 7th in the nation</a> for crime among large cities.</p> <h2>4. Louisville, KY</h2> <p><img width="605" height="340" alt="" src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5123/louisville.jpg" /></p> <p>The low cost of living, modest housing costs, and picturesque mountains may make it appear to be a good choice for retirement, but Louisville has been named as the &quot;<a href="http://www.aafa.org/pdfs/FINAL_public_LIST_Spring_2014.pdf">worst place for allergy sufferers to live</a>,&quot; making it an easy destination to avoid by retirees with respiratory or other health issues.</p> <h2>5. Bridgeport, CT</h2> <p><img width="605" height="340" alt="" src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5123/bridgeport.jpg" /></p> <p>High taxes are a major concern for retirees, and some states tax retirement income much more than other states. (Florida's low rate is what makes it one of the most desirable states for retirees, for example.) But Connecticut is one of those states that taxes both Social Security and pension income. Bridgeport, more specifically, has expensive housing costs and even more expensive health care costs. Assisted living facilities in this area of the country can charge over over $400 a day &mdash; <a href="https://www.genworth.com/cost-of-care/landing.html">almost twice the national average</a> for long-term care, which will deplete your nest egg very quickly should you require assistance at some point.</p> <h2>6. New York, NY</h2> <p><img width="605" height="340" alt="" src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5123/new%20york%20city.jpg" /></p> <p>The Big Apple requires a big budget, as real estate is pricey and hard to afford on a fixed income. By taking your current retirement budget and adjusting it to the high cost of living for any of the more popular parts of NYC <a href="http://money.cnn.com/calculator/pf/cost-of-living/">via this calculator</a>, you can see that the real estate isn't the only thing that will cost you. Even retirees who own their own homes will feel the pinch of higher utility bills and transportation fees.</p> <h2>7. Chicago, IL</h2> <p><img width="605" height="340" alt="" src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5123/chicago.jpg" /></p> <p>Illinois as a whole gets a low approval rating from its own residents, with one in four saying <a href="http://www.gallup.com/poll/168653/montanans-alaskans-say-states-among-top-places-live.aspx">the state is the worst place to live</a>. Why? It could possibly be because of the high income tax hikes and lower bond rates, both signs of a troubled economy. Add in the fact that many Chicago residents have decided to leave the city altogether, making Chi-town the <a href="http://www.forbes.com/pictures/mli45lmhg/4-chicago-ill/">6th most-abandoned large city</a> in the U.S. and it's a less appealing option to live out the rest of your years.</p> <h2>8. Philadelphia, PA</h2> <p><img width="605" height="340" alt="" src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5123/philadelphia.jpg" /></p> <p>While it's not as expensive to live in as New York City, there are some issues that may keep the 65 and older crowd away from the city of brotherly love. A higher-than-average sales tax and poor air quality may be of concern to retirees. Throw in the <a href="http://os.cqpress.com/citycrime/2013/2014_CityCrimeRankingsbyPopulation.pdf">high rate of crime</a> (it ranks 5th nationwide), and you have a few good reasons to shop around for your retirement abode.</p> <h2>9. Washington, D.C.</h2> <p><img width="605" height="340" alt="" src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5123/washington%20dc.jpg" /></p> <p>In addition to brutally cold winters, economics continues to be a problem for our nation's capital, with the numbers of those under the <a href="http://www.dcfpi.org/poverty-rates-remain-high-for-some-groups-of-dc-residents">poverty line increasing</a> &mdash; despite a rise in median income. With seniors living on a fixed income, the high cost of real estate can also cause concern.</p> <h2>10. Providence, RI</h2> <p><img width="605" height="340" alt="" src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5123/providence.jpg" /></p> <p>Across numerous rating scales out there, Providence almost always appears at the top of the worst lists. This is due to a high cost of living, high tax rates, and one of the highest unemployment rates in the nation (currently at a rate of 10% for the city and <a href="http://www.providencejournal.com/business/content/20141124-r.i.-unemployment-rate-again-3rd-worst-in-nation.ece">3rd highest</a> for the entire state.) If you are hoping to supplement your income or kill some boredom during your retired years, finding a part-time job in Providence may be impossible.</p> <p><em>Where are you planning to retire?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/linsey-knerl">Linsey Knerl</a> of <a href="http://www.wisebread.com/dont-choose-these-10-cities-if-you-want-to-retire-comfortably">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-15"> <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/book-review-work-less-live-more">Book review: Work Less, Live More</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/x-exciting-world-cities-you-can-afford-to-retire-in">4 Exciting World Cities You Can Afford to Retire In</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/are-you-on-this-list-of-cushiest-retirement-jobs">Are YOU on This List of Cushiest Retirement Jobs?</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-much-money-should-a-ceo-make">How much money should a CEO make?</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/retirement-on-the-installment-plan">Retirement on the installment plan</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Career and Income Retirement cost of living places to retire retire retirement cities where to live Thu, 04 Dec 2014 11:00:07 +0000 Linsey Knerl 1263679 at http://www.wisebread.com