Retirement http://www.wisebread.com/taxonomy/term/417/all en-US 5 Questions to Ask Before Buying a Second Home in Retirement http://www.wisebread.com/5-questions-to-ask-before-buying-a-second-home-in-retirement <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-questions-to-ask-before-buying-a-second-home-in-retirement" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/couple_house_retirement_21246021.jpg" alt="Couple asking questions before buying second retirement home" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>It's nice image: You, your children, and your grandchildren gathering every summer at the lake house you bought after you retired from the workforce. Or maybe you instead picture these same children bringing their grandchildren for long weekends at the downtown city condo you purchased immediately after heading into retirement.</p> <p><a href="http://www.wisebread.com/how-to-retire-rich" target="_blank">Buying a second home after retirement</a> can be a reward for years of hard work. It might also be a good investment if you buy the right property; real estate, after all, has historically increased in value.</p> <p>But buying a second home in your retirement years can also be a financial misstep. These potential pitfalls are why you need to ask five key questions before you invest in that second home after you retire.</p> <h2>1. How Will You Pay for It?</h2> <p>Buying a second home is fairly simple if you plan to use cash from your savings. You still have to be careful, though, to make sure that such a big expenditure won't eventually make it more of a struggle to meet your other retirement goals. It might not be easy to take that long-awaited cruise if you've spent too much of your savings on a second home.</p> <p>If you need to finance the purchase of a second home with a mortgage, you might face an even bigger challenge. Under federal law, lenders can't reject you for a mortgage loan because of your age. They can, though, reject your application if they think you don't have enough income to afford your monthly mortgage payments.</p> <p>Lenders rely partly on your debt-to-income ratio when making mortgage decisions. Lenders want your total monthly debts, including your new mortgage payment, to equal no more than 43% of your gross monthly income. Income, of course, isn't just money you receive from a salary. You can also count Social Security payments, pension payments, monthly rent checks, money from legal settlements, and any other recurring source of monthly income. But if your income is so low that your debt-to-income ratio sails over that 43% mark, you'll struggle to get the mortgage you need to buy a second home.</p> <h2>2. Can You Afford It?</h2> <p>This, of course, is the big question: Even if you can buy a second home, can you afford the monthly expenses that go with it now that you can no longer rely on your regular paycheck?</p> <p>If you are financing the second home with a mortgage, can you afford to add those monthly payments to your existing expenses? And even if you are not taking out a mortgage, you'll have to face the normal expenses associated with owning a home: Furnaces go out, water heaters leak, and utility bills add up. If you buy a condo as a second home, are you okay with paying association dues each month?</p> <p>In short, can you afford the financial burden of owning that second home?</p> <h2>3. Who Will Maintain It?</h2> <p>Homes require regular maintenance. Someone has to mow the lawn, shovel the walks, sweep the floors, and replace fading paint jobs. Is this something you are willing to do, even as you get older? You might think your children will be happy to spend a few hours pulling weeds and mowing the lawn. But are they really okay with that?</p> <p>You might need to hire a service to handle the regular maintenance of your second home. That will ease your burden. But these companies don't come cheap. Can you afford the additional expense of hiring someone to maintain your second home?</p> <h2>4. How Often Will You Use It?</h2> <p>You might dream of spending months at your vacation home surrounded by visiting family members. But that dream might not be realistic. Your children and grandchildren have lives of their own. They might visit far less than you expect.</p> <p>And what about you? You might think now that you'd like to spend every summer at the lake house in that quaint, touristy town. But after three or four summers, you might get tired of that restaurant you've eaten at every visit or you might no longer have the appetite for all those fudge shops and antique stores. Yes, you might get bored with your second home, too.</p> <p>Instead of vacationing in the same spot, you might instead want to travel to new places each year. If so, a permanent second home might not be the best choice.</p> <h2>5. What Happens After You Die?</h2> <p>We don't like to think about dying. But when you buy a second home in your retirement, you need to consider it. What will happen to that second home after you pass on?</p> <p>You might want to leave it to one of your children. You'll have to decide, though, who gets it, without causing strife among them. What if none of your children want the home? They'll then have to go through the hassle of selling the property after you die. You'll need to determine before your death, just how the proceeds of that sale &mdash; if there are proceeds &mdash; will be divvied up.</p> <p><em>Have you considered buying a second home?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/5-questions-to-ask-before-buying-a-second-home-in-retirement">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/is-it-safe-to-re-finance-your-home-close-to-retirement">Is it Safe to Re-Finance Your Home Close to Retirement?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/frayed-relationships-damaged-credit-and-costly-additions-what-a-multi-generational-home-might-cost-y">Frayed Relationships, Damaged Credit, and Costly Additions — What a Multi-Generational Home Might Cost 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/the-7-most-important-financial-moments-of-your-life">The 7 Most Important Financial Moments of Your Life</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-reasons-you-shouldnt-buy-a-house-yet">5 Reasons You Shouldn&#039;t Buy a House (Yet)</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-homebuying-questions-youre-embarrassed-to-ask">5 Homebuying Questions You&#039;re Embarrassed to Ask</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing Retirement condos family maintenance mortgages second homes vacation homes Fri, 24 Jun 2016 09:00:03 +0000 Dan Rafter 1737542 at http://www.wisebread.com Using Your Roth IRA as an Emergency Fund — Ever a Good Idea? http://www.wisebread.com/using-your-roth-ira-as-an-emergency-fund-ever-a-good-idea <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/using-your-roth-ira-as-an-emergency-fund-ever-a-good-idea" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_piggy_bank_73354919.jpg" alt="Woman using Roth IRA as emergency fund" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>You know you need an emergency fund, that pool of savings that you can dip into to cover the costs of replacing everything from a burst water heater to your car's blown transmission. But does it ever make sense to use a Roth IRA as that emergency fund?</p> <p>The short answer? It might. If you're careful about your withdrawals.</p> <p>You usually think about Roth IRAs as retirement vehicles. But with a Roth IRA, you can also withdraw from your <em>contributions </em>at any time without penalty, even if you are younger than 59 &frac12;. That's because you've already paid taxes on your contributions.</p> <h2>No Penalties From Contribution Withdrawals</h2> <p>Because of this quirk, a <a href="http://www.wisebread.com/4-reasons-why-a-roth-ira-may-be-better-than-your-401k" target="_blank">Roth IRA can work as an emergency fund</a> <em>and</em> retirement fund at the same time. You make your yearly deposits &mdash; for 2016, you can contribute a maximum of $5,500 every year into a Roth IRA (unless you are 50 or older, in which case you can contribute a maximum of $6,500 a year) &mdash; and watch that money grow as you near retirement. But if an expensive emergency comes up, you can withdraw the funds you need, as long as what you are withdrawing is coming from the money you contributed to your Roth IRA, and not from the dollars that those contributions have earned.</p> <h2>You'll Pay for Earnings Withdrawals</h2> <p>In other words, withdrawing your contributions is never penalized. Withdrawing from your Roth IRA's earnings, though, will leave you with a penalty and a tax hit. If you withdraw the money that your Roth IRA has earned before you hit the age of 59 &frac12; &mdash; aside from a few special circumstances &mdash; you'll not only pay taxes on those dollars, you'll also have to pay a penalty of 10% of whatever you withdraw.</p> <p>Say you withdraw $2,000 worth of earnings on your Roth IRA before you turn 59 &frac12;. Not only will you have to pay taxes on that money, you'll also have to pay a penalty of $200.</p> <p>Fortunately, it's not easy to withdraw your earnings too early. You'll have to request the withdrawal from your brokerage, mutual fund, or bank. These financial institutions will know if your withdrawal request is high enough to cut into your earnings. If this does happen, it's best to find an alternative source of funds, unless you are not bothered by the idea of paying extra taxes or an additional penalty.</p> <h2>The Annual Cap Means You Can't Pay It Back</h2> <p>There is another disadvantage to using a Roth IRA as an emergency fund. Say you withdraw $2,500 to buy a new furnace. You can still only contribute your maximum to your Roth IRA each year.</p> <p>If you can only contribute $5,500 each year, you can't make up for that $2,500 withdrawal by contributing $7,000 instead. This could slow the pace of your retirement savings.</p> <p>You'll also need to be careful with your investments if you plan on using your Roth IRA as an emergency fund. You should place your money in safer, more conservative investment vehicles such as CDs and bonds. That way, the odds are greater that more of your money will be available in case of a financial emergency.</p> <p>Whether you use a Roth IRA, a traditional savings account, or some other savings vehicle as your emergency fund, one factor doesn't change: You need to build and maintain that fund. How much money you need in your emergency fund varies, but most financial experts recommend that you have at least six months of daily living expenses saved up. More, of course, is even better.</p> <p><em>Have you ever pulled money from a Roth IRA to cover an emergency? Would You?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/using-your-roth-ira-as-an-emergency-fund-ever-a-good-idea">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/where-to-turn-for-help-when-you-dont-have-an-emergency-fund">Where to Turn for Help When You Don&#039;t Have an Emergency Fund</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-opportunity-funds-are-the-new-emergency-funds">Why &quot;Opportunity&quot; Funds Are the New Emergency Funds</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-emergency-fund-myths-you-should-stop-believing">6 Emergency Fund Myths You Should Stop Believing</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-ways-to-strengthen-your-finances-before-retirement">5 Ways to Strengthen Your Finances Before 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/dont-despair-over-small-retirement-savings">Don&#039;t Despair Over Small Retirement Savings</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Retirement borrowing contributions emergency funds Roth IRA savings withdrawals Thu, 16 Jun 2016 09:30:21 +0000 Dan Rafter 1731947 at http://www.wisebread.com 5 Ways to Handle a Forced Early Retirement http://www.wisebread.com/5-ways-to-handle-a-forced-early-retirement <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-ways-to-handle-a-forced-early-retirement" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_taking_notes_73540307.jpg" alt="Woman finding ways to handle early retirement" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>You had a plan: You would work until 67, contributing the maximum amount of each paycheck into your company's 401K plan. You would then <a href="http://www.wisebread.com/how-to-plan-for-retirement-when-you-re-ready-to-retire">enjoy a retirement</a> of traveling the world and spending time with your grandchildren.</p> <p>But then your company changed your plans. They let you go you at age 55 or 60. Finding a new job at this age isn't easy. According to an AARP study released in 2015, 45% of job hunters aged 55 or older were members of the long-term unemployed, those who were out of work for 27 weeks or longer. And when these older job seekers did find new jobs, they tended to earn less money. The same AARP survey found that almost 48% of people 55 or older were earning less on their new jobs than they did at their old ones.</p> <p>Those are intimidating numbers. But they don't mean that a forced early exit from the workforce will dash your retirement dreams. Here are five steps that you can take after you've been laid off or fired to make your earlier-than-planned retirement a successful one.</p> <h2>1. Assess Your Financial Reality</h2> <p>It's easy to panic when you've lost a job. But your financial situation might not be as dire as you think. To find out, it's time to perform a quick financial assessment.</p> <p>First, list your monthly expenses. These might be lower if you are no longer paying a mortgage each month. Then list the income you have coming into your household. Maybe your spouse's income means that you can still save enough money each month for a happy retirement. Maybe you'll need an extra income boost from somewhere to still hit those goals.</p> <p>Depending on how close you are to your official retirement age, you might decide to start receiving your monthly Social Security payments. You'll get less each month if you haven't reached full retirement age, but if you can't hold off on the extra monthly income, receiving your benefits a few years early might be a sound move.</p> <p>If you were laid off or fired, you probably qualify, too, for unemployment insurance. Make sure to take advantage of this. That extra monthly income could help you stay on track for your retirement goals.</p> <h2>2. Get Realistic About Your Retirement Goals</h2> <p>You might have to scale back your retirement goals should you be forced to exit the workplace earlier than planned. Maybe you planned to take a long trip every year. If you're forced out of work five years early, you might have to scale that back to just three big trips spread out over your entire retirement.</p> <p>This doesn't mean that your retirement is ruined. But you might have to refocus. Maybe instead of joining that high-priced country club, you'll be taking your golf clubs to public courses throughout your city.</p> <h2>3. Make Sure You Have a Plan for Insurance</h2> <p>You'll need health insurance even after you lose your job. You might qualify for Medicare or Medicaid, though you might not qualify for these government programs depending on your age and income levels.</p> <p>If you need insurance not offered through the government, you can search for a low-cost plan through the insurance exchange created under the Affordable Care Act.</p> <p>Letting your health insurance lapse can be a costly mistake.</p> <h2>4. Find Part-Time Work to Fill in the Income Gaps</h2> <p>If you need some extra income each month, consider taking a part-time job. This work, even if it doesn't come with the benefits of a traditional full-time job, could provide you with the extra bit of cash that will keep your retirement dreams alive.</p> <p>Depending on your field, you might find a part-time job as a consultant. But even if you can't, you can still find enjoyment, and some extra financial security, by taking on a position in a new field.</p> <h2>5. Meet With a Professional</h2> <p>Retirement planning is complicated when everything goes according to plan. When those plans are suddenly changed? It's even more of a challenge to make sure that you have enough dollars saved for your after-work years.</p> <p>That's why it's important to meet with a financial adviser who can help you determine what financial steps you need to take now. Depending on your income and community, you might even qualify for free financial advice.</p> <p>A financial planner can help you create a new budget and a new financial plan that fits with your new money reality.</p> <p><em>Have you faced early retirement? What steps have you taken?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/5-ways-to-handle-a-forced-early-retirement">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-moves-that-guarantee-a-great-retirement">4 Moves That Guarantee a Great Retirement</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-signs-you-arent-saving-enough-for-retirement">10 Signs You Aren&#039;t Saving Enough for Retirement</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/which-retirement-account-is-right-for-you">Which Retirement Account Is Right for You?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/stop-making-these-10-bogus-retirement-savings-excuses">Stop Making These 10 Bogus Retirement Savings Excuses</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-penalty-free-ways-to-withdraw-money-from-your-retirement-account">7 Penalty-Free Ways to Withdraw Money From Your Retirement Account</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401k early retirement extra income forced retirement insurance job loss medicaid medicare part-time jobs unemployed Tue, 07 Jun 2016 09:30:33 +0000 Dan Rafter 1725699 at http://www.wisebread.com 10 Signs You Aren't Saving Enough for Retirement http://www.wisebread.com/10-signs-you-arent-saving-enough-for-retirement <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/10-signs-you-arent-saving-enough-for-retirement" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/man_frown_broke_000026428663.jpg" alt="Man learning signs he&#039;s not saving enough for retirement" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Are you concerned that you aren't saving enough for retirement? Well, you're not alone. In fact, more than one third of Americans haven't started investing for retirement yet. About 75% of Americans over the age of 40 are also behind on their retirement savings, so it's time to break the statistic. We've come up with some common warning signs that you may not be saving enough and need to increase what you're investing.</p> <h2>1. You Don't Have Specific Goals in Mind</h2> <p>First, you need to figure out what the minimum is that you'll need to retire. This will allow you to properly plan your retirement and ensure you are meeting your benchmark goals. Work on determining a target retirement age and goal amount so that you can develop a savings plan on your own or with a skilled professional.</p> <p>It's also important that you know what you'll get from Social Security so that you can plan what you need to save above that. Lastly, work on an estimated monthly financial plan so that you have some idea what you'll be spending on monthly bills and debt payments.</p> <h2>2. You Don't Know How Much to Save</h2> <p>Most professionals recommend saving at least 10% of your gross salary, if you've been saving since your 20s. However, if you don't start saving until your 30s, Schwab recommends upping that contribution to 15%&ndash;25%. If you start in your 40s or later, you would want to save 35% of your income, which is a rather hefty amount. This is all thanks to the power of compounding interest, so it's never too early to start saving.</p> <h2>3. You Aren't Matching Your Employer's Contribution</h2> <p>If your employer is matching your 401K contribution, that is basically free money invested in your future. That's why it's crucial to at least match your employer's contribution, so that they can help you prepare for your retirement as much as possible.</p> <h2>4. You've Borrowed From Your 401K</h2> <p>Borrowing against your 401K is never a good idea. It may help in the short-run, but in the long-run, it can affect your savings goals and financial health during retirement. You would also need to save more aggressively going forward just to catch up with your original savings goals.</p> <h2>5. You Aren't Prioritizing Your Future</h2> <p>One of the first things you should always think about is building savings for yourself so you have the money you need in case of an emergency or unexpected expense. Short of that savings account, you shouldn't be prioritizing anything over your retirement savings. Your retirement and your future should be your first priority, even over your children's education, because nobody will be saving for your retirement except for you.</p> <h2>6. You're Only Investing in a 401K</h2> <p>Contributing to a 401K is a great start to your retirement savings, but it usually isn't enough. Your best bet is to diversify your portfolio, investing in both a 401K and an IRA or Roth IRA. This will ensure you are well prepared for your golden years. (See also: <a href="http://www.wisebread.com/which-retirement-account-is-right-for-you?ref=seealso">Which Retirement Account Is Right for You?</a>)</p> <h2>7. You Aren't Accounting for Inflation</h2> <p>On average, inflation rates linger around 3%, which means that your expenses will double in less than 25 years. You will need to account for this, as it's one of the biggest retirement planning mistakes anyone makes.</p> <h2>8. You Haven't Sought Advice</h2> <p>You may not necessarily need a financial planner, but that doesn't mean that you shouldn't seek advice on your retirement portfolio from time to time. For instance, have you diversified properly? Are you investing in the right types of investment products? Have you adjusted your portfolio to match the appropriate level of risk and reward for your age range and lifestyle? These are some of the many questions you need to ask yourself (and/or a professional) to ensure you are saving and planning correctly. (See also: <a href="http://www.wisebread.com/do-you-need-a-financial-planner?ref=seealso">Do You Need a Financial Planner?</a>)</p> <h2>9. You Haven't Started Saving Yet</h2> <p>The sooner you start investing in your future, the more you'll have by retirement, thanks to compound interest. This also means that the sooner you start saving, the less you'll need to save every month to have enough in your retirement years. (See also: <a href="http://www.wisebread.com/stop-making-these-10-bogus-retirement-savings-excuses?ref=seealso">Stop Making These 10 Bogus Retirement Savings Excuses</a>)</p> <h2>10. You're Worried About Retirement</h2> <p>Possibly the most obvious sign that you aren't saving enough is that you feel very nervous about retirement. If you don't think you're saving enough, then you probably aren't.</p> <p><em>Do you know of other signs that a person isn't saving enough for retirement? Please share your thoughts in the comments!</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/andrea-cannon">Andrea Cannon</a> of <a href="http://www.wisebread.com/10-signs-you-arent-saving-enough-for-retirement">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-moves-that-guarantee-a-great-retirement">4 Moves That Guarantee a Great Retirement</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/stop-making-these-10-bogus-retirement-savings-excuses">Stop Making These 10 Bogus Retirement Savings Excuses</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-warning-signs-youre-sabotaging-your-nest-egg">6 Warning Signs You&#039;re Sabotaging Your Nest Egg</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/one-smart-thing-you-can-do-for-your-retirement-today">One Smart Thing You Can Do for Your Retirement Today</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-penalty-free-ways-to-withdraw-money-from-your-retirement-account">7 Penalty-Free Ways to Withdraw Money From Your Retirement Account</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401k compound interest goals golden years IRA nest egg not saving enough Thu, 02 Jun 2016 10:30:03 +0000 Andrea Cannon 1721735 at http://www.wisebread.com 4 Moves That Guarantee a Great Retirement http://www.wisebread.com/4-moves-that-guarantee-a-great-retirement <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/4-moves-that-guarantee-a-great-retirement" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/couple_sun_roadtrip_000087905209.jpg" alt="Couple making moves to guarantee a great retirement" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Times have changed. Retirement is no exception.</p> <p>Back in 1998, 60.5% of Americans said they were <a href="https://www.ebri.org/pdf/PR1160.Ret-Sat.26Apr16.pdf">very satisfied with their retirement</a> in a study conducted by the Employee Benefit Research Institute. Fast forward 14 years later, that percentage dropped to 48.6%. Even worse, the percentage of Americans not satisfied at all with their retirement situation went up from 7.9% to 10.5%.</p> <p>But you can avoid that fate. Here are four ways to turn this period into the best time of your life.</p> <h2>1. Semi-Retire</h2> <p>An old retirement adage goes, &quot;When you retire, think and act as if you were still working; when you're still working, think and act a bit as if you were already retired.&quot; There are three good reasons why this is true.</p> <p>First, putting off retirement may help stave off certain maladies of aging, such as Alzheimer's disease. According to French researchers, there is a correlation between higher retirement age and <a href="http://health.usnews.com/health-news/news/articles/2013/07/15/putting-off-retirement-may-help-stave-off-alzheimers">lower dementia risk</a>.</p> <p>Second, later retirement allows you to make the most out of your nest egg:</p> <ul> <li>While you can start receiving Social Security retirement benefits at age 62, you can wait until full retirement age to receive <a href="https://www.ssa.gov/planners/retire/delayret.html">delayed retirement credits</a>.<br /> &nbsp;</li> <li>Roll over a former employer's 401K plan after you turn 70 1/2 into another plan with a current employer, and you aren't required to take required minimum distributions (RMDs) starting the second year after the rollover.<br /> &nbsp;</li> <li>By continuing to work part-time, you can continue to contribute to a Roth IRA (up to $6,500 in 2016) after you reach <a href="http://www.irs.gov/retirement-plans/roth-iras">age 70 1/2</a>.</li> </ul> <p>Third, 83% of U.S. retirees cited &quot;<a href="https://www.ebri.org/pdf/briefspdf/EBRI_IB_397_Mar14.RCS.pdf">enjoying working</a>&quot; as a major reason to work for pay after retirement. Among current workers who expect to work in retirement, 79% of them cite &quot;wanting to stay active and involved&quot; as a major reason to work for pay in retirement.</p> <h2>2. Take Advantage of Catch-Up Contributions</h2> <p>Starting age 50, you can make additional contributions on top of the regular limit to eligible plans.</p> <ul> <li>Catch-up contributions of <a href="https://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics-Catch-Up-Contributions">up to $6,000</a>: 401K (other than a SIMPLE 401K), 403(b), SARSEP, and governmental 457(b).<br /> &nbsp;</li> <li>Catch-up contributions of up to $3,000: SIMPLE IRA and SIMPLE 401K.<br /> &nbsp;</li> <li>Catch-up contributions of up to $1,000: Traditional or Roth IRA.</li> </ul> <p>Let's take a look at the power of catch-up contributions: Let's imagine that you have a 401K and you make $6,000 in catch-up contributions for 15 years. Here is how much more you would have at the end of 15 years, assuming different rates of return, in your 401K:</p> <ul> <li>3% return compounded annually: $113,398.69</li> <li>4% return compounded annually: $122,728.99</li> <li>5% return compounded annually: $132,951.76</li> <li>6% return compounded annually: $144,154.23</li> <li>7% return compounded annually: $156,431.90</li> </ul> <h2>3. Research Adequate Health Coverage and Disability Insurance</h2> <p>Despite the best-laid plans, chances are circumstances will require you to make some changes along the way. Nearly one out of two Americans reported retiring earlier than expected. While some individuals have good reasons, such as accumulating sufficient financial resources or wanting to do something else, many had negative reasons. Of those that retire early, 61% of cited health reasons or disabilities, and 18% cited the need to care for a spouse or family member.</p> <p>This is why getting the right health coverage and disability insurance now for your spouse and yourself is a key way to make retirement enjoyable. Plan ahead so that you don't become part of the 24% of Americans who aren't confident about paying for medical expenses in retirement. Disability insurance is essential for the main breadwinner of the household. (See also: <a href="http://www.wisebread.com/make-these-7-money-moves-now-or-youll-regret-it-in-20-years?ref=seealso">Make These 7 Money Moves Now or You'll Regret It in 20 Years</a>)</p> <p>If you have to retire early due to health problems, the Social Security Administration suggests applying for <a href="http://www.ssa.gov/pubs/EN-05-10035.pdf">Social Security disability benefits</a>, which are full, unreduced retirement benefits.</p> <h2>4. Consider Retiring Abroad</h2> <p>According to a study from a Transamerica Center for Retirement Studies, 71% of Americans say travel has <a href="http://www.transamericacenter.org/docs/default-source/resources/travel-survey/tcrs2013_op_travel_and_aging_executive_summary.pdf">helped them enjoy retired life</a>. That's why one way to turn retirement into the best time of your life is to move abroad. Additionally, living abroad can enable you to reduce your living expenses during retirement, without forsaking quality of life. Several cities around the world offer visa pension programs, such as Malaysia's <em>My Second Home</em> and Panama's &quot;pensionado&quot; program, that offer U.S. retirees generous tax breaks and high-quality medical services at reduced costs. Of course, beautiful locales and ideal weather conditions don't hurt either! (See also: <a href="http://www.wisebread.com/x-exciting-world-cities-you-can-afford-to-retire-in?ref=seealso">4 Exciting World Cities You Can Afford to Retire In</a>)</p> <p><em>How do you plan turn retirement into the best time of your life?</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-moves-that-guarantee-a-great-retirement">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-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/10-signs-you-arent-saving-enough-for-retirement">10 Signs You Aren&#039;t Saving Enough for Retirement</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-warning-signs-youre-sabotaging-your-nest-egg">6 Warning Signs You&#039;re Sabotaging Your Nest Egg</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-ways-to-handle-a-forced-early-retirement">5 Ways to Handle a Forced Early 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/stop-making-these-10-bogus-retirement-savings-excuses">Stop Making These 10 Bogus Retirement Savings Excuses</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-penalty-free-ways-to-withdraw-money-from-your-retirement-account">7 Penalty-Free Ways to Withdraw Money From Your Retirement Account</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401k disability golden years healthcare insurance IRA moving abroad nest egg work in retirement Fri, 27 May 2016 10:00:12 +0000 Damian Davila 1717321 at http://www.wisebread.com How to Retire Rich http://www.wisebread.com/how-to-retire-rich <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-retire-rich" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/rich_man_money_000026485996.jpg" alt="Man learning how to retire rich" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Here at Wise Bread, we've told you a lot about how to <a href="http://www.wisebread.com/one-smart-thing-you-can-do-for-your-retirement-today" target="_blank">grow a retirement fund</a> that will allow you to live comfortably after you stop working. Usually, this means saving enough to be able to maintain your current lifestyle and prepare for your long-term care.</p> <p>But what if you want to really live it up in retirement? How can you accumulate enough wealth to be considered among the truly rich? There's no magic bean to help you get super-wealthy. But smart and disciplined investors <em>can </em>amass retirement accounts in the tens of millions of dollars, simply by earning a bit more, investing more aggressively, and for a longer period of time.</p> <p>Let's take a look at these strategies for building serious wealth in retirement.</p> <h2>Earn More</h2> <p>While it's certainly possible to build a very nice retirement fund even if you earn a modest salary, the path to top-tier wealth usually comes from having a high income. So get to work!</p> <p>Those with very large retirement accounts often have the ability to max out their 401K plans each year ($18,000 annually) and likely a Roth IRA, as well ($5,500 per year). Earning more money also helps you avoid debt, and it expands your ability to move into other great investments, such as real estate. Even an extra few thousand dollars a year will give you the ability to invest more aggressively in order to accumulate more over the long haul.</p> <p>&quot;I think people would be surprised to learn how hard the 1% work,&quot; said David Schneider of Schneider Wealth Strategies in New York. &quot;You've got to work long and you've got to work hard.&quot;</p> <h2>Start Investing Early and Stay in the Game</h2> <p>One of the most important tools for building wealth is time. We've written a lot about the power of compound interest, and time is arguably more important than the rate of investment return and contributions.</p> <p>Let's say you start with $50,000 and contribute another $5,500 each year. Assuming a 7% annual return, you'll have $280,000 in 20 years. In 30 years, you'll have $631,000. In 40 years, you'll have $1.3 million. In 50 years, it's $2.6 million. So you can imagine how important it is to begin saving for retirement right when you begin earning money.</p> <h2>Own Your Own Company</h2> <p>It's nice to own shares of companies and see their value grow over time. But if you want to get super rich, you will want to own the whole business. If you work for a company and take a salary, there's a ceiling to how much you can earn and invest.</p> <p>Most of the wealthiest people on Earth are people who started their own companies and watched them grow into huge enterprises.</p> <p>&quot;By building something, that's where you see the biggest successes,&quot; said Andrew Rafal of Bayntree Wealth Advisors in Scottsdale, AZ.</p> <h2>Don't Do Stupid Stuff</h2> <p>While all investing comes with risk, there are certain things that every person should avoid if they plan to retire rich. Financial advisers say it's imperative that investors avoid major mistakes that wipe out large portions of their savings. This means staying away from more complicated and risky things like options, or trading on margin (which Rafal called &quot;a recipe for disaster&quot;).</p> <p>Don't place all of your money with one investment, and stay away from get-rich-quick schemes or products that claim to be able to time the market.</p> <p>&quot;You have to sort of put a garbage detector on,&quot; Schneider said.</p> <h2>Invest in Small Cap and Value Stocks</h2> <p>Conventional investment wisdom suggests that people invest in a mix of equities from varying industries, often weighted toward stable, large-cap stocks. This is good advice, but those who are willing to take on a little more risk may be able to supercharge their returns.</p> <p>Investing more heavily in smaller companies and looking for undervalued stocks will help lead to longer returns over time, financial advisers said.</p> <p>Schneider noted that between 1972 and 2015, small cap value stocks generated an average return of 12.9%, compared to 10% for large cap. That 3% gap may not seem like much, but if you started with $10,000, it was the difference between $600,000 and nearly $2 million.</p> <p>&quot;Over time, smaller companies do better than large stocks, and if you combine that with value stocks, you get more bang for your buck,&quot; Schneider said.</p> <p>He acknowledged that there is more volatility with small cap stocks, but said the higher returns were &quot;compensation for taking the bigger risk.&quot;</p> <h2>Live Within Your Means</h2> <p>In order to retire rich, you will need to live modestly in your younger years. Maxing out retirement accounts requires the discipline to put money aside rather than spend it. It means avoiding debt, especially high-interest debt from credit cards.</p> <p>Financial advisers said that some of their best and most successful clients were those that lived humble, non-flashy lives, but ended up with massive retirement funds because of their disciplined spending habits.</p> <h2>Be Born Into It</h2> <p>There are plenty of stories of wealthy people who started with nothing and grew their fortune on their own. But the truth is that many of the world's ultra-rich started off with a certain level of financial comfort, thanks to the success of the generations who came before them. Presidential candidate Donald Trump likes to boast of his wealth, but his father was a successful businessman and loaned him money early on in his career. While he's become a successful businessman in his own right, it didn't hurt to have early loans from wealthy family. Billionaires like the Koch brothers, members of the Walton family, and Lilliane Betancourt all inherited much of their wealth.</p> <p>A 2013 report researchers at the University of California and London School of economics concluded that entrepreneurs are more likely to be born into privilege. And Global Entrepreneurship Monitor reports that 80% of funding for new businesses comes from savings or from friends and family.</p> <h2>Use Debt Intelligently</h2> <p>Most financial advisers will say that staying out of debt is a key part of building wealth. After all, you can't put money into the stock market if you're too busy paying off high-interest credit cards or auto loans. But there are several instances in which borrowing money may help you build wealth over the long term.</p> <p>Rafal said using leverage to acquire real estate can be a sound wealth-building strategy, especially with interest rates at historic lows. He also said that if interest rates are lower than stock market returns, most people will be better off in the long run investing their money than paying off debt early.</p> <p><em>How do you plan to retire rich?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/how-to-retire-rich">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-5"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-one-woman-retired-at-60-and-traveled-the-world">How One Woman Retired at 60 and Traveled the World</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/money-resolutions-6-ways-to-take-control-in-2013">Money Resolutions: 6 Ways to Take Control in 2013</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-12-month-get-richer-plan">The 12-Month Get-Richer Plan</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/using-your-roth-ira-as-an-emergency-fund-ever-a-good-idea">Using Your Roth IRA as an Emergency Fund — Ever a Good Idea?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement getting rich investing millionaires one percent savings wealth Wed, 25 May 2016 10:00:06 +0000 Tim Lemke 1715215 at http://www.wisebread.com A Simple Guide to Rolling Over All of Your 401Ks and IRAs http://www.wisebread.com/a-simple-guide-to-rolling-over-all-of-your-401ks-and-iras <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/a-simple-guide-to-rolling-over-all-of-your-401ks-and-iras" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/retirement_fund_jar_000061741674.jpg" alt="How to roll over all of your 401ks and IRAs" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>The median number of years that U.S. workers <a href="http://www.bls.gov/news.release/archives/tenure_09182014.htm">stick with their current employer</a> is 4.6 years, according to U.S. Department of Labor. This means that sooner or later you're bound to quit, get fired, or get laid off from your current job. To avoid steep transaction fees, early distribution taxes, or losing retirement account contributions, you need to be ready to roll over your hard-earned nest egg when the time comes.</p> <h2>Establish How Much You Really Have</h2> <p>The first step is to determine the current balance of your 401K or IRA. While you'll eventually receive a separation from employment notice from your previous employer stating your total vested account balance, you can save time by researching your vested balance, net of any 401K loan balances you may owe.</p> <h3>Take Care of Any Outstanding Loans From Your 401K</h3> <p>Unlike IRAs, many 401K plans offer the option to take loans from your retirement account. As long as you keep up with your payment schedule, you generally have up to five years to pay back your loan in full. However, when you change jobs, the unpaid loan balance becomes due within 60 days.</p> <p>Any unpaid loan monies by the deadline or transaction date of your rollover are subject to federal income tax, a 10% early distribution penalty for those age 59 1/2 and under, and state income tax or penalty, if applicable. You can't roll over unpaid 401K loans.</p> <h3>Know the Vesting Schedule</h3> <p>Your own contributions to your 401K or IRA are always fully vested. However, contributions from your employer to your retirement account may be subject to a vesting schedule. Trying to retain top talent as long as possible, employers may require a minimum period of employment before employees gain full control on part of their retirement accounts. The two most common vesting schedules are <em>cliff vesting</em> (100% vesting is only provided after a set number of years) and <em>graded vesting</em> (a vested percentage is provided every year).</p> <p>When you separate from your employer, you forgo any non-vested contributions to your retirement account.</p> <p>Once you know your outstanding loan balance and vesting schedule, you have a clear idea of how much you can rollover.</p> <h2>Choose Rollover Options</h2> <p>Under most scenarios, you have six options for your total vested account balance:</p> <ol> <li>Keep your account;</li> <li>Rollover account into a new or existing IRA;</li> <li>Rollover account into a new or existing qualified plan;</li> <li>Do an indirect rollover;</li> <li>Request a full cash-out of your account; or</li> <li>Do a mix of the above five options.</li> </ol> <p>Let's analyze each one of these scenarios, because some of them may trigger taxes.</p> <h3>1. Keep Your Account</h3> <p>All retirement accounts stipulate a minimum amount required to remain in your old employer's plan, usually ranging from $1,000 to $5,000. If you're happy with your current financial provider, you can choose to keep the account.</p> <p>Make sure to read the fine print because some providers may strip away some services (such as certain investment options or coverage of fees) and gain the right to convert your 401K into an IRA without your input. According to a Plan Sponsor Council of America survey of 613 plans with eight million participants, 57% of 401K plans transfer balances between $1,000 and $5,000 to an IRA when the participant leaves the employer.</p> <p>While such forced-transfer IRAs don't trigger early withdrawal penalties or income taxes, they are often subject to high fees and low investment returns. A November 2014 report from the U.S. Government Accountability Office (GAO) found that forced-transfer IRAs <a href="http://www.gao.gov/assets/670/667151.pdf">have administrative fees</a>, ranging from $0 to $100 or more to open the account, and $0 to $115 annually to retain the account.</p> <h3>2. Rollover Account Into a New or Existing IRA</h3> <p>Whether you have a 401K or IRA, your current provider will provide you the option to request a rollover to an existing IRA, or open a new one through any of their partner institutions. Either option triggers no income taxes or distribution penalties. Under this scenario, keep in mind that you're not bound to the offerings from your old employer's financial institution and have the option to shop around for a new IRA with other financial institutions, as well.</p> <p>There are two types of IRAs: traditional IRA and Roth IRA. The main difference between them is that you pay taxes up front with the Roth IRA, and that you pay taxes at withdrawal with the traditional IRA. One of the advantages of owning an IRA is that there are many penalty-free ways to withdraw money from your retirement account before age 59 1/2. (See also: <a href="http://www.wisebread.com/7-penalty-free-ways-to-withdraw-money-from-your-retirement-account?ref=seealso">7 Penalty-Free Ways to Withdraw Money From Your Retirement Account</a>)</p> <h3>3. Rollover Account Into a New or Existing Qualified Plan</h3> <p>Besides an IRA, you can also rollover your retirement account into a 401K, 403(b), 457, Federal Thrift Savings Plan, or employer qualified plan, as long as the target plan allows those funds. Rollovers into new or existing qualified plans trigger no income taxes or early distribution fees.</p> <p>The IRS provides a useful <a href="https://www.irs.gov/pub/irs-tege/rollover_chart.pdf">rollover chart</a> to determine to which accounts you can rollover retirement contributions. However, the most surefire way to find out is by contacting your plan's customer service center.</p> <h3>4. Do an Indirect Rollover</h3> <p>Direct rollovers are only possible if you already have a retirement account with a previous or new employer or are able to open a new plan on your own. In the event that you think that you can find a new job offering a retirement account within 60 days, then you could try to do an indirect rollover.</p> <p>Your old employer would cut you a check, withholding the necessary 20% for income tax purposes. Once you have a qualified plan with your new employer, you would deposit the check in full and add the 20% withholding out of pocket. The IRS will return you the 20% withholding when you file your tax return. Make sure to deposit the full amount because any gap is subject to applicable income taxes and penalties for those age 59 1/2 and under.</p> <h3>5. Request a Full Cash-Out of Your Account</h3> <p>This is the least desirable of all options because not only do you pay incomes taxes and trigger early distribution fees, but also forgo investment returns. At age 20, a $600 balance on a 401K may not seem like much. However, assuming an investment return of 6% compounded annually and a target retirement age of 65, you would be saying goodbye to an extra $8,258.77 for your nest egg.</p> <p>Every year you have a ceiling on how you much contribute to your 401K or IRA. By cashing out that past contribution, you'll never be able to make it up.</p> <h3>6. Do a Mix of the Previous Options</h3> <p>Depending on your unique situation and set of rules from your old and new retirement accounts, you could use portions of your old account for different purposes. For example, you could cash out 10% of your vested account balance, subject to income taxes and early distribution penalties when age 59 1/2 and under, and rollover 90% of vested account balance to an IRA.</p> <p>Doing a mix of rollover options requires careful planning and plenty of legwork, but it may provide the solution that is better suited to your financial goals.</p> <h2>The Bottom Line</h2> <p>Knowing how to rollover your 401K or IRA is a skill that you'll use many times throughout your work years. The process is relatively simple but requires many steps. Before rolling over funds, make sure to plan ahead by minimizing loans from your 401K and maximizing total vested balance. Contact your old and new plan managers so that you are aware of all applicable rules and can make an informed decision. Keep an eye on the deadline for a rollover so that you're not forced to take a cash-out or forced to transfer to a high-fee IRA.</p> <p><em>Have you ever rolled over your 401K or IRA? How did you do it?</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/a-simple-guide-to-rolling-over-all-of-your-401ks-and-iras">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/6-warning-signs-youre-sabotaging-your-nest-egg">6 Warning Signs You&#039;re Sabotaging Your Nest Egg</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-reasons-why-a-roth-ira-may-be-better-than-your-401k">4 Reasons Why a Roth IRA May be Better Than Your 401(k)</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-signs-you-arent-saving-enough-for-retirement">10 Signs You Aren&#039;t Saving Enough for Retirement</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/which-retirement-account-is-right-for-you">Which Retirement Account Is Right for You?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/stop-making-these-10-bogus-retirement-savings-excuses">Stop Making These 10 Bogus Retirement Savings Excuses</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401k cash out employers IRA outstanding loans rolling over Roth IRA vesting schedule Wed, 18 May 2016 09:00:08 +0000 Damian Davila 1709866 at http://www.wisebread.com Ask the Readers: Have You Started Saving for Retirement? http://www.wisebread.com/ask-the-readers-have-you-started-saving-for-retirement <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/ask-the-readers-have-you-started-saving-for-retirement" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_piggy_bank_000088088071.jpg" alt="Woman starting to save for retirement" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p><em>Editor's Note: Congratulations to <a href="http://www.wisebread.com/ask-the-readers-have-you-started-saving-for-retirement#comment-792024">Kat</a>, John, and Natasha for winning this week's contest!</em></p> <p>We need money for a lot of things, like day-to-day expenses, paying bills or debt, or even saving up an emergency fund. It's easy to put off saving for your retirement when it seems to be a long way off. But it's important to take advantage of the years to have to save...and the interest you'll accrue from a retirement savings account. And if you're almost at retirement age, it's imperative that you begin preparing for your non-earning years.</p> <p><strong>Have you started saving for retirement?</strong> What kinds of accounts (or other methods) do you use? Are you happy with the amount that you're saving so far?</p> <p>Tell us whether you've started saving for retirement and we'll enter you in a drawing to win a $20 Amazon Gift Card!</p> <h2>Win 1 of 3 $20 Amazon Gift Cards</h2> <p>We're doing three giveaways &mdash; here's how you can win!</p> <h3>Mandatory Entry:</h3> <ul> <li>Post your answer in the comments below. One commenter will be randomly selected to win a $20 Amazon Gift Card!</li> </ul> <h3>For Extra Entries:</h3> <ul> <li>You can tweet about our giveaway for an extra entry. Also, our Facebook fans can get an extra entry too! Use our Rafflecopter widget for your chance to win one of the other two Amazon Gift Cards:</li> </ul> <p><a id="rcwidget_1pjr5ydh" data-template="" data-theme="classic" data-raflid="79857dfa245" rel="nofollow" href="http://www.rafflecopter.com/rafl/display/79857dfa245/" class="rcptr">a Rafflecopter giveaway</a> </p> <script src="https://widget-prime.rafflecopter.com/launch.js"></script></p> <p>If you're inspired to write a whole blog post OR you have a photo on flickr to share, please link to it in the comments or tweet it.</p> <h4>Giveaway Rules:</h4> <ul> <li>Contest ends Monday, May 23rd at 11:59 p.m. Pacific. Winners will be announced after May 23rd on the original post. Winners will also be contacted via email.<br /> &nbsp;</li> <li>You can enter all three drawings &mdash; once by leaving a comment, once by liking our Facebook update, and once by tweeting.<br /> &nbsp;</li> <li>This promotion is in no way sponsored, endorsed or administered, or associated with Facebook.<br /> &nbsp;</li> <li>You must be 18 and US resident to enter. Void where prohibited.</li> </ul> <p><strong>Good Luck!</strong>&nbsp;</p> <div class="field field-type-text field-field-blog-teaser"> <div class="field-items"> <div class="field-item odd"> Tell us whether you&#039;ve started saving for retirement and we&#039;ll enter you in a drawing to win a $20 Amazon Gift Card! </div> </div> </div> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/ashley-jacobs">Ashley Jacobs</a> of <a href="http://www.wisebread.com/ask-the-readers-have-you-started-saving-for-retirement">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/ask-the-readers-200-giveaway-what-does-corporate-social-responsibility-mean-to-you">Ask the Readers $200 Giveaway: What Does Corporate Social Responsibility Mean to You?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/ask-the-readers-should-kids-get-paid-for-doing-chores">Ask The Readers: Should Kids Get Paid For Doing Chores?</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-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-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/33-places-to-retire-if-you-love-the-rain">33 Places to Retire If You Love the Rain</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/x-exciting-world-cities-you-can-afford-to-retire-in">4 Exciting World Cities You Can Afford to Retire In</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Giveaways Retirement Ask the Readers retirement Tue, 17 May 2016 10:00:08 +0000 Ashley Jacobs 1708928 at http://www.wisebread.com Best Money Tips: How to Retire By 55 http://www.wisebread.com/best-money-tips-how-to-retire-by-55 <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/best-money-tips-how-to-retire-by-55" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_happy_hammock_000068947321.jpg" alt="Woman learning how to retire by 55" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Welcome to Wise Bread's <a href="http://www.wisebread.com/topic/best-money-tips">Best Money Tips</a> Roundup! Today we found a strategy for early retirement, questions that will help you declutter, and the details on Hulu&rsquo;s new cable TV service.</p> <h2>Top 5 Articles</h2> <p><a href="http://www.bluntmoney.com/how-to-be-able-to-retire-at-55/">How to Be Able to Retire at 55</a> &mdash; Early retirement is a dream for many of us&hellip; but you can make it a reality balancing your sources of income and expenditure. [Blunt Money]</p> <p><a href="http://parentingsquad.com/6-amazing-books-on-motherhood-you-should-read-immediately">8 Questions to Ask Yourself to Help You Declutter</a> &mdash; Do you have a concrete plan to use this item? If not, toss it. [PopSugar Smart Living]</p> <p><a href="http://www.csmonitor.com/Business/Saving-Money/2016/0513/Cord-cutters-rejoice!-Hulu-is-planning-an-online-cable-style-TV-service">Cord-cutters rejoice! Hulu is planning an online cable-style TV service</a> &mdash; Hulu recently announced that they will offer an online streaming package that would include broadcast and cable channels. [The Monitor]</p> <p><a href="http://www.experian.com/blogs/news/about/build-emergency-fund/">Surefire Ways to Boost Your Emergency Fund</a> &mdash; Life is full of surprises &mdash; some good, some bad, and some very expensive! Join Experian's #CreditChat tomorrow at 3 p.m. ET to learn how to boost your emergency fund for life's very expensive surprises. [Experian]</p> <p><a href="http://flippingincome.com/items-you-can-resell-from-dollar-stores/">5 Items You Can Resell From Dollar Stores</a> &mdash; Who knew you could make a profit from these dollar store items? [Flipping Income]</p> <h2>Other Essential Reading</h2> <p><a href="http://www.northerncheapskate.com/12-cheap-quick-and-easy-stress-relievers/">12 Cheap, Quick, and Easy Stress Relievers</a> &mdash; Crank up the music and dance like you mean it! It'll only take a few minutes for you to start feeling better. [Northern Cheapskate]</p> <p><a href="http://flippingincome.com/items-you-can-resell-from-dollar-stores/">4 ideas for spring landscaping on a budget</a> &mdash; Check out check out yard sales, thrift shops, and dollar stores for things like containers, décor, and gloves. [Bargaineering]</p> <p><a href="http://www.everybodylovesyourmoney.com/2016/05/16/12-ways-for-teenagers-to-earn-money-this-summer.html">12 Ways for Teenagers to Earn Money This Summer</a> &mdash; Many companies hire teens for seasonal part-time jobs. Check out your local bowling alley, movie theater, and mall for openings. [Everybody Loves Your Money]</p> <p><a href="http://www.bluntmoney.com/how-to-be-able-to-retire-at-55/">How to Compare Two Job Offers</a> &mdash; When choosing between two (or more!) job offers, you need to consider compensation and benefits, of course, as well as the commute and company culture. [Mint Life]</p> <p><a href="http://parentingsquad.com/6-amazing-books-on-motherhood-you-should-read-immediately">6 Amazing Books on Motherhood You Should Read Immediately</a> &mdash; These books offer serious food for thought for mothers everywhere. [Parenting Squad]</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/amy-lu">Amy Lu</a> of <a href="http://www.wisebread.com/best-money-tips-how-to-retire-by-55">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/5-ways-to-handle-a-forced-early-retirement">5 Ways to Handle a Forced Early Retirement</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-reasons-early-retirement-might-be-financially-risky">4 Reasons Early Retirement Might Be Financially Risky</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-one-woman-retired-at-60-and-traveled-the-world">How One Woman Retired at 60 and Traveled the World</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-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-5 views-row-odd views-row-last"> <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> </ul> </div> </div> </div> </div><br/></br> Retirement best money tips early retirement Tue, 17 May 2016 09:30:23 +0000 Amy Lu 1711443 at http://www.wisebread.com One Smart Thing You Can Do for Your Retirement Today http://www.wisebread.com/one-smart-thing-you-can-do-for-your-retirement-today <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/one-smart-thing-you-can-do-for-your-retirement-today" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/000020745280.jpg" alt="Learning one thing you can do for retirement today" title="" class="imagecache imagecache-250w" width="250" height="141" /></a> </div> </div> </div> <p>Retirement planning sounds like a daunting and confusing task. But there's one practical and surprisingly simple step you can take today to greatly improve your retirement preparedness &mdash; run some numbers to estimate how much money you'll probably need. You'll be happy to see how quickly you can do this, and how beneficial it will be.</p> <h2>A Quick Calculation</h2> <p>It's never been easier to estimate your retirement needs, with numerous free online calculators readily available. One of the simplest is <a href="http://personal.fidelity.com/planning/retirement/content/myPlan/index.shtml">Fidelity's myPlan Snapshot</a>. You just need to enter five bits of information (your age, income, how much you have saved so far, the monthly amount you're now contributing to a retirement plan, and your investment style). Then it will give you a quick read on how much you may need to have in your nest egg by the time you retire, and how much you should be setting aside each month right now in a 401K plan or IRA.</p> <p>For example, according to the calculator, a 25-year-old who makes $50,000 per year, has $15,000 saved so far, contributes $300 per month to their retirement plan, and invests aggressively, will need to have about $2.8 million saved by the time they're 65. If the market performs poorly, the calculator says they'll end up with about $880,000 at age 65; if it performs on average, they'll end up with about $2.3 million.</p> <p>The calculator enables you to easily change various inputs to see what you could do to get more on track. For example, what if they changed their investment style to &quot;most aggressive&quot; (100% stock-based investments), changed the amount they save each month to $500, and moved their assumed retirement age to 67? Now the calculator says if the market performs poorly, they'll end up with about $1.5 million. If it performs on average, they'll end up with a portfolio totaling nearly $4.8 million.</p> <p>After running the quick calculation, Fidelity gives you the option to run a more detailed analysis by clicking &quot;Create a Plan.&quot;</p> <h2>An Unpopular, Yet Helpful Chore</h2> <p>Despite how easy it is to run the numbers on retirement, relatively few people have done so. According to the Employee Benefit Research Institute, just 48% of all current workers have calculated their needs. Among workers age 25-34 &mdash; those who have the most time to take advantage of <a href="http://www.wisebread.com/2-investing-concepts-everyone-should-know">compound interest</a> &mdash; just 38% have run some numbers.</p> <p>Those that have calculated their needs report higher savings goals than those that haven't and greater confidence in their ability to one day retire comfortably. Apparently, crunching the numbers on retirement motivates people to act on what they learn.</p> <h2>From Insight to Action</h2> <p>Of course, that's what makes a needs assessment beneficial &mdash; taking action on what you learn by making any needed changes to the amount you're setting aside for retirement each month.</p> <p>Don't be discouraged if there's a large gap between how much the calculator says you need to save and the amount you're now saving. Just do what you can to start narrowing that gap. Using a budget is one of the best ways to free up monthly cash flow that could be put toward increased retirement savings. Another is committing in advance to use at least a portion of any future pay increases to boost retirement savings.</p> <p>It's a good idea to run a new retirement needs assessment once a year. Circumstances change. Running new numbers annually &mdash; and making any needed adjustments to how much you're saving for retirement &mdash; will help make sure your retirement plan stays on track.</p> <p><em>Have you taken this step? Have you put a plan in place to begin acting on your insight?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/matt-bell">Matt Bell</a> of <a href="http://www.wisebread.com/one-smart-thing-you-can-do-for-your-retirement-today">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/10-signs-you-arent-saving-enough-for-retirement">10 Signs You Aren&#039;t Saving Enough for Retirement</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-warning-signs-youre-sabotaging-your-nest-egg">6 Warning Signs You&#039;re Sabotaging Your Nest Egg</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-wasting-300000-on-lunch">Are You Wasting $300,000 on Lunch?</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-false-allure-of-compound-interest">The False Allure of Compound Interest</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/this-one-thing-will-get-you-to-1-million-tax-free">This One Thing Will Get You to $1 Million (Tax-Free!)</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement compound interest investing nest egg retirement calculators saving money Mon, 16 May 2016 10:00:03 +0000 Matt Bell 1703113 at http://www.wisebread.com A Simple Guide to Retirement Plans for the Self-Employed http://www.wisebread.com/a-simple-guide-to-retirement-plans-for-the-self-employed <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/a-simple-guide-to-retirement-plans-for-the-self-employed" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_working_laptop_000064887191.jpg" alt="Woman learning about self-employed retirement plans" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Being self-employed has its ups, but it can also have its downs. For instance, there may be enormous business costs to worry about, and you likely have to finance your retirement account entirely on your own. Fortunately, there are a number of self-employed retirement plans that can help you save enough for retirement.</p> <p>In fact, these specialized plans allow you to save significantly more than you could with traditional retirement accounts. That's because self-employed workers typically don't have the employer contributions and match benefits that many traditionally employed workers enjoy. By contributing to one of these accounts, you can save a ton in taxes this year with an upfront tax break and tax-deferred growth.</p> <h2>SEP IRA</h2> <p>The Simplified Employee Pension (SEP) IRA plan is similar to a traditional IRA, but does not have the high start-up or operating costs of a conventional retirement plan. Instead, there are low administrative costs, and the plan is simple to operate. Any contributions you make to your SEP IRA are with pre-tax funds. You will be required to take a minimum distribution at age 70 &frac12;. (See also: <a href="http://www.wisebread.com/the-sep-ira-is-how-the-self-employed-do-retirement-like-a-boss?ref=seealso">The SEP-IRA Is How the Self-Employed Do Retirement Like a BOSS</a>)</p> <h3>Maximum Contribution Amount</h3> <p>$53,000 per year ($59,000 if you're age 50 or older), or 20% of your net earnings from self-employment.</p> <h3>Tax Advantages</h3> <p>Contributing to your SEP IRA can lower the amount of income you pay taxes on now. Once you retire, your withdrawals will be taxed at your ordinary income tax rate. If you make withdrawals before age 59 &frac12;, there will be an additional 10% early withdrawal penalty fee added. You may also be eligible for a <a href="http://www.dol.gov/ebsa/publications/SEPPlans.html">tax credit of up to $500</a> per year for the first three years to cover the cost of starting the plan.</p> <h2>SIMPLE IRA</h2> <p>The Savings Incentive Match Plan for Employees (SIMPLE) IRA Plan allows both the employee and employer to contribute. Contributions are on a pre-tax basis, and you will be required to take a minimum distribution at age 70 &frac12;.</p> <h3>Maximum Contribution Amount</h3> <p>$12,500 per year, $15,500 if you're age 50 or older, plus an employer contribution of 3% of income.</p> <h3>Tax Advantages</h3> <p>Contributing to your SIMPLE IRA can lower the amount of income you pay taxes on now. Once you retire, your withdrawals will be taxed at your ordinary income tax rate. If you make withdrawals before age 59 &frac12;, there will be an additional 10% early withdrawal penalty fee added. The penalty is 25% if you make withdrawals within the first two years of participating in the plan.</p> <h2>Individual or Solo 401K</h2> <p>This is very similar to a traditional 401K plan, with lower maintenance charges. Any contributions you make to your self-directed 401K plan are with funds you haven't been taxed on yet. You will be required to take a minimum distribution at age 70 &frac12;.</p> <h3>Maximum Contribution Amount</h3> <p>$18,000 per year ($24,000 if you're age 50 or older). With a <a href="https://www.fidelity.com/retirement-ira/small-business/self-employed-401k/overview">profit sharing contribution</a>, business owners can contribute up to 20%&ndash;25% of the business earnings. The total contribution limit is $53,000 per year ($59,000 if you're age 50 or older).</p> <h3>Tax Advantages</h3> <p>Contributing to an Individual or Solo 401K plan can lower the amount of income you pay taxes on now. Once you retire, your withdrawals will be taxed at your ordinary income tax rate. If you make withdrawals before age 59 &frac12;, there will be an additional 10% early withdrawal penalty fee added.</p> <h2>Which One Is Right for You?</h2> <p>If you aren't sure about which self-employed retirement account is right for you, consider speaking with a financial adviser. They can help you make informed decisions based on your financial situation and retirement goals. You can also use a simple <a href="https://scs.fidelity.com/products/mobile/sepMobile.shtml">self-employed plan contribution calculator</a> to determine which plan may be right for your scenario.</p> <h2>Don't Wait to Sign Up</h2> <p>Don't wait any longer to start investing. The sooner you get your retirement plan going, the sooner you can begin taking advantage of compound interest. (Visit the <a href="https://www.irs.gov/Retirement-Plans/Retirement-Plans-for-Self-Employed-People">IRS' website</a> for information on how to set-up one of these plans.) Most self-employed workers claim that their lack of preparation for retirement is due to their limited budget. However, nearly all retirement experts agree on one thing: It doesn't matter how much you're saving for retirement, as long as you're saving.</p> <p><em>Do you have other tips for choosing the right self-employed retirement plan? Please share your thoughts in the comments!</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/andrea-cannon">Andrea Cannon</a> of <a href="http://www.wisebread.com/a-simple-guide-to-retirement-plans-for-the-self-employed">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/the-5-biggest-mistakes-freelancers-make">The 5 Biggest Mistakes Freelancers Make</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-sep-ira-is-how-the-self-employed-do-retirement-like-a-boss">The SEP-IRA Is How the Self-Employed Do Retirement Like a BOSS</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/10-signs-you-arent-saving-enough-for-retirement">10 Signs You Aren&#039;t Saving Enough for Retirement</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/which-retirement-account-is-right-for-you">Which Retirement Account Is Right for You?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-ways-to-handle-a-forced-early-retirement">5 Ways to Handle a Forced Early Retirement</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Entrepreneurship Retirement 401k freelance individual 401 k self-employed SEP IRA SIMPLE IRA solo 401k Fri, 06 May 2016 09:30:20 +0000 Andrea Cannon 1703114 at http://www.wisebread.com Best Money Tips: How to Make Your Retirement More Successful http://www.wisebread.com/best-money-tips-how-to-make-your-retirement-more-successful <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/best-money-tips-how-to-make-your-retirement-more-successful" 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_happy_000014401417.jpg" alt="Couple learning how to make their retirement more successful" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Welcome to Wise Bread's <a href="http://www.wisebread.com/topic/best-money-tips">Best Money Tips</a> Roundup! Today we found helpful articles on ways to make your retirement more successful, tips to save money at big box stores, and the best college degrees for job security.</p> <h2>Top 5 Articles</h2> <p><a href="http://www.cashthechecks.com/7-ways-make-retirement-successful-employment-period/">7 Ways to Make Your Retirement More Successful</a> &mdash; Don't wait to downsize! The money you make from selling a too-large house or a luxury car could then be invested. [Cash The Checks]</p> <p><a href="http://www.frugalvillage.com/2016/04/26/six-secret-ways-to-save-money-at-big-box-stores/">Six Secret Ways to Save Money at Big Box Stores</a> &mdash; Shopping for furniture, electronics, and seasonal items? Ask the store for a discount on floor models. [Frugal Village]</p> <p><a href="https://ptmoney.com/best-degrees-to-get-that-promise-job-security/">The 8 Best College Degrees for Job Security</a> &mdash; People with physician assistant and nursing degrees will not have too much trouble finding jobs; both professions are expected to grow over the next decade. [PT Money]</p> <p><a href="http://funhappyhome.com/2016/04/9-farmers-market-shopping-tips-that-will-help-you-save-big-and-get-the-best-produce/">9 Farmer&rsquo;s Market Shopping Tips That Will Help You Save Big and Get The Best Produce</a> &mdash; The selection at a farmer's market can vary from week to week, so if you find something you like, jump on it! It might not be available the next time you visit. [Fun Happy Home]</p> <p><a href="http://www.popsugar.com/smart-living/Bathroom-Cleaning-DIYs-40684545#photo-40684545">These 15 Budget-Friendly DIYs Will Make Your Bathroom Sparkle</a> &mdash; Combat bad odors in the bathroom with an orange peel air freshener. [PopSugar Smart Living]</p> <h2>Other Essential Reading</h2> <p><a href="http://www.mattaboutmoney.com/2016/04/26/are-you-financially-healthy-rate-yourself-on-this-9-point-scale/">Are You Financially Healthy? Rate Yourself Using These 9 Qualifications</a> &mdash; Do you have adequate insurance? This includes life insurance, homeowner's or renter's insurance, health insurance, and possibly disability insurance. [Matt About Money]</p> <p><a href="http://everythingfinanceblog.com/17402/5-first-time-homebuyer-mistakes.html">5 First-Time Homebuyer Mistakes: What We&rsquo;ll Do Different Next Time</a> &mdash; Pay attention to the details and crunch the numbers to make sure the repairs you'll have to make are really worth it. Little projects can really add up! [Everything Finance]</p> <p><a href="https://timemanagementninja.com/2016/04/10-productive-tasks-you-can-do-on-your-phone/">10 Productive Tasks You Can Do on Your Phone</a> &mdash; Don't just read emails on your phone &mdash; process them! [Time Management Ninja]</p> <p><a href="http://www.currentoncurrency.com/5-ways-laughter-save-you-money/">5 Ways That a Little Bit of Laughter Can Save You Money</a> &mdash; It makes sense that you do better at your job when you enjoy it. Bringing some humor into your workplace will help nurture your work relationships and improve the atmosphere for everyone. [Current on Currency]</p> <p><a href="http://www.thesimpledollar.com/25-free-things-to-do-to-make-today-feel-awesome/">25 Free Things to Do to Make Today Feel Awesome</a> &mdash; Write out a list of everything you have floating in your head &mdash; and immediately do two or three of those things. [The Simple Dollar]</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/amy-lu">Amy Lu</a> of <a href="http://www.wisebread.com/best-money-tips-how-to-make-your-retirement-more-successful">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/10-signs-you-arent-saving-enough-for-retirement">10 Signs You Aren&#039;t Saving Enough for Retirement</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-retire-rich">How to Retire Rich</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/using-your-roth-ira-as-an-emergency-fund-ever-a-good-idea">Using Your Roth IRA as an Emergency Fund — Ever a Good Idea?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/which-retirement-account-is-right-for-you">Which Retirement Account Is Right for You?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/one-smart-thing-you-can-do-for-your-retirement-today">One Smart Thing You Can Do for Your Retirement Today</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement best money tips successful retirement Thu, 28 Apr 2016 10:01:03 +0000 Amy Lu 1699080 at http://www.wisebread.com You Don't Need a Retirement Plan — You Need a Financial Independence Plan http://www.wisebread.com/you-dont-need-a-retirement-plan-you-need-a-financial-independence-plan <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/you-dont-need-a-retirement-plan-you-need-a-financial-independence-plan" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/saving_retirement_fund_000088359337.jpg" alt="Learning the alternative to retirement" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>In the golden age of a &quot;job for life,&quot; and when defined benefit pensions were the standard, all you had to do was tough it out to hit the jackpot. A mere 40 years of employment, and you struck lucky in your golden years.</p> <p>Whether the idea of working in the same place for a lifetime fills you with nostalgia or horror, the reality is that those days are long gone.</p> <p>Without a steady employer doing the hard work for us, traditional notions of retirement planning do not work. The alternative, it seems, is the ostrich approach, with 48% of working age Americans saying they have never even tried to calculate the amount of savings they might need for a comfortable retirement. Ignorance might be bliss in the moment, but it's no genius long term plan. So what's the better option?</p> <h2>What Went Wrong With Retirement?</h2> <p>The Employee Benefit Research Institute (EBRI) found, in their 2016 survey measuring retirement confidence, that nearly one in five American workers (19%) were <a href="https://www.ebri.org/pdf/surveys/rcs/2016/PR1157.RCS.22Mar16.pdf">not at all confident</a> in their ability to finance a comfortable retirement. For these workers, options are limited &mdash; spend less now, work for longer, and be prepared to compromise more on the lifestyle they expect in later years. Not a happy picture.</p> <p>To add insult to injury, working longer is not actually a viable option for many of us. The EBRI reported a large gap between expectations and outcome, with a massive 37% of people saying they expect to work past the age of 65, compared to the more modest reality of only 15% of retirees in 2016 who were older than 65. This is often because options to continue working later in life become limited, with layoffs and declining physical health ending working lives without regard to the size of one's pension pot.</p> <p>So with working until you drop off the agenda, what can we do to improve the prospects of having a happy, and financially secure retirement?</p> <h2>Start Thinking Personal Financial Independence</h2> <p>Ironically, part of the solution might actually be to stop thinking about retirement, and replace that thought with one of &quot;personal financial independence.&quot;</p> <p>Retirement today has changed as much as working life has, meaning there is no longer a cookie cutter approach to retirement planning that can be relied upon. The answer instead is to get educated about your household finances, with a focus on achieving personal financial independence &mdash; for life, not just for your later years. Getting clued up about your money is the only way to do that.</p> <h2>Start Creating It</h2> <p>Pull your head out of the sand, and get a realistic grip on what savings you have &mdash; and what you will need to finance your retirement.</p> <h3>Do the Math</h3> <p>Work out what you will want to <a href="http://www.wisebread.com/how-much-can-you-afford-to-spend-in-retirement">spend in retirement</a>. Tools are out there to help, like this <a href="http://money.cnn.com/calculator/retirement/retirement-need/">retirement calculator</a>, which helps you calculate what you might need to save to achieve a desired financial return in future. If you don't have an idea of your goal, then planning is a whole lot more difficult.</p> <h3>Optimize What You Have</h3> <p>If you have money in 401K plans, then you're in a strong position already. But don't just assume that it's being managed in your best interests. <a href="http://americasbest401k.com/fee-checker/">Check out the fees</a>, which vary wildly and through a compounding effect can whittle away your savings at an alarming speed. Once you can safely withdraw from your 401K without incurring penalties, you will be able to choose to take a lump sum if you wish, to help you achieve the magic 4% number described below.</p> <h3>Understand the 4% Rule</h3> <p>A common premise of modern retirement planning calculations is the &quot;4% rule&quot; which assumes that you can live happily on the growth of a savings pot, without significantly denting the principle, so long as you withdraw no more than 4% per year. This principle, put forward by Bill Bengen in 1994, has <a href="http://www.forbes.com/sites/robertberger/2015/05/20/how-much-do-you-really-need-to-retire/#90464644939a">come under some scrutiny</a> due to our current turbulent times &mdash; but as a starting point is still considered a sound measure.</p> <p>Here's how it works.</p> <p>Start with the amount of money you think you will need to finance your retirement lifestyle. Multiply this by 25 to get the amount of savings you need to have to make that number a reality if the 4% rule is applied.</p> <p>Then sit down, because in all likelihood that number is going to be scary.</p> <p>If you calculated that you would like a household income of $40,000, then the sums say you need a pot of a cool million. How hard this really is to achieve depends on your current position. If you're just setting out and don't plan to retire for 40 years, you will need to save something like $640 a month (shared out among the earning members of the household &mdash; so half that if you're in a couple), assuming a <em>modest </em>5% return on your investment. If you plan to retire a lot sooner, or do not not have existing savings or 401K plans, this number might be more daunting.</p> <p>If the savings you need to achieve financial independence feel unrealistic, then it's time to start thinking of the levers you have to close the gap. Earn and save more, or plan to spend less, perhaps through lifestyle adjustments or by taking <a href="http://www.wisebread.com/5-incredible-places-to-retire-abroad-that-anyone-can-afford">advantage of geographic differences</a> in things like cost and quality of living. Or, plan to manage your retirement as a gradual wind down, continuing to be economically active after your usual retirement age, but in a flexible role. Considering these options now, rather than being pushed into them at the point you wish to quit working, is far more likely to have a happy ending.</p> <p>The new world of planning for later life brings with it more choices, but also more questions to mull over and decisions to make. Instead of facing these questions, too many of us are ignoring the issue. Experience shows that working longer (or windfalls, or a fairy godmother) is unlikely to be the answer. Getting clued up about your money <em>now</em> is the only way to give yourself a shot at the golden years you deserve.</p> <p><em>What do you think? What is the optimum way to plan for your retirement now?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/claire-millard">Claire Millard</a> of <a href="http://www.wisebread.com/you-dont-need-a-retirement-plan-you-need-a-financial-independence-plan">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/one-smart-thing-you-can-do-for-your-retirement-today">One Smart Thing You Can Do for Your Retirement Today</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/which-retirement-account-is-right-for-you">Which Retirement Account Is Right for You?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/12-times-youre-better-off-without-a-promotion">12 Times You&#039;re Better Off Without a Promotion</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-dumb-ira-mistakes-even-smart-people-make">5 Dumb IRA Mistakes Even Smart People 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/6-great-retirement-jobs">6 Great Retirement Jobs</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement calculator careers financial independence jobs saving money working Mon, 25 Apr 2016 09:30:29 +0000 Claire Millard 1693265 at http://www.wisebread.com 6 Great Retirement Jobs http://www.wisebread.com/6-great-retirement-jobs <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-great-retirement-jobs" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock_000084253925_Large.jpg" alt="looking for a great job in retirement" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>With the cost of living always on the rise, retirees are looking for creative ways to supplement their incomes. And for those living on fixed incomes, finding part-time work can be tricky and sometimes challenging, because they cannot exceed the SSI annual earnings threshold of $15,720, and $41,880 for those in their first full year of retirement. But, if you're looking for ways to supplement your income, here are five great part-time retirement job ideas.</p> <h2>1. Local Tour Guide</h2> <p>The sharing economy is making all sorts of short-term side jobs available, and if you've got a lot of local knowledge, consider setting yourself up as a tour guide on a service like <a href="https://www.vayable.com/">Vayable</a>. Rates range from $50&ndash;$85 per person, per tour. If apps and computers are not your thing, check with local tour operators or local tourist attractions about picking up a shift or two. You'll put your wisdom and experience to work &mdash; and you'll meet lots of great people, besides.</p> <h2>2. Tutor or Teach</h2> <p>You don't need a background as a teacher in order to help others learn. If you're good at math, English, or any other subjects, consider tutoring or teaching part-time. You can set your own rates, and signing up with a tutoring website like <a href="http://www.varsitytutors.com/">VarsityTutors</a> will pair you with students. And there are so many opportunities to teach, because it goes beyond the classroom these days, as many people prefer the convenience of online courses.</p> <h2>3. Babysitter</h2> <p>Do you have an interest in working with kids? If so, it could be a valuable skill-set. Part-time babysitters can earn as much as $25 per hour, and they work on their own terms. Plus, if you already have experience working with kids, and a flexible schedule, you'll probably find lots of job opportunities.</p> <h2>4. Postpartum Doula</h2> <p>Jackie Prescott, founder of <a href="http://www.firstbumpthenbaby.com/">First Bump Then Baby</a>, says becoming a modern-day baby nurse is a great way for older women (and men!) to earn money, because it's essentially about mothering new mothers and helping new parents to quickly feel at ease.</p> <h2>5. Tax Preparer</h2> <p>Some people think of tax preparation services as a seasonal job, but the truth is, many self-employed individuals and businesses deal with tax issues year-round. If this is a skill-set that you possess, it can earn you a sizable penny. But, because it is so lucrative, be careful not to cross the annual earnings threshold if you're receiving SSI.</p> <h2>6. Become an Uber or Lyft Driver</h2> <p>The Uber and Lyft car sharing programs have grown to reach every city, and they're looking for drivers everywhere. Anyone with a valid driver's license and clean criminal record is eligible to become a driver. Drivers are of all ages and professional backgrounds. Many are stay-at-home moms and current and former professionals seeking a way to earn extra income. (See also: <a href="http://www.wisebread.com/how-to-earn-extra-money-driving-for-uber-or-lyft?ref=seealso">How to Earn Extra Money Driving for Uber or Lyft</a>)</p> <p><em>What are some other great side jobs for retirees? Share with us in the comments!</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/qiana-chavaia">Qiana Chavaia</a> of <a href="http://www.wisebread.com/6-great-retirement-jobs">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/6-great-side-jobs-for-book-lovers">6 Great Side Jobs for Book Lovers</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-ways-to-make-an-extra-1000-this-summer">9 Ways to Make an Extra $1,000 This Summer</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/flashback-friday-68-best-ways-to-make-money-that-are-actually-fun">Flashback Friday: 68 Best Ways to Make Money That Are Actually Fun</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/30-great-side-jobs">30 Great Side Jobs</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-smart-summer-side-jobs-for-new-grads">6 Smart Summer Side Jobs for New Grads</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Career and Income Extra Income Retirement extra money jobs part-time jobs retirement jobs side jobs Fri, 22 Apr 2016 09:00:09 +0000 Qiana Chavaia 1695168 at http://www.wisebread.com Which Retirement Account Is Right for You? http://www.wisebread.com/which-retirement-account-is-right-for-you <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/which-retirement-account-is-right-for-you" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/retirement_fund_money_000085578577.jpg" alt="Learning if an IRA, 401k, or 40k is right for you" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Saving for retirement is one of the most important things you can do for your future self. With so many options to choose from, how can you decide which type of account to invest your money in? There are a number of differences between an IRA, Roth IRA, and 401K. We've covered some of the most important factors below to get you started.</p> <h2>Roth IRA</h2> <p>Any contributions you make to your Roth IRA are with funds you've already paid taxes on, so your money can grow tax-free from then on. If you make more than $132,000, or $194,000 for married couples filing jointly, then you won't be eligible to contribute to a Roth IRA. There are no required minimum distributions and no age limit for contributions.</p> <p>Maximum contribution amount: $5,500 per year, $6,500 if you're age 50 or older.</p> <p>Tax advantages: Earnings grow tax-free with tax-free withdrawals in retirement.</p> <h2>Traditional IRA</h2> <p>Any contributions you make to your IRA are with funds you haven't been taxed on yet. You will be required to take a minimum distribution at age 70-&frac12;.</p> <p>Maximum contribution amount: $5,500 per year, $6,500 if you're age 50 or older; cannot contribute after age 70-&frac12;.</p> <p>Tax advantages: Contributing to your IRA can lower the amount of income you pay taxes on now. Once you retire, your withdrawals will be taxed at your ordinary income tax rate. If you make withdrawals before age 59-&frac12;, there will be an additional 10% early withdrawal penalty fee added. Certain approved purchases can be withdrawn penalty-free, such as a first home purchase and approved college expenses.</p> <h2>401K</h2> <p>A 401K is a retirement savings plan sponsored by an employer. Any contribution you make to your employer-sponsored deferred contribution retirement plan is made with funds you haven't been taxed on yet.</p> <p>Maximum contribution amount: $18,000 per year, $24,000 if you're age 50 or older.</p> <p>Tax advantages: Contributing to a 401K can lower the amount of income you pay taxes on now. Once you retire, your withdrawals will be taxed at your ordinary income tax rate. If you make withdrawals before age 59-&frac12;, there will be an additional 10% early withdrawal penalty fee added.</p> <h2>Which One Is Best?</h2> <p>If you can only open one account, or only have the funds to contribute to one retirement account, which is the one to go for? Suze Orman is a big proponent of the Roth IRA and calls it &quot;the best retirement investment you can make.&quot; There are also a number of benefits to the Roth IRA.</p> <p>For instance, you can withdraw your contributions (but not the earnings) in emergency situations, without worrying about taxes or penalties. While you don't want to ever withdraw from your retirement accounts, it can provide you with peace of mind knowing that the funds are available to you in an unexpected future emergency situation. (See also: <a href="http://www.wisebread.com/7-surprising-facts-about-roth-iras?ref=seealso">7 Surprising Facts About Roth IRAs</a>)</p> <p>If you believe you are in a lower tax bracket now than you will be in retirement (like you are just starting your career), a Roth IRA is usually the way to go. With a Roth IRA, you will be investing after-tax funds now, which means you won't be taxed later when you are in a higher tax bracket. On the other hand, if you are near your peak income now, then you will likely be at a lower tax rate in retirement, which favors a traditional IRA or 401K plan. (See also: <a href="http://www.wisebread.com/why-roth-iras-are-ideal-for-young-professionals?ref=seealso">Why Roth IRAs Are Ideal for Young Professionals</a>)</p> <p>If your employer offers contribution matching, definitely invest towards that account until you hit the company match limit so that you can benefit from the free money. With both an IRA and 401K, whatever you invest can be deducted from consideration this tax year. This means that you will be taxed on a lower amount, resulting in tax savings now.</p> <h3>Employer-Sponsored Plans</h3> <p>If your employer offers retirement benefits (such as contribution matching), then take advantage of this free money; your future self will thank you for it. You'll want to invest at least as much as the company match.</p> <p>Ask about what sort of 401K, 403(b), 457, or pension plans your employer offers. This will allow you to take advantage of as much of the employer's contribution as possible. (See also: <a href="http://www.wisebread.com/8-steps-to-starting-a-retirement-plan-in-your-30s?ref=seealso">8 Steps to Starting a Retirement Plan in Your 30s</a>)</p> <h3>Self-Employed Options</h3> <p>Did you know that 28% of the nearly 15 million self-employed Americans are <a href="http://www.amtd.com/English/newsroom/research-and-story-ideas/Self-Employed-Survey/">not saving for retirement</a> at all? Sure, it can be difficult to set aside money for retirement when you can barely pay your business expenses as it is. However, it is imperative that you save what you can now to take advantage of compound interest and to ensure you are prepared for retirement.</p> <p>Self-employed individuals have <a href="https://www.irs.gov/Retirement-Plans/Retirement-Plans-for-Self-Employed-People">further retirement savings options</a>, such as the SEP-IRA, SIMPLE IRA, and Individual or Solo 401K. These have higher contribution limits so that you can have a more sizable retirement savings. These accounts will allow you to save for retirement, while enjoying an up-front tax break and tax-deferred saving.</p> <h2>When in Doubt, Ask a Pro</h2> <p>If you aren't sure about which retirement account is right for you, it's time to speak with a financial adviser. They can help you make informed decisions based on your financial situation and retirement goals. (See also: <a href="http://www.wisebread.com/do-you-need-a-financial-planner?ref=seealso">Do You Need a Financial Planner?</a>)</p> <p><em>Do you have other tips for choosing the right retirement plan? Please share your thoughts in the comments!</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/andrea-cannon">Andrea Cannon</a> of <a href="http://www.wisebread.com/which-retirement-account-is-right-for-you">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-warning-signs-youre-sabotaging-your-nest-egg">6 Warning Signs You&#039;re Sabotaging Your Nest Egg</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-reasons-why-a-roth-ira-may-be-better-than-your-401k">4 Reasons Why a Roth IRA May be Better Than Your 401(k)</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-sep-ira-is-how-the-self-employed-do-retirement-like-a-boss">The SEP-IRA Is How the Self-Employed Do Retirement Like a BOSS</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/a-simple-guide-to-rolling-over-all-of-your-401ks-and-iras">A Simple Guide to Rolling Over All of Your 401Ks and IRAs</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/10-signs-you-arent-saving-enough-for-retirement">10 Signs You Aren&#039;t Saving Enough for Retirement</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401k Roth IRA saving money self-employment traditional ira Thu, 21 Apr 2016 09:30:24 +0000 Andrea Cannon 1691583 at http://www.wisebread.com