Retirement http://www.wisebread.com/taxonomy/term/417/all en-US How to Enjoy Retirement If You Haven't Saved Enough http://www.wisebread.com/how-to-enjoy-retirement-if-you-havent-saved-enough <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-enjoy-retirement-if-you-havent-saved-enough" 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_vacation_000038250840.jpg" alt="Retired couple taking cheap vacation" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Are you ready to retire, but haven't managed to save enough yet?</p> <p>In fact, the U.S. Census Bureau of Labor Statistics says that although the average retirement age is 62, many seniors are retiring at age 65 or older, and a large percentage &mdash; roughly 80% &mdash; still will not have saved enough by then. Of them, about a third will depend entirely on Social Security benefits. If you're within five years of calling it quits but haven't saved enough to retire, here are a few steps that may bring retirement closer within reach.</p> <h2>1. Wait Until You're 65</h2> <p>Wait until you're age 65 or older before you start collecting Social Security benefits, as the longer you wait, the larger your benefit. Use Bankrate's Social Security <a href="http://www.bankrate.com/calculators/retirement/social-security-benefits-calculator.aspx">benefit calculator</a> to estimate your future payments.</p> <h2>2. Don't Wait to Downsize</h2> <p>Consider selling your home and investing the profits. Downsize to a lower-cost senior living community or condominium in an area where your property taxes will be affordable. You can also inquire about school parcel tax exemptions that allow seniors to apply for tax exemption from taxes imposed by local school districts.</p> <h2>3. Move to a No Tax State</h2> <p>Move to a state with no income tax on pension, Social Security, or dividend income. Florida, Nevada, New Hampshire, Pennsylvania, Washington, and Wyoming are among the states that do not tax that income.</p> <h2>4. Accept Government-Sponsored Medical Insurance</h2> <p>Medicare provides adequate health insurance coverage for doctor's visits, emergency care, assisted living, etc., but does not cover prescription drugs, dental, or vision care. For this, you will need add-on coverage like those offered by Medicare Advantage and Supplemental Insurance (Medigap). Consult with your insurance provider prior to retirement to ensure you can afford proper health insurance coverage. If you can't, inquire about government subsidies or senior plans offered by the likes of <a href="http://www.aarp.org/">AARP</a>.</p> <h2>5. Max-Out Retirement Accounts</h2> <p>By now you should be fully funding all of your retirement accounts and making any catch-up contributions. The 2015 catch-up contributions for IRAs total an additional $1,000 ($6,500) and $6,000 ($24,000) for your 401(k). As they are the most tax advantageous, make sure you are fully funding these accounts over the next few years preceding your retirement.</p> <h2>6. Diversify Using Bonds and ETFs</h2> <p>As you are nearing retirement age, you will want to gradually rebalance your portfolio so that it has less of volatile investments like stocks, and more of safer investments such as bonds and exchange-traded funds, or ETFs.</p> <h2>7. Join AARP</h2> <p>The benefits of joining AARP are endless. For those unfamiliar, AARP is the popular senior citizens advocacy group. The annual membership fee is only $16 and is discounted even further when years are bought in bulk. Members receive invaluable discounts on dining, travel, roadside assistance, auto insurance, health benefits, and more. This is a program that's definitely well worth signing up for.</p> <p><em>Are you prepared for retirement? What are you doing to get ready?</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/how-to-enjoy-retirement-if-you-havent-saved-enough">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/4-things-millennials-should-do-today-to-prepare-for-retirement">4 Things Millennials Should Do Today to Prepare 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-start-saving-for-retirement-at-40">How to Start Saving for Retirement at 40+</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/retirement-planning-if-you-re-under-30">Retirement Planning If You’re Under 30</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/12-things-you-didnt-know-about-retirement">12 Things You Didn&#039;t Know About Retirement</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/retirement-accounts-and-money-to-spend">Retirement accounts and money to spend</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401(k) aarp investments IRAs saving money social security Fri, 01 May 2015 15:00:25 +0000 Qiana Chavaia 1400950 at http://www.wisebread.com How to Start Saving for Retirement at 40+ http://www.wisebread.com/how-to-start-saving-for-retirement-at-40 <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-start-saving-for-retirement-at-40" 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_000020745280.jpg" alt="Retirement fund you should start adding to over 40" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Perhaps you missed the memo urging you to start saving for retirement in your 20s or 30s. Or, if your situation is anything like mine, you started a family early or didn't find your passion in life until you were in your 30s.</p> <p>Fortunately, it's not too late to start saving for retirement, because you're likely earning more today than you did a decade ago. You should be able to start saving now and still retire with a hefty nest egg. But first, you must take some essential steps.</p> <h2>1. Evaluate Your Savings Potential</h2> <p>Be realistic. Sure, we all wish we could save $5,000 per month, but can you <em>actually </em>achieve this based on your earnings and expenses? Remember, no savings amount is so small that it won't positively impact your goals. Save what you can, even if it's only a few hundred dollars per month. There are always ways to push your savings goals further by <a href="http://www.wisebread.com/the-first-step-to-budgeting">establishing a budget</a>, <a href="http://www.wisebread.com/10-great-home-based-side-business-ideas">creating a side business</a>, <a href="http://www.wisebread.com/this-is-how-you-downsize-your-home-and-start-living-a-better-life">downsizing your life</a>, or all of the above.</p> <h2>2. Set a Financial Goal</h2> <p>How much do you need to retire? Start by taking an assessment of where you are financially and where you need to be. How much money do you need to live comfortably in retirement? Do you anticipate a need for $25,000, $50,000 per year, or maybe more? It may be that you have to postpone your retirement by a few years while you make a few adjustments and implement a quick-fix plan to catch up with your goals.</p> <h2>3. Create a Plan</h2> <p>Any good financial plan should begin with an honest assessment of your goals and the steps you'll take to get there. Try using a <a href="http://www.aarp.org/work/retirement-planning/retirement_calculator.html">retirement calculator</a> to determine how much you'll need to save each month in order to retire by your desired date.</p> <p>You may be surprised by how much money you'll need to save, but don't fear the challenge. Consider working longer, finding a second income, or downsizing your lifestyle to enable progress toward your savings goals.</p> <h2>4. Bias Your Portfolio Towards Stocks</h2> <p>Because stocks offer higher returns than other, less aggressive investments, and you're playing a bit of catch-up, you will want to take on more risk by favoring these over bonds or other more conservative investments. As you grow nearer to retirement, you can take a more conservative investment approach.</p> <h2>5. Max-Out Retirement Accounts and Catch-Up Contributions</h2> <p>Max out your retirement accounts. Take full advantage of employer-sponsored accounts whether your employer offers match contributions, or not. If you don't already have one, open an Individual Retirement Account (IRA) and make the maximum contribution of $5,500. At retirement, given your account has been open at least five years, you can make withdrawals absolutely tax-free.</p> <p>If you're over the age of 50, the government allows you to make <a href="http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics-Catch-Up-Contributions">catch-up contributions</a> to your 401(k) or IRA plans, thus enabling you to save even more tax-deferred money for retirement.</p> <h2>6. Take Your Retirement Savings to New Heights</h2> <p>If you need to boost your savings in order to meet your goals, consider falling back on your business consulting skills, or any other skill you've developed throughout your career, and using it to create a second income. Freelancers, independent contractors, and small business owners can deduct many of their expenses.</p> <p>There's also a retirement savings incentive for being self-employed. The self-employed can set-up retirement accounts that allow both employer and employee contributions. For 2015, annual plan contributions for a SEP-IRA is up to $52,000, SIMPLE IRA is up to $12,500 plus an employer contribution of 3% of income, and the Solo 401(k) is up to $53,000.</p> <p>The IRS allows the self-employed to make contributions to both an IRA and 401(k). That's a lot of savings towards retirement.</p> <p><em>What steps are you taking toward retirement savings after age 40?</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/how-to-start-saving-for-retirement-at-40">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/retirement-accounts-and-money-to-spend">Retirement accounts and money to spend</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-enjoy-retirement-if-you-havent-saved-enough">How to Enjoy Retirement If You Haven&#039;t Saved Enough</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/retirement-planning-if-you-re-under-30">Retirement Planning If You’re Under 30</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-boost-your-odds-of-retiring-early">5 Ways to Boost Your Odds of Retiring Early</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/when-not-to-put-money-in-your-401-k">When NOT to put money in your 401(k)</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401(k) budgeting downsizing financial planning IRAs savings stocks Tue, 28 Apr 2015 11:00:29 +0000 Qiana Chavaia 1397574 at http://www.wisebread.com 4 More Exciting, Affordable American Cities to Retire In http://www.wisebread.com/4-more-exciting-affordable-american-cities-to-retire-in <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/4-more-exciting-affordable-american-cities-to-retire-in" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/retired_couple_beach_000038686710.jpg" alt="Happy retired couple settling in affordable American city" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>As of February 2015, the average <a href="http://www.ssa.gov/policy/docs/quickfacts/stat_snapshot/#table2">monthly Social Security benefit</a> of a retired American worker was $1,331.44.</p> <p>This means that a couple of retirees would have about $31,954 available in annual Social Security benefits. While some people have additional savings, 26% of Americans are planning to <a href="https://www.transamericacenter.org/docs/default-source/resources/center-research/tcrs2014_sr_15th_annual_compendium.pdf">rely on Social Security</a> as their primary source of income during retirement.</p> <p>Savvy folks know that they need to plan ahead and find affordable cities to make the most out of their nest eggs. Here are four more exciting, affordable U.S. cities to retire in. (See also: <a href="http://www.wisebread.com/4-exciting-affordable-american-cities-to-retire-in?ref=seealso">4 Exciting Affordable American Cities to Retire In</a>)</p> <h2>1. Pittsburgh, Pennsylvania</h2> <p>Financial advice website Nerdwallet put Pittsburgh at the top of its 2013 list of best places for baby boomers. Since over 25% of the city's population is between the ages of 50 and 70, and 13.8% is 65 years or older, retirees can enjoy an active social life.</p> <p>Senior citizens can find affordable housing options in Pittsburgh, as the <a href="http://money.usnews.com/money/retirement/slideshows/10-best-places-to-retire-on-social-security-alone/8">median monthly mortgage payment</a> is $1,023 and the median monthly rent is $614. Getting around the city by bus, light rail (The T), or Mon Incline is free at all times for senior citizens age 65 or over that present a Pennsylvania Senior Citizen ID Card or a Medicare card at the time of fare payment.</p> <p>Pittsburgh is a great retirement destination for sports fans, because the city is home to the Pittsburgh Panthers (college athletics), Pittsburgh Penguins (hockey), and Pittsburgh Pirates (baseball), and of course, the Pittsburgh Steelers. If sports isn't your thing, you still have the 14-block Cultural District, which offers opera, theater, ballet, and live music events.</p> <h2>2. Tucson, Arizona</h2> <p>If you're part of the 26% of U.S. retirees planning to rely primarily on your Social Security check, then take a good look at the state of Arizona. The Grand Canyon State doesn't tax Social Security income.</p> <p>And it gets even better. Up to $2,500 total of military, civil-service, and Arizona state and local government pensions are also <a href="http://www.kiplinger.com/tool/retirement/T055-S001-state-by-state-guide-to-taxes-on-retirees/index.php?map=&amp;state_id=3&amp;state=Arizona">exempt from taxes</a>. Plus, Arizona has no inheritance or estate taxes. Combine these tax breaks with the fact that Tucson's <a href="http://www.forbes.com/pictures/mjf45hfje/tucson-az/">cost of living</a> is 4% below the national average and you can quickly see how Tucson is one of the most affordable American cities to retire in.</p> <p>But it isn't just about the tax savings, since there's also plenty of local fun year-round. Since 1986, this city has been home to the Tucson Folk Festival, which attracts more than 10,000 folk music lovers every year with more than 20 hours of free, live bluegrass, Irish, and old country and western music. Other popular annual events are the Tucson Rodeo (a 90-year old rodeo, also known as La Fiesta de los Vaqueros), the Tucson Meet Yourself (a celebration of folk and ethnic communities of the multinational Arizona-Sonora region), and the 4th Avenue Street Fair (taking place twice a year).</p> <p>But I think it's all about the <a href="http://www.nytimes.com/2009/08/26/dining/26unit.html?_r=0">Sonoran hot dog</a>, which people believe to have been invented in Tucson.</p> <h2>3. St. Louis, Missouri</h2> <p>In St. Louis, retirees with an annual adjusted gross income of less than $85,000 (less than $100,000 for married couples) enjoy a <a href="http://www.kiplinger.com/tool/retirement/T055-S001-state-by-state-guide-to-taxes-on-retirees/index.php?map=&amp;state_id=26&amp;state=Missouri">tax exemption</a> on their Social Security benefits. For tax purposes, residential property is assessed at 19% of fair market value, and some retirees may qualify for a property tax credit. There is no inheritance tax or estate tax.</p> <p>Baby boomers comprise about 28% of the St. Louis population for three reasons. First, the city has a low cost of living &mdash; about 16.30% lower than that of the U.S. average. Second, <a href="http://money.usnews.com/money/retirement/articles/2012/10/15/best-places-to-retire-for-under-40000?page=2">housing costs for retirees</a> are affordable, at a median of $1,186 per month for those with a mortgage, $442 for seniors with a paid-off house, and $657 monthly for senior renters. Third, St. Louis is home to the Barnes-Jewish Hospital/Washington University, a <a href="http://health.usnews.com/best-hospitals/area/mo/barnes-jewish-hospitalwashington-university-6630930">nationally-ranked hospital</a> by U.S. News in several specialities.</p> <p>But St. Louis is an exciting city for several other reasons:</p> <ul> <li>Bud Selig, baseball's outgoing commish, proclaimed St. Louis as the <a href="http://sports.yahoo.com/blogs/mlb-big-league-stew/bud-selig-proclaims-st--louis--the-best-baseball-city-193010313.html">best baseball city</a> in 2015.<br /> &nbsp;</li> <li>With the highest concentration of sports bars in the country, St. Louis stands at #6 in the list of <a href="http://www.bestplaces.net/docs/studies/manliest_cities.aspx">manliest U.S. cities</a>.<br /> &nbsp;</li> <li>St. Louis ranks #4 in a list of America's <a href="http://www.bestplaces.net/docs/studies/blockparties.aspx">best places for block parties</a>.<br /> &nbsp;</li> <li>The city operates more than 100 parks, including the Citygarden, the Tower Grove Park, and the Carondelet Park.<br /> &nbsp;</li> <li>The city is within driving distance of more than 100 wineries and more than 6,000 caves.</li> </ul> <h2>4. Cleveland, Ohio</h2> <p>Located in the Buckeye State, Cleveland provides four tax breaks to retirees:</p> <ul> <li>No state taxes on Social Security benefits;</li> <li>No inheritance tax or estate tax;</li> <li>Four tax credits for retirees; and</li> <li>Homestead exemption for qualifying homeowners at least 65 years old.</li> </ul> <p>A big draw for Cleveland retirees is the state-of-the-art Cleveland Clinic, which ranks within the <a href="http://health.usnews.com/best-hospitals/area/oh/cleveland-clinic-6410670">top 10 U.S. hospitals</a> for several specialties, including geriatrics, cardiology, rheumatology, and urology. According to the latest U.S. Census, Cleveland has 476 physicians per 100,000 residents, a number much higher than the national average.</p> <p>Playhouse Square Center is the second largest performing arts center in the country, housing four theaters and attracting over one million guests every year to its more than 1,000 annual events. The Cleveland Orchestra is considered among the &quot;Big Five&quot; symphony orchestras leading the field in musical excellence and calibre of musicianship.</p> <p>Due to all these reasons (and more), Cleveland often ranks among one of the best <a href="http://www.cleveland.com/business/index.ssf/2013/06/cleveland_ranks_no_2_as_one_of.html">U.S. cities to retire in</a>.</p> <p>Planning for retirement is a two-step process. Not only do you have to maximize your nest egg, but also you have to minimize your living expenses during your golden years. In order to achieve both objectives, consider these four American cities when you're looking at retirement destinations. (See also: <a href="http://www.wisebread.com/5-simple-ways-to-boost-an-underperforming-401k?ref=seealso">5 Simple Ways to Boost an Underperforming 401(k)</a>)</p> <p><em>In what U.S. city are you planning to retire &mdash; and why?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/damian-davila">Damian Davila</a> of <a href="http://www.wisebread.com/4-more-exciting-affordable-american-cities-to-retire-in">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-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/social-security-is-not-a-ponzi-scheme">Social Security Is Not a Ponzi Scheme</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/tiny-nestegg-retire-abroad">Tiny Nestegg? Retire abroad!</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-enjoy-retirement-if-you-havent-saved-enough">How to Enjoy Retirement If You Haven&#039;t Saved Enough</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/12-things-you-didnt-know-about-retirement">12 Things You Didn&#039;t Know About Retirement</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/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> </ul> </div> </div> </div> </div><br/></br> Retirement affordable living baby boomers social security tax exemptions u.s. cities Mon, 20 Apr 2015 13:00:09 +0000 Damian Davila 1392146 at http://www.wisebread.com 5 Ways to Boost Your Odds of Retiring Early http://www.wisebread.com/5-ways-to-boost-your-odds-of-retiring-early <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-ways-to-boost-your-odds-of-retiring-early" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/guy_computer_000025658945.jpg" alt="Man trying to boost his odds of retiring early" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>The <a href="http://crr.bc.edu/briefs/the-average-retirement-age-an-update/">average age of retirement</a> stands today at 62 for women and 64 for men. But if you're like many Americans, you'd probably much prefer to have your feet in the sand and a piña colada in hand well before you reach your 60s. No matter your age, it'll be pretty hard to pay for that oceanfront real estate and tiki bar tab if you haven't set aside enough savings.</p> <p>Fortunately, your dreams of a comfortable, early retirement can still come true &mdash; so long as you're willing to do some heavy duty planning, smart saving, and savvy investing. Read on for our roundup of the best tips and tricks for retiring early &mdash; without winning the lottery.</p> <h2>1. Set a Savings Goal</h2> <p>First thing's first: You need to calculate how much money you'll need to stockpile before you can quit your day job. Be forewarned &mdash; it'll likely be a number that will make your jaw drop. But even if it seems totally unattainable, rest assured that it's not. Let's say you'd like to retire at 48 &mdash; a plum 15 years earlier than the average American. Take your pre-retirement income and multiply it by the number of expected years of life you'll have in retirement; in this case, we'll say it's 48 x 31 (this assumes you're going to live to be 79, the average life expectancy for an American).</p> <p>For example, if you're living off a $70,000 salary now, you'll need to save $2.2 million before you can ditch your nine-to-five. On average, retirees spend between 65% and 95% of their<a href="http://www.forbes.com/sites/fidelity/2015/03/23/are-you-on-track-for-the-retirement-you-want-infographic/?sr_source=lift_polar"> pre-retirement income</a>, so this calculation shoots a little high. But since you very well may live a decade or two longer than the average Joe, it's better to have a bigger cushion than no cushion at all.</p> <h2>2. Live Frugally</h2> <p>If you want to achieve a comfortable, early retirement, one way of getting there is by living frugally. That means forgoing name brand clothing, coupon-less meals at restaurants, salon visits, and airplane travel. Buying used cars only &mdash; or giving up cars, altogether and instead riding a bike or public transit. (See also: <a href="http://www.wisebread.com/the-two-biggest-mistakes-people-make-when-starting-to-live-frugally?ref=seealso">The Two Biggest Mistakes People Make When Starting to Live Frugally</a>).</p> <p>If this sort of lifestyle sounds foreign to you, you may want to begin by crafting a carefully detailed budget that will set you up to achieve your long-term retirement savings goal. If all of this sounds exactly like the way you don't want to live out your younger years, frugal living as a road to early retirement quite simply may not be for you.</p> <h2>3. Start a Business &mdash; Then Let Someone Else Run It for You</h2> <p>If you've got an entrepreneurial bone in your body, you might want to explore launching your own business as a means of achieving early retirement. Whether it's a food truck or a marketing and consulting firm, the idea is to launch the business and work it until it's profitable enough that you can hire someone else to run the day-to-day operations while you kick back in that beach chair and watch the money pour in. Alternatively, the sale of your business could fund your retirement. Nearly 40% of small business owners say they are <a href="http://www.guardianlife.com/glife11pp/groups/camp_internet/@stellent_camp_websites/documents/document/sbo-retirement-readiness.pdf">poised to retire earlier</a> than they had anticipated. (See also: <a href="http://www.wisebread.com/starting-your-dream-business-is-easier-than-you-think-heres-how?ref=seealso">Starting Your Dream Business Is Easier Than You Think &mdash; Here's How</a>)</p> <h2>4. Get Yourself a Pension</h2> <p>The beauty of the pension plan: It's sort of like earning a salary, only without having to put in the work. And although many industries are phasing out these plans, about one in four large employers still offer some sort of <a href="http://www.towerswatson.com/en/Insights/Newsletters/Americas/Insider/2014/retirement-in-transition-for-the-fortune-500-1998-to-2013">pension to new hires</a>, according to a recent study. At the top of the list are companies in the insurance, utilities, energy, transportation, and food and beverage industries. Government is another sector where pensions are alive and well. Many municipalities still offer firefighters, police officers, and public works employees pensions that include overtime and saved vacation in the final calculation. The result is that some workers can retire with a pension that's <a href="http://www.ctpost.com/local/article/Crushed-by-town-pensions-1413396.php">higher than their former salary</a>. Imagine that.</p> <p>Alternatively, Apple, Google, Microsoft, and other big-name employers in the <a href="http://money.usnews.com/money/retirement/slideshows/10-industries-with-the-best-retirement-benefits/10">information industry</a> offer workers an average retirement benefit contribution of $2.76 per hour worked. That's huge. Also, these tend to be pretty high-paying jobs, which means employees have more flexibility to make larger contributions to their own retirement savings, in addition to what the company chips in.</p> <h2>5. Make Smart Investments</h2> <p>The best time to start investing is now. Case in point: If you start maxing out your IRA contributions at age 25, you will have saved $1.6 million by the time you're 70. But if you were to start at 35, you'd save about half that sum. Clearly, a few years can make a huge difference. Now, if you're not investment savvy, there are tons of tools available to help you figure out where to put your money.</p> <p>One of the best and easiest is an automated investment advisor, such as FutureAdvisor, that specializes in retirement planning. With <a href="https://www.futureadvisor.com/">FutureAdvisor</a>, you can get your 401(k), IRA, and other accounts analyzed, plus receive recommendations on how to improve your existing investments &mdash; absolutely free of charge. Then, if you're impressed with the results and want to hire FutureAdvisor as your investment manager, there's a monthly fee of either $9 or $19, depending on the value of your assets. Rest assured, all of FutureAdvisor's investment recommendations are made with the goal of setting you up for the most comfortable retirement years possible.</p> <p><em>What other steps are you taking to ensure an early retirement?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/brittany-lyte">Brittany Lyte</a> of <a href="http://www.wisebread.com/5-ways-to-boost-your-odds-of-retiring-early">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/how-to-start-saving-for-retirement-at-40">How to Start Saving for Retirement at 40+</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-times-raiding-your-retirement-accounts-early-is-okay">4 Times Raiding Your Retirement Accounts Early Is Okay</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-start-a-business-with-your-401k">How to Start a Business With Your 401(k)</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/retirement-accounts-and-money-to-spend">Retirement accounts and money to spend</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/when-not-to-put-money-in-your-401-k">When NOT to put money in your 401(k)</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Entrepreneurship Investment Retirement 401(k) pensions savings Tue, 14 Apr 2015 09:00:42 +0000 Brittany Lyte 1379696 at http://www.wisebread.com 5 Best Online Brokerages for Your IRA http://www.wisebread.com/5-best-online-brokerages-for-your-ira <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-best-online-brokerages-for-your-ira" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_laptop_000029434486.jpg" alt="Woman managing her online IRA accounts" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Are you ready to save for retirement, but aren't sure where to start? I've created a short list of the five best brokerages for your <a href="http://www.irs.gov/Retirement-Plans/Individual-Retirement-Arrangements-(IRAs)-1">Individual Retirement Account (IRA)</a>. To develop my recommendations, I began by considering account minimums and investment fees.</p> <p>I also examined the ease of managing the IRA, identifying firms that have excellent offerings for a wide range of investors, whether you're hands-off or deeply engaged. Specifically, I evaluated the breadth of investment choices, value of commission-free and no-transaction fee selections, simplicity and costs associated with putting the account on auto-pilot, and any investment educational content provided.</p> <p>Here are my top picks.</p> <h2>1. TD Ameritrade</h2> <p><a href="https://www.tdameritrade.com/offer-home.page?s_tnt=54494:8:0">TD Ameritrade</a> is an online brokerage well-suited to the novice investor. There are no account minimums, so you can get started with a modest amount of cash. Plus, there are no maintenance or inactivity fees, so you don't have to worry about these nibbling away at your retirement account balance.</p> <p>This brokerage boasts more than 100 commission-free exchange-traded funds (ETFs), and nearly 2,000 no-load, no-transaction fee mutual funds (plus funds with loads that are waived for TD Ameritrade investors). If you choose to buy individual stocks and transaction fee funds, the commissions for stock and ETF trades are $9.99, while no-load mutual funds cost $49.99 per transaction.</p> <p>There are vast educational resources that include videos on basic investing principles for new investors and tools to screen and evaluate investments.</p> <h2>2. Charles Schwab</h2> <p><a href="https://www.schwab.com/">Charles Schwab</a>, the first brokerage firm to <a href="http://www.sfgate.com/business/article/The-genesis-of-discount-brokerage-1975-SEC-2637815.php">discount its commissions</a>, continues to be a good deal. The company has developed its own proprietary line of ETFs and mutual funds, and created the OneSource listing of funds that are available free of trading fees. You'll find nearly 200 commission-free ETFs and more than 3,000 no-load, no-transaction fee mutual funds, including a good selection of market index funds.</p> <p>You'll typically need $1,000 or more to establish an IRA with Schwab. However, this account minimum is waived if you deposit $100 or more on a monthly basis. And, you can find mutual funds with initial investments as low as $100 and ETFs priced between $40 and $100+ available free of transaction charges.</p> <p>Stock and ETF trades are $8.95 per transaction when you buy individual stocks or non-commission-free ETFs. Transaction fee, no-load mutual funds will cost $76 when you purchase shares; however, selling shares is free.</p> <p>There are no account management or inactivity fees, making Schwab a good choice for those who may have low balances or little activity associated with their accounts. Furthermore, Schwab has educational content and tools to help you plan and invest for retirement. These include articles, workshops, webcasts, and sessions both for do-it-yourself investors and those who wish to receive guidance on a periodic or ongoing basis.</p> <h2>3. E*Trade</h2> <p><a href="https://us.etrade.com/">E*Trade</a> is an online brokerage with investment choices that include stocks, mutual funds, ETFs, and bonds. Among its offerings are more than 100 commission-free ETFs and 1,300 no-load, no-transaction fee mutual funds.</p> <p>If you choose individual stocks and most ETFs, you will pay $9.99 per trade; and $19.99 on no-load mutual fund purchases and redemptions.</p> <p>At E*Trade, there are no account minimums or annual fees charged on IRAs. If you're eager to learn about investing and retirement planning, you'll find plenty of educational content. And E*Trade's free retirement planning calculator generates an action plan based on your retirement savings to date, current income level and anticipated needs in retirement, and more. You can also gain access to courses and webinars that provide instruction on topics such as researching a stock.</p> <h2>4. Vanguard</h2> <p><a href="http://www.vanguard.com/">Vanguard</a> is best known for its low cost, commission-free, market-index mutual funds; they were the first to develop and market these for individual investors, thanks to visionary founder John Bogle.</p> <p>Among the options available are Vanguard mutual funds and Vanguard ETFs linked to major stock and bond indexes, along with specialty funds representing various industry segments, investing styles (e.g., small cap growth or large cap value), and global regions. Most funds do not carry a transaction fee and their operating expenses are among the lowest in the industry.</p> <p>There is no minimum to open a mutual fund account with Vanguard. However, mutual funds carry initial investment minimums, beginning at $1,000 for target date retirement funds. You'll need $3,000 to establish a brokerage account, but you can then purchase Vanguard ETFs commission-free.</p> <p>If you decide to buy and sell non-Vanguard securities, you'll pay $7 for trades of individual stocks and ETFs, and $35 for transaction fee mutual funds. There are no account maintenance fees if you elect to receive electronic statements. You'll find solid educational content on the site geared toward long-term planning and construction of diversified portfolios.</p> <h2>5. TradeKing</h2> <p><a href="https://www.tradeking.com/">TradeKing</a> is an online brokerage firm that is inexpensive and accessible to the new investor. There is no account minimum and fees are low compared to other brokers. The firm does not offer commission-free ETFs or no-load, no-transaction fee mutual funds. However, you'll pay just $4.95 for stock and ETF trades, and $9.95 for no-load mutual funds, so your transaction costs can be readily contained.</p> <p>There are no account fees, but you'll need to make at least one trade per year or keep at least $2,500 in your combined TradeKing accounts to avoid an inactivity charge. New investors will find plenty of educational resources to learn about stocks, mutual funds, ETFs, and more.</p> <p>If you are looking for low minimums, low investment fees, a full range of investment choices, relative ease of managing the account, and education to guide your decisions, an IRA with one of these brokerages should fit your needs for retirement savings.</p> <p><em>Which online brokerage do you use for your IRA </em><em>&mdash;</em><em> and why?</em><em><br /> </em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/julie-rains">Julie Rains</a> of <a href="http://www.wisebread.com/5-best-online-brokerages-for-your-ira">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/is-this-hidden-cost-sapping-your-retirement-savings">Is This Hidden Cost Sapping Your Retirement Savings?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-much-should-you-have-saved-for-retirement-by-30-40-50">How Much Should You Have Saved for Retirement by 30? 40? 50?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/3-steps-to-getting-started-in-the-stock-market-with-index-funds">3 Steps to Getting Started in the Stock Market With Index Funds</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-ways-etfs-can-put-more-money-in-your-pocket-than-mutual-funds">8 Ways ETFs Can Put More Money in Your Pocket Than Mutual Funds</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-start-saving-for-retirement-at-40">How to Start Saving for Retirement at 40+</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement ETFs investing ira accounts mutual funds online brokerages stocks Thu, 09 Apr 2015 11:00:06 +0000 Julie Rains 1376575 at http://www.wisebread.com 4 Things Millennials Should Do Today to Prepare for Retirement http://www.wisebread.com/4-things-millennials-should-do-today-to-prepare-for-retirement <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/4-things-millennials-should-do-today-to-prepare-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_work_000015424612.jpg" alt="Millennial woman at work preparing for retirement" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>The Millennial generation &mdash; those born between 1980 and 1995 &mdash; have it pretty tough. After starting their careers in the worst economic downturn in a century, they're now being blamed for everything from <a href="http://time.com/money/3585877/millennials-thanksgiving-shopping/">shopping on Thanksgiving</a> to their own <a href="http://jobs.aol.com/articles/2012/11/12/generation-y-fails-to-prepare-for-job-market-survey-finds/">unemployment rates</a>. (If it makes you feel any better, you should know that they used to blame everything on us Generation X kids, too.)</p> <p>And they face a tough road to retirement, too. Various economists and experts have crunched the numbers and decided that at best, Millennials won't be able to retire until age 73, before keeling over at 84. The reasons are obvious: Student loan debt is at an all-time high of $1.2 trillion overall, with the average college graduate finishing school nearly $30,000 in debt as of 2013. Employment has been tough to come by for this generation, and even those lucky enough to have a job earn less than their parents did at the same age (adjusted for inflation).</p> <p>But this is also an extremely resilient generation that has learned to get ahead in tough times. Here are four things that Millennials (not to mention Gen-Xers and Boomers) can do today to prepare for retirement:</p> <h2>1. Open an IRA</h2> <p>For the most part, Millennials who are given the opportunity to invest in their company's 401(k) do so. According to polls, 70% of Millennials are already saving for retirement, which is a huge accomplishment.</p> <p>Where things get tougher are when young workers do not have access to a retirement vehicle at work. That's why it's a great idea to open an IRA (whether your employer offers a 401(k) or not). No matter the vagaries of your career, having an IRA will always provide you with a retirement vehicle that you can invest in.</p> <p>What kind of IRA should you get? Look for one that offers no-load mutual funds. No-load means you are not paying a commission on your investments, so you keep more of your money.</p> <h2>2. Automatically Transfer $10 Per Week</h2> <p>This kind of advice sounds like something your grandmother would tell you to do, but Nana has the right idea. Automating your savings is the best way to get into the habit of setting money aside, since you don't have to think about it. Starting with a low amount that you are unlikely to miss is an excellent way to build your retirement account.</p> <p>This small action can make a huge difference. After 35 years, your weekly $10 contribution can grow to $76,915.00, assuming an 8% rate of return. If you increase your automatic transfer rate each year to reflect your raises, that growth will be even more impressive. And all from an amount of money you probably won't even notice is missing.</p> <h2>3. Embrace the Side Hustle</h2> <p>More than their parents or grandparents, Millennials recognize that there is no such thing as a dream job &mdash; that is, the one true job that will provide fulfillment and compensation beyond one's wildest wishes. That's partially because many members of this generation have had to cobble together employment from multiple opportunities just to keep the lights on.</p> <p>But getting in the habit of working for several employers is not just good for your current bottom line &mdash; it's potentially good for your career and your retirement prospects, too.</p> <p>That's because your side hustle can help you with networking and time management, which will help your main career. In addition, maintaining multiple gigs can help you weather any financial or career setbacks. (See also: <a href="http://www.wisebread.com/find-a-side-gig-at-these-4-best-micro-jobs-sites?ref=seealso">The 4 Best Micro Job Sites</a>)</p> <p>But most importantly, working a side hustle can help you to redefine work &mdash; which will be helpful in the future when retirement is less likely to look like the blank space between the end of your career and death, and more likely to be a different chapter in an interesting life. No matter what you do with the money from your side hustle (hint: invest it!), embrace the idea that there are many things you can do to make money and feel productive.</p> <h2>4. Split Your Windfalls</h2> <p>Many of us have a tendency to spend <a href="http://www.wisebread.com/mental-accounting-why-you-blow-your-tax-refund-but-not-your-raise">unexpected windfall money</a> on fun purchases. But start getting in the habit of splitting your windfall money between your splurges and your retirement accounts. The splurge-to-retirement account ratio is up to you (although 50/50 is generally a good idea), but starting to think of windfalls as a gift to both present and future you is a great way to enjoy that money twice &mdash; which is even better than spending it all on a shopping spree today.</p> <h2>The Kids Are Alright</h2> <p>It's human nature for every generation to give the next one a hard time. And the pundits who warn of the sky falling for Millennial finances aren't making things up. But they are ignoring all of the things that Millennials have going for them: The experience of watching their parents lose money during the 2008 downturn, a sense of personal responsibility for retirement, and plenty of time.</p> <p>There will come a time when financially secure Millennials will be the ones worrying about the whippersnappers who come after them. Let's just hope the Millennials will be able to keep the hysterical rhetoric to a minimum when it's their turn.</p> <p><em>What are you doing now to prepare for retirement?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/emily-guy-birken">Emily Guy Birken</a> of <a href="http://www.wisebread.com/4-things-millennials-should-do-today-to-prepare-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-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/how-to-enjoy-retirement-if-you-havent-saved-enough">How to Enjoy Retirement If You Haven&#039;t Saved Enough</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-start-saving-for-retirement-at-40">How to Start Saving for Retirement at 40+</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/retirement-planning-if-you-re-under-30">Retirement Planning If You’re Under 30</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/retirement-accounts-and-money-to-spend">Retirement accounts and money to spend</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-ways-to-max-out-your-ira-contributions-by-april-15th">7 Ways to Max Out Your IRA Contributions by April 15th</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement Economy generation y IRAs millennials saving money Mon, 06 Apr 2015 17:00:08 +0000 Emily Guy Birken 1368069 at http://www.wisebread.com 12 Surprising Things Women Should Know About Retirement Planning http://www.wisebread.com/12-surprising-things-women-should-know-about-retirement-planning <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/12-surprising-things-women-should-know-about-retirement-planning" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/retirement_000014649650.jpg" alt="Woman considering her retirement as homeless person" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>One of my longstanding fears is that my retirement will see me living on the street, homeless and destitute. As it turns out, my fear is far from unique. In fact, it even has a name: Bag Lady Syndrome. According to a poll by Allianz Life Insurance, 49% of American women fear <a href="https://www.allianzlife.com/retirement-and-planning-tools/women-money-and-power/bag-lady">ending up a bag lady</a>, even those who make six figure salaries. In fact, according to a recent survey of workers by the Transamerica Center for Retirement Studies, only 14% of women are very confident in their ability to retire comfortably.</p> <p>Yes. I have heard the news: Women continue to make huge strides in school and in the workplace. But I also know the reality. Women are at a much greater risk of financial insecurity in later life than men for a number of reasons.</p> <h2>1. Longevity Does Not Work in Women's Favor</h2> <p>The women in my family generally live to be close to 100. While most people are impressed by my genetics, I find longevity to be an expensive double-edged sword. How am I going to pay for a 30-year retirement? The average American woman lives six years longer than the average man, which is why 70% of Social Security beneficiaries over age 85 are women. There are <a href="https://www.americanprogress.org/issues/women/report/2008/10/08/5103/the-straight-facts-on-women-in-poverty/">50% more elderly women</a> living in poverty than men.</p> <h2>2. 54% of Women Don't Plan to Retire, Ever</h2> <p>Like Mrs. Hughes on Downton Abbey, over half of all American women plan on working until they drop dead.</p> <h2>3. Almost Half of All Women Plan to Work Through Retirement</h2> <p>Shuffleboard and sensible shoes are not everyone's dream retirement. Roughly 49% of women plan on continuing to work during retirement. While work is pleasurable for many women, and delaying retirement is a great way to shore up savings, the job market for 70- year-olds isn't great. Planning to simply not retire is not a viable retirement strategy.</p> <h2>4. Baby Boomers Are Still Living the Dream</h2> <p>Like every other gen X-er on the planet, I figured out in college that I would spend my life paying for someone else's social security, since it's a benefit that I doubt I will ever enjoy. However, this bitter worldview is generational. To wit: 26% of baby boomers (born 1946-1964) don't have a backup plan if they are <a href="http://money.usnews.com/money/personal-finance/mutual-funds/articles/2013/10/08/boomers-forced-to-retire-face-unexpected-challenges">forced into retirement</a> sooner than expected due to health problems or job loss.</p> <h2>5. Time Off for Caregiving Negatively Impacts Retirement</h2> <p>Millennials, get ready to be poor when you are old. Even if your baby boomer parents put away enough money for retirement, you might still have to supplement their care. A recently published study by the Employment Benefit Research Institute calculates that female baby boomers on the verge of retirement have a <a href="http://www.ebri.org/publications/ib/index.cfm?fa=ibDisp&amp;content_id=5487">savings shortfall</a> of nearly $63,000, while male boomers have a deficit of $34,000.</p> <p>What's worse, 58% of women don't plan to take time out of the workforce to act as a caregiver for a child or an aging parent, which is odd considering that 80% of American women give birth at some point during their child bearing years. In fact, the average woman spends <a href="http://boston.cbslocal.com/2014/09/29/bag-lady-syndrome/">17 years raising children</a> and 18 years caring for aging relatives (including her spouse).</p> <p>Of the 22% of the female population who <em>aren't </em>living in denial of the time suck that is parenting or childcare, 67% believe that taking time off work to care for children or aging parents will hurt their ability to save for retirement. (See also: <a href="http://www.wisebread.com/the-9-people-in-your-life-who-are-keeping-you-poor?ref=seealso">9 People in Your Life Who Are Keeping You Poor</a>)</p> <p>While women who take off time to be caregivers lose out on matching funds and cannot contribute to a 401(k), a survey by the asset management firm BlackRock shows that women can <a href="http://www.cnbc.com/id/102473846#.">close the savings gap</a> when they return to the workforce. However, they miss out on the magic that is compound interest during years spent being caretakers.</p> <h2>6. The Majority of Women Expect to Self-Fund Retirement</h2> <p>Only 5% of women expect a company-funded pension to be the primary source of retirement, because less than a third of women will receive any kind of pension at all. Roughly 27% expect to rely on social security, while 59% of women expect to self-fund their retirement through a 401(k) or other savings and investments.</p> <h2>7. Part-Time Work Is Women's Work</h2> <p>Due to childcare responsibilities, women are much more likely than men to <a href="http://www.nytimes.com/2014/08/21/upshot/how-a-part-time-pay-penalty-hits-working-mothers.html?abt=0002&amp;abg=0">work part-time</a>. Not only does this translate into a much smaller paycheck, most part-time jobs do not include benefits such as health care.</p> <h2>8. Women Are Less Likely to Be Offered a Retirement Plan</h2> <p>Also, because part-time workers of either gender are less likely to be included in 401(k)-style retirement plans through work, fewer women are offered retirement benefits.</p> <p>This is compounded by the fact that women who take time out from their careers to raise children or care for aging relatives are not eligible for retirement plans and miss out on matching contributions.</p> <h2>9. Women's Annual Contributions to 401(k)-Style Plans Lag Behind Men</h2> <p>This falls into the &quot;No Duh&quot; category of financial factoids. Women's annual contributions to retirement plans lag behind men's because women make less money on average, and have to take off more time for childcare.</p> <h2>10. Fewer Women Take Advantage of Retirement Plans Than Men</h2> <p>What is preposterous, however, is that even when women are <a href="https://www.transamericacenter.org/docs/default-source/resources/women-and-retirement/tcrs2015_sr_womens_retirement_outlook.pdf">offered retirement plans</a>, only 77% participate, compared to 82% of men!</p> <h2>11. Women Think They Will Only Need $800,000 to Retire Comfortably</h2> <p>Statistically, women live longer than men, and therefore have a longer retirement. This should correspond with higher estimates for retirement savings needs. However, it does not. The median estimated retirement savings need for women is $800,000, compared to the $1,000,000 median men need to feel financially secure in retirement. Why is there this discrepancy?</p> <h2>12. Women Are Guessing Their Retirement Savings Needs</h2> <p>Alas, the main reason that women are low-balling their savings is because 57% are just <a href="http://womenmoneyandsuccessmag.com/resources/statistics">guessing their retirement needs</a>. Only 8% of women in the Transamerica Study used a calculator to run numbers.</p> <p>While this is depressing news, women of every age can take steps to improve their retirement readiness.</p> <h3>Develop a Retirement Strategy and Put It on Paper</h3> <p>Use a retirement calculator to figure out how much you will need to save each year &mdash; including both employer-sponsored plans and outside savings.</p> <h3>Plan Your Parenthood</h3> <p>Can you actually afford to have children? If you already have children, carefully consider any and all options to help mitigate the impact on your long-term financial security. Can you move in with family to help save on childcare costs?</p> <h3>Seek Retirement Benefits</h3> <p>If you employer doesn't offer you a retirement plan, it doesn't hurt to ask for one or seek out an employer who does.</p> <h3>Participate in Company Plans</h3> <p>Regardless of how little money is left over from each paycheck, workers with 401(k) plans should try to maximize the amount of money they put away, especially if the employer matches funds. Women (and men) who don't participate in matching 401(k) plans are literally refusing free money.</p> <h3>Educate Yourself About Retirement Investing</h3> <p>If you can, seek professional guidance. Learn about ways to stretch savings, including when to withdraw money from retirement accounts with minimal penalties.</p> <h3>Have a Backup Plan</h3> <p>Do you have disability insurance or life insurance? Identify possible cost-cutting or money-making lifestyle changes such as moving into a smaller home or living with roommates.</p> <h3>Actually Do the Math</h3> <p>Use a retirement calculator to estimate your retirement savings needs and do everything in your power to achieve that goal.</p> <h3>Share Your Knowledge and Plans</h3> <p>Talk to your family and close friends about your retirement plans. Managing financial and time expectations should be part of everyone's retirement strategy.</p> <p><em>Are you afraid of becoming a bag lady? What is your strategy to keep this paranoid fantasy from becoming a reality? </em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/max-wong">Max Wong</a> of <a href="http://www.wisebread.com/12-surprising-things-women-should-know-about-retirement-planning">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-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/how-to-start-saving-for-retirement-at-40">How to Start Saving for Retirement at 40+</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-ways-to-boost-your-odds-of-retiring-early">5 Ways to Boost Your Odds of Retiring Early</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/retirement-accounts-and-money-to-spend">Retirement accounts and money to spend</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/when-not-to-put-money-in-your-401-k">When NOT to put money in your 401(k)</a></span> </div> </li> <li class="views-row views-row-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> Retirement 401(k) bag lady syndrome poverty savings women Mon, 30 Mar 2015 11:00:08 +0000 Max Wong 1359519 at http://www.wisebread.com The Step-by-Step Guide to Rolling Over Your 401(k) http://www.wisebread.com/the-step-by-step-guide-to-rolling-over-your-401k <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/the-step-by-step-guide-to-rolling-over-your-401k" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_401k_000020117190.jpg" alt="Woman discussing rolling over her 401(k) with her employer" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>If you've recently switched jobs, you may be wondering what to do with your retirement accounts. First, congratulations on thinking ahead and planning for your future. Rolling over accounts is an important step toward continuing to build your financial future, and we've created this step-by-step plan to help you navigate the process.</p> <p>That said, before you figure out how to rollover your 401(k), it's first important to know what not to do.</p> <h2>Don't Take a Distribution</h2> <p>It's tempting to let your former employer send you a check to cash out your account, but, unless you're over age 59&frac12;, this can be a huge mistake. Your former employer is required to withhold 20% of the distribution. On top of that, the IRS will charge you an additional 10% penalty if you're younger than 59&frac12;.</p> <p>To break it down in dollars and cents, let's assume there's a $10,000 balance in your 401(k) and you're in a 25% tax bracket.</p> <p>$10,0000 &ndash; $2,000 (20% Withholding) &ndash; $1,000 (10% Tax Penalty) = $7,000</p> <p>You've just taken a $3,000 hit on your portfolio. That's a heavy hit to take. Plus, you'll no longer have that money working in the market for you, which means you're more likely to end up like the majority of Americans who fear their retirement funds are lacking.</p> <p>Some people take distributions because they're not sure how to make ends meet between jobs (a valid fear). But taking a 401(k) distribution is one of the most expensive ways to bridge the gap when you're between jobs.</p> <p>But some distributions happen by accident. If you don't know how to conduct a 401(k) rollover, the paperwork can be confusing and it's easy to check the wrong box or make an inaccurate assumption.</p> <p>If your former company has already sent a check directly to you, there is a remedy, if you act fast. You'll have 60 days to get the funds deposited into an IRA. There is a bit of a hitch, though. You'll be directly responsible for making up the 20% that was withheld by your former employer.</p> <h2>So, What Should You Do?</h2> <p>If you're just starting the 401(k) rollover process, you'll have a few options.</p> <h3>Keep Your Funds In the Current 401(k)</h3> <p>If your 401(k) balance is greater than $5,000, you'll have the option to keep the money right where it is. The upside? No paperwork. The downside? Well, there are a few.</p> <ul> <li>It's easy to lose track of your accounts. The average person holds 11 jobs by age 46. That can add up to a lot of retirement accounts, if they're not being rolled over or combined.<br /> &nbsp;</li> <li>Retirement plan quality varies greatly. Not all 401(k)s are created equal. There are drastically different fee structures and varying levels of investment options. Most separated employees would be better off moving their money into an account with a low-fee provider like Vanguard or Fidelity, each of which offers vast investment options for your IRA.</li> </ul> <p>Some employers automatically distribute 401(k) funds for separated employees if the balance is below the $5,000 mark. If this is you, you'll want to get your rollover going immediately.</p> <h3>Roll Your Funds Into Your New Employer's Retirement Plan</h3> <p>It's not a bad idea to keep your retirement funds in the same place, so that you don't lose track of previous accounts. Not all 401(k) plans accept rollovers, so if you want to go this route, check with your new employer first.</p> <p>If rollovers are accepted, ask your new employer for instructions on where your former employer should send your existing 401(k) funds. Once you have these rollover instructions, call your former employer and ask for the forms you'll need to fill out.</p> <p>Once the paperwork is complete, your former employer should send your account balance directly to your new employer's plan. There shouldn't be any taxes withheld or penalties assessed for a direct rollover. (See also: <a href="http://www.wisebread.com/10-easy-ways-to-supercharge-your-retirement?ref=seealso">10 Easy Ways to Supercharge Your Retirement</a>)</p> <h3>Roll Your Funds Into an IRA</h3> <p>This is my favorite option, because low cost mutual fund giants like Vanguard or Fidelity generally offer more investment options than most employer 401(k) plans, and they're usually cheaper, too.</p> <p>The first step is to open a new IRA account with a high-quality, low-fee investment provider (like <a href="https://personal.vanguard.com/us/openaccount?CompLocation=GlobalHeader&amp;Component=OpenAccount">Vanguard</a> or <a href="https://rewards.fidelity.com/offers/iramatch?imm_pid=1&amp;immid=00994&amp;imm_eid=e41730670&amp;buf=999999&amp;gclid=CjwKEAjwoZ-oBRCAjZqs96qCmzgSJADnWCv8IN3h4jALOK1EtX2J45rce9bLEBvEsPyTK_PJF86VXxoCDLLw_wcB">Fidelity</a>). You can open an account online with most investment providers by simply going to their website, selecting the Open An Account option, and looking for an account option for rolling over employer-sponsored retirement plan account. To open the new account, you'll need the following:</p> <ul> <li>Your personal information, like social security number, birth date, email address, and street address;</li> <li>The current balance in the 401(k) account that you're rolling over;</li> <li>Your former employer's name;</li> <li>The name of the investment (usually a mutual fund of exchange traded fund) in which you plan to invest your funds. If you don't know what to choose, a popular option is a target retirement fund, which automatically rebalances your account as you age and get closer to retirement.</li> </ul> <p>Once the rollover account is open, the next step is to call your former employer and ask for their rollover instructions. They will likely have a form that needs to be completed and will likely ask for the name and address of the investment house where the funds are to be sent. They'll also need your new rollover IRA account number.</p> <p>Make sure the check they send goes directly to the investment house where you've opened the new account. The check should be made out to the new investment house, with your name and new account number notated on the check. Do not have the check sent directly to you.</p> <p>To complete the transaction, some employers will require a letter of acceptance. If yours is one that does, you'll need to go back to the investment house where you opened the IRA and make the request. Not all employers require this, but it's not uncommon, either, meaning getting the form together shouldn't be a big deal for your new account holder.</p> <p>Once all the forms are signed and completed, it usually takes about three weeks for a rollover to be complete. The funds should be sent directly from your old employer to your new account holder and you should receive a confirmation either in the mail or email. Again, there shouldn't be any taxes withheld or penalties assessed for a direct rollover. (See also: <a href="http://www.wisebread.com/how-to-set-up-an-ira-to-build-wealth?ref=seealso">How to Set Up An IRA to Build Wealth</a>)</p> <p>The whole thing should take about 10 minutes in paperwork and three weeks in wait time (while your old employer sends the funds to your new account holder). It's a small price to pay for building a secure retirement.</p> <p><em>Have you rolled over your 401(k) recently? Did you hit any snags or was it smooth sailing? Tell us about it in the comments below.</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/alaina-tweddale">Alaina Tweddale</a> of <a href="http://www.wisebread.com/the-step-by-step-guide-to-rolling-over-your-401k">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-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/if-you-want-your-401k-to-grow-stop-doing-these-6-things">If You Want Your 401K to Grow, Stop Doing These 6 Things</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/left-a-job-do-a-rollover">Left a job? Do a rollover.</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/this-is-why-you-cant-postpone-planning-for-your-retirement-and-how-to-start">This Is Why You Can&#039;t Postpone Planning for Your Retirement (And How to Start)</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/intimidated-by-retirement-investing-get-professional-help">Intimidated by Retirement Investing? Get Professional Help!</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/you-may-be-putting-your-retirement-money-in-the-wrong-place">You May Be Putting Your Retirement Money in the Wrong Place</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401(k) IRA life hacks personal finance retirement rollover Wed, 25 Mar 2015 13:00:10 +0000 Alaina Tweddale 1356036 at http://www.wisebread.com 7 Ways to Max Out Your IRA Contributions by April 15th http://www.wisebread.com/7-ways-to-max-out-your-ira-contributions-by-april-15th <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/7-ways-to-max-out-your-ira-contributions-by-april-15th" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_piggybank_000013609451.jpg" alt="Woman saving for IRA" title="" class="imagecache imagecache-250w" width="250" height="141" /></a> </div> </div> </div> <p>Did you know that if you make a <a href="https://www.fidelity.com/retirement-ira/contribution-limits-deadlines">personal IRA contribution</a> before April 15th of this year, that amount is deductible on your 2014 taxes? If you have the extra cash on hand, this is a great way to boost your retirement account while reducing your current tax burden. Here are seven creative ways to come up with that extra contribution money in the next month.</p> <h2>1. Don't Dine Out</h2> <p>April 15th is about a month away. What if you could make a promise to yourself not to eat out at all in the intervening weeks? Skip the morning coffee pick-up, bring your lunch to work, and find free ways to spend time with friends. Now, take all of that money you would have spent and deposit it into your IRA account, instead. It may sound like a big sacrifice, but it's only a month long and could add up to a big tax break.</p> <h2>2. Lace up Your Walking Shoes</h2> <p>Transportation is another big expense for many people. Consider when you might be able to use your own two feet, take low-cost or free public transportation, or bike to get you from point A to point B. Then, you can bank that transit money right into your IRA account.</p> <h2>3. Delay Spring Wardrobe and Home Purchases</h2> <p>Once the warm weather arrives, we're anxious for a personal and home makeover. If you can delay making any purchases such as these for the next month, you can use that money to contribute to your IRA. Think of it as giving your future self the gift of more freedom by putting that extra money into your retirement account today.</p> <h2>4. Itemize Your Deductions</h2> <p>Many people don't want to be bothered with itemizing their expenses, because it can take some time and requires additional organization and paperwork. However, if your itemized deductions are greater than the standard deduction, you'll save on taxes you owe, or get a bigger refund. Calculate your potential savings and put away that money in your IRA now to enjoy later.</p> <h2>5. Student Loan Interest Deduction</h2> <p>Many working adults today have student loans. If you make less than $80,000 per year as an individual (or less than $160,000 if filing jointly), you can deduct the interest you've paid on student loans. Use the money you'll save on that deduction to increase your contribution to your IRA.</p> <h2>6. Make Your Vacation a &quot;Staycation&quot;</h2> <p>After the rough winter we've had this year, it's tempting to take advantage of the ever-present travel deals being offered. Resist their offers and turn your spring vacation into a staycation. Chances are your hometown comes back to life once it thaws out from winter, and there are plenty of opportunities to re-discover it through events and activities that will help you <em>feel</em> like a tourist in your own backyard.</p> <h2>7. Delay Big Purchases</h2> <p>My laptop is now over five years old, and it's showing its age a bit with decreased speed. I'm tempted by all the features now available on new laptops, but I've decided that I can deal with a bit of decreased speed for the sake of banking some extra money. When it comes to big purchases like electronics, one thing is certain: In six months there will be a brighter, shinier model that's likely no more expensive than today's top-of-the-line. Get as much value out of your durable goods as possible, and only replace them when it's truly necessary. You'll be glad you did once you see that extra money accruing in your savings account.</p> <p>Maxing out your IRA isn't the sexiest purchase you'll ever make, but it's important to contribute as much as you can <em>as soon as you can</em> to take advantage of the compound interest it will generate.</p> <p><em>What clever tricks are you using this tax season to max out your IRA contributions? </em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/christa-avampato">Christa Avampato</a> of <a href="http://www.wisebread.com/7-ways-to-max-out-your-ira-contributions-by-april-15th">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-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/is-this-the-end-of-the-back-door-roth-ira-tax-loophole">Is This the End of the Back-Door Roth IRA Tax Loophole?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/should-you-choose-a-roth-401k-or-a-regular-401k">Should You Choose a Roth 401k or a Regular 401k?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-enjoy-retirement-if-you-havent-saved-enough">How to Enjoy Retirement If You Haven&#039;t Saved Enough</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-things-millennials-should-do-today-to-prepare-for-retirement">4 Things Millennials Should Do Today to Prepare for 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/101-tax-deductions-for-bloggers-and-freelancers">101 Tax deductions for bloggers and freelancers</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement Taxes deductions IRA saving money Mon, 23 Mar 2015 11:00:09 +0000 Christa Avampato 1350978 at http://www.wisebread.com Is This the End of the Back-Door Roth IRA Tax Loophole? http://www.wisebread.com/is-this-the-end-of-the-back-door-roth-ira-tax-loophole <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/is-this-the-end-of-the-back-door-roth-ira-tax-loophole" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/president obama speech_0.jpg" alt="president obama speech" title="president obama speech" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>One of America's most beloved tax-trimming strategies may soon be outlawed.</p> <p>Deep inside President Barack Obama's proposed <a href="http://www.whitehouse.gov/sites/default/files/omb/budget/fy2016/assets/budget.pdf">Fiscal Year 2016 budget</a> is a measure &mdash; &quot;Limit Roth conversions to pre-tax dollars&quot; &mdash; that could put the kibosh on a practice used by high earners to dodge the income limits on Roth IRA contributions. The verbiage in the budget proposal is succinct, and therefore unclear. But experts say those six little words could stop high earners from contributing to their Roth by way of the back-door strategy.</p> <h2>What's the Big Deal With Back-Door Roths?</h2> <p>The Roth IRA offers account holders something very valuable: tax-free income in retirement. Since contributions to Roths are made using <em>after-tax dollars</em>, these accounts are not taxed as they grow, and no tax money is due when funds are withdrawn in retirement. The catch is that you can only directly <a href="http://www.wsj.com/video/psstthe-backdoor-route-to-a-roth-ira/09198754-C88E-4767-84F5-1FAD8547EBE9.html">contribute to a Roth IRA</a> if your income is below a certain ceiling. For jointly filing married couples, that limit is $191,000. For single filers, it's $129,000. Folks with income beyond those barriers may instead contribute to a traditional IRA account.</p> <p>But high earners (who value the benefits of these Roth accounts as much as the everyman) have a way of dodging the contribution limits that prevent them from enjoying these tax perks. Using the back-door strategy, high earners can make after-tax contributions to a traditional IRA account, for which there are no income restrictions, and then convert that account into a Roth. This method affords all the benefits of a Roth account with few of the limitations. And it's precisely this practice that Obama budget proposal wants to eradicate.</p> <h2>Uncertainty Around the Proposal</h2> <p>&quot;It seems to me they're saying that was a good workaround, but we don't want you to do it anymore,&quot; IRA expert and CPA Ed Slott told Forbes.</p> <p>But Slott says ending the back-door strategy is not so simple. One issue with Obama's l<a href="http://www.forbes.com/sites/ashleaebeling/2015/02/02/obama-budget-would-prohibit-backdoor-roth-iras/">oophole closure proposal</a> is that it doesn't jibe with the Internal Revenue Service's new rules on <a href="http://www.forbes.com/sites/ashleaebeling/2014/10/15/aftertax-401k-rollovers-advanced-version/">after-tax rollovers</a>, which actually make it easier to convert after-tax dollars into Roth IRA accounts.</p> <p>&quot;They didn't look at the practicality of how it butts heads with the rules that we're working with now,&quot; Slott says.</p> <p>Now, it's important to keep in mind that the president's budget is more of a wishlist than a decree. It's bound to get rewritten, trimmed, and cut as the budget vetting process continues in Congress. But it's an important indicator of what the administration is thinking. And if you're a high earner enjoying the benefits of back-door Roths, it may signal an upcoming change in your retirement planning.</p> <p><em>Do you think back-door Roths should be eradicated? Why or why not?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/brittany-lyte">Brittany Lyte</a> of <a href="http://www.wisebread.com/is-this-the-end-of-the-back-door-roth-ira-tax-loophole">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-10"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-ways-to-max-out-your-ira-contributions-by-april-15th">7 Ways to Max Out Your IRA Contributions by April 15th</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/should-you-choose-a-roth-401k-or-a-regular-401k">Should You Choose a Roth 401k or a Regular 401k?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/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-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-reasons-why-you-must-open-a-roth-ira-before-april-15">4 Reasons Why You Must Open a Roth IRA Before April 15</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/12-things-you-didnt-know-about-retirement">12 Things You Didn&#039;t Know About Retirement</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement Taxes IRA Roth tax evasion Thu, 12 Mar 2015 13:00:08 +0000 Brittany Lyte 1333205 at http://www.wisebread.com How Much Should You Have Saved for Retirement by 30? 40? 50? http://www.wisebread.com/how-much-should-you-have-saved-for-retirement-by-30-40-50 <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-much-should-you-have-saved-for-retirement-by-30-40-50" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/money-bills-piggy-bank-saving-Dollarphotoclub_53083976.jpg" alt="money piggy bank" title="money piggy bank" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>How much money should you have put aside for retirement when you hit your milestone birthdays?</p> <p>In a perfect world, financial experts could rattle off a specific number that would be true for the vast majority of workers, and no one would find themselves staring down an underfunded retirement in their later years.</p> <p>Unfortunately, this is not a perfect world, and the answer to the retirement saving question is an unsatisfying &quot;It depends.&quot; Despite the fact that no one can tell you the exact dollar amount that you will need to have set aside each decade, there are rules of thumb for determining if you are on the right track to retirement. (See also: <a href="http://www.wisebread.com/just-saving-isnt-enough-how-cash-flow-allocation-helps-you-retire?ref=seealso">How Cash Flow Allocation Helps Your Retirement</a>)</p> <p>Here is what you need to know about saving for retirement in your 20s, 30s, and 40s to ensure a secure (and dare we say epic?) second act.</p> <h2>Before You Turn 30</h2> <p>As a regular Wise Bread reader, you probably know exactly what you're supposed to do in your 20s to prepare for retirement.</p> <ul> <li>Enroll in your company's 401(k) program on the very day you are hired at age 22.<br /> &nbsp;</li> <li>Contribute at least up to the employer match to your 401(k) each year.<br /> &nbsp;</li> <li>Open an IRA or Roth IRA in addition to your 401(k) and maximize your contribution, which in 2015 is $5,500 per year.<br /> &nbsp;</li> <li>Maximize your 401(k) contribution, which in 2015 is $18,000 per year.</li> </ul> <p>Just looking at the math, it's clear that a perfect 20-something who could afford to maximize retirement contributions starting at age 22 could theoretically have $188,000 set aside by their 30th birthday, not including interest. ($18,000 x 8 = $144,000 and $5,500 x 8 = $44,000.)</p> <p>Sadly, just because we all know what we should be doing does not mean that we are doing it. And few of us earn enough at 22 (or heck, even 29!) to contribute the full $18,000 yearly max to a 401(k). (Full disclosure: I am the daughter of a financial planner, and I did not make a single contribution toward my retirement until I was 27.)</p> <p>So, what is a reasonable goal for us mere mortals? It's a good idea to have one year's salary&nbsp;<a href="http://www.moneyunder30.com/how-much-in-401k-at-30">set aside in a 401(k) or IRA</a>&nbsp;by the time you reach 30. This can be an attainable goal even if you get started late, hit some financial rough patches, or otherwise fail to be a perfect saver. In addition, having a nest egg equal to your annual salary by the time you turn 30 will give you decades of compound interest. And the earlier you get the magic of compound interest started, the more impressive its resulting growth.</p> <h3>How to Save One Year's Salary by Age 30</h3> <p>Assuming an 8% annual rate of return, annual raises of 3%, and a starting salary of $30,000 at age 22, rising to a salary of $38,000 on your 30th birthday:</p> <ul> <li>If you start saving at age 22, you can set aside 10% per year to have one year's salary saved for retirement.<br /> &nbsp;</li> <li>If you start saving at age 25, you will need to set aside 18% per year to reach this goal.<br /> &nbsp;</li> <li>If you start saving at age 27, you will need to set aside 30% per year to reach this goal.</li> </ul> <p>(Here's a <a href="http://www.moneychimp.com/calculator/compound_interest_calculator.htm">compound interest calculator</a> if you want to check my math.)</p> <h2>Before You Turn 40</h2> <p>In some ways, 30-somethings can have the worst of both financial worlds. Often, it can take a few years into your 30s to shake off bad habits, outstanding debts, and other financial problems from your 20s. But your 30s are also prime baby-having years, which means you have the financial responsibilities and challenges of parenthood piled on top of lingering money woes from the previous decade.</p> <p>Taken together, that can mean that it's very tough to pay yourself first when there are student loans and daycare fees competing for your dollars.</p> <p>However, between career advances and starting to get paid what you are worth, your 30s are also a time when you potentially have more income. That means it's generally a good idea to have <a href="https://www.fidelity.com/viewpoints/retirement/8X-retirement-savings">two times your annual salary</a>&nbsp;set aside for retirement by the time you hit the big 4-0.</p> <p>While you will need to maintain a good savings rate in your 30s to achieve this goal, having one year's salary already saved will help you to reach your target more easily, as your interest compounds.</p> <h3>How to Save Two Years' Salary by Age 40</h3> <p>Assuming an 8% annual rate of return, 3% annual raises, and a salary of $38,000 on your 30th birthday, rising to a salary of $51,000 on your 40th birthday:</p> <ul> <li>If you have one year's salary saved by age 30, you will need to set aside 5% per year to have double your salary saved by age 40. (Although it's a <em>great</em> idea to save more than 5%.)<br /> &nbsp;</li> <li>If you have half of a year's salary saved by age 30, you will need to set aside 10% per year to reach this goal.<br /> &nbsp;</li> <li>If you have not started saving as of age 30, you will need to set aside 17% ($6460) per year to reach this goal.</li> </ul> <h2>Before You Turn 50</h2> <p>Many workers don't even start to think about retirement until they reach their 40s. Before those gray hairs start showing up on a regular basis, it can be very difficult to take the idea of retirement seriously. You might know intellectually that you will someday retire from crime-fighting or office work, but it can be hard to wrap your head around it while you're in the midst of making the world a better place one TPS report at a time.</p> <p>So, it can be very disheartening to learn that experts believe you should aim for a nest egg of four to five times&nbsp;your annual salary by the time you reach age 50.</p> <p>Again, if you have done any saving at all prior to your 40s, saving that much by age 50 is much easier because of the power of compound interest.</p> <h3>How to Save Four Years' Salary by Age 50</h3> <p>Assuming an 8% annual rate of return, 3% annual raises, and a salary of $51,000 on your 40th birthday, rising to a salary of $68,000 on your 50th birthday:</p> <ul> <li>If you have two years' salary saved by age 40 ($102,000), you will need to set aside 7% per year to reach this goal.<br /> &nbsp;</li> <li>If you have one year's salary saved by age 40, you will need to set aside 20% per year to reach this goal.<br /> &nbsp;</li> <li>If you have no money saved by age 40, you will need to set aside 35% per year to reach this goal.</li> </ul> <h2>Paying Yourself First Should Hurt a Little</h2> <p>You may not be able to squeeze blood from a turnip, but you can probably find more money in your budget to meet these goals. David Weliver from Money Under 30 recommends making contributions that are &quot;just large enough to feel uncomfortable.&quot; Once you hit that sweet spot, your money will be working for you, making each decade's goal easier to reach than the last.</p> <p><em>What are your milestone birthday retirement savings goals? Are you reaching them?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/emily-guy-birken">Emily Guy Birken</a> of <a href="http://www.wisebread.com/how-much-should-you-have-saved-for-retirement-by-30-40-50">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-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/9-things-people-who-retire-early-do">9 Things People Who Retire Early Do</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-false-allure-of-compound-interest">The False Allure of Compound Interest</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-thoughts-everyone-has-their-first-day-of-retirement">6 Thoughts Everyone Has Their First Day of Retirement</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/dont-let-poor-health-kill-your-retirement-fund">Don&#039;t Let Poor Health Kill Your Retirement Fund</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-ways-to-boost-your-401k-returns">4 Ways to Boost Your 401(k) Returns</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement birthdays investing retiring Mon, 09 Mar 2015 13:00:07 +0000 Emily Guy Birken 1324646 at http://www.wisebread.com 4 Exciting, Affordable American Cities to Retire In http://www.wisebread.com/4-exciting-affordable-american-cities-to-retire-in <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/4-exciting-affordable-american-cities-to-retire-in" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/mature-couple-city-market-Dollarphotoclub_42889174.jpg" alt="mature couple city" title="mature couple city" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Every month, more than a <a href="http://fivethirtyeight.com/features/what-baby-boomers-retirement-means-for-the-u-s-economy/">quarter-million Americans turn 65</a>.</p> <p>This means that either you or someone close to you is getting ready to retire in the near future. However, retiring from work doesn't mean retiring from life. You need to find a place that allows you to truly thrive in your golden years. (See also: <a href="http://www.wisebread.com/x-exciting-world-cities-you-can-afford-to-retire-in?ref=seealso">4 Exciting World Cities You Can Afford to Retire In</a>)</p> <p>While there are some great options abroad, there are also plenty of great domestic destinations to choose from. Here are the top four exciting (and affordable) American cities to retire in.</p> <h2>1. Columbus, Ohio</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5123/colombus%20ohio.jpg" width="605" height="340" alt="" /></p> <p>In 2015, Where to Retire Magazine has selected Columbus as the top domestic destination for retirement. This river city is no stranger to top retirement lists, because it topped the lists of <a href="http://money.usnews.com/money/retirement/slideshows/americas-best-affordable-places-to-retire/1">most affordable places to retire</a> in both&nbsp;2008 and 2009.</p> <p>On top of providing affordable living standards, Columbus offers a vibrant sports scene with the Columbus Blue Jackets (hockey), Columbus Clippers (baseball), and Ohio State Buckeyes (college football). With so many sports options available year round, it's not a surprise that Columbus is constantly on the top 10 of the <a href="http://www.bestplaces.net/docs/studies/manliest_cities.aspx">U.S. manliest cities</a>.</p> <p>But if sports isn't your thing, don't worry. The city is also known for its many museums, theaters, performing arts venues, and <a href="http://www.columbus.gov/seniors/">50+ fitness and recreation centers</a>. Some of the top events are <a href="http://theactorstheatre.org">Shakespeare in Schiller Park</a>, <a href="http://www.redwhiteandboom.org">Red, White, and Boom! </a>(largest fireworks display in Ohio), and <a href="http://www.columbusoktoberfest.com">Columbus Oktoberfest</a>.</p> <h2>2. Santa Barbara, California</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5123/santa%20barbara%20california.jpg" width="605" height="340" alt="" /></p> <p>If you have done a good job building your nest egg, then why not splurge a bit during retirement in Santa Barbara? Known as the &quot;American Riviera,&quot; the city of Santa Barbara is not only a popular tourist and resort destination, but also has been named a <a href="http://www.independent.com/news/2013/aug/04/santa-barbara-featured-where-retire-magazine/">top retirement destination</a> by Where to Retire Magazine. (See also: <a href="http://www.wisebread.com/7-ways-to-keep-your-retirement-funds-from-disappearing?ref=seealso">7 Ways to Keep Your Retirement Funds From Disappearing</a>)</p> <p>This city is blessed with an ideal location along California's coast that provides warmer winters and cooler summers compared to cities farther inland. Santa Barbara is an exciting destination for beach lovers because it has four miles of beaches including East Beach, West Beach, Leadbetter, Shoreline Park, and it is bisected by the historic U.S. Route 101, which provides access to even more beautiful beaches up and down the California coast.</p> <p>Foodies rejoice: Santa Barbara has an eclectic food scene, ranging from Mexican carnitas to British fish and chips. And while you're out, you may run into celebrities, such as Santa Barbara born and raised Katy Perry or TV mogul Oprah Winfrey.</p> <h2>3. Austin, Texas</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5123/austin%20texas.jpg" width="605" height="340" alt="" /></p> <p>With a motto like &quot;Keep Austin Weird,&quot; this city in Texas is for those retirees looking for something off the beaten path. Its vibrant music, tech, and small business scenes all contributed to Kiplinger selecting Austin as the number-one <a href="http://www.kiplinger.com/article/business/T012-C000-S002-best-cities-2010-austin-texas.html">best city for the next decade</a>.</p> <p>A major draw for retirees is the University of Texas at Austin. Retirees enjoy the opportunity to take courses or extend their professional learning through the university's <a href="http://www.utexas.edu/community-engagement/continuing-education">continuing education programs</a>. The university also offers several cultural offerings, such as art exhibitions, open air markets, and live performances. Plus, attending classes at an university is a way for single seniors to meet new people and make friends faster. (See also: <a href="http://www.wisebread.com/want-to-be-more-attractive-work-these-5-magic-words-and-phrases-into-your-vocabulary?ref=seealso">Want to Be More Attractive? Work These 5 Magic Words (and Phrases) Into Your Vocabulary</a>)</p> <p>Austin has two strong economic draws for retirees. First, the city (like all others in Texas) has no state income taxes. Second, <a href="http://www.zillow.com/austin-tx/home-values/">Austin's mortgage delinquency</a> is only 1.3%, which is lower than the national average, 6.4%. This shows a healthy housing market and overall strong economic climate.</p> <h2>4. Jacksonville, Florida</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5123/jacksonville%20florida.jpg" width="605" height="340" alt="" /></p> <p>If you talk about retirement, you have to talk about the Sunshine State. There are three strong reasons why retirees flock to Florida:</p> <ul> <li>No state income tax;</li> <li>No estate tax; and</li> <li>No inheritance tax.</li> </ul> <p>Jacksonville stands out from other cities in Florida because it offers the same comfortable winters at much more affordable prices. U.S. News includes Jacksonville as one of the 10 best places to <a href="http://money.usnews.com/money/retirement/articles/2014/10/14/the-10-best-places-to-retire-on-social-security-alone?page=2">retire on Social Security alone</a>, and for good reason: Retirees age 65 and older pay a median monthly rent of only $861.</p> <p>From the <a href="http://www.taxslayerbowl.com/">TaxSlayer Bowl</a> in January, to the <a href="http://www.jaxjazzfest.com/">Jacksonville Jazz Festival</a> in May, and the Holiday at St. James at City Hall in December, there is always something exciting happening in Jacksonville. You can get plenty of fresh air in the city's 57,373 acres of parks or 22 miles of sandy beaches.</p> <p>The city's main landmark is the St. John's River. Along the river you'll find the ever-expanding Northbank Riverwalk, a popular attraction in downtown Jacksonville, and the <a href="http://riversideartsmarket.com/">Riverside Arts Market</a>, a popular event in the <a href="http://www.riversideavondale.org/">Riverside Avondale Historic District.</a></p> <p>Choosing a city to retire in is no easy task &mdash; and you can't just pick based on pure economic reasons. After all, you're going to have a lot of extra time available, so your city needs to offer enough exciting activities to keep you comfortably busy. These four American cities provide the right mix.</p> <p><em>Where are you planning to retire &mdash; and why?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/damian-davila">Damian Davila</a> of <a href="http://www.wisebread.com/4-exciting-affordable-american-cities-to-retire-in">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-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/how-much-should-you-have-saved-for-retirement-by-30-40-50">How Much Should You Have Saved for Retirement by 30? 40? 50?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-things-people-who-retire-early-do">9 Things People Who Retire Early Do</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-thoughts-everyone-has-their-first-day-of-retirement">6 Thoughts Everyone Has Their First Day of Retirement</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-incredible-places-to-retire-abroad-that-anyone-can-afford">5 Incredible Places to Retire Abroad That Anyone Can Afford</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-things-you-should-never-skimp-on-when-traveling">9 Things You Should Never Skimp on When Traveling</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement Travel american cities retiring Fri, 06 Mar 2015 14:00:04 +0000 Damian Davila 1320504 at http://www.wisebread.com 5 Simple Ways to Boost an Underperforming 401(k) http://www.wisebread.com/5-simple-ways-to-boost-an-underperforming-401k <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-simple-ways-to-boost-an-underperforming-401k" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/piggy-bank-chalkboard-retirement-savings-growth-Dollarphotoclub_77966716.jpg" alt="piggy bank retirement savings" title="piggy bank retirement savings" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>There are about 52 million Americans saving up for retirement using a 401(k). While this is an impressive number, it doesn't tell the full picture of the state of U.S. retirement planning. (See also: <a href="http://www.wisebread.com/12-things-you-didnt-know-about-retirement?ref=seealso">12 Things You Didn't Know About Retirement</a>)</p> <p>In 2014, the average U.S. worker had only accumulated in their 401(k) enough for $4,000 annual retirement income, or about $333 monthly. That's an alarmingly low figure.</p> <p>Here are five simple ways to boost those underperforming 401(k) plans.</p> <h2>1. Switch Actively Managed Funds to Index Funds</h2> <p>When allocating the funds in their 401(k), folks often choose accounts that promise high returns. In other words, they look to beat the market.</p> <p>Stop it.</p> <p>Chasing those high returns is eating away your 401(k) contributions. Funds that try to outperform the market, also known as actively managed funds, generally have higher fees than those that seek to simply track market performance, known as index funds.</p> <p>While investing in index funds may sound like a boring investment strategy, consider these three facts:</p> <ul> <li>While the average expense ratio for actively managed U.S. mutual funds is 1.32%, the Vanguard Total Stock Market Index (VTSMX), the largest index mutual fund, charges just 0.17% per year.<br /> &nbsp;</li> <li>Warren Buffett's will stipulates that 90% of his assets be invested in a very low-cost <a href="http://www.berkshirehathaway.com/2013ar/2013ar.pdf">S&amp;P 500 index fund</a>.<br /> &nbsp;</li> <li>Mad Money's Jim Cramer has gone on the record about the benefits of index investing: &quot;After a lifetime of picking stocks, I have to admit that Bogle's arguments in favor of the index fund have me thinking of joining him rather than trying to beat him.&quot; John &quot;Jack&quot; Bogle, the founder of Vanguard, has championed low-cost index investing since the 1970s.</li> </ul> <h2>2. Stop Playing Stock Trader</h2> <p>Would you hire a plumber to fix your car?</p> <p>Definitely not!</p> <p>So, why are you insisting on trading the stocks and accounts in your 401(k)?</p> <p>A nationwide <a href="http://pressroom.aboutschwab.com/press-release/schwab-corporate-retirement-services-news/workers-bank-401k-retirement-need-help-makin">survey of 401(k) participants</a> found that:</p> <ul> <li>52% of American workers find explanations of their 401(k) investments more confusing than explanations of their health care benefits;<br /> &nbsp;</li> <li>46% don't know what their best investment options are; and<br /> &nbsp;</li> <li>34% feel a lot of stress over allocating their 401(k) monies.</li> </ul> <p>If you're still unconvinced about the negatives of actively trading your account, remember that the average actively managed mutual fund has an average <a href="http://www.fool.com/School/MutualFunds/Performance/Record.htm">annual return of 2% less</a> than that of the stock market. A sample of <a href="http://money.usnews.com/money/personal-finance/mutual-funds/articles/2012/06/18/some-401k-plans-let-you-take-the-wheelif-you-dare">self-directed account holders</a> showed that 76% of their account returns underperformed the S&amp;P, and 72% underperformed the core model of their plans.</p> <p>On top of that, some 401(k) plans may charge you additional fees for self-directed brokerage options. Now that's a double whammy for playing stock trader. Instead, request a one-on-one appointment with your plan's administrator (over half of retirement plans offer individual investment advice) to go over your retirement saving strategy, and stick to it. (See also: <a href="http://www.wisebread.com/this-is-the-basic-intro-to-having-a-retirement-fund-that-everyone-needs-to-read?ref=seealso">This Is the Basic Intro to Having a Retirement Fund That Everyone Needs to Read</a>)</p> <h2>3. Consolidate 401(k) Balances</h2> <p>The term &quot;four-year career&quot; has gone from oxymoron to a reality for younger generations. According to data from the Bureau of Labor Statistics, today's average worker <a href="http://www.forbes.com/sites/jeannemeister/2012/08/14/job-hopping-is-the-new-normal-for-millennials-three-ways-to-prevent-a-human-resource-nightmare/">stays on the job</a> for 4.4 years. And for younger workers, that time period is cut in half.</p> <p>This means that there are many workers who have several 401(k) plans laying around. Since not all 401(k)s are alike, it's a good idea to consolidate all those balances into a single account. It will simplify your life and make it easier to keep track of your nest egg's performance.</p> <p>While there are several criteria to evaluate plans, there are two that lead the pack:</p> <ul> <li>Choose the plan with the lowest expense ratio. A good rule of thumb is that your total expense ratio should be no more than 1%.<br /> &nbsp;</li> <li>Evaluate the additional perks that may become available for maintaining a larger balance at a single institution.</li> </ul> <h2>4. Maximize Employer Contributions to Your 401(k)</h2> <p>Vanguard reports that the <a href="https://pressroom.vanguard.com/content/nonindexed/How_America_Saves_2014.pdf">most common matching formula</a> for employers is $0.50 on the dollar on the first 6% of pay. This means that an employee with a $50,000 annual salary would receive a $1,500 boost to her 401(k), if she were to maximize her contributions.</p> <p>It's in your best interest to bump up your savings to the full 6% (or the applicable maximum of your plan) of your pay. If you don't use it, you are missing out on <em>free </em>retirement cash.</p> <p>Additionally, ask your plan sponsor about a couple of key plan details: true-up and vesting schedule.</p> <h3>True-Up Feature</h3> <p>Some companies have complicated contribution matching formulas, so a true-up feature helps you maximize the amount of possible matching funds under your 401(k)'s guidelines. This feature is particularly useful for those employees that wait for big bonuses to make a contribution to their retirement accounts.</p> <h3>Vesting Schedule for Employer Contributions</h3> <p>Employer contributions to your 401(k) plan may be subject to a vesting period. If you change jobs before the vesting period, you lose your employer's contributions to your retirement plan.</p> <h2>5. Ask Your Plan Administrator for Lower Fees</h2> <p>If you're using an employer-sponsored 401(k), then ask your plan's sponsor to renegotiate operating expenses. During the 2013-2014 period, more than 75% of employers attempted to <a href="http://www.kiplinger.com/article/investing/T001-C000-S002-employers-trim-401k-fees.html#buTvG5muw7udQ0Hw.99">cut 401(k) expenses</a>, so your request is nothing out of the ordinary.</p> <p>Find out why your plan administrator is choosing the funds that the're choosing. If there is no record of legitimate reasons, then you have ammunition to demand a re-evaluation of current fees and class shares. The lower your plan's fees, the better your returns.</p> <p><em>What have you done to boost an underperforming 401(k)?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/damian-davila">Damian Davila</a> of <a href="http://www.wisebread.com/5-simple-ways-to-boost-an-underperforming-401k">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-13"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/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-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/this-one-thing-will-get-you-to-1-million-tax-free">This One Thing Will Get You to $1 Million (Tax-Free!)</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-dumb-401k-mistakes-smart-people-make">5 Dumb 401(k) Mistakes Smart People Make</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/you-may-be-putting-your-retirement-money-in-the-wrong-place">You May Be Putting Your Retirement Money in the Wrong Place</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-times-raiding-your-retirement-accounts-early-is-okay">4 Times Raiding Your Retirement Accounts Early Is Okay</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401(k) investing retirement savings saving Tue, 03 Mar 2015 14:00:09 +0000 Damian Davila 1315320 at http://www.wisebread.com 9 Things People Who Retire Early Do http://www.wisebread.com/9-things-people-who-retire-early-do <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/9-things-people-who-retire-early-do" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/happy-loving-senior-couple-Dollarphotoclub_56515946.jpg" alt="happy senior couple" title="happy senior couple" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>We all dream of retiring early (at least I do), but for most of us that's all it is &mdash; a dream. It doesn't necessarily have to be, however, and you don't need to strike it rich to start enjoying the finer things in life well before age 67. (Yep, that's the government-acknowledged age for full retirement &mdash; and it stinks.) To provide some much-needed motivation to kick your hustle into high gear, here are nine things people who retire early do &mdash; and you should, too.</p> <h2>1. Live Relatively Modestly and Save, Save, Save</h2> <p>If you weren't born into one of those famous family dynasties that provided you a trust fund at birth or otherwise have won some sort of lottery, you've got to work hard for your money. If you want to retire early, live modestly and save like your life depends on it. The truth is your life does depend on it &mdash; at least the one you want, anyway.</p> <p>&quot;I'm not retired myself yet, but I do know a couple who managed to retire early,&quot; says Mike Collins, owner of the personal finance blog <a href="http://www.wealthyturtle.com">Wealthy Turtle</a>. &quot;The secret to their success was saving and investing as much as possible when they were young. They worked lots of extra hours and also built up a side income so they could invest more and more. They kept their expenses low and just increased their saving rate whenever they got a raise. Over time their wealth grew and they were both able to retire young.&quot;</p> <h2>2. Build Financial Roadmaps</h2> <p>When we're traveling, we use a map to get where we're going &mdash; and the same principle applies to our professional paths. It's never a bad idea to plan your route so you can achieve your goals with minimal blocks and detours.</p> <p>Elle Kaplan, founder/CEO of LexION Capital, agrees.</p> <p>&quot;People who retire early build financial roadmaps. They have a step-by-step plan in place that details the route to their financial goals,&quot; she says. &quot;They know what a safe spending level would be given their portfolio and any other income they have coming in, from real estate holdings to Social Security. They know what major expenses or windfalls they anticipate, whether that's travel or income from the sale of a home as they downsize or relocate. And they have extra room built in for the bumps in the road that they can't anticipate, taking into account very conservative assumptions: living to 100, and having a plan to address unexpected costs.&quot;</p> <h2>3. Earn Passive Income</h2> <p>You don't have to have an ungodly amount of money in the bank to retire early, but you should absolutely have a continued source of income, if that's not the case.</p> <p>Passive income is an excellent way to continue earning money, even after you slow down or retire. Great sources of passive income include rental properties, a product that people will buy for years to come (could be a book or maybe a new invention), or a brick-and-mortar or online business that you can afford to pay other people to manage for you. The latter comes with a warning, however: It's hard to find help that will treat your business with the level of care and professionalism that you would, so it's wise to prepare accordingly.</p> <h2>4. Make New Investments</h2> <p>If you're able to retire early, chances are you've made some wise investments up to this point &mdash; and you probably have enough dough saved to make some more in the near future. That's how you'll build your passive-income portfolio, and, frankly, if you have excess money in the bank that's not being invested, it's going to waste, anyhow.</p> <p>Consider this anecdote from Ken Barret, owner of K-Bar Inc., a company he founded after retiring early.</p> <p>&quot;I retired from the auto industry in 2009 when I took a buyout and decided I didn't want to work in the corporate world anymore,&quot; he recalls. &quot;I moved to the United States from Canada and purchased three laundromats in seven months. I always considered retirement as being able to do what you want, and that's what I'm doing. Two of my laundromats are unattended and open 24 hours a day, so I can stop by on my own schedule. The other laundromat has three employees and is partially attended. It requires more attention, but still it's my decision when and how much.&quot;</p> <h2>5. Go Back to School and Continue Education</h2> <p>Chances are, you won't be retired for long if you use your newfound freedom to whoop it up like some Hollywood hotshot &mdash; you'll drain your retirement fund eventually and find yourself forced back to the workforce before you know it. One way to prevent that fate is by making constructive use of your free time, such as continued education.</p> <p>Learning should never stop, and if you plan your courses strategically, you can learn new skills that will only improve your business savvy. And if you're not retired yet, additional education can mean a path to increased income, more savings, and an earlier retirement date.The website <a href="http://www.retiredbrains.com">RetiredBrains</a> has excellent resources for retirees &mdash; young and old &mdash; on how to navigate the prospect of going back to class.</p> <h2>6. Focus on Relationships With Friends and Family</h2> <p>One of the more personal benefits of having ample time on your hands is that you get to spend more time with family and friends. Use this very rare opportunity &mdash; not many people get to focus on the important people in their lives with minimal distractions, after all &mdash; to build stronger relationships that will not only enrich your life, but also theirs. And if you're still working toward an early retirement, spending more time with loved ones is not only a terrific way to enhance your wellbeing, but also an essential strategy for saving money.</p> <h2>7. Spend Time Pursuing New Goals and Passions</h2> <p>If you've retired early, it's a safe bet to assume that you've accomplished many of your goals. But that's no reason to stop. In fact there's no better time &mdash; since you now have much more time &mdash; to set new goals and concentrate on pursuing your passions. And if you've yet to retire, these new goals can help motivate you to find new ways of increasing your income and exiting the corporate world sooner.</p> <p>&quot;I retired about two years ago after 30-plus years of corporate life,&quot; says Judy Freedman, author of the blog, <a href="http://www.aboomerslifeafter50.com">A Boomer's Life After 50</a>. &quot;I decided to take early retirement at age 55 to slow down and pursue my passions. After losing my husband when I turned 50 and emptying out my nest when my last child graduated college, I decided that it was time to change up my life and have more time to do things that I only dreamed of doing when I was younger and busy raising and supporting a family. In addition to my writing and blogging, I am pursuing my studies to become a yoga instructor. I'm also doing more traveling to places that I've always wanted to go to, most recently to France and Spain.&quot;</p> <h2>8. Allotting Time to Volunteer or Give to Charity</h2> <p>For 25 years, Stan Goldberg was a professor at San Francisco University. He says his life revolved around academia, but when he was forced to retire at age 57 because of a health issue, he thought his contributions to society had ended. Instead, they had just begun.</p> <p>&quot;Since retiring, I served as a bedside hospice volunteer for eight years, counseled caregivers, wrote two&nbsp;<a href="http://www.stangoldbergwriter.com">internationally award-winning books</a>, and I currently have a series of books on the sharper points of life under review by mainstream publishers,&quot; boasts Goldberg. &quot;Since retiring my life has become fuller and my contributions to society have increased beyond my wildest dreams.&quot;</p> <h2>9. Travel for Life-Enriching Experiences</h2> <p>It's almost a given that you'll want to travel when you retire early &mdash; who doesn't, right? &mdash; but it'll cost you. At least that's the theory, anyway. In reality, you can travel the world very inexpensively if you're resourceful. There are plenty of volunteer programs abroad that will subsidize your trip (this guy pulled off the ultimate coup of <a href="http://www.today.com/video/today/48070573#48070573">paying zero dollars to trek the globe</a>), and there are programs that will let you take house-sitting gigs in the destinations of your choice for the paltry fee of $96 a year.</p> <p>Rachel Martin, co-founder of <a href="http://www.trustedhousesitters.com">TrustedHousesitters.com</a>, explains how you can take advantage of the latter by caring for pets in exchange for lodging in over 130 countries. If you've yet to retire, this can be a cost-effective way of seeing the world (or of making some extra dollars).</p> <p>&quot;From a month in the South Pacific to a couple of weeks in a lodge in Breckenridge, Colorado, it's a simple premise (providing a real win-win: free pet care for free accommodations) and one which is growing in its popularity among retirees who may have time on their hands and are looking for adventure in their 'fun years,'&quot; she says.</p> <p><em>Would you like to retire early? What are some of the things you'd do?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/mikey-rox">Mikey Rox</a> of <a href="http://www.wisebread.com/9-things-people-who-retire-early-do">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-14"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-much-should-you-have-saved-for-retirement-by-30-40-50">How Much Should You Have Saved for Retirement by 30? 40? 50?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-thoughts-everyone-has-their-first-day-of-retirement">6 Thoughts Everyone Has Their First Day of Retirement</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-exciting-affordable-american-cities-to-retire-in">4 Exciting, Affordable American Cities to Retire In</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-enjoy-retirement-if-you-havent-saved-enough">How to Enjoy Retirement If You Haven&#039;t Saved Enough</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> Retirement retire early retiring second career Mon, 16 Feb 2015 14:00:08 +0000 Mikey Rox 1289632 at http://www.wisebread.com Why Taking Social Security Could Cost You Thousands http://www.wisebread.com/why-taking-social-security-could-cost-you-thousands <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/why-taking-social-security-could-cost-you-thousands" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/social-security-finance-Dollarphotoclub_37675746.jpg" alt="social security" title="social security" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>I recently attended a weekend barbecue with some neighbors, and at one point the conversation shifted from the usual topics &mdash; family updates, local news, sports, and politics &mdash; to retirement. Strangely enough, it was raised by a friend's daughter, Barbara, who is in her early 30s. I was a little surprised (but encouraged) that she was already doing some retirement planning at that age.</p> <p>Barbara is a bright, hard-working human resources manager with a promising future, but after 10 years in a challenging work environment, she said she was beginning to feel a little fatigued. That's certainly understandable. She and another 80 million millennials have had the misfortune of joining a workforce that's experiencing some major disruptions. For most workers, America's recent economic restructuring has led to less job security, lower wages, fewer benefits, and longer hours. That's not exactly a recipe for long-term optimism if you're a thirty-something.</p> <p>With this in mind, it didn't take long for me to realize that Barbara raised the issue of retirement not because she was interested in long term financial planning, but instead out of sheer frustration. Barbara's question was, &quot;What is the earliest age I can begin receiving my Social Security retirement benefit?&quot; Age 62 was the answer. &quot;Then that's when I'll take it,&quot; she said.</p> <p><a href="http://www.socialsecurity.gov/planners/benefitcalculators.htm"><img width="605" height="340" src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5123/Whelan%20Blog%20Table%20-%20Social%20Security%20Benefit%20Reductions.jpg" alt="" /></a></p> <p>What Barbara didn't realize is that by doing so, she'd forfeit 30% of her full benefit amount. If her full amount was, say, $2,000 per month, then she would be giving up $600. So I said to her, &quot;What if you needed $2,000 a month from Social Security just to break even financially? And what if, by taking your Social Security benefit at age 62 instead of age 67, your benefit amount is reduced by $600 a month, to $1,400?&quot; Barbara's reply: &quot;I'd still take the lower amount.&quot;</p> <p>Of course I couldn't just let the issue end there, so I asked a follow-up question: &quot;But that would put you $7,200 in the hole each year. By your mid 70s your debt would add up to $100,000. How would you pay for it?&quot; &quot;I don't care,&quot; she said. &quot;I just want to stop working the moment I first qualify for a monthly retirement check.&quot;</p> <p>At that point I sensed I was stepping on a nerve, so I let it go. But, I'm glad she raised the topic and I give her credit for starting the conversation. Now that the issue has been framed with real numbers and dates, she is in a better position to make a sound decision when the time comes.</p> <p>For some, the loss of $600 each month for the duration of their retirement would be difficult to absorb. For others, it would be less of an issue. And for others still, there might be health-related concerns or other extenuating circumstances that make early distribution a reasonable choice.</p> <p>The point is, before choosing to give away so much of what you earned and accumulated over many decades, be sure to consider the trade-offs. Let reason, not emotion, drive your decision.</p> <p><em>At what age are you planning on taking Social Security?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/keith-whelan">Keith Whelan</a> of <a href="http://www.wisebread.com/why-taking-social-security-could-cost-you-thousands">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-15"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-much-do-i-need-to-retire-how-much-can-i-spend">How much do I need to retire? How much can I spend?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/tiny-nestegg-retire-abroad">Tiny Nestegg? Retire abroad!</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-enjoy-retirement-if-you-havent-saved-enough">How to Enjoy Retirement If You Haven&#039;t Saved Enough</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-more-exciting-affordable-american-cities-to-retire-in">4 More Exciting, Affordable American Cities to Retire In</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-end-of-the-4-rule">The End of the 4% Rule?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement early retirement pension social security Fri, 23 Jan 2015 14:00:06 +0000 Keith Whelan 1282530 at http://www.wisebread.com