Will working longer affect your retirement? Of course. But how much longer and how big of an impact will it make? That question will lead you down a much more useful thought path. There are many things that will affect how long you are in the workforce. Some of these things you can’t control (such …
Living happily in retirement means crafting a spending plan to support your lifestyle. To do that, you’ll need to think about how you plan to live in retirement. Not just now, but for the long term too. That could involve a plan to spend more early in your retirement.
Market dips are inevitable. If you have been saving for retirement for decades, then you are no doubt aware of market fluctuations and have weathered a few yourself.
Asset allocation is the next step in the investment process. It the simplest terms, it means deciding how much of your savings to place in various types of stocks and bonds. At the highest level we think of it as the balance between stocks and bonds. For example, 60% stock and 40% bonds or 80% …
In this article I’m going to explain what index investing is and why it is such a good strategy for your retirement. This article goes a little deeper into market theory, so I want to give you the bottom line up front. Index investing simplifies investment selection. When you invest in an index, you are …
Social Security is a significant portion of most retirees total income. In fact, about a third of retirees get 90% of their income from Social Security. Such an important component of your income deserves some attention. In this article you will learn how your benefit is calculated so that you can get an idea of …
Is Social Security Going Broke? More importantly, will YOU be able to collect Social Security benefits when you retire? Well, to quote the 42nd President of the United States, that depends on what the meaning of the word is… is. That’s right. I said it. The point I want to make here is that there …
One withdrawal strategy that you could use for your retirement income is to withdraw a fixed percentage of your portfolio each year. Because of its simplicity this approach may be appealing to you. It is also very easy to implement.
What is a Roth conversion ladder and how can it help you fund early retirement? I’ve written before on the five year rules of Roth IRA’s. This strategy utilizes a specific rule that affects Roth IRA conversions, and provides a means of taking tax-efficient withdrawals from your retirement account BEFORE you turn 59.5.
If you withdraw money from your tax-deferred IRA or 401k accounts before you turn 59.5 you will owe a 10% penalty in addition to income tax. A 72(t) distribution is a way of accessing the money in your retirement account before you turn 59.5 without incurring the penalty. No doubt, you are aware that withdrawing …
How much can you spend in retirement without the risk of running out of money? That is arguably the key consideration of your retirement income plan. This requires you to strike a balance between current spending and future account value to support that spending later. In simple language, this means that you are deciding how …
Retirement income is inherently dependent on many different factors. This is true because retirement income planning involves accounting for unpredictable variables over a long time horizon, and weighing them against the comfort level of the individual retiree. Inflation is one of those factors. Even for a given amount of retirement savings, different retirees can have …
A bond ladder is a useful tool for providing security in retirement. A bond ladder can protect your investments from volatility and provide you with some peace of mind. Retirement planning is a comprehensive issue. What I mean by this is that there are a number of sub-components of retirement planning that are pretty distinct …
In How to Make Your Money Last – The Indispensable Retirement Guide, Jane Bryant Quinn provides an excellent comprehensive overview of retirement planning. If you want to understand the key areas that will affect your retirement this book is a good read. If you are managing your own retirement, or plan to, I highly recommend …
Bonds are a common asset in retirement accounts. Whether held individually or through an ETF, most retirement accounts contain bonds. Bonds are most often held because of their relative safety over equities, and for income through their contractual obligations to pay interest. However, bonds still exhibit market risk that needs to be managed. Buying bonds …
If you save for retirement using tax-deferred accounts then you need to understand the rules surrounding required minimum distributions (RMDs) in order to avoid some pretty steep penalties. For some retirees, the required minimum distribution is less than they would withdraw anyway, and is therefore not much of a planning concern. For others who intend …
The purpose of accumulating retirement savings with tax-advantaged retirement accounts is to withdraw an income that will last for the duration of your retired lifetime. Considering this could be thirty or forty years, it’s important to get this right. Efficient retirement account withdrawals can help stretch your savings and achieve this goal. Clearly then, you …
The most commonly cited method of withdrawing retirement income from an investment portfolio is “the 4% rule”. This rule comes from a very popular study conducted by William Bengen and published in The Journal of Financial Planning in 1994 as Determining Withdrawal Rates Using Historical Data. The short-hand version of the rule, and the basic conclusion …
What is sequence of returns risk? We often think of investment return as an average rate over some period, such as 10, 15, or 20 years. This is especially true regarding investment returns within a retirement planning context where the investment horizon is often very long. Anyone interested enough to be reading this knows that …
Tax reform stirred up a lot of debate. Fortunately, the Tax Cuts and Jobs Act did not greatly modify the retirement savings vehicles that often house index funds and a variety of other investments. However, prudent and intelligent investors will still want to stay educated about all of the tax bill’s implications to generate greater …
C.S. Lewis said, “You are never too old to set a new goal, or dream a new dream.” Is it possible he could have known about today’s retirement crisis? The truth is, no matter how much we prepare, sometimes, life happens. The closer we are to retirement age, the more strategy we need to employ …
When you’re self-employed, the burden of saving for retirement falls entirely on you, which can be a bit daunting. At the same time, being self-employed allows you total freedom over your financial future; you can more-or-less decide how much to contribute to your retirement fund as well as what type of retirement account will best suit …
The primary difference between a 403b vs 401k retirement account is who uses them. A 401k is for people employed by a for-profit organization. In contrast, the 403(b) plan is for those who work for a non-profit organization. Some typical examples include teachers, members of religious organizations, and hospital employees. This is the key difference …
Roth IRA’s can be an excellent retirement saving vehicle. Roth IRAs allow you to save $6,00 per year towards retirement if you are under 50. People who are 50 or older can contribute a “catch-up” contribution of $1,000 each year for a total Roth IRA contribution limit of $7,00 per year. Unlike Traditional IRA’s and …
The research on investor performance is clear. The average mutual fund investor tends to have worse returns than the average mutual fund. Behavioral factors have a lot do with this. People tend to be emotional, and can often react in precisely the most incorrect way possible when markets are volatile. Fear often causes investors to …
When someone passes away leaving money in a traditional IRA, the money will go to whomever is listed as the beneficiary of the retirement account. That is simple enough, and is accomplished by writing names in the appropriate blocks on the IRA form at opening. When this happens, the beneficiary has an inherited IRA. However, …
It is no secret that Americans have a tough time saving for retirement. This is particularly true of millennials. The Great Recession has delayed the beginning of well-paying careers for many 18 to 34 year olds. A recent Bankrate.com study showed that millennials fear running out of money in retirement, but if you are struggling to …
There are several key points to consider if you’re interested in a non-traditional retirement or one involving a second career. With the booming innovation economy and rapidly expanding communication technology, people are no longer restricted to one career or even location. Traditional methods of financial planning focus on wealth and capital accumulation during the working …
