ROTH vs Traditional IRA’s: What’s the Difference?

ROTH vs Traditional IRA’s

What’s the Difference?

The ROTH after tax and the Traditional Pre-tax method of saving is almost identical except for one variable, which is a person’s income tax. A person’s income tax rate will be a key factor in deciding which avenue to take, pre-tax or not.

How Are Personal Income Tax Rates Determined?

An income tax rate is based on the amount of taxable income a person brings in. The higher the taxable income, the higher the income tax rate. A person’s filling status, meaning if they have dependents or other deductions, will directly affect the tax bracket a person falls in. More income, or higher wages equals a hirer tax bracket.

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What To Do With Medicare If You Work After 65

What To Do With Medicare If You Work After 65

Advice For Those That Have Coverage Through Their Employer

Many of my financial planning clients are introduced to me as they approach age 65 and have questions related to Medicare, specifically: “What do I do with Medicare if I plan on working past age 65?” In this post, I will go over a few of the more common scenarios that I encounter while working with clients that plan to continue working past age 65, and answer a few of the questions that I tend to field on a regular basis. If you have an individual health insurance policy that is not through an employer, chances are you will not be able to keep that policy when you become eligible for Medicare. This article is for those that have coverage through an employer and have additional decisions that need to be made.

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A Quick Guide to Retirement

A Quick Guide to Retirement

• Your 20’s: Planning Pays off Richly – You’re poorer than you’ll ever be again. If you’re in your 20’s and broke, you are in good company. There is good news! You can begin laying the groundwork for a prosperous future. Getting your act together now means you are putting time on your side. Live as cheaply as you can, avoid the usual financial traps like: spending too much on cars, wardrobe, or eating out. Shovel money into your retirement plan; aim to put aside 12-15% of your gross pay. Consider this: Someone who puts $4,000 a year into retirement accounts starting at 22 can have $1 million by age 62, assuming 8% average annual returns. Wait 10 years to start contributing, and you’d have to put in more than twice as much — $8,800 a year — to reach the same goal.
• Your 30’s: Don’t be Derailed by Debt – Nine out of 10 people in their 30s are in debt, the highest proportion of any decade. Budget, budget, budget! Did I mention you should have a budget? Control your expenses by knowing where you are spending your money, and aggressively pay off debt.
• Your 40’s: Make it or Break it – Pay off your debt (excluding the house) and make retirement savings your top goal. Every $1 you fail to set aside now could mean $10 less in retirement income. Meet with an advisor to determine the amount of money you need to save before you retire, then make it happen. Every financial decision from here on out is a big one.
• Your 50’s: Heads-up – People in their 50s are usually in their peak earning years, and more than half no longer have kids at home. Now is not the time for looking in the rear-view mirror by saying, “I should’ve started saving when I was in my 20’s.” Retirement saving is Priority #1. Review your retirement accounts annually, rebalance to make sure you are taking the appropriate amount of risk.
• Your 60’s: Last Chance to Get Ready –  Zero in on a retirement date. To know if you can comfortably retire, you’ll need to have a target retirement date, because how much money you’ll need and how much you’ll get (from Social Security and other options) depends on this. But you need to stay flexible, in case the day you’d like to quit working turns out to be too early. Working even a year or two extra can boost your nest egg and increase your retirement income enormously, but there is also no point in hanging around longer than you have to. Review Social Security options. Review your estate plans. Meet with a fee-only planner. The decisions you’re about to make are too important to your future not to get a second opinion. Look for an objective planner who’s experienced with retirement-income calculations.

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8 Social Security Questions That You Need To Consider Before Retiring

8 Social Security Questions That You Need To Consider Before Retiring

If you are thinking about retiring in the next few years, chances are you are wondering about
the same things that many other people are at this stage of life. Here are some of the most
frequently asked questions that clients ask me about Social Security Benefits:

How is my monthly benefit amount determined?

Social Security bases your monthly benefit on the amount of FICA taxes that you paid through
out your work history. They take your monthly earnings during the 35 years in which you earned
the most, and index earnings from past years for inflation to calculate your basic benefit,
formally called your primary insurance amount.

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Understanding the WHY Behind Saving & Investing

Understanding the WHY Behind Saving & Investing

Getting it right the first time

Over the past 15 years, it feels like I’ve heard it all. The stories from investors saving for retirement are all over the board. From “Man, if only I would’ve started saving when I got my first job”, to “I’ve never really understood investing, so it’s probably best I just wait until I have time to figure it out.” Then, of course, my favorite, “My retirement plan is to win the lottery!” 

One of the obstacles is that many of us have very little knowledge of investing. It’s not exactly standard curriculum in school, and most of us have little desire, let alone the time, to actually dig in and learn it ourselves. My goal in the next few paragraphs is to give you a basic understanding of saving, investing, and most importantly, WHY we do it.

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Understanding the WHY Behind Saving & Investing

Understanding the WHY Behind Saving & Investing

Getting it right the first time

Over the past 15 years, it feels like I’ve heard it all. The stories from investors saving for retirement are all over the board. From “Man, if only I would’ve started saving when I got my first job”, to “I’ve never really understood investing, so it’s probably best I just wait until I have time to figure it out.” Then, of course, my favorite, “My retirement plan is to win the lottery!” 

One of the obstacles is that many of us have very little knowledge of investing. It’s not exactly standard curriculum in school, and most of us have little desire, let alone the time, to actually dig in and learn it ourselves. My goal in the next few paragraphs is to give you a basic understanding of saving, investing, and most importantly, WHY we do it.

(more…)