While it’s true that each person is unique and every financial plan should be customized according to their situation, it is generally accepted that people should start saving for retirement early in their lives so they can take advantage of compounding returns. Here is some general information and things to consider about saving for retirement for each age group. Gen Z Roth IRA accounts. As soon as children or grandchildren have earned income, either you or they can open and contribute to a Roth IRA (Individual Retirement Account) in their name. Roth IRA contributions can’t exceed the child’s earned income
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Archives for Retirement Planning
It’s Annuity Awareness Month. How much do you know about annuities?
Because June is Annuity Awareness Month, here is an overview about them. Annuity product designs and types continue to evolve, primarily to meet the demands of people nearing retirement. In addition to their original purpose of providing retirement income, insurance companies have developed hybrid policies, adding features to address the multiple risks consumers face as they get older. The most important thing you should know about annuities is that they are insurance policies, or contracts between you and an insurance company. Guarantees in them are backed by the financial strength and claims-paying ability of the issuing insurance company. As with
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What is a Roth Conversion?
To understand what a Roth conversion is, you must first understand some of the basics about the different types of retirement accounts, called “qualified accounts.” Pensions Also called defined-benefit plans, pensions are paid for by employers. They have largely gone away for Americans in the private sector starting with the passage of three laws during the Reagan administration, the Tax Equity and Fiscal Responsibility Act passed in 1982, The Retirement Equity Act of 1984, and The Tax Reform Act and Single Employer Pension Plan enacted in 1986. The lack of pensions is one reason why it’s important for people to
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How Rich Do You Have to Be in Order to Retire?
Even though perceptions have changed during the pandemic with more Americans now saying they need less money to feel rich1, when it comes to retirement, most people are still unclear about how much they will need to have saved before they can quit their jobs. The answer to that question is different for every person. Here are some of the things you need to think about in order to get a realistic retirement number in mind. What do you want to do during retirement? Where will you live? Different people have different retirement goals and visions. You may not
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The Rules Are Changing For 401(k)s In 2020
The Rules Are Changing For Your 401(k) In 2020 If you’re still working and contributing to a 401(k) or similar workplace retirement plan, there is some good news for the upcoming year. If you’re under age 50, the amount you can contribute to your 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan is now $19,500 for 2020—a $500 increase over 2019. Additionally, for those who are age 50 or over by December 31, 2020, the catch-up amount is now $6,500, up by $500 (and the first increase since 2015). Keep in mind that you can still
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Does Your Retirement Plan Include Inflation Risk?
Inflation may not always be top of mind when you think about planning for retirement. Of course, you will likely consider your current expenses, but you need to account for what the costs of those expenses could be over time. None of us can predict the future, but we can plan. Inflation diminishes purchasing power over the years and increases the costs of services that retirees and pre-retirees need. Given that more Americans are living longer, it can pay dividends to include inflation risk in your overall planning. The other issue we have to contend with when it comes to
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The IRA Had a Birthday Last Month
The IRA can provide many gifts as part of a comprehensive retirement plan. The Individual Retirement Account (IRA) turned 45 on Labor Day. On September 2, 1974, the Employee Retirement Income Security Act, or ERISA, was enacted into law, introducing broad safeguards to protect employee savings in both defined benefit plans like pensions, and defined contribution plans. The intent of Congress in initially establishing IRAs was to provide a tax-advantaged retirement savings plan for those workers at businesses that weren’t able to offer pensions. The IRA also made it possible to preserve the tax-deferred status of qualified plan assets when
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Make Room for Rising Healthcare Costs as Part of Your Retirement Planning
Does your retirement plan include strategies to plan for, manage, and even reduce healthcare costs in retirement? It is projected that an average healthy 65-year-old couple retiring this year will incur total lifetime healthcare costs of $387,644 in today’s dollars, according to research by HealthView Services, a provider of retirement healthcare, long-term care and Social Security optimization tools for the financial services industry. The figures were released in early July. To no surprise, as the couple ages, costs will be significantly higher later in retirement than at the beginning. In the first year of retirement, the couple’s total annual premium
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12 Retirement Risks
You may know that Market Risk is a concern in your retirement. But do you know of the other risks that you may face and how to prepare for them? Education is key, so read on.
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