Posts Tagged ‘Retirement’

Make Room in Your Budget for Retirement Savings {infographic}

Monday, December 14th, 2015

Retirement savings - norm

Living on a budget can be tough, especially if you’ve had to make cuts to your spending in the past to make sure you’re living within your means. But even if you’re living well within your means, and you’re still not saving for retirement, all that budgeting can be for naught.
The fact is that a majority of Americans don’t have a regular savings account, and an even bigger majority don’t have a retirement savings account.

Here are the stats:

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Retirement stats

New Year’s Resolutions: Apps That Will Help Get Your Finances in Order in 2016

Monday, November 30th, 2015

resolutions

Behind losing weight and being healthier, getting out of debt and saving money might be one of the biggest New Year’s resolutions that Americans set for themselves. It’s also one of the most broken New Year’s resolutions, because like all resolutions, it’s easier said than done. If you’re serious about getting serious, and want to start being financially healthy, saving money, whether it’s for retirement, or you’re trying to save up for a new car, then you’re going to need some good tools in your tool box.

Robinhood

robinhood

Robinhood started with the idea that a technology-driven brokerage could operate with significantly less overhead. They cut out the fat that makes other brokerages costly — hundreds of storefront locations and manual account management. Regularly, to make a trade, it can be up to $10 per trade, but with Robinhood, there’s no trade fee, runs commission-free, and will allow users to transfer money from their bank account to trade stocks and ETFs. Real-time market data, and notifies you in advance of scheduled events — like earnings, dividends, or splits, so you can get up-to-date information at the right time.
Robinhood is available for iOS as well as Android.

Acorns

acorns

In their own words, Acorns is an automated process driven by a team of engineers, mathematicians, and a Nobel Prize-winning economist constructs and monitors your investment program, so you don’t have to. Acorns invests in low cost ETFs and passes these savings on to the users in the form of low management fees. Using Acorns for a year can cost less than some traditional brokers charge for two trades.
The app lets users round up purchases to the nearest dollar and invest that spare change, but users can also contribute lump sums if they want. In terms of investments, there are 5 basic diversified portfolios of index-based ETFs, based on risk levels, from conservative to aggressive. In terms of fees, Acorns charges $1 per month, while the investment portfolios charge between 0.25% and 0.5% of assets, annually.
Acorns is also available for iOS as well as Android.

Digit.co

digit

Digit.co is a little different from the other two on this list not only because it’s not an app (it operates through your phone and online), but also because its purpose isn’t investing, but saving money. Signing up for Digit takes a couple minutes, it syncs up with your bank, and gathers data on the spending habits of its users. I use Digit personally, and I can’t say how I feel about it, mainly because I don’t notice it working, and that’s the entire point. Digit transfers a small amount of money every few days into your Digit savings account, it’s designed to learn your spending habits so that you won’t accidentally overdraw your account, and as I said, it’s very sneaky. Small amounts of money here and there add up very quickly, and when you want to transfer money from your Digit savings account to your checking account, it’s quick and easy.
Digit is available on every device as it’s not an app.

Does Anything Change for Your Retirement After Marriage?

Thursday, November 12th, 2015

retirement marriage

It’s no secret that married couples in the US are eligible for a variety of nuptial benefits, like tax breaks, deductions, estate planning, and so on. But what most people don’t know if that there are retirement benefits as well, and some that single retirement savers are not eligible for. What those benefits are differ depending on what type of retirement plan you invest in, so let’s break them down.

401ks

If both people in a marriage are working and earning income both have a 401k can defer income tax twice as much cash as single people. Couples who are only able to save a limited amount can decide which 401k has the better employer contributions, and focus their savings efforts there, but the ideal situation would be getting matches from both employers. It’s silly to turn down free money. Between 1992 and 2010, married women’s contributions to retirement accounts increased from 20 percent to 38 percent, on average, according to a Government Accountability Office analysis of Federal Reserve data. And among dual-earner households ages 55 to 64 with 401ks or similar types of accounts, women contributed an average of 44 percent of the household’s deposits in retirement accounts.

Individual Retirement Accounts

According to IRS rules regarding IRAs, married couples have different income limits than individuals when it comes to their ability to make tax-deductible IRA contributions if they also have retirement accounts at work, such as a 401K. For example, the tax deduction for traditional IRA contributions is phased out for married couples with a modified adjusted gross income between $96,000 and $116,000, compared to between $60,000 and $70,000 for individuals. An individual who doesn’t have a workplace retirement account, but is married to someone who does have one can claim the tax deduction until the couple’s income is between $181,000 and $191,000. The adjusted gross income phase out range for Roth IRAs is $181,000 to $191,000 for married couples and $114,000 to $129,000 for unmarried individuals.

Social Security

Married individuals have Social Security claiming options that single people don’t, and they can use various strategies to maximize their benefit as a married couple. Spouses are eligible to receive Social Security payments worth as much as 50 percent of the retired worker’s benefit (if it’s more than they would get based on their own work record), and surviving spouses are entitled to up to 100 percent of the higher earner’s benefit. Married individuals can also claim spousal payments and benefits based on their own work record at different times in their lives. For example, a wife claiming Social Security payments based on her own work record might switch to survivor’s payments based on her husband’s work record when he passes away if his payment is higher than the one she is getting. Couples have an advantage in that they can play the game a little bit and try some strategies, a widow’s benefit is going to be based on whatever his final benefit is, so by waiting until age 70, if something does happen to him, she will get that higher benefit. Divorced spouses can get these payments too if the marriage lasted at least 10 years. In contrast, single people or divorced individuals whose marriage did not last a decade can only claim benefits based on their own work record.

Traditional Pension

Traditional pensions generally provide a steady stream of payments over the lifetime of the retiree and are also required to provide payments to a surviving spouse. However, more than a third of married households with pensions opted not to receive a spousal survivor benefit, often to get higher monthly payments, the Government Accountability Office found. But a worker who wishes to opt out of the spousal coverage needs written consent from the spouse. Some pension plans also give workers the option to take lump-sum cash payments instead of lifetime payments, which allows them greater freedom to spend or invest the money, but also results in the loss of the security of guaranteed monthly payments in old age.

Author: Tanya

How Could The Federal Rate Hike Affect Your Retirement?

Thursday, November 5th, 2015

Rate hike - taller

It hasn’t even been 24 hours since Fed Chair Janet Yellen told Congress that the Federal Reserve may be closer than ever to hiking interest rates for the first time in nearly a decade, and already, there’s already been an uproar from the market in anticipation. The Washington Post reported that mortgage rates have surged as of Thursday morning due to talks of the possible Federal rate hike from Chair Yellen. Although economic and job growth has slowed recently, Yellen told the House Financial Services committee the economy is performing well. But a decision on whether to hoist rates at the Fed’s Dec. 15-16 meeting will depend on economic reports in coming weeks, she said.

While rates are most likely rising next month, this makes us question whether or not these changes will affect retirement in any adverse way. There’s some speculation that Federal Reserve doesn’t want Americans to retire, that they want to keep rates as low as they have to encourage spending, and deter saving in order to prolong retirement. While there might be some truth to that, it is far from the grand conspiracy that some claim it to be. And unfortunately, no one can say with certainty whether the effects of a hike will be mostly positive or negative until it happens. For those who hope to retire someday, that uncertainty is disconcerting at best.

When it comes to long-term debt, increased rates directly affects how much it costs banks to borrow from one another, and subsequently, to consumers, the cost of borrowing will also increase. For those who have say, a variable rate mortgage loan or are in the market to borrow money for a large purchase, the fed rate hike will make borrowing slightly more expensive. The best thing to do if you’re in either of those situations is to either lock in today’s low rates or work to eliminate potentially expensive debt that could eat away at retirement savings.

With equities, experts say that in preparation of a hike, that investors should do what’s called ‘sector rotation’ within portfolio and should think about selling some stocks from industries that perform well during falling rate environments, such as apparel, retail, construction, durable goods and autos, and buying stocks in industries that perform well during rising rate environments, such as energy, consumer goods, utilities, food and steel products.

Experts suggest that when it concerns bonds, investors should get out and look for safer options. The reason for this is because history shows when interest rates go up, bond values go down, and since most people use bonds to protect their money, when interest rates go up, bonds will no longer hold the title of safe. As the Fed begins to solidify its plans, retirement savers will need to move some of that money into other securities to offset the price drop.

Retirement savers should not be afraid when the Fed initiates its first interest rate hike in more than nine years. Our economy and markets have been through them many times before and weathered the storm. As always, asset allocation within your self-directed IRA, or 401K, and persistence remain the most important ingredients to retirement success.

Here are the Stats: Why You Should Start Retirement Planning Today

Thursday, October 22nd, 2015

Retirement stats

According to the 2014 Survey of Household Economics and Decisionmaking, conducted by the Federal Reserve, American’s are very ill-prepared for retirement. A whopping 38% of the more than 5,800 respondents answered that they had no intention of retiring, or planned to work for as long as possible. 31% of non-retirees had no retirement savings or pension whatsoever, including a quarter of the people in the survey age 45 and up.

If this trend keeps up, and we’re unable to make up this deficit, a big majority of American’s could be forced to rely on Social Security in their would-be retirement years, or may have to work passed the desired age. The biggest issue with working well into retirement age is that unfortunately you can’t know for sure that your health, or your employer will accommodate you working 60 and beyond.

The problem with us relying on Social Security is that ideally, it’s only meant to make up %40 of retiree’s income. With people living longer than before, and baby boomers beginning to retire, it’s no wonder that Social Security is making headlines lately with talks of it possibly drying up.

start saving today

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Fortunately, there are several options when it comes to retirement planning, 401K’s and pensions offered through your employer, the rollout of myRA through the government, individual IRA’s and Self-Directed IRA’s hosted through IRS approved custodians, SEP IRA’s for self-employed people or small business owners, and more.

Talking with your financial advisor is important when making retirement decisions, they’ll give you an objective view on where you are, and what can be done to help you reach your goals. The most important thing is to not throw your hands up in defeat. Small victories and goals can be met, and make a big difference in the long run.

Click here to open an IRA today, and click here and fill out the form on the right to get more information on how you can get started today.

Author: Tanya