Category Archives for Finance

Prescription savings you (may) have overlooked

pillsWhen it comes to medication, your insurance always gives the best deal, right? Not necessarily. Many people don’t realize that Walmart, Target, CVS, and other national pharmacy chains offer prescription drug discount plans that may provide some savings.

Although these plans have nominal annual fees, often it’s possible to more than recoup that on prescription drug savings, as well as savings on other services such as flu shots. Continue reading

Take the back door into a Roth IRA

investing2If you’re a high-salary-earner and are looking for ways to put away a sizeable portion of your income for retirement, traditionally your options have been limited. Employer-sponsored retirement accounts like 401(k)s and individual accounts like IRAs have contribution limits that cap how much you can put in each year. For example, Roth IRAs have a limit of $6,500 per year for those age 50 and over. And if you make over a certain limit ($131,000 for singles in 2015) you can’t open a Roth IRA at all.

But under recent IRS rules, you have a potential way around that. Some are calling it the mega-backdoor Roth because it allows you to sock away larger amounts into your Roth IRA, if you qualify.

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Four retirement myths you (might) think are true

retirement2For many people, retirement involves a plunge into an unknown realm for which they are not sufficiently prepared. Like every life transition, retirement goes much more smoothly with proper planning. Here are four misconceptions that many people have about retirement.

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How a government pension may reduce your Social Security benefits

cointowersThe Windfall Elimination Provision (WEP) is a little-known rule that reduces your Social Security retirement benefits if you receive a pension from a past job in which you were not required to pay Social Security taxes. It’s little-known because it applies only to a small segment of retirees. Mostly it applies to former state and local government employees, like police officers, firefighters, teachers, and workers at state and local governments and nonprofit organizations that are not part of the federal Social Security system.Continue reading

Survey says: you may not need as much retirement income

moneyinhandFor people close to retirement who are feeling anxious about having sufficient funds, there’s some good news. A survey by T. Rowe Price of new retirees found that most are doing well, both financially and emotionally, and that retirees are less anxious than those who are approaching retirement. The survey also indicated that the retirees, who had been retired for one to five years, weren’t spending as much as they had expected, but were satisfied with their retired lives nevertheless.Continue reading

The four percent rule, revised

percentThe venerated four-percent rule states that retirees can safely withdraw four percent of their retirement savings per year without running out of money in retirement. For example, if a retiree has $1 million in a retirement account, they can take out $40,000 the first year, and annually adjust that figure for inflation.Continue reading

Short of retirement funds? Here are some suggestions

fiverinhandIf you’re approaching retirement and worried that you don’t have enough saved, you have plenty of company. Financial advisors see clients every day in their fifties and even sixties who have little retirement savings. The median amount of retirement savings of Americans age 55 to 64 is $103,000. A survey by the Center for Retirement Research at Boston University found similar results and concluded, “many Americans need to save more and/or work longer.”Continue reading

Early retirement – how to get there

beachchairA dream of many people is to retire early. Leaving the daily 9 to 5 grind at age 60, 55, or even earlier, and having the day and the rest of your life free to do as you please, is an appealing vision. But how do you actually get there? For most people there are ways to make the dream a reality, but it takes planning and some adjustments.Continue reading

Why to pay yourself instead of your child’s college

collegeMany middle-aged, middle-class couples today find themselves in a bind. On the one hand, they know they have to save for retirement, and worry they aren’t saving enough. On the other, college tuition bills are looming, and they want the best for their children. Financial advisors recommend making retirement saving the priority. Here are some tips for doing that.Continue reading

Why withdrawing your retirement savings in chunks may be good

stackofbillsHow much of your retirement savings should you plan on taking out each year? Many retirees’ number one fear is outliving their savings, and that’s a question which is at the top of their minds. A common figure is the “4 percent rule”, which says you should plan on taking out no more than 4% of your savings each year. In today’s low-interest environment, many financial advisors are recommending even lower amounts, closer to 3 or even 2 percent.Continue reading

Why and how to save $100 per month for retirement

If you want to have a comfortable retirement someday, it’s important to start planning early. By putting money away starting at an early age, you allow compound interest to work for you. Here are some general tips that can help.Continue reading

Five common retiree scams

Frauds and scams aimed at retirees and seniors have become big business. Here are five common types of scams and tips for avoiding become a victim.Continue reading

Minimizing your tax bill in retirement

Many people are concerned about taxes taking a bite out of their retirement income. With a little planning, your taxes in retirement will likely be lower than during your working years. Here are some suggestions for keeping your retirement tax bill to a minimum.Continue reading

Taking IRA distributions early without penalty

We’ve all heard the common rule that you can’t access your IRA funds until age 59 ½ without incurring a 10% penalty. Less commonly known is a provision in the tax code that allows you to take distributions earlier, without any penalty. This provision has restrictions however, and is only suitable for certain individuals.Continue reading

Your credit score may reveal more than your spending habits

credit card

Credit score requests have become quite commonplace in today’s society. Your bank uses your credit score to decide how much interest to charge on your loan; your life insurer uses it to set your premiums; prospective employers even use it when making hiring decisions.

A credit score encapsulates a host of prior financial decisions, which many believe reflects attributes that are harder to measure such as trustworthiness and personal responsibility. Now research has shown that credit scores are correlated with physical health.Continue reading