- I’m 67 With $680k in My 401(k). Should I Convert to a Roth IRA to Avoid RMDs?
If you need retirement funds for living expenses now, paying taxes on a Roth conversion may cost more than it saves. But, if you plan to keep the money for growth or pass it on to heirs, a conversion can help you avoid future required minimum distributions (RMDs) and provide tax-free income for beneficiaries. To… read more…
- How to Use Dividend Investments for Early Retirement: Examples
Retiring early is possible for many people, but it requires smart planning and reliable income sources. Dividend-paying investments offer one path by providing consistent cash flow while still allowing your portfolio to grow. By reinvesting dividends during your working years and later using them to cover living expenses, you can bridge the gap to early… read more…
- How Much Do You Lose By Retiring at 62? Benchmarks and Examples
How much you can lose by retiring at 62 depends on Social Security, savings growth, and pensions. Starting Social Security at 62 usually cuts monthly benefits by 25% to 30% compared to waiting until full retirement age. Retiring early also means fewer years to save and less time for investments to grow. Pension checks may… read more…
- Mega Backdoor Roth vs. Backdoor Roth: Benefits and Limits
High earners often weigh the mega backdoor Roth against the backdoor Roth to expand tax-free growth. A backdoor Roth works by making a nondeductible traditional IRA contribution and then converting it to a Roth. A mega backdoor Roth, on the other hand, uses after-tax 401(k) contributions that are later converted in-plan or rolled to a… read more…
- How to Retire at 62 With Little Money: Tips and Example
Retiring at 62 with little money can feel daunting, but it is possible with the right strategies. Many people reach their early 60s without a large nest egg. However, they can still create a sustainable lifestyle by combining Social Security benefits, part-time income and careful budgeting. Understanding how to reduce expenses, adjust expectations and make… read more…
- Do Pensions Run Out of Money? Rules and Risks
For generations, pensions have been regarded as the gold standard of retirement security, offering guaranteed income you can count on for life. However, funding gaps, longer life expectancies and economic volatility have put pressure on many pension plans. It begs the question: do pensions run out of money? Understanding the rules, risks and options for… read more…
- 80% Rule for Retirement: How It Works and Example
Retirement planning often comes down to one big question. How much money will you really need to maintain your lifestyle once the paychecks stop? Many experts point to the “80% rule” as a simple answer. This rule suggests that most retirees can live comfortably on about 80% of their pre-retirement income. While this offers a… read more…
- What Is a Group Annuity? Common Uses, Pros and Cons
A group annuity is a retirement savings contract typically offered through an employer that pools contributions from multiple participants to provide guaranteed income in retirement. Unlike individual annuities, these plans are structured for groups, which can lower costs and simplify administration. They are often used in pension plans or other workplace retirement arrangements, giving employees… read more…
- Early Withdrawal Penalties for Annuities and Exceptions
Because annuities are designed to provide long-term income, accessing funds too early can trigger an annuity early withdrawal penalty. Insurance companies typically impose surrender charges if you withdraw money within the first several years, and the IRS may add a 10% penalty on withdrawals before age 59 ½. These costs can reduce the value of… read more…
- Pension vs. 403(b): Pros and Cons for Each
Pensions and 403(b) plans represent two distinct ways to save for retirement, each with its own structure and advantages. A pension provides a predictable income stream in retirement, usually funded and managed by an employer. A 403(b), on the other hand, relies on employee contributions and investment growth, giving individuals more control but also more… read more…
- I’m 63 With $1.35 Million in My IRA and a $2,200 Social Security Check. What’s My Retirement Budget?
By your 60s, most of your retirement foundation is already in place. While you may still have a few years to save, building significant new wealth is less likely unless you continue working during retirement. This stage typically shifts focus to taxes, withdrawals, Social Security and budgeting. To help you create a retirement budget, let’s… read more…
- 403(b) vs. Pension: Retirement Plan Comparison
A 403(b) plan is common in public schools, nonprofits and religious groups. It is a defined contribution plan where employees add money to a pre-tax or Roth account. The money is usually invested in mutual funds or annuities. Growth depends on contributions, investment performance, fees and time. Some employers may contribute, but matching is not… read more…
- How Long Does It Take to Get a 401(k) Loan?
How long it takes to get a 401(k) loan can vary depending on your employer, plan administrator and whether your plan offers an online portal or requires paperwork. In some cases, the process may take just a few days. In others, you may need to wait a couple of weeks before the funds hit your… read more…
- Can I Withdraw From My 457 While Still Employed?
Planning for retirement often comes with questions about when and how you can tap into your savings. One such question many people ask is, “Can I withdraw from my 457 while still employed?” Unlike other retirement accounts, 457 plans (also known as 457(b) plans) have their specific rules and exceptions that can make them both… read more…
- Can You Convert an Inherited IRA to a Roth? Rules and Taxes
Roth IRAs are known for tax-free growth and distributions in retirement. However, inherited IRAs come with their own rules and limitations that can complicate the picture. Whether you can convert an inherited IRA to a Roth IRA depends on both your status and current IRS guidelines. By understanding IRS law, you can make strategic investment… read more…
- I’m 78 With $735k in My 401(k). How Should I Handle My RMDs?
The IRS mandates withdrawals from pre-tax retirement accounts once you reach a certain age. These are referred to as required minimum distributions (RMDs). For many retirees, RMDs don’t change much since they already take out more than the minimum to cover living costs. But, for those who want to withdraw less than the required amount… read more…
- I’m 58 With $680k in My 401(k). Does It Make Sense to Pivot to Roth Contributions?
Roth IRAs can be appealing because they allow tax-free withdrawals and have no required minimum distributions (RMDs). For younger savers, paying taxes now for tax-free growth later can be a smart move. But, if you are near retirement, this strategy can be more complicated. Balances are typically larger, the time to grow tax-free is shorter… read more…
- Deferred Compensation Plan vs. 401(k): Key Differences
Planning for retirement can feel overwhelming, but fortunately, there are several savings tools available to help take the sting out of the process. By utilizing these tools, you can create a financial strategy that helps you save for retirement. Two common options are deferred compensation plans and 401(k)s. While both can help you defer taxes… read more…
- Are Roth IRA Contributions Tax Deductible? Rules and Exceptions
With a Roth IRA, you contribute after-tax dollars, so there is no tax deduction when you put money in. The benefit comes later because your investments grow tax-free and qualified withdrawals in retirement are also tax-free. This differs from traditional IRAs, which give you a tax break upfront but require you to pay taxes when… read more…
- How to Withdraw Money From Your 401(k) Before Retirement
Tapping into your retirement savings early may seem like a risky idea, but there are many reasons why you may have to take money from your 401(k) before retirement. These accounts are meant to support you in your later years, yet unexpected financial challenges can force your hand at using your funds sooner. Before doing… read more…
- Should You Roll Over Your 401(k) to an IRA or a Roth?
When you leave a job or retire, you need to decide what to do with your 401(k). If it’s a traditional 401(k), you can move it to a traditional IRA, where taxes are paid when you withdraw, or to a Roth IRA, where you pay taxes now but withdrawals in retirement are tax-free. If it’s… read more…
- How Much Should I Have in My 401(k) at Age 55?
By age 55, you’re about a decade away from retirement. Many financial experts suggest having seven to eight times your annual salary saved by this age if you want to maintain a comfortable retirement. By 55 you still have time to benefit from compounding and catch-up contributions, but not much. Knowing the benchmarks, the potential… read more…
- How Much Should I Have in My 401(k) at Age 45?
Financial planners often recommend aiming for roughly three times your annual salary in retirement savings by the time you reach 45. At the same time, your mid-forties are a turning point when compounding can still work in your favor. The decisions you make now, whether you’re on track or catching up, will affect your nest… read more…
- I’m 67 With $870k in a 401(k), $120k in an IRA and a $2,200 Social Security Check. What’s My Retirement Budget?
Deciding how much to withdraw from your retirement accounts means finding a balance between enjoying life and making your money last. Taking too little leaves you with unused savings, while taking too much risks running out of money later. Taxes also affect how much you can actually spend. To help you create a retirement budget,… read more…
- ESOP vs 401(k): Key Differences and How Each Plan Works
An Employee Stock Ownership Plan (ESOP) gives employees an ownership stake in the company. It does this at no direct cost by allocating shares of company stock to their retirement accounts. In contrast, a 401(k) allows employees to save and invest a portion of their paycheck. These plans often offer employer matching for extra savings,… read more…