- What Is an Active Participant in a Retirement Plan?
Active participation in a retirement plan refers to an individual being involved in an employer-sponsored retirement program, like a 401(k) or pension plan, during a given tax year. This status affects eligibility for certain tax benefits, including the ability to deduct contributions to a traditional IRA. Knowing whether you are an active participant and understanding… read more…
- 9 Steps to Planning for Retirement
Planning for retirement involves a series of well-defined steps that aim to maintain financial stability and offer greater peace of mind in later years. Your first step will be to set clear retirement goals. This can help you assess your current financial situation, including savings and investments. Creating a detailed budget helps track expenses and… read more…
- Differences in the Types of Retirement Plans
There are many retirement plans available to help you save for your golden years. 401(k)s, IRAs and Roth IRAs offer unique benefits and tax advantages tailored to different financial goals and employment situations. Choosing the right plan can affect your savings strategy, tax liabilities and overall retirement readiness, which is why carefully comparing the available… read more…
- How Thrift Savings Plans Are Affected by a Divorce
A Thrift Savings Plan (TSP) can be divided in a divorce through a court-issued Retirement Benefits Court Order (RBCO). This document must meet specific federal requirements to be honored by the TSP, and it can award a portion of the account to a former spouse. These orders ensure a fair distribution of retirement savings between… read more…
- I’m 65 With $1.2 Million in an IRA. I’ll Get a $2,900 Monthly Social Security Benefit. What’s My Retirement Budget?
As you approach retirement, your financial focus shifts. During your working life, retirement is about goals and planning. You decide what kind of lifestyle you want, figure out what kind of income will support that spending, then build a savings and investment plan to reach those goals. That should be your retirement approach at age… read more…
- How Are Fixed Annuities Taxed?
Fixed annuities are popular for their stability and guaranteed returns, but it’s important to understand the tax implications of this type of annuity when using it as part of your financial planning. The funds you contribute to a fixed annuity typically grow tax-deferred, meaning you won’t owe taxes on the interest earnings until you start… read more…
- How Are Non-Qualified Annuities Taxed for Beneficiaries?
Non-qualified annuities offer tax-deferred growth, providing financial benefits during the annuity holder’s lifetime. When the annuity holder passes away, their beneficiary inherits the annuity, which comes with some specific tax implications. Understanding how inherited non-qualified annuities are taxed to beneficiaries is an important part of effective estate planning and tax management. Consulting with a financial… read more…
- What Is the Minimum Annuity Investment You Can Make?
Annuities offer a reliable income stream for retirees. But if you’re wondering how much it takes to buy an annuity, the minimum investment required can vary. Generally, the initial investment for an annuity starts around $5,000 to $10,000, depending on the type of annuity and the provider. Fixed annuities often have lower minimums compared to… read more…
- Factors That Determine the Amount of Your Social Security Benefits
Understanding what your Social Security benefit is based on can significantly impact your financial planning for retirement. The amount you receive hinges on several factors, including your lifetime earnings, the age you start claiming benefits, and the number of years you’ve worked. Additionally, the Social Security Administration uses a formula to calculate your benefits, which… read more…
- Retirement Plan Options for 1099 Workers
Independent contractors face unique challenges when it comes to retirement planning due to the lack of employer-sponsored plans. The good news is that there are several retirement plan options designed specifically for self-employed individuals, each with unique benefits and consideration. Popular choices include SEP IRAs, SIMPLE IRAs and solo 401(k)s, each offering distinct benefits and… read more…
- Retirement Plan Options for Nonprofits
Nonprofits have a variety of retirement plan options to help their employees save for the future. Popular choices include 403(b) plans, similar to 401(k) plans but tailored for nonprofit organizations, and 401(a) plans, which offer higher contribution limits. Additionally, SIMPLE IRAs and SEP IRAs cater to smaller nonprofits with simpler administrative requirements. Understanding the specific… read more…
- Retirement Planning Questions You Should Be Asking (FAQs)
Making a good plan, any plan, generally starts the same way: You need to ask the right questions. Whether getting a degree, finding a job, buying a house, or anything else, the right place to start is by asking the right questions. It will help you clarify what you want to achieve and the details… read more…
- Why Is It Called a 401(k)?
The term “401(k)” comes from the section of the U.S. Internal Revenue Code that established this retirement savings plan. Introduced in 1978, Section 401(k) allows employees to defer a portion of their salary into individual accounts, which can be invested in various financial products. This tax-advantaged retirement plan gained popularity because it provides employees with… read more…
- I’m 67 With $1.2 Million in a 401(k). Is It Too Late for a Roth Conversion?
Converting funds in a traditional 401(k) into a Roth IRA can provide you with tax-free retirement income, and there are no rule prohibiting conversion at any age. However, converting when you are close to or at retirement age involves some additional considerations. For one thing, you may have to let converted funds age for five… read more…
- Am I Too Late? I’m 65 and Only Have $120k Saved for Retirement
A low-savings retirement is one in which you don’t have enough money in your portfolio to generate a comfortable retirement income. For example, let’s say that you’re 65 and have $120,000 in a retirement portfolio. We’ll assume that this money is in a pre-tax 401(k). This won’t generate a livable income on its own. That doesn’t… read more…
- Does VA Disability Affect My Social Security Retirement Benefits?
As you plan for your retirement and financial future, you may wonder, does VA disability affect Social Security retirement benefits? Rest assured, VA disability benefits do not reduce the amount of Social Security retirement benefits you receive. VA disability compensation is considered an independent benefit and is not counted as income for Social Security purposes.… read more…
- What Is a Social Security Statement?
A Social Security statement is a document provided by the Social Security Administration (SSA) that outlines your earnings history and projected benefits. It serves as a comprehensive record, detailing your contributions to the Social Security system over your working life. By reviewing your statement, you can verify the accuracy of your earnings record and get… read more…
- I’m 60 and Make $150k. Should I Convert $50k per Year From My IRA to a Roth to Avoid RMDs?
There are plenty of ways to analyze your retirement strategy. Sometimes, when we have lots of concrete information, we can start by running the numbers. If X, then Y, and the next steps are to decide what risks and outcomes you’re comfortable with. But sometimes, the place to start is with questions. As you build… read more…
- A Comprehensive Guide to Planning for Retirement
When you plan for retirement, you’re preparing to one day leave the workforce. And you’ll need to decide how you’re going to pay for your living expenses after you’re no longer receiving a salary. It’s typically a decades-long process that begins with envisioning a desirable retirement, estimating what that will cost, and then amassing the… read more…
- Common Investment Advice to Consider for Retirement
Planning for retirement involves a few key investment strategies that can help ensure financial stability in your later years. The timing of your investments, the diversity of your portfolio, and your understanding of interest rates over the years are just some of the retirement investment advice you’ll need to seek out in order to fulfill… read more…
- Self-Directed IRA vs. Traditional IRA
Understanding the difference between a self-directed IRA and a traditional IRA can help you decide how and where to invest your retirement savings. A traditional IRA is a popular choice for many investors, offering tax-deferred growth on contributions made with pre-tax dollars. This means you don’t pay taxes on your investments until you withdraw them… read more…
- 13 Retirement Planning Mistakes to Avoid
Retirement planning is an important aspect of financial management that could help you ensure a comfortable and secure future. However, many individuals fall into common pitfalls that can jeopardize their retirement dreams. From starting too late to underestimating expenses, these mistakes can have significant repercussions. Understanding and avoiding these retirement planning mistakes can help you… read more…
- What Is a Self-Invested Personal Pension (SIPP)?
A self-invested personal pension (SIPP) is a type of pension plan offered in the United Kingdom that allows individuals greater control over their retirement savings by letting them choose and manage their investments. Unlike traditional pension plans, SIPPs provide access to a wide range of investment options. This flexibility can help tailor a retirement strategy… read more…
- Estimating How Much to Save for Retirement at 40
By age 40, you should have a clear plan for retirement savings. The first step is to evaluate your current savings and projected retirement needs. Experts often recommend aiming to have three times your annual salary saved by this age. This ensures a solid foundation as you continue to build your nest egg. You’ll also… read more…
- Retirement Plan Options in the United States
Retirement planning in the United States offers a variety of options tailored to meet different financial goals and needs. You’ll most likely be familiar with 401(k)s and IRAs, which are two of the more common options, but we’ll also take a look at SEP IRAs, SIMPLE IRAs and Thrift Savings Plans, among others. Choosing the… read more…