Are you planning out your retirement strategy but are puzzled about required minimum distributions (RMDs) and what they mean for you? If so, the good news is you’re not alone. The bad news is that failure to set a proper RMD withdrawal strategy can result in significant tax penalties.
RMDs are annual distributions required from a tax-deferred retirement account once you reach the age of 70 ½ years old. (Note that you can take withdrawals of any amount without penalty once you reach age 59 ½.) They are also required if you inherit an IRA or 401(k) type account at any age. Distributions are subject to income tax, since they were saved “tax-deferred” during your working years. A key component of your retirement planning is taking required minimum distributions from your retirement accounts. But there are rules that govern when you must start taking withdrawals and the minimum amount you must withdraw from specific retirement accounts. Below are some tips you should know about RMDs:
While we have enjoyed steady gains in the equity markets, corrections do happen. When the next correction occurs we offer the following thoughts for investors to keep in mind.
A stock market correction is often announced with attention-grabbing headlines. The effect can be scary and overwhelming to any investor. It’s hard to stay calm and not panic when bright red numbers and flashy headlines tempt you to take immediate action. Let’s discuss what a correction in the market means and how it may impact you.
Do the following words have you holding your head in fear and confusion - Recession, Depression, Bubbles, Bull and Bear Markets? Do you wonder when morning shows use them whether you should be celebrating or stuffing your money into a mattress? If so, you’re not alone. It can all be a bit bewildering. Good news is, we’re here to help. Let’s discuss the history and definition behind all these terms and what they mean for you.
“Buy low and sell high. It’s pretty simple. The problem is knowing what’s low and what’s high.” - Jim Rogers, Chairman of Rogers Holdings and Beeland Interests, Inc.
Buy low, sell high, four words that make the idea of investing in the stock market seem exciting and simple. The reality, however, can be overwhelming and frustrating, particularly if your investments aren’t performing as well as you expected in the markets. Maybe you heard the latest buzz about a new and upcoming technology that had you jumping at the chance to be a part of the action – only to realize later that you purchased high and now their stock price is dropping. You’re not alone.
Blackrock reports, “The average investor, over a 20-year span ending in 2015, underperformed the S&P 500 by six percent.”
Below are a few key reasons that uninformed investors don’t make more money in the stock markets.
You’ve spent your entire career saving and planning for a long and happy retirement. You’re counting on your Social Security benefits to represent a significant portion of your assets upon retirement. The question is, when should you begin claiming Social Security in order to maximize your benefits? Let’s review some of the basic Social Security claiming strategies so you can take full advantage of your benefits.
In our previous article, we reviewed five tips that parents could teach kids on being ethically responsible with money. This week, we’ll continue our financial education discussion with how we can teach kids about budgeting and saving from an early age.
How many of us wish we were taught more about money during our childhood? One of the best ways to help our kids avoid financial mistakes in the future is to teach them to manage money.
According to an EverFi, Inc recentsurvey, “More than a quarter of students believe they will be unprepared to manage their finances upon high school graduation. In addition, students surveyed demonstrated that they do not understand basic financial facts and concepts.” Teaching kids basic financial tasks like developing and sticking to a budget will result in strong habits that they can carry into the future. So, now the question is, what financial skills do you teach them? Well, it really depends on how old they are.
Truth, responsibility, respect, compassion and fairness tend to be the global understanding of the values we associate with ethics. But what about financial ethics? How do we teach our children to be ethically responsible with money?
Research shows that the best way to teach children morals and ethics is through example. From an early age, children observe their parents spending, saving and discussing money. They pick up on their parents’ views regarding money just by watching them.
Last time, we discussed the various reasons affluent retirees are being overly cautious in spending their savings and fully enjoying their retirement life. Reasons ranged from concern over the financial stability of the US economy to emotional responses that prevent retirees from spending. All of them lean towards retirees not taking advantage of living life to the fullest at a period of their lives when they have both the time and resources to enjoy it.
How do we address this? How do retirees overcome their fear of spending down their life-savings? We have a few tips that should help, so that you can relax and enjoy your well-deserved golden years without depleting your resources.
After years of being focused on managing personal finances to ensure they have the resources available during retirement to sustain their lifestyle, there is a new trend growing in America. Instead of kicking back and enjoying spending their life savings, affluent retirees are cutting back and being frugal.
A Vanguard study estimates that affluent retirees spend only 60 percent of the money they withdraw for retirement. They are spending the majority on routine expenses (mortgage, household transportation, etc.) or discretionary expenses (medical, entertainment, credit cards).
The last thing anyone wants to think about when dealing with the loss of a spouse is taxes. Coping with the loss of a loved one is stressful enough. Not knowing what to do regarding finances and taxes presents yet another burden. If you are newly widowed, there are a few questions you may have regarding finances and potential tax breaks.
Filing for qualifying widow(er) status provides you the same exemption as if you were filing married jointly. You can usually file as a qualifying widow(er) if you meet the following requirements:
Last time, we discussed the various adoption opportunities (private, international and foster care) along with the average cost associated with each. We also walked through the basic steps for adopting one of the 428,000 children currently in foster care. In this article, we will review the different financial assistance available for those adopting children in foster care.
In addition to Federal and State financial assistance for children adopted from foster care, families may be able to access employer-provided adoption benefits, tax credits, and loans or grants to offset adoption expenses.
So, you’re thinking about adopting a child. We think that’s admirable. But while raising children can be rewarding, there are also many financial considerations. Adoption comes with its own set of financial challenges. For some people, the question becomes, how can they best provide for their child financially as well as emotionally?
According to the Child Welfare Information Gateway’s Planning for Adoption: Knowing the Costs and Resources, the average U.S. private agency adoption costs can range from $20,000 to $45,000, and international adoptions can average between $20,000 to $50,000. While both of those are great opportunities for some families if finances are planned accordingly, for others, the costs associated with the process can be disheartening. There is another option, however – adopting a child in foster care.
Summertime is the time when many of us think about vacations. But maybe you’re retired and vacations just haven’t lived up to your expectations. Is something missing? If so, you might want to consider a volunteer vacation.
It’s a testament to human compassion that so many retirees are choosing to use their vacation time to volunteer nationally and internationally. But these unique options are about more than that. Retirees aren’t just looking to sit back and relax on vacations these days. More and more retirees are opting to immerse themselves into local cultures and do something meaningful. And if planned correctly, volunteer vacations, like other forms of giving, can also mesh with a solid, retirement financial plan.
Last week, we discussed two types of funds – lifestyle funds and lifecycle funds – that aim at simplifying investment strategies for individual investors who may be choosing their employer retirement plan investments with limited options, or just beginning to invest. Lifestyle funds blend stocks, bonds and other investments in order to maintain a consistent level of acceptable risk. Lifecycle funds on the other hand, focus on managing your investments towards a target end date. This week, we will look at whether or not these are options that will best help you meet your financial planning goals.