Retirement Saving Tips

Saving for retirement can seem like a daunting task at times. How in the world am I going to be able to save enough to live off of when I stop working? There are many ways to help your savings grow as well as avoid tax expenses. Here are the top 10 ways to save on taxes with your retirement money.Savings Chris Novinger

Employees defer payment on their income taxes through traditional 401(k)’s up to an amount of $18,000 a year. This money is pre-tax from your paycheck so when you take it out when you are retired, hopefully the tax rate is low, because thats when you’ll pay it.

Another form of tax deferral, up to $5,500 doing so on your own in an individual retirement account. Contributions are not due until April 15, so contributions can be made right up until tax filing to cut your tax output or boost your refund.

Roth IRA
The exact same contribution limits as a regular IRA but the taxes are paid before savings. You are essentially making a bet that the tax rate is better now than what it will be when you retire.

Roth 401(k)
Structured parallel to the Roth IRA, you pay taxes during the year but do not get hit with taxes when you remove your money during retirement.

Catch Up Contributions
When you read the age of 50 you can extend your maximum dollar amount of contribution by $6,00 in a 401(k) and $1,000 in an IRA. This offer only lasts 20 and a half years as the catch-up contribution loophole closes at 70 ½ .

Savers Credit
Those households or tax filers that meet a certain criteria can be eligible for savers credit on top of tax deduction on retirement accounts. The maximum credit that a single filer can receive is $1,000 and married couples is $2,000.

Steer Clear of Early Withdrawal Penalty
Those who withdrawal money from their 401(k)’s or traditional IRA’s get hit with a 10% penalty absent first time home buying or college payment.

Take out the minimum withdrawal when the time comes.
The IRS calculates the minimum withdrawal from your accounts based on the value and your life expectancy. If you fail to withdrawal what they demand, you will be hit with a 50% tax upon next removal from the fund

Delay 401(k) withdrawals if you are working
If you are employed after 70 ½ and own 4% or less of the company you’re employed by, you can delay your 401(k) withdrawals from that company, but not from previous jobs.

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Differences Between Roth and Traditional IRA’s

When looking to decide where to place money for retirement, if an individual is not seeking professional help there are certain alternatives that are present. Many times, the toss up between traditional and Roth IRA’s comes to the forefront of the decision. Much of the confusion comes from the lack of knowledge of each individual fund and what benefits each contain.RIRA

There is a certain number of limits regarding income according to age for each fund. For those who are younger than 70 years old, Roth IRA’s have eligibility income restrictions for $129,000 for a single tax filer. For married couples you must have less than $191,000 combined gross income level to be eligible to contribute to Roth IRA’s.

The tax benefits offered by both funds vary in time at which you are taxed. Traditional IRA contributions are tax deductible for state and federal filings during the year of the contribution but at the point of withdrawal they will be subject to regular tax rates. Roth IRA’s provide no tax deductions for the year of contribution but are tax free at the point of withdrawal. So you are either paying taxes on the way out of the the fund (traditional), or paying taxes on the way in (Roth).

The decision you should be making is whether or not the tax rate will be higher when you retire or when you contribute to the fund. That should be the indicator for you to base your decision on.

Withdrawals are also different for each fund. Traditional IRA’s mandate that minimum withdrawal be made by the time the owner reaches the age of 70 ½. Roth IRA’s do not need to be distributed to anyone beyond the lifetime of the owner. This IRA is optimal to pass along and transfer to next of kin.

Added Benefits and Eyebrow Raising Items:

Traditional IRA:
Contributions over the year are tax deductible for that year’s filings. Lowering adjusted gross income. Up to $10,000 can be withdrawn without the normal 10% early penalty for qualified first time homeowners. These are taxable though.

Roth IRA:
Roth contributions, not earnings can be withdrawn at any time without penalty even before the age of 59 ½. For first time homeowners, after 5 tax years of contributions, you can withdraw up to $10,000 of Roth earnings if qualified.

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3 Personal Finance Tips

Looking to improve your personal finance management skills? There are many tricks of the trade to be aware of when assigning value to each thing you spend money on. Here are three tips to keep in mind when managing your personal finance.Unknown-4

Use your vacation days! That is right, contrary to what many believe if you leave vacation days on the table at the end of the year it is not reflected in bonus compensation. Your extra work time is not paying off if you do not use them! states that those who leave 11-15 unused vacation days on their plate are 6.5% less likely to obtain a bonus than those who do not. It is also reflected through the power of relaxation, for every 10 hours spent vacationing, review scores increased 8%.

“There is no such thing as a free lunch” or free data. AT&t’s unlimited data plan has a trick up its sleeve to catch consumers in a fee trap. The Federal Trade Commission brought a lawsuit against the telecommunication company earlier in the month citing that after 2 gb of data use their connections slowed significantly. The most extreme cases of this are outlined by loading speeds up to 95% slower.

Car loan market could be heading for trouble. According to the WSJ banks have been lax about the loans given out for car loans. With the average value of loans exceeding car value, this might have led to the 60 day delinquent number to exceed $4 billion. That number is up 27% from last year, along with a 17% increase of bank write off from these bad loans.

Personal finance is a combination of many things coming together in harmony for the benefit of the individual, if done so the right way. Taking the tips that are offered in this blog and others by Chris Novinger may help you making financial decisions!

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Nine ways to save for retirement

Retirement planning is a constantly looming overcast whenever a paycheck is handed over. How will one know how much to save? How much will one need when they are retired? The questions are endless, but thanks to USA Today, and an article by Nanci Hellmich, here are 9 simple ways to plan for retirement.Saving_money

The word budget brings with it a negative connotation in today’s society. One that is associated with constriction, and monotony. While it does imply some degree of responsibility, a budget does not have to be a ball and chain. It is merely a way to keep yourself on track to be able to live comfortably when senior-citizenship sets in. Allocating portions of each paycheck to what needs to be paid for keeps the bills paid, food on the table, money in the bank, and peace of mind constant.

Reduce Spending:
Eating out, taking taxi’s, all forms of luxury can be expensive over time, when inexpensive alternatives are present. Pennies you save on a daily basis can add up over time to big dollar signs in the future.

Credit Card Traps:
Making minimum payments on credit card are ways for these companies to suck the most profitable amount of money out of every borrower. The longer you have to take to pay back credit debt the more you pay in total with interest.

Look For Better Interest Rates:
Saturation of the credit card market has led to a competitive playing field for these companies. This only benefits the customer, do not think twice about calling your credit card company and asking for a better rate.

If you find you’re digging yourself into a hole, stop digging:
The definition of insanity is doing the same thing, over and over, and expecting a different result. In a financial scope, if you find yourself in a great deal of debt you will need to curb the behavior that got you there. This may be curbing a shopping inkling, or reducing vacations.

If you have a matching 401(k), allocate money to the fund! This is the best case scenario, for what you put in, employers will match it. An added bonus is that these contributions are not taxable.

Sell Your Idle Things:
Everyone has those old college texts or pairs of jeans they haven’t fit into since 20 lbs. ago. Sell these dormant things instead of throwing them away, it is a great to generate extra income.
“If you fail to plan you are planning to fail”:
Put together an emergency fund to hedge against whatever life has to throw your way. This could be anything from an injury, to a household appliance failing, it is always nice to be prepared.

Cooking is not just financially responsible, through less eating out, it can also be healthier. Buying food in bulk is a great way to say and cooking is a great way to bring a household together daily.

Investing at Record Highs May Cause Problems for Investors

Since the stock market rally, people have been questioning the safety of their investments.  According to USA Todayculs112033, some believe that many stocks will have a stark drop after their record highs, while others think that a gradual fall in stock prices until 2020 is on the table and Warren Buffet thinks that the US stock market is a place where reasonableness prevails.

Rather than asking whether stocks are fairly priced, investors should be focusing on how much they are willing to lose before pulling out.  According to David Salem, chief investment officer at Windhorse Capital Management says that figuring how much financial misery you are willing to put yourself through before backing out.

In addition to helping you planning for worst case scenarios, this will also help you realize whether you will be able to realistically follow through on your planned investments.  In addition, this keeps you from being lulled into a sense security and ambivalence, because you always know how big a hit you can take.

In short, planning for the worst case scenario will help you evaluate where you are and how much more risk you are willing to expose yourself to.

Planning your custom-tailored retirement

Planning for retirement has become a big quandary in recent years.  An average of 10,000 baby boomers are retiring each day and only a miniscule fraction will have pensions.  A plethora of professionals calling themselves things like “retirement coach” and “life planner” have cropped up to help you figure out how to retire.

One way to plan for retirement

One way to plan for retirement

Thirty-five years ago, 62% of retirees from the private sector had pensions, while today, that number has dropped to 7%.  This means that there are crowds of retirees and those soon to join them who don’t know how to use their copious amounts of free time or how to make their money last.  Many of the professionals in this sector have seen an opportunity to craft retirement plans conducive to boomer health, interests, and values.

Retirement coaches come from a variety of backgrounds and also have varied qualifications.  This fact has made it pretty difficult to get an accurate estimate of retirement professionals in the field.  There are programs out there that certify retirement experts, like Retirement Options at Chapel Hill, N.C., who count 832 certified retirement experts in the United States.

Many traditional brokerage firms have even moved into the wishy-washy life-coach realm.  These firms engage in conversations about life priorities as well as financial ones in order to add value to the services already provided.

During this boom in the retirement coach industry, pricing varies.  Some are paid by the hour often more than $100 per hour, while others also use typical advisory fees, which can be up to 2% of total assets annually.

Like payments, training for retirement experts also varies.  At the lowest level, one must simply take a multiple choice test for the Certified Retirement Counselor designation, while others go through intensive multi-course programs for Certified Specialist in Retirement Planning.  If you want to learn more about the different designations and their qualifications, visit this link.

Many retirement ask questions like, “envision your typical day, month, year and what would they be?”  These questions are meant to help find activities that their clients can be happily engaged in.  This is often especially important for those who found a great sense of satisfaction and affirmation in their jobs.

Retirement experts come in all sorts of varieties and it is important that you find one who is qualified to meet your specific needs.