Search results for retirement savings
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Posted
Aug 19 2009, 11:40 AM
by
Karen Datko
Rating:
Money Blog: Smart Spending Blog - MSN Money
If there's anything the housing bubble should have taught us, it's that a home is a nice place to hang your hat. Investment? Not so much.
Still, 92% of Americans consider a home a good investment for the future, a new Bankrate survey says. That's incredibly optimistic in light of the fact that 48% of those surveyed worry about whether they can afford their homes, now or down the road.
The survey does show we're a practical bunch when it comes to love and money. Six out of 10 would reconsider their marriage plans if they found out their sweetie had lots of debt. (After the knot is tied, limited finances would not stop a similar number from divorcing a lousy spouse.)
Among the many head-scratchers in the survey results:
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Posted
Jul 31 2009, 06:33 AM
by
Karen Datko
Rating:
Money Blog: Smart Spending Blog - MSN Money
This post comes from partner blog The Dough Roller.
One of the features of many 401(k) retirement plans is that you can borrow money from your own account. While 401(k) plans are not required to permit plan participants to take out loans, many plans do.
Much has been written about the pros and cons of 401(k) loans. One of the potential drawbacks comes into play if you leave your job (voluntarily or otherwise) while you still have an outstanding loan from your 401(k) plan.
When this happens, you generally have two options: Pay back the loan in full within 60 days, or don't. If you follow the second option, the IRS will treat the loan as an early withdrawal from your 401(k) plan and, with some exceptions, smack you with a 10% penalty of the outstanding loan amount AND require you to pay taxes on the distribution.
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Posted
Jul 22 2009, 09:18 AM
by
Karen Datko
Rating:
Money Blog: Smart Spending Blog - MSN Money
Grace of GRACEful Retirement is 60 years old, and she plans to work for nine more years. Otherwise, she won't have enough savings for even a modest retirement.
So a recent study was sobering news for her: Nearly half of retirees leave the workforce earlier than planned.
Here's how she summed it up: "Job loss, age discrimination, family duties (such as caring for a spouse or one's parents) or a personal health crisis make a mockery of well-laid plans."
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Posted
Jul 20 2009, 01:45 PM
by
Karen Datko
Rating:
Money Blog: Smart Spending Blog - MSN Money
This guest post comes from Frank Curmudgeon at Bad Money Advice.
I'd been hoping for a Brett Arends column I could say something nice about, and I got my wish in the form of "Baby boomers to kids: Kiss your inheritance goodbye." The theme of the article, or the first few paragraphs anyway, is the trend of dropping a nice inheritance for the kiddies from the retirement plan in reaction to the market swoon.
I myself am just a bit too young to be a baby boomer and my parents just a little too old, so I am merely an outside observer on this one. But I have to ask those kids of boomers out there: You were expecting to inherit something? From the Me Generation? Really?
A few paragraphs into Arends' column, he abruptly starts talking about annuities. This may seem like a non sequitur, but it follows nicely from the idea that retirees may be jettisoning the legacy for the children from their planning.
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Posted
Jul 20 2009, 05:08 AM
by
Karen Datko
Money Blog: Smart Spending Blog - MSN Money
This post comes from J.D. Roth at partner blog Get Rich Slowly.
Americans are beginning to save again, or so the media is reporting. The personal saving rate has jumped from 0.4% in 2007 to a whopping 6.9% in May. But what does that mean? Is it a good thing? And how long will it last?
"Personal saving rate" is an economic term for income that is not used immediately to buy goods and services. It's money that consumers save for the future. (According to Wikipedia, it's "personal disposable income minus personal consumption expenditure.")
For decades, the personal saving rate hovered at about 7% or 8%. It would spike into the teens during times of economic turmoil, but then settle at 7% or 8% when things returned to normal. During the early 1990s, the personal saving rate began to drop. For the past 10 years, it's mostly been 2%. Or 1%. Or close to zero.
But, as resident GRS economist "JerichoHill" has noted in the past:
The personal saving rate is a very poor metric. Most folks save via IRA and 401(k). So we should look at that savings rate, which is the national saving rate. The NSR shows the same disturbing downward trend, but is the more proper metric to use, in my opinion.
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Posted
May 29 2009, 06:55 AM
by
Karen Datko
Rating:
Money Blog: Smart Spending Blog - MSN Money
This post comes from partner blog The Dough Roller.
Recently I published an article called "Dave Ramsey unleashed." I learned long ago that any post about Dave Ramsey will receive a passionate response from readers. Those who follow his financial teachings do so with "gazelle-like intensity," as Dave would say.
One response I received in both comments and e-mail is that Dave Ramsey teaches that one should stop contributing to retirement savings (whether 401(k) or IRA) while paying off nonmortgage debt. The question is whether this is the right choice.
The first thing to keep in mind is that there is no "right" choice. There is a reason it's called personal finance, as a reader reminded me just the other day. That's not to say that any choice is a good one. But there is almost always more than one reasonable approach to a money-management decision. For example, while Dave Ramsey would stop saving for retirement to pay off debt, as would Michelle Singletary, Liz Pulliam Weston believes we should not stop saving for retirement to pay off debt.
With that in mind, let's walk through several steps that will help you make the best decision for you and your family:
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Posted
May 26 2009, 05:11 AM
by
Karen Datko
Rating:
Money Blog: Smart Spending Blog - MSN Money
This guest post comes from Frank Curmudgeon at Bad Money Advice.
Every day it becomes increasingly clear that the Great Recession marks the beginning of a New World Economic Order. And with the new comes an end of many parts of the old. Some will not be missed (e.g., no-doc mortgages, investment banks, Circuit City). Others will be missed by the nostalgically inclined (newspapers that actually print on paper, the Big Three automakers, movie theaters).
And recently Free Money Finance brought sad news of another part of our culture that is disappearing: "Maybe the latte factor is now less of a factor?" Apparently, caffeine vendors from Starbucks to McDonald's are now cutting prices, meaning that doing without your morning fix just isn't the compelling savings it once was.
Not that it was really ever that compelling. Indeed, I am saddened by the news because The Latte Factor® is such an excellent example of symbolic frugality that I will miss it. Realizing that this may be my last chance to take it out for a spin, here goes.
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Posted
May 26 2009, 04:36 AM
by
Karen Datko
Rating:
Money Blog: Smart Spending Blog - MSN Money
This post comes from J.D. Roth at partner blog Get Rich Slowly.
I thought it would be fun to share an interview with my real millionaire next door, a man we'll call John. He used the basic tenets of money management to build wealth and to retire early. Here's how I described John when I first wrote about him last year:
John is a 71-year-old retired shop teacher who lives in a modest ranch house on half an acre, the same house he's had for over 40 years. He has an old barn filled with salvaged lumber, outdated appliances, and who knows what else. When he's around, he drives a junkie 25-year-old station wagon. But most of the time, he's not around.
He spends his winters in New Zealand helping friends on a dairy farm. His summers are spent fishing in Alaska. For a couple of months each year, he's home, puttering in the yard. Year-round, he rents his house to boarders. He leads a very active retirement.
John's story was popular with Get Rich Slowly readers, and many of you asked me to interview him. I had to wait for him to return from New Zealand, but recently the opportunity finally presented itself. John agreed to sit down for a chat.
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Posted
May 08 2009, 05:40 AM
by
Karen Datko
Rating:
Money Blog: Smart Spending Blog - MSN Money
This post comes from partner blog The Dough Roller.
Dave Ramsey's "Baby Steps" to financial peace have become a popular way to get control of finances. In case you're not familiar with the Dave Ramsey approach to money, here are the seven Baby Steps:
- $1,000 to start an emergency fund.
- Pay off all debt using the "debt snowball."
- Three to six months of expenses in savings.
- Invest 15% of household income in Roth IRAs and pre-tax retirement.
- College funding for children.
- Pay off home early.
- Build wealth and give.
While there are those who quibble with some aspects of these steps, by and large it's a sound approach to money management. If my children, when they leave home, decide to follow the Dave Ramsey way of handling money, I'll take great comfort that they are headed in the right direction.
But what about those of us who aren't just starting out or recovering from a financial meltdown. When many of us look at Dave's Baby Steps, we realize that we have been taking many of those steps all at the same time. For example, we have a lot more than $1,000 in our emergency fund, yet we also have nonmortgage debt, we save for our children's education (my son starts college in three years), we save for retirement, and we give money to charity.
All of this raises the question we are going to address: Should we "Dave Ramsey our finances," and if we did, would we be better off?
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Posted
Apr 29 2009, 01:59 PM
by
Karen Datko
Rating:
Money Blog: Smart Spending Blog - MSN Money
Mr. "GoTo" at Go To Retirement has a high-deductible health insurance plan and set up a companion health savings account. He used to draw on the HSA to pay for routine medical expenses not covered by insurance -- until it occurred to him that there's a better use for that money.
He discovered a way to tap an HSA for some tax-free, non-medical retirement income -- which is normally taxed -- and it's perfectly legal. That's right. Contributions to your HSA are tax-free, and non-medical withdrawals within certain limits can be too when you're 65 or older -- if you follow Mr. GoTo's advice. "To my knowledge," Mr. GoTo says, "there is no other legal investment option that gives you that advantage."
Here's how it works, according to his post "Tax-free retirement investing with your health savings account."
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