Over your lifetime, there have been many changes to retirement plan rules, Social Security benefits, and other financial matters relating to your age. It can be challenging to keep track of what you need to do - and when you need to do it. Below is a guide to Milestones by Age to keep you and your family members on track about financial decisions and important life milestones.
In fact, the assets in Mortimer’s Roth IRA used to live in his Traditional IRA. Years ago, he worked with his Certified Financial Planner™ practitioner to determine the optimal amount to convert to a Roth IRA. By doing so, he removed a fair sum from his IRA which was subject to required minimum distributions (taxed as ordinary income) and moved these assets to a Roth IRA that has no required minimum distributions and money coming out, is not subject to any taxes.
Navigating the different options for student loans can feel like deciphering a foreign language.
As humans we are hardwired to seek safety, security and certainty. Back in the ‘hunter-gatherer days’ our survival depended on fending off lethal predators and finding enough food to survive. Recognizing the benefits and efficiencies of a collective, humans began to organize themselves into tribes which were more formidable to predators than single individuals trying to sustain themselves. This led to systems: males typically hunted for food while females managed the home and childrearing. Stability to these systems helped them have a better chance of avoiding starvation or death, which were real threats.
I continue to be surprised by how many new clients have been contributing far less than the annual maximum amounts. Sometimes this is due to limited cash flow or financial capacity to contribute. But more often this is due to a lack of understanding about the employer plan rules. Some have not been contributing at all - even if the employer offers matching contributions. In this case, they are leaving free money on the table. Most plans offer an employer match, anywhere from 1% to 5% or more. But in many cases, employees contribute only the percentage of salary that is matched by the employer, not recognizing their potential to save much more. Employer matching contributions usually have a vesting schedule, so know your employer’s vesting schedule, especially if you plan to change jobs before your funds are 100% vested.
Meet Sarah and James1, a couple in their late 50s with a net worth of over $2 million. Over the years, they’ve worked hard to save and invest wisely, building a diversified portfolio and an almost paid-off home.