April 8, 2013
The Time is Now for Your Income Plan
 I have a friend who says, “Why make a decision today if it can be put off until tomorrow?” While that might sound cute, waiting until the transmission on your car is totally broken and having the vehicle towed to a dealer for a trade-in certainly isn’t the optimal way to negotiate the price of a new vehicle. You can’t drive around and shop at other dealers to get a decent price. Unfortunately, this is the way he has lived his life. The more difficult the decision is financially or emotionally, the longer he drags his feet. What he has yet to understand is that doing nothing is also a decision and can turn out to be very, very expensive. If you don’t want to follow in my friend’s footsteps, I have three suggestions: 1. When you see storm clouds (more)…
April 4, 2013
When Should You Take Social Security? 62 or Full Retirement Age?
 My wife, Jo, started receiving Social Security as soon as she could. When she wondered aloud how much larger her checks would have been if she’d waited, I said, “It makes no difference! You are already four years ahead of the game.” When we applied at the local office, the agent kept reminding her of the big raise she would get if she waited until full retirement age, or better yet until she was 70. Stop with the hard sell; she wanted it at 62, period! Why did she take it early? To illustrate, I did a little investigating on the Social Security Administration’s website and used its retirement planner. First, a person born on January 1, 1951 could begin receiving benefits in January 2013, at age 62. What if you are 62 years old and still working? The website (more)…
March 20, 2013
How Credit Card Companies Are Making Plastic Obsolete
 Credit cards have become convenience replacements for checks, cash, and other bulky payment methods. No matter how simplistic they may be though, they are still too bulky for the future. Indeed, we are coming to a time when the physical credit card will no longer be necessary. Technology has other plans in mind. Here is a look at some of the many ways credit cards are vanishing for good. Mobile Credit Cards Smart phone apps are getting more complex every day, to the point that you can do just about anything you want with your phone. That includes making a credit card purchase, thanks to programs like Google (GOOG) Wallet and Square Wallet. With both of these offers, you can load your credit card information into a secure account online and then pay for items using nothing but your phone. A (more)…
March 19, 2013
5 Simple Ways to Save More for Retirement Starting Today
 More than half of all American adults have less than $25,000 saved for retirement, and over a quarter have less than $1,000. We’re always focused on our immediate financial problems – mortgage payments, credit card debt, student loans, and so on – but that doesn’t mean we can afford to lose sight of our long-term planning. If you’re one of the many out there struggling to see the finish line, here are five tips that can help solve the problem: 1. Clip Coupons to Save on Groceries Clipping coupons isn’t just for old folks anymore. Pick up two copies of the Sunday paper every week and you can double your savings (and make sure you get coupons on both sides of the page). Categorize your coupons by expiration date so you don’t miss out on any savings. Then, find out (more)…
March 15, 2013
The Retirement Investor Squeeze: Keys to Investing in “the New Normal”
 In the first 3 installments of this series, we considered the reasons why investors that are in retirement, or close to retirement – like it or not – will need to allocate a portion of their assets to stocks. However, based on actual investor behavior, it is obvious that most investors are still not investing in stocks. Recent reports on money flows that track how the individual investor is actually investing reveal their lack of trust in the stock market. During this four-year rally to record highs evidence can be found in two data points: Fund flows and trading volume. From 2008 through 2012, individual investors pulled about $153 billion from U.S. stock mutual funds and exchange-traded funds, according to data from mutual-fund tracker Lipper. As a result, most have not participated in the market’s bull run – even with (more)…
February 28, 2013
What is a Target-Date Fund?
 When you are trying to choose investments for your retirement portfolio, there are many different types of funds to pick from. While you could try to analyze the endless numbers of funds out there, a simpler option for some people is to put their money into a target-date fund. If you are investing for retirement, the target date fund could make retirement planning simpler. Here are the basics of what you should know about this type of mutual fund. How Target-Date Funds Work The basic idea behind a target date fund is simple. When you are investing for retirement, you choose a target date that you want to be able to retire by. Then you start buying shares on a regular basis. The mutual fund manager automatically changes the asset allocation and the risk level as you get closer to (more)…
February 27, 2013
What is Required Minimum Distribution?
 One of the best features of a retirement account is the ability to amass large amounts of money through contributions and investment gains without having to pay taxes on it. However, the government intends that money to help fund your retirement, so it expects you to eventually withdraw it, at which point you will pay taxes on it. To ensure that you do this, the government mandates you withdraw a certain amount annually from your retirement fund, called a required minimum distribution, once you hit age 70 1/2. What Retirement Plans Have RMDs? Most retirement funds are subject to required minimum distributions, including 401(k) and 403(b) plans as well as individual retirement accounts. The only exception to the required minimum distribution rule is a Roth IRA. How Do Required Minimum Distributions Work? The Internal Revenue service determines how much you (more)…
February 26, 2013
How Do Employee Stock Options Work?
 Companies offer stock options to top-paid executives as well as rank-and-file staff. Stock options from an employer give employees the ability to buy a specific number of shares of the company’s stock. The employer sets the time period the stock can be purchased and the price the employees will pay. Both publicly held and private companies make stock options available for several reasons: -To attract and keep qualified employees. -To make employees feel more invested in the company. -To recruit skilled workers by offering compensation that exceeds a traditional salary. Stock options are common for all types of companies but are especially popular with start-up companies who are attempting to keep as much cash in reserve as possible. Stock options are typically offered as an employee perk and are not intended to serve as a replacement for salaried compensation. How (more)…
February 25, 2013
What Are Annuities?
 When planning for a retirement, there are some investments that are more popular than others. In today’s uncertain economic landscape, many retirement investors are putting their money into annuities. These fixed income investments are becoming more attractive as they guarantee a certain payment during your retirement years based on several factors. How exactly do these investments work? How Annuities Work With this type of investment, you pay a certain amount of money per month to an insurance company, much like you would if you were buying a life insurance policy. Then when you reach retirement age, you stop making payments and the annuity begins paying you an amount each month. This can be a good way to supplement your retirement fund or to supplant your other retirement fund investments completely. Benefits of Annuities Many people like the security that comes (more)…
February 22, 2013
Traditional IRA vs. Roth IRA
 An individual retirement account allows you to save money for retirement while taking advantage of tax breaks. Individual retirement accounts come in two varieties–traditional IRAs and Roth IRAs– and while both are very similar, they have a couple of distinct differences. Timing of Tax Savings With a traditional IRA, the government allows you to save $5,500 a year ($6,500 if you are 50 or older) without having to pay taxes on it. This allows your money to grow tax-free and not pay any taxes until you withdraw it. The upfront tax break is not available with a Roth IRA, but all the money in the account, including investment earnings, can be withdrawn tax-free in retirement. If you contribute $100,000 over the life of a Roth IRA and your account grows to $300,000, the additional $200,000 is tax-free. One of the (more)…
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