How Much Money Do You Need To Retire?

What's Your Number?The million dollar question. Or is it two million? Either way, it’s hard to save for anything without knowing how much you need. When it comes to how much you need to retire, there’s no perfect answer.

In its entirety, it’s a series of educated guesses, along with dirty math, to come up with a fuzzy number you’ll need to live off throughout retirement.

I don’t say this to discourage you. Understand, we’re predicting the future based on past averages. You’re projections need to account for: inflation, expected returns (and an asset allocation to get you there), your ability to save, and your behavior along the way.

It’s simply not a perfect science. Retirement calculators work in a vacuum, reliant on fixed numbers. The economy and the stock market don’t move in a straight line or act rationally at all times. Continue Reading…

All The IRA Investment Options For Your Money

IRA Investment OptionsSaving for retirement is a goal with a limited number of ways to meet it. Did you know that your IRA investment options extend beyond stocks, bonds, and mutual funds? You have more choices than think.

An IRA (Individual Retirement Account) is just a tax shelter. You use it to store money for retirement, so it can grow tax-free. You see, when you open an IRA and fund it, the money just sits there in the form of cash. Some banks or brokers may offer an interest rate on that money, some don’t. But with rates at all time lows, that money won’t grow very fast. In order to boost that growth, you need to invest it in other assets. Thankfully, the IRS gives you some leeway with all the IRA investment options available.

That doesn’t mean you need to invest in each one. There is nothing wrong with taking a nontraditional approach when investing your retirement money. Just make sure you understand the costs and risks associated with any investment before you begin. And do your homework before jumping into something new. Continue Reading…

Do You Know Who Your Beneficiary Is?

Beneficiary ReviewA beneficiary review should be on your yearly financial to-do list. When you get life insurance or start a new retirement account, filling out the beneficiary designation is part of the process. It lets the company know where that money goes when you’re gone. But is that name you wrote down years ago still the person you want as a beneficiary? If not, the wrong person will get your money.

I recently got my monthly IRA statement from TD Ameritrade. Part of the email was a simple question that asked “Is your IRA beneficiary up-to-date?”.

Good question.

I wasn’t slacking on keeping it updated, since I haven’t had a reason to change it. But keeping track of it certainly wasn’t a priority either. Continue Reading…

2014 IRA Contribution Limits Stay The Same

IRA Contribution LimitsThe IRA is the most versatile tool in your retirement planning toolbox. It’s not surprising that an important step in the retirement planning guide is to understand all the savings tools available. That includes staying on top of yearly changes to the IRA contribution limits.

Each year the IRS announces the inflation adjusted numbers for the traditional and Roth IRA contribution limits along with the traditional IRA deduction limits. These cost of living adjustments are made when the inflation index meets a certain criteria. In turn, the adjustments prevent inflation from eating away at the IRA limits and your ability to save for retirement.

2014 Maximum IRA Contribution Limits

The 2014 IRA contribution limits will look just like it did for 2013. Both the traditional and Roth IRA will have the same contribution limit, which will max out at $5,500. If you are 50 years or older, there is a $1,000 catch up contribution. Continue Reading…

2014 401k Contribution Limits Unchanged

401k Contribution LimitsThe 401k plan has become the popular retirement plan offered by companies today. One of the keys to retirement planning is knowing about the savings tools available to you. If that happens to be a 401k, it pays to know when changes are made.

Every year the IRS must calculate cost of living adjustments for the 401k and other retirement plans. In keeping with tradition, the IRS recently released a slew of information for the 2014 tax year including the 401k contribution limits.

The decision to raise the 401k limits is based on an inflation index, specifically the Consumer Price Index (CPI). If the CPI meets a certain threshold the IRS will adjust the contribution limits accordingly. Some years inflation is high enough to call for a change other years it’s not. Either way, the point is to make sure the limits aren’t eaten away by inflation. Continue Reading…