Tag Archives: retirement

The Government Wants To Limit Your Retirement Savings!

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uncle-sam

The US government wants to limit how much money you can save across your tax-advantaged retirement accounts (401k,IRA, Roth IRA…). President Obama released his budget plan the other day and one specific proposal really caught my attention. In the name of raising $9 billion in new revenue for the government, the President wants to limit the amount you can save in your retirement accounts to $3 million. The reasoning for the $3,000,000 limit is that it’s about equal to an annuity that would pay out $205,000 per year. A “reasonable retirement” in their terms. My initial reaction to the plan was some combination of shock and anger. “How dare they tell us how much we can save in our retirement accounts!” However, after taking the time to sit down and think about it some more, I can see both side of the argument.   Not many people are affected, at all. Currently 0.3% … Continue reading →

What Is Your Retirement Scenario?

 
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passive-income

Retirement and the process of saving for it is not a new topic for anyone that has ever read a finance blog before. The question that few people ask however, is what exactly is retirement? If we want to go the dictionary route, retirement is simply: “The period of one’s life after leaving one’s job and ceasing to work.” That’s all fine and good, but to really plan for retirement we have to get a little more specific. Retirement means different things to different people, to accurately plan for yours you have to decide what your definition of retirement is. For a large number of Americans retirement is something that only happens when they’ve become too old to work anymore. They didn’t save anything on their own during their working years and will live out the rest of their life relying on social security or a pension if they were lucky enough to have one. … Continue reading →

Should I Contribute to a 401(k) With No Match?

 
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401k-no-match

If there’s one piece of advice that I, and just about every other personal finance blogger has  written a thousand times it’s: “Always contribute enough to your 401(k) so that you get your employers full match.” But what if your employer doesn’t match your 401(k) contributions? What should you do then? It’s not a situation I ever gave much thought to. Then, right before the new year, the following email from the CEO of my company showed up in my inbox… Needless to say, this did not make me a happy little worker bee. I had planned on making a significant increase in the amount of my 401(k) contribution, now I started wondering if I should even contribute at all. If you find yourself in the same situation  with your employer cutting its 401(k) match. Don’t make any rash decisions, it can still be worth it to contribute to a 401(k) … Continue reading →

2013 Maximum Contribution Increasing For 401(k) and IRA

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401k-limits

Savers everywhere, rejoice! The IRS has given us a gift for 2013. The maximum contribution limits for the 401(k) and Roth IRA are increasing! This means we’ll all be able to stash away just a little bit more tax advantaged cash in the upcoming year. Here’s what’s changing: 2013 401(k) Maximum Contribution: For 2013 the maximum contribution you can make to your 401(k) account will be $17,500. This is up just a touch from the $17,000 limit in 2012, and up a full grand from the $16,500 limit that we were stuck with between 2009-2011. Remember, your employer’s matching contributions to your 401(k) don’t count against the $17,500 limit. Only the contributions out of your paycheck count against the limit. It also doesn’t matter if you contribute to a standard 401(k), a Roth 401(k) or both. It’s $17,500 no matter how you want to split it. To find what percentage … Continue reading →

The Retirement Plan For The Lazy Man

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lazy-mans-portfolio

It was recently brought to my attention that not everyone likes to spend countless hours pouring over their 401(k)’s and IRA’s looking for the absolute best investments. Shocking! I know! I learned of this strange type of person just last week when I received an email from a friend asking for some advice on his 401(k). He sent me a list of the funds his 401(k) plan offered and asked me what he should invest in, with the caveat that he didn’t want to have to pay attention to it. He has zero interest in doing anything but contributing money out of his paycheck and getting on with his life. At first I was taken aback. Someone who doesn’t want to spend a lot of time managing their 401(k)?! I guess I had read about people like this before, but like a supermodel or rock star, never thought I’d actually … Continue reading →

Should I Contribute To A Roth 401k?

 
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How Much Should I Save For Retirement

Should I Invest in a Traditional or Roth 401(k) I got an interesting email at work yesterday. As of November 1st of this year, my company is going to begin offering a Roth 401(k) along side its traditional 401(k) plan. Yes, that says Roth 401(k), not IRA! I’ve spent much of my time since then researching the topic to see if I should steer some or all of my 401(k) contribution to the Roth option. Here’s what I found, and what you should know… Benefits of the Roth 401(k) Much like the Roth IRA, the Roth 401(k) is funded upfront with after-tax dollars. Once you hit age 59.5 you are able to start withdrawing from the account tax-free. The edge the Roth 401(k) has over its IRA cousin is that the 401(k) contribution limits still apply to the 401(k) version. Meaning that you can contribute a full $17,000 per year … Continue reading →