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Never Use A Roth IRA As An Emergency Fund

Roth Withdrawal – Short Term Gain – Long Term Loss

Roth LossesRoth IRAs are unique retirement tools. They allow the owner of the account to withdraw their original deposits from the account at any time without penalty. Roth accounts are funded with after-tax money. Uncle Sam, therefore, doesn’t have to worry about getting a cut as money moves in and out of the IRA. This feature could lead some people to use their Roth IRA as a sort of emergency fund if they have no other savings to draw from.

According to The Simple Dollar, however, it is not a good idea to use the account in this way. Gains you’ve accumulated over time will be lost with a single withdrawal.  Since there are lifetime limits on contributions, the impact can be great. Say that a 25 year-old deposited the $5,000 yearly limit and wanted to see how much this would turn into when they retire in 40 years. At 7 percent interest compounded annually, there will be $74,872 when they turn 65. Taking that $5,000 back out when they are 30 to cover an emergency will result in only $21,489 over the same time frame. Taking money out early might sound good in the short term, but it will be disastrous for long-term financial security.

Read the full article here.

Real-World Retirement Planning

What I Should Have Said For Real-World Retirement Planning

Happy real-world retirementThe NY Times posted an article recently from Paul B. Brown. He’s a former advisor and author. When asked if he would change the advice he gave he said, ” No, I wouldn’t change any of the advice. I told people to start saving aggressively while they’re young and to diversify their holdings. — But I would have provided not only more empathy, but more real-world advice as well.”

The article goes on to detail 3 examples of things he would say now – in hindsight. He talks about the age of retirement, the reality of life and finances as well as those special expenses that come along. He actually even gives a percentage goal for how much you’ll need – which may surprise you.

You can read the full article here.

Credit Scores – How Much Can They Rise?

Credit Scores

Raising Your Credit Scores

Credit scores:  It is so incredibly important for a person’s financial well-being. So why is there is a surprising amount of mystery surrounding the FICO method of evaluating credit scores? According to FICO itself, after examining its own data, they revealed some solid information.  This can help explain how much a person could expect their credit score to rise after a delinquency falls off of their report.
What did they find? After one delinquency was removed from an account holder there was a rise. Over a three month period, it seems that it typically resulted in a 14-point rise in their credit score. A removal of all outstanding delinquencies over the same period showed a 33-point increase. Although this might not seem like a dramatic increase, they also point out that the penalty for major negatives on an account decreases over time, so the recovery after it actually falls off can be modest.

Data Breach From – What Retirees Need To Know Today

Equifax data breach

Data BreachAs a sign of the times, there is another data breach, this time it is Equifax, affecting millions of people. There are numerous sources for what do do as a consumer in response to this latest breach, but what about retirees? Is there anything additional that you need to know to protect yourself?

Check out this article from MaketWatch.com for a couple of good suggestions. There are a couple of suggestions you should consider regarding your Social Security and Medicare numbers.

 

Final Installment – Important Retirement Savings – Age 70 1/2

Last but not least – age 70 1/2

Age 70 1/2We’ve reached the end of our series sharing important information you need to know for your retirement milestones. Here we are at age 70 1/2 – what’s left to know?

Required distributions? Yep! After age 70 1/2, your traditional IRA, ROTH 401(k) and traditional 401(k) require distributions each year with large tax penalties for missing those deadlines. What are those deadlines? How can you avoid taxes on IRA withdrawals? Can you delay withdrawals from your 401(k)? When are you no longer eligible for tax deductions on new IRA contributions? All important questions!

Check out this minute and a half video from US News and World Reports for more details.

If you missed any of the milestones in this series, you can link to those below

Age 50

Age 59 1/2

Age 65

Age 66

MORE Important Retirement Savings – Age 66

Continuing our series: Age 66 – What you need to know now.

Age 66This is the next to the last installment in our series. I hope you’ve learned a lot! Maybe it hasn’t applied to you to this point so you’re just joining us now. In either case, what do you need to know about your retirement planning at age 66?

Social Security! We all have been waiting – hoping it will be there when we finally are eligible to collect. Those of you who are baby boomers are indeed eligible to receive full benefits at age 66, however, there are increases in monthly benefits if you wait until age 70 to start claiming them. Claiming Social Security before age 66 can mean significant reductions in your monthly pay outs. The opposite is also true – if you wait – you will see a significant increase in those same monthly benefits.

What if you aren’t a baby boomer, but you are looking ahead – as a wise person should? The requirements are different for you! Check out this full video from US News and World Reports for all the details.

Missed one in the series? Just click below. Want to be sure you catch the last installment regarding important information for your retirement by age?  Watch for it on Thursday September 28th.

Age 50

Age 59 1/2

Age 60

MORE Important Retirement Savings – Age 65

What? Age 65 and I can still make a difference in my retirement savings?

Age 65With yet another installment in our series: if you have 90 seconds to spare, I found some awesome more important information that can enhance your retirement savings if you are turning age 65!

We’ve covered age 50 and 59 1/2 in previous posts. Now, what if you’ve reached the golden age of 65?  Yes, there are still important things you need to know regarding your retirement savings with this new birthday. Who said aging stinks? The benefits keep piling up!

Let’s talk Medicare: there is a window where you first become eligible for signup beginning 3 months before your 65th birthday and until 4 months after your 65th birthday. Signing up after that can mean permanent cost penalties can be added to your plan. There are a host of other deadlines you need to keep on your radar for the next few years.

Check out all the details in this short video from US News and World Reports.

10 Steps You Can Take Right Now

10 stepsDaunting Task

Are you concerned about having enough savings and assets to retire? Does it feel like the bills just keep coming in like the tide? Do you feel like you don’t really understand what it is you need to do to prepare in the first place? Do you wish that someone would give you 10 steps to success?

10 Steps

Well, look no further! If you aren’t sure where to begin, here’s a great list of steps from bankerate.com. First of all, step one says, to begin with an assessment. What should you evaluate, you ask? Read all about it here.

Is Retirement Possible Without $1 Million?

Retirement$1 Million Retirement

Of course entering retirement with a million dollars makes things easier, but you can absolutely live well without having met that magical goal. Preparing ahead of time and making small changes – or big ones – can pay off big in the long run.

5 Strategies

There are a few things you can try to help meet your goals like boosting your Social Security payments. Here are 5 strategies, from our friends at USNews.com that  you can employ to make your (less than $1K 401(k)) retirement a joy!

We would love to know if any of these suggestions have worked for you or if you think any of these strategies might help. We would also love to hear what else might have made your less than $1K savings work for you.

 

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