SPF15 tips for people in their 50s

When you consider protection in your 50s, both from the sun and for your money, the key is application. It is one thing to buy the sunblock, it is quite another to use it effectively. Similarly, the trick with money management in your 50s is how well you understand and apply the concepts as they pertain to your own situation. Here are our Sound and Practical Finance (SPF) 15 for people in their 50s. Anyone over 50 is eligible to make catchup contributions to their retirement account, including 401(k), 403(b), SEP and 457. This means you can exceed the $19,500 limit by up to $6,500 annually. This can make a big difference as the interest that extra money earns compounds. People over 50 also can contribute an extra $1,000 annually to their traditional IRA for a total of $7,000 annually. To the extent that you can afford it, we recommend maximizing these accounts. Understand the difference between a Roth IRA and a traditional IRA as it relates to your own anticipated tax status when you retire. If you will be in a lower tax bracket when you retire, it probably makes sense to direct most of your retirement savings into a traditional IRA and pay the taxes when you withdraw. If, however, you think you will be heading into a higher tax bracket, you should invest in a Roth IRA, from which you can withdraw at will without paying taxes, when you retire. If you don’t qualify to contribute to a Roth IRA (due to income limits) and your employer offers this option, you can look into a Roth 401(k), which has no income limits. Consider splitting your contributions between Roth and traditional accounts to retain a portion of the current-year tax break. Begin looking at ways to trim your budget so you can direct more money into retirement accounts now and spend less on day-to-day expenses in the future…. | Read More »

The changing world of rotary phones and retirement

Time was when a pension and Social Security would provide most people all they needed for a secure retirement.  But, back then, people were content with working the same job all their lives, watching just three TV stations, and using a rotary phone with no texting or video. People now have an infinite number of choices for career opportunities, entertainment and social engagement. Furthermore, today’s technology is powerful enough to meet our needs almost instantaneously. These innovations have made our lives better in ways that are almost too numerous to count, but there’s a trade-off.  We didn’t have as many choices in the age before cell phones and the internet, but most of us could rely on a pension that was provided for us, risk free, by a company that assumed all of the responsibility for our retirement.  So, the trade-off has been that we now have more individual freedom in the form of greater choices, but we have less security in that employers no longer take on the responsibility for providing us with a secure retirement.   Under the pension system, workers didn’t have a choice about how their retirement would be funded.  The company took care of everything. Those days are gone.  Providing for a secure retirement is now another of the many “choices” we are free to make on a daily basis. It’s up to us and, apparently, left to our own smart devices, we are not faring well. Only a third of working Americans are saving money in an employer-sponsored or tax-deferred retirement account, according to U.S. Census Bureau’s recent figures.  And, according to the Economic Policy Institute, the average retirement savings of all families in America is just $95,776. Even those frightening numbers don’t tell the whole story because many of the surveyed families reported zero savings, with ultra-wealthy families pulling up the average. A more accurate gauge may be the median savings rate, or those at… | Read More »