Tag Archives: Retirement Planning

Majority of Elderly Rely on Social Security to Survive: Study

Majority of Elderly Rely on Social Security to Survive: Study

The Social Security program has been underfunded for decades after being raided repeatedly for funds going to other programs, but a surprising number of Americans still rely on Social Security in their later years. According to a recent health and retirement study by the Social Security Administration, 60% of individuals aged 65 and older rely on Social Security benefits for retirement funding. What’s more, one-third of retirees are completely dependent on Social Security to survive. If you trust your own ability to save more than that of the Social Security Administration, Like and Share this post.

Study Finds Majority of Workers Unsure about Retirement

Study Finds Majority of Workers Unsure about Retirement

A survey by the Employee Benefit Research Institute has found that 56% of American workers have no idea how much money they would need to retire comfortably. What’s more, only 14% of those surveyed believe they will be able to retire comfortably.

If you had the foresight to plan and save in order to retire comfortably, Like and Share this post.

1 in 5 Eligible Employees Opt Against 401k Savings Plan

1 in 5 Eligible Employees Opt Against 401k Savings Plan

The Center for Retirement Research has found that 21% of employees who are eligible for a 401k plan at work decline to take advantage of the offer, despite the fact that many employers will match at least a portion of employees’ contributions.

If you’re part of the 79% of employees who see the value in saving with a 401k savings plan, Like and Share this post.

1/3 Of Households Not Ready For Retirement

⅓ of Households Not Ready For Retirement

According to a recent study by the Employee Benefit Research Institute, ⅓ of U.S. residents aged 30 to 59 will not have enough money to retire, even if they work until they turn 70 years old.

If you are a responsible saver who wants to enjoy your golden years, Like and Share this post.

2016 Budget Proposal Could Close Roth IRA Savings Loophole

2016 Budget Proposal Could Close Roth IRA Savings Loophole

A CPA and IRA consultant from New York uncovered a proposal in President Obama’s 2016 budget plan that would severely limit investors’ ability to save using company 401k plans as well as Roth IRAs. Current laws allow savers to make after-tax contributions to Traditional IRA plans and then convert those Traditional IRAs into Roth IRAs.

Additionally, Obama’s proposed budget would eliminate investors’ ability to contribute after-tax dollars to their maxed-out 401k plans and then convert those plans to Roth IRAs upon retirement.

If you are like the millions of other 401k and IRA owners who plan to use your hard-earned savings in retirement or for your children, Like and Share this post so this budget proposal gets eliminated instead of our ability to save.

2016 Budget Proposal Could Mean Higher 401k Taxes

2016 Budget Proposal Could Mean Higher 401k Taxes

President Obama’s proposed budget for fiscal year 2016 includes measures that would increase the capital gains tax on profitable investments to 28%. Obama also wants to put a cap on tax-advantaged retirement accounts like 401k and IRA plans. What’s more, he wants to introduce the Buffett Rule, which requires a 30% minimum federal tax rate for wealthy Americans.

If you believe individuals who save for retirement should be rewarded instead of punished, Like and Share this post today. Together, we can make a difference.

401K Rollovers Why So Popular

401k Rollovers: Why So Popular?

Why have 401k rollovers become so popular over the last few years? Well, since the 1980’s we have been blessed with retirement savings options that take into account our job flexibility and, thus portability. Gone are the days of 40 years with one company, getting a monthly pension and a gold watch upon reaching age 65. Americans have been able to accumulate over $5 trillion in defined contribution plans (profit sharing and 401k plans) according to the Investment Company Institute (“ICI”.) According to Fidelity Investments, the average 401k account balance in approximately $91,000 while the average IRA balance is approximately $92,000. However, the ICI has data that shows the average account balance of the “near retiree” (age 60 to 64) to be approximately $360,000. For many of us, the 401k plan is our largest asset, with the possible exception of our home equity.

So, what makes the 401k rollover so popular? One simple word: CONTROL. When we are in the company sponsored 401k, our investment options are limited. In many cases, the employer contribution to OUR retirement plan is in the stock of the company. You are given the option of investing in a menu of mutual funds or other investment products as selected by your employer. They must uphold their fiduciary duty and, consequently, end up limiting your choices. Better to be safe than sorry, so they think.

When you separate from service with the employer (i.e., quit, laid off, retire) you have the ability to take a distribution from the 401k plan of your entire account balance. This is what is known as a 401k rollover. You can have a check issued to you (be careful) or have a “direct rollover” into an IRA. If the 401k plan is handled by a large company like Fidelity, Schwab or Vanguard, they want you to set up an IRA with them. That may be an excellent move because it is simple and you may be able to keep your investment program intact. However, you have plenty of options. Remember, once you execute the 401k rollover YOU ARE IN CONTROL. You can probably find an investment adviser or a boutique trust company that would love to invest your ½ million dollars!

If you have taken the check for your 401k account balance you have 60 days in which to put it into an IRA rollover account. Otherwise, the amount you received will be treated as income and you will have to pay income tax on that amount. That can be very painful if you are unprepared.

It is highly recommended that you consolidate all of your employer sponsored retirement assets into one account. It is easier to manage and maintain one large account rather than several smaller accounts. You can have all of your previous 401k or profit sharing plans transferred directly into your new IRA rollover account. But do not commingle your regular IRA accounts with the monies from employer sponsored retirement plans. (More on that in a later blog.)

In summary, take full advantage of the retirement programs offered by your employer. Be sure to maximize the company match of your 401k salary deferral. When you leave the company, take the 401k account and put it into an IRA. Now, you are in CONTROL. Your options are virtually limitless and we can tell you more. Even if you do not possess the will, skill or time to invest this significant asset, there are many ways that are available to you. And, remember that this is the source of your retirement paycheck. You earned it!