It’s that time again. A new year has arrived. For many, the new year is a time for resolutions. Weight loss is a popular resolution, as are goals related to education and career advancement. Unfortunately, most people don’t stick with their resolutions. A recent study found that nearly 80 percent of all resolutions fail by February.1
Perhaps you have some financial goals among your list of resolutions. That could be a wise idea. With some simple changes in habit and behavior, you can significantly improve your financial picture. The key, of course, is to stay consistent and stick with your resolutions.
Retirement is a major financial challenge for many workers. In fact, according to a study from Gallup, it’s the top financial worry for 54 percent of Americans.1 They’re concerned that they won’t be able to save enough money to fund their desired lifestyle in retirement.
Retirement planning isn’t just about saving, though. While it’s important to accumulate assets during your working years, you also need a plan to make those assets last through retirement. It’s possible that your retirement could last decades, so you’ll need a strategy to make sure you don’t outlive your money.
Do you plan on leaving an inheritance to your children, grandchildren and other loved ones? If you’re like many retirees, you’ve worked hard to build a career, accumulate assets and raise a family. While it may not be enjoyable to think about your death, an estate can help you pass your legacy on to your family members after you die.
Of course, there’s nothing saying you have to wait until your death to distribute your legacy. It may be just as effective for you to give assets away to your family members while you’re still alive. That way, you can see your loved ones put your legacy to use.
Your employer 401(k) plan may be one of your most important retirement assets. The combination of your regular contributions, the matching contributions from your employer and tax-deferred growth makes the 401(k) a powerful savings tool.
Because this is probably one of your largest accounts, you might be tempted to take cash from your 401(k) plan. Life is unpredictable, and when you face a significant financial threat, like medical bills, a 401(k) distribution might seem like the only good option.
Many people believe that estate planning is simply about creating a will to distribute your assets after you pass away. While asset distribution is an important part of estate planning, there are also other risks and issues to consider.
Estate planning is really about creating the legacy you will leave for your loved ones after you are gone. Your legacy includes not only the assets you will leave behind but also the financial issues that you may leave for your family to deal with. You likely want to minimize these types of risks so that your family won’t have to deal with financial challenges during this time.
However, you may be unknowingly exposing your family to a sizable financial risk. It’s long-term care, or more precisely, the costs for any care you may require in the final months or years of your life.
Are you one of the one-third of Americans with a will? According to a 2015 survey from Rocket Lawyer, 64 percent of Americans haven’t taken the most basic and fundamental step in estate planning.1 A will provides guidance and instruction on which assets should flow to which heirs after your death.
Even if you have a will, though, you still could have gaps in your estate plan. Although a will is a valuable tool, it can’t do everything. You may have needs and goals that can’t be achieved with just a will. If so, you may want to consider a trust.
Have you used a traditional IRA to save for retirement? You’re not alone. Traditional IRAs are among the most popular retirement savings vehicles. Much of their popularity is due to their unique tax treatment. You can deduct your IRA contributions, and all growth is tax-deferred as long as it stays in the account.
Of course, you can’t avoid taxes on your traditional IRA growth forever. Distributions from your traditional IRA are treated as taxable income. That means that in retirement, your traditional IRA income could create a tax liability and possibly even push you into a higher tax bracket.
Some people delay traditional IRA distributions to avoid the tax hit. However, the latest you can delay your distributions is to age 70½. At that point, you have to begin taking required minimum distributions (RMDs).
Every solid financial plan should be built on a foundation of risk management. It’s difficult to achieve your biggest life goals without first minimizing the risks that could threaten those goals. There may be no more catastrophic risk than the financial fallout from an unexpected death. Life insurance is an effective tool for managing this risk because it protects your loved ones, dependents, business partners and others from financial harm if you pass away.
Life insurance benefits are often paid as a tax-free lump sum. A death benefit could provide your loved ones with much-needed liquidity and financial stability during an already difficult period.
However, it’s important to choose the right individuals as your beneficiaries. A beneficiary designation often can’t be challenged after the fact. If you accidentally forget to include someone as a beneficiary, they may have little recourse to correct the issue after you pass away.
What do you dream about when you think of retirement? Travel? Pursuing a new passion? Spending time with family? Retirement is the time to live life on your terms and spend your time doing what you love the most.
Unfortunately, there could be some roadblocks standing in the way of your dream retirement. Many of those roadblocks may stem directly from your planning decisions. Retirement is a major financial goal, and there are a number of planning mistakes that could leave you unprepared to fund your desired lifestyle.
Do you own a traditional IRA but think a Roth may be a better option? You’re not alone. The Roth IRA has become an increasingly popular savings vehicle. That popularity is driven largely by its unique tax treatment, which allows you to take tax-free distributions in retirement and leave a tax-free asset for your loved ones.
Not everyone can contribute to a Roth IRA, however. Roth contributions are governed by income limits. If you’re a high earner, you likely haven’t been able to put money in a Roth. The traditional IRA doesn’t have income limits for contributions. Your traditional IRA contributions may not be deductible if you have high income, but that doesn’t mean you can’t contribute.