Retiring

Health Savings Accounts (HSA) have gained popularity as a way to compensate for higher deductibles and out-of-pocket expenses related to Medical Insurance.  Think of an HSA as a medical savings account.  Your contributions are tax deductible, grow tax deferred, and come out tax-free when used for eligible medical expenses. 

There are a number of dates to be aware of on the way to retirement.  Deadlines are triggered by various ages, from age 50, when you can start making catch-up contributions to retirement plans, through age 72 when Required Minimum Distributions begin.  Download our PDF with 14 retirement-related milesto

Making IRA contributions is more complicated than it used to be; there are traditional, non-deductible and Roth IRAs, and each has different income thresholds for eligibility along with rules about whether you or your spouse have retirement plans at work.  However, if you don’t qualify to make a contribution directly, with a couple of extra steps, you can make what is called a &ldquo

A common question I hear is “when can I stop working?”  Not that the client necessarily wants to stop working, they just want to know that they can stop.  That would be my definition of financial independence; knowing that your investments or other income is enough to support your lifestyle, independent of your work. 

There is ongoing academic research regarding how much money it takes to be happy, or at least satisfied, with one’s financial life.  While the numbers vary, at a certain point, studies show that increases in annual income no longer seem to bring greater happiness.

When you turn 65 you become eligible for Medicare.  Part A is free, but Medicare Part B is based on the income reported on your tax return from 2 years ago.  But is that a fair way to determine the cost when your income level may have changed in the meantime?

While you are working, you add money to your investments to build a nest egg.  In retirement, it’s time to start taking that money back out.  The income goal in retirement is to mimic the paycheck you were receiving while you worked.  This new “paycheck” often comes from several sources, including Social Security and/or pension payments, and perhaps rental incom

When MFP builds financial plans, we usually create a model that assumes clients maintain their current standard of living throughout their life.  Our models adjust for: kids moving out, loans paying off, post-retirement projects, big purchases, and/or travel.

When investments are down, one financial strategy is to convert your traditional IRA to a Roth while the value is reduced so you pay taxes on the decreased value. If and when the market rebounds, that rebound will be in the Roth’s tax-free environment.

If you do a quick Google search to find out how much you can contribute to your 401k, you’ll usually find that the most you can defer from your salary is $19,500*. In reality, the maximum that can go into a 401k is $57,000*.

*If you’re over 50, add $6,500 to both of these numbers.