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  • Archive for the ‘401K’ Category

    Grandma’s Wisdom: Lessons about Saving and Retirement

    Sunday, September 13th, 2015

    By Kassie Barroquillo, former WISER Research Associate

    September 13th is Grandparents Day – a day when we can celebrate our grandparents and those people in our lives who fill that role. One reason to celebrate is because grandparents can provide us with wise advice based on their own years of experience. This year, WISER asked grandmothers at all stages in their lives for advice they would give their grandchildren on saving and retirement.

    Saving Early

    Linda, a grandmother of a four- and a five-year-old, said, “Every time you get any money try to save some back, even if its small amounts.” She also added that she hopes her granddaughters start saving early, so they can retire. Penny wanted her two grandchildren, seven and nine, to remember that “no amount is too small to begin saving.”

    Want to help younger children learn about the importance of saving and planning for the future? WISER has a children’s book called “Sonja Meets Her Future Self,” which teaches kids the valuable lesson of Save, Spend, and Give.

    Budgeting

    Barb, who has three grandsons between the ages of three years and three months, said they should add retirement savings to their budget. Gayle, who has three grandchildren between the ages of 10 and 19, added that they should discern between “what you need versus what you want.”

    WISER has two budget worksheets, if you want to start building your own budget: Simple Budget Worksheet and Detailed Budget Worksheet.

    When the Grandkids Grow Up

    Retired grandma to a four- and a five-year-old, Barbara, said “My advice is to save money, comparison shop, buy quality items, and to save a portion of all your pay for a ‘rainy day’…and always take advantage of employer savings programs like 401k.” She also added that if you have the means, use a financial advisor. Michelle, who has two grandchildren, ages two and four, echoed Barbara, “Definitely invest in a 401k for retirement!”

    WISER has an entire page dedicated to 401k’s here! Don’t have access to a 401(k) Plan? Learn more about other ways to save for retirement.

    A Little Advice from my Grandmas

    I asked my own grandmas what advice they would give me. My Grandma Greta has 13 grandchildren, three great grandchildren, and one on the way, between the ages of two and 38. She said I should be sure to “have enough money saved to plan for inflation. It is more than you think it’s going to be.” She also said I should consider investing in property.

    Learn more about inflation and ways to invest your savings in The Beginner’s Guide to Saving and Investing.

    I am the oldest of my Grandma Wilma’s four grandchildren at 26, with the youngest being 13. She said, “Save money in a 401k or IRA while you are working. I’ve been saving my money the entire time I’ve been working, so I will be able to live, hopefully, without depending on anybody.” She added that she always had money taken out of her paychecks and always put it in a retirement fund. Most importantly she never borrowed from it.

    To find out more about IRAs and what happens if you borrow early, see this page from WISER.

    Thanks to the grandma’s who contributed their words of wisdom and happy grandparent’s day to all!

     

    5 Steps for Your End-of-Year Financial Planning

    Wednesday, December 17th, 2014

    As 2014 comes to a close, this is a perfect time to review your finances, make last minute adjustments to your savings, and plan for the future. These five steps will help you make the most of your December and ensure you start 2015 as financially fit as you can.

     

    1. Add money to your 401(k).

    Give yourself the gift of retirement savings. In 2014, you can contribute up to $17,500 to your 401(k) plan. If you are 50 or older, you can contribute an additional $5,500 as a catch-up contribution. WISER recommends making contributions throughout the year, but even if you cannot reach the max, contribute at least enough to get the benefit of your employer match (if your company offers one).

    It’s tempting to put off saving, especially during the holidays when you are buying gifts for others, but contributing to your retirement now saves you more in the long run.

    2. Open up a Roth Individual Retirement Account (IRA).

    If you don’t have a retirement plan through your employer, this step is the next best one to take. Find out if you are eligible for a Roth IRA. The contribution limits to IRAs are smaller than 401(k)s — $5,550 in 2014, or $6,500 if you are over age 50.

    To learn more about IRAs and how to decide which type is best for you, see our page about ways to save for retirement. You have until April 15, 2015 to make IRA contributions for 2014. 

    3. Don’t forget to take your required minimum distribution.

    If you are 70½ or older, you generally must start taking money out of your taxable retirement accounts by December 31st. Of course, there are a number of exceptions to these very complicated rules so check with your tax advisor or accountant. If you do not take out the required minimum, you may have to pay a steep penalty to the IRS. Not sure what your required minimum distribution is? The financial industry regulator, FINRA, offers a calculator to help you figure it out. You can also check out this WISER newsletter for more detailed information.

    5 documents.hand copy4. Find and review important documents.

    At bare minimum, you should review your beneficiaries on financial accounts and insurance policies annually. Make sure you have a designated beneficiary for each account or policy. If there were any significant changes in your life and family such as a birth, marital status change, or death, your accounts should reflect the change. Now is also a great time to gather documents and records you’ll need to complete you 2014 tax returns. If you start preparing now, you can file for your tax refund sooner!

    We also recommend reviewing your personal end-of-life documents such as your health care directive. While this time of year may be busy, it’s also a perfect time to consider letting others know where these important documents are kept. Step 6 of our Financial Steps for Caregivers booklet offers lots of information on the types of documents you need. Most Americans do not have up-to-date documents, so start thinking about how you can prepare your family’s paperwork.

    5. Make tax-effective, charitable contributions.

    You probably know that you can deduct all kinds of charitable contributions from your taxes, including cash, stocks, donated clothing, and even the cost of ingredients you bought for a soup kitchen! In order to maximize the benefit from these charitable gifts, you’ll need to itemize your deductions when filing your taxes. In many cases, donating is a great way to lower your tax bill. (If you are looking to make any end-of-year donations, you might consider a gift to WISER!)

     

    The holiday season is a busy time of year, but it also provides a great opportunity to get your finances organized and on track. If you can’t take all of these steps right now, choose at least one or two of them and commit to checking them off your list. Then ring in the New Year with even greater peace of mind about your financial future.

    Happy Holidays!

    It’s National Save For Retirement Week! Today’s Topic: Company Benefit Plans

    Tuesday, October 23rd, 2012

    It’s National Save for Retirement Week 2012! A week dedicated to building knowledge and taking action toward securing your retirement. Each day this week we are going to look at a different contributing factor to retirement and help you increase your understanding of it so that you can take action and be prepared. Today we are looking at company benefit plans.

    One of the best ways to save for retirement is through your company’s benefits plan. What is especially great about employer-sponsored retirement plans is that employers often match a percentage of your contribution to your accounts.  If you don’t contribute at least enough to get the full match, it’s like leaving money on the table!  In additional to retirement benefits, employer-sponsored benefits can include health, disability, life, long-term care and flexible spending accounts. A typical benefits package is worth a lot, often as much as 25% of an employee’s income.  It is up to you to know what your employer provides and to take advantage of those opportunities to help protect your future. Read WISER’s booklet called 20 Ways to Take Advantage of your Company Benefits Plan to learn more about different benefits and how you should approach them.

    While some employers offer retirement plans that provide a guaranteed amount of income per month for life when you retire (also called “defined benefit” plans), most now offer defined contribution plans, which include retirement plans like 401(k) and 403(b) plans.  Since you are ultimately responsible in defined contribution plans for how your money is invested and ultimately managed as retirement income, you need to become familiar with your plan, the investing options available, as well as what fees are associated with your plan.  Check out the WISER defined contribution plans webpage and follow our Related Resources links. Also read our special report, Make Sure You Know the Ins and Outs of Your 401(k) Plan.

    For more information, our five-minute podcastWork those Work-Based Retirement Savings Plans!” covers the basics of employment-based retirement savings plans, including employer matching contributions, investment options, how to avoid tax penalties when you change jobs and how 401(k) and 403(b) plans work. Also listen to our “Know What You Have: Workplace Pensions” podcast to learn about defined benefit pension plans.

    Taking full advantage of company benefits plans is strongly recommended if your employer offers them.  Many people, however, do not have access to such plans, either because their company doesn’t offer them or they haven’t worked enough years or work part-time and are not eligible.  If this is the case, you should still look into ways to contribute earnings to a retirement account.  Individual Retirement Accounts (IRAs) might be a good option for you.  As with any investment though, you need to do your homework to learn about the different types of IRAs so you can determine what is best for you.  Check out WISER’s fact sheet Roth IRAs.

    Now that we’ve covered the basics of company benefits plans, check back tomorrow for more information about other types of investing!

     

    WISER

    About Us

    WISER is a nonprofit organization that works to help women, educators and policymakers understand the important issues surrounding women's retirement income. WISER creates a variety of consumer publications including fact sheets, booklets and a quarterly newsletter that explain in easy-to-understand language the complex issues surrounding Social Security, divorce, pay equity, pensions, savings and investments, banking, home-ownership, long-term care and disability insurance.

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