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  • Archive for the ‘Financial Planner’ Category

    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!

    Retirement Plans – Understanding the Basics

    Wednesday, October 15th, 2014

    October means pumpkins, turning leaves, and the beginning of the holiday season. While it is easy to launch yourself into shopping mode and spend your money on gifts for family and friends, WISER suggests paying yourself first. Luckily, National Save for Retirement Week is right around the corner (October 19-25, 2014). It’s a perfect time to improve your knowledge of retirement plans and how to maximize your savings.

    The first step is to understand the different types of retirement plans and which ones may be available to you at your workplace. Many employers offer retirement plans. There are two types available – defined benefit plans and defined contribution plans. What do these mean?

    Defined benefit plans are ones in which your employer often contributes money to the plan and selects a plan administrator who makes investment decisions. Since the plan has an administrator, your company entirely controls your investment risk and portfolios management. Once you retire, you receive a specific monthly benefit determined by formula. The formula takes into account the age at which you retire, your rate of pay, and the number of years you worked at the company. One of the best features of this type of plan is that you will have a fixed benefit, ensuring you know exactly how much income you will have in retirement.

    Defined contribution plans, on the other hand, are ones in which you as the employee contribute some or all of the funds and decide how to invest the money. Sometimes an employer will match part or all of the employee contribution. If this is the case, you should always invest at least enough to receive your full employer match. It’s basically free money for your retirement!

    The most common defined contribution plan is a 401(k). If you have a 401(k), your money is contributed from your paycheck before taxes, meaning you do not pay taxes on the money you add to your retirement plan. The more you contribute, the lower your taxable income. You will only be taxed on the money once you start withdrawing it. If you withdraw the money, however, before you are 59 ½, you will pay a penalty up to a 10% additional tax. There are some contribution limits to these plans, but they are significantly higher than other retirement plans. The current limit (for 2013 and 2014) is $17,500. Check out the IRS website for more information on contribution limits. Unlike the defined benefit plan, however, the amount of money available at your retirement depends entirely upon how much money you contributed and how well your chosen investments performed over the years.

    Additionally, 401(k)s are considered “portable.” When you change jobs, you can take all the money in your account and roll it over into an individual retirement account (IRA) or other qualified, employer-sponsored 401(k) plan. WISER has a chart to help you understand what types of plans you can rollover.

    If you work for a tax-exempt organization, you may have a 403(b) plan. These plans are similar to 401(k).

    Other defined contribution plans include an employee stock ownership plan, money purchase plans, profit-sharing plans, and stock bonuses. Small businesses may offer Keogh plans, payroll deduction for IRAs, a simplified employee pension (SEP), or a savings incentive match plan for employees (SIMPLE). Our factsheet offers some more details on these plans.

    Are you self-employed, working part time, ineligible for an employer-sponsored retirement plan, or otherwise want other options? There are other ways to save for retirement.

    You can open an IRA account. There are two typical types of IRAs – Traditional IRA and Roth IRA. For both types, your contribution limit is $5,500 ($6,500 if you’re age 50+) in 2014. This limit may change in 2015. The main differences between these two accounts are how they are taxed and when you can withdraw your money. For a Traditional IRA, your money is tax deductible, meaning you will not pay taxes on it in the year you contribute it. Like contributions to a 401(k), you will only pay taxes on the money once you start withdrawing it in retirement. You cannot withdraw money before you are age 59 ½ without paying a penalty. You also must start taking distributions by April 1 following the year you turn age 70 ½. If you are further along in your career and in a high-income bracket for taxes, a Traditional IRA may be a good option for you because it will lower your taxable income.

    Contributions to Roth IRAs, in contrast, are taxed as you contribute them, and are tax-free when you withdraw them (if you are 59 ½ older and opened your account at least 5 years prior). If you are younger than 59 ½, you can withdraw money 5 years after opening the account for certain medical expenses, higher education expenses, or to buy your first home. You are not required to take distributions at any age. Many young savers prefer Roth IRAs because they have a lower tax bracket now than they will when they retire.

    You may also want to invest in government bonds. These are safe ways to invest money because the government backs them. You can buy small bonds for as little as $25. Different bonds have different interest rates and cash them in at different times. We break down I bonds, EE bonds, and HH bonds in more detail on our factsheet.

    Understanding your retirement plans may seem daunting at first, but by starting with the basics, you can continue to build on what you learn. The more you know, the better prepared you will be to make decisions that can greatly impact your savings and future financial security.

    Keeping a Budget as a Caregiver

    Tuesday, November 12th, 2013

    In this blog celebrating National Family Caregivers Month, we’ll take a look at another important issue for caregivers—budgets! Being a caregiver can have financial consequences, both long term and short term. As mentioned in our last update, caregivers pay an estimate of $5,531 out of their own pockets each year. It is therefore extremely important for caregivers to understand their budget and make sure they keep track of their spending and saving. In this post we discuss simple steps you can take as a caregiver to ensure your own financial future is not damaged.

    Step 1: Track Your Spending

    SpendingTake a notebook with you for a month and write down all of your expenses, big and small. Once you do this for a few weeks, organize your spending into categories like food, household items, transportation, and clothing. Make sure that you include bills you must pay on a regular basis, like insurance, rent or mortgage, and medical payments. Organizing your spending will help you understand on what items you spend the most and how much your necessary items cost you.

    Double check to ensure you included everything.

    We have a worksheet at the end of our booklet for caregivers that will also help you account for expenses that result directly from caregiving.

    Step 2: Compare Your Expenses and Income

    Now it’s time for a little math! But don’t be afraid. It is very easy to do with a calculator!

    Add up your expenses. Since you tracked them for a month, just find the total.

    Now, add up your total income, including salary, benefits, and any earnings form investments. This number gives you your annual income. Divide it by 12 to calculate your monthly income.

    Subtract the total of your month of spending from this monthly income.

    Step 3: Make Budget Decisions

    In the perfect scenario, you should have positive number when you subtract your spending from your income. Less ideally, these numbers will be the same and when you subtract them you will end up with zero. You may also end up with a negative number. If your income is not covering your expenses, or barely doing so, it is time to reconsider your spending.

    And my money goes to...Take a look at that itemized list of your monthly spending. Are you buying anything you do not need? Do you spend more money when you eat away from home? Is transport to and from your caregiving duties costing more than you thought?

    If you notice a trend in your own spending such as buying unnecessary items, or spending more when you are traveling, then consider ways you can reduce these expenses and reduce your debt.

    If you notice that you are picking up expenses for the person you are helping taking care of, consider talking to family members to help you offset these expenditures. Transportation can be a huge contributing factor to caregivers’ expenses. If some of those costs come from the fact that the person you care for cannot cover her/his own expenses look into ways she/he can save such as different plans for Medicare or see if she/he qualifies for dual coverage under both Medicare and Medicaid. If you’re not sure that the person you care for qualifies for assistance, the National Council on Aging offers a free services called Benefits CheckUp. Benefits CheckUp helps individuals determine if they are eligible for assistance with health care costs, food, utilities, transportation, housing, and other needs.  Check out the Consumer Finance Protection Bureau’s guides to managing someone else’s finances for more tips.

    Step 4: Save for Retirement

    pink piggy and hand

    Despite the added costs of caregiving, and likely the decreased income from rearranging your work hours, you cannot give up on saving for retirement! You will need a way to cover your own expenses as you reach retirement. Check out WISER’s Retirement Calculators fact sheet for easy-to-use calculators that can help you see how much you need to save for retirement. Use that result as a way to know how much you should be putting into your retirement funds.

    Stay tuned for more information this month to help caregivers manage their finances!


    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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