Here are a couple of fine points of retirement planning tax management. Your accountant probably knows all of this, but if you’re the do-it-yourself type or you have a tax preparer who’s new to you, this might be helpful.
CPA Tim Steffen, who is director of financial planning for Robert W. Baird in Milwaukee, says it’s important to keep track of any nondeductible contributions you might have made to a traditional IRA.
Steffen says that while nondeductible contributions have no impact on your tax liability in the year they are made, if you don’t report these contributions on your return using Form 8606, it’s more difficult to …» Read more
Fidelity Investments, which provides more IRAs and 401(k) plans than any other investment company in the U.S., pointed out today that its 700,000 customers ages 65 to 69 with both a 401(k) and an IRA have an average of $359,000 in their retirement accounts. That’s nearly three times as much as customers have who save» Read more
Only 14 percent of Americans are very confident that they will have enough money to retire and live comfortably, according to the 22nd annual Employee Benefit Research Institute’s Retirement Confidence Survey released today.
This number hasn’t changed since 2009 when a host of people not too far from retirement lost their jobs. According to the survey, 42 percent see uncertainty over whether they will have a job as their most pressing economic issue.
The survey also emphasizes that many Americans haven’t saved much for retirement. Some 60 percent of workers say — not counting the value of their homes and any old-fashioned defined-benefit pensions they may expect — their savings total less than $25,000.» Read more
Check out Bankrate’s Fundamentals of Retirement Plans package of stories posted today by my colleague and Bankrate’s Senior Managing Editor, Barbara Whelehan. It’s a terrific guide to workplace-based retirement planning and saving.
What we didn’t talk about is ways to maximize your retirement savings in that all-important plan. Here are a few thoughts, most of them from Charles Epstein, principal in Epstein Financial Group and author of Paychecks for Life:
Let’s say you start saving 10 percent of your salary when you are 25 and earning $30,000. Your employer kicks in a match — a common employer matching formula is 50 percent of the amount an employee contributes, up to 6 percent of your total annual earnings.
The Alzheimer’s Association estimates that the cost of caring for people in the U.S. with Alzheimer’s and other forms of dementia will be $200 billion in 2012 alone.
About $140 billion of it will be paid for by Medicare and Medicaid. The rest of the costs will fall directly on victims of these diseases and their families. For many, it will dominate their retirement planning and still ruin their retirement.
Harry Johns, CEO of the Alzheimer’s Association, says spending money to find ways to prevent and treat this disease is critical.
More than 5 million Americans currently live with Alzheimer’s.
If you run a small business or are employed by one, there’s a very good chance you don’t have an employer-sponsored retirement plan.
According to the U.S. Census Bureau, only 29 percent of workers employed by businesses with fewer than 100 employees have access to an employer-sponsored plan. That makes retirement planning tough. By comparison, 81 percent of workers at companies with 100 or more employees have access to employer-sponsored plans.
At a hearing this week held by the U.S. Senate Special Committee on Aging, the General Accounting Office released an analysis that said more owners of small businesses don’t have plans because the plans are expensive and offering them carries with it fiduciary responsibilities that small businesses don’t feel qualified to accept.
Buying individual long-term care insurance is getting more difficult — yet another retirement-planning handicap.
Prudential has joined the list of major insurers that have dropped their business. Besides Prudential, these include MetLife and Unum Group, which have eliminated some group policies. All say the cost of offering this retirement protection is too high.
Large long-term care insurers still in the business of selling insurance to individuals include Genworth and John Hancock.
In the meantime, the IRS has increased deductibility levels for long-term care insurance policies purchased in 2012. If you run a small business — even one that you or you and your spouse operate part time — long-term care can be a significant tax deduction.» Read more
If you’re maxing out your 401(k) — getting every penny of the available employer match — you might want to consider opening an individual retirement account. Or better yet, if you don’t make too much money, save in a Roth 401(k), says Doug Zarookian, manager of Charles Schwab’s Park Avenue office in New York. Zarookian» Read more
In honor of Older Americans Month, the U.S. Census Bureau sent out a host of facts and figures about people age 65 and older. Here are six of the most significant for people doing some retirement planning. We’re big and getting bigger. In 2010, there were 40.3 million people in the U.S. who were 65» Read more
In Friday’s blog post, called “Averting retirement disaster,” I described the risk-averse approach to retirement planning that Erin Botsford writes about in her book, “The Big Retirement Risk: Running Out of Money Before You Run Out of Time.” I’ll reiterate: It’s a must-read for those who are approaching retirement. If you don’t want to subject» Read more