Recently I wanted to find out: How can I start making contributions to an HSA? HSA's (Health Savings Accounts) have been gaining a lot of buzz in the personal finance community. In case you've never heard of them, HSA's are a type of special investment account in the U.S. you can setup to help bank money that can be used for medical expenses - tax free! This means that similar to your retirement accounts, you get a tax-break on the front-end ... just for saving your money. For years, we've been using an FSA (flexible spending account) to help stash tax-advantaged funds that we can … [Read more...]
Roth IRA Contribution Limits and Using the Backdoor Conversion to Get Around Them
Would you like to contribute to a Roth IRA, but been told you make too much money to do so? According to the IRS, your Roth IRA contribution limits can be affected by how much you earn as well as your tax filing status. In other words, the more money you and your spouse earn, the greater the chances your ability to put money into a Roth will be reduced … all the way down to zero. However, I’m here to tell you: You CAN still contribute to one; even if you earn more than the IRS Roth IRA income limits. You just have to use a little known technique of what’s known as a Backdoor Roth IRA … [Read more...]
How to Retire on $500,000 In Your 50’s or 60’s
Question: Is it possible to retire on $500K (i.e. $500,000) in your 50’s and 60’s? Unfortunately, not all of us are great savers. Most financial articles will recommend that you’ll need at least $1 to $2 million dollars in savings before you can even consider retirement. But the reality for a large segment of the population is anything from that. To give you an idea, a 2015 study from the Government Accountability Office found that those savers between the ages of 55 to 64 have an average of just $104,000 in their retirement accounts. This is not surprising at all. With the … [Read more...]
How to Turn $50 Dollars Per Paycheck Into $163,732
Do you wish you could be saving more money for retirement than you are right now? It’s easy to read a couple of personal finance blogs and feel like you’re being left behind if you’re not budgeting yourself down to the bare-bones or saving up an obscene amount of money. But don’t get discouraged! It might benefit you to know that even small changes to your saving habits can still help aide in your retirement planning success. How small of a sacrifice are we talking? My challenge to you: Start by spending $50 less per paycheck and redirecting that savings back into your … [Read more...]
Roth IRA vs. Traditional IRA 2017 – Which One Is the Better One to Have?
Once you get involved in retirement planning, one of first questions you’ll be faced with is which kind of account you’d like to go with: A Roth IRA vs. Traditional IRA? As someone who has both, let me tell you that each one works great by their own right. In both cases, you’re taking advantage of a unique opportunity from the IRS to save and grow your money without having to pay taxes right away (or in some cases, never). Over time, when compared to a “normal” savings or investment account, these tax-advantages will add up in an incredible way. For some people, it might mean an … [Read more...]
How To Keep Our Jobs From Being Replaced By Robots
When I was 18, I had an encounter that got me noticing the phenomenon of robots replacing jobs in our society. And the sad part is how easily the person in this story let it happen. I was a teenager busing tables part-time and collecting tips. They had just opened a branch of the bank I went to inside a local super-market near my work. “Great”, I thought. “Now I can just conveniently swing by on my way to work and deposit my money." Well, little did I know, things weren't going to be that easy. Every time (it seemed) I would walk in, there was always this one grumpy bank-teller who … [Read more...]
The Power of Saving More and Spending Less – The Double-Ended Approach to Retire Early
If you’re hoping to retire sooner rather than later, then there’s more to be gained from saving more and spending less than you might realize at first. On the surface, everyone can recognize that saving a larger proportion of your income does exactly what you think it will do: Help you stock-pile more money more rapidly, and reach your nest egg target quicker. But another benefit that sometimes gets lost is the way in which our habits react. Spending less doesn’t JUST mean having more money to set aside. It requires learning how to forego that lost additional income, and adjusting your … [Read more...]
Why Do More People Invest In Actively Managed Funds vs Passive Index Funds?
If passive index funds are the way to go, then why does anyone invest in actively managed funds at all? That was the question I received when I was trying to help someone pick some mutual funds for their 401(k) plan. It's definitely a good one to ask! Over the years, a seemingly growing number of academics and financial bloggers have really been showing their love for investing with passively managed index funds (myself included). With all the major advantages and benefits they point out, it sure seems like a no-brainer that this is the way to go. Yet, when you take a closer look at … [Read more...]