How a Good Asset Allocation Model Can Impact Your Financial Future

Asset Allocation Model

Assets allocation is just not one of those topics that most people find particularly sexy.  Usually it’s the sort of thing that gets about as much attention as the instruction manual to your Blu-ray player. But as you’ll see below, it’s one of those parts of investing that you simply can’t ignore – largely because it can have a MAJOR effect on your finances and how long they ultimately last. The reason I wanted to bring this up is because of the roller-coaster of market activity lately.  In case you haven’t checked your stocks or 401k balance in a while, there have been some pretty big … [Read more...]

Ask MMD: Should I Do a Rollover, Pension Lump Sum or Annuity?

Pension Lump Sum or Annuity

How do you know you’re a true financial geek?  The answer: You get excited when one of your friends asks you a money question because it means crunching some numbers with Excel! Okay … maybe not to that extreme, but that’s pretty much how I felt recently for a friend who had a question about whether or not to cash out his pension with an old employer.  Here was his email: So I attended a webinar today about the buyout (with my old employer).  Attached is a snip of the five options they gave us and what the amounts would be. Rollover to an IRA or another employer’s plan = … [Read more...]

We Saved Over $1,000 in Taxes This Year By Contributing to Our Vanguard SEP IRA

Vanguard SEP IRA

One of the coolest things I discovered last year in terms of retirement planning was that I have the option to contribute to yet another tax-deferred savings plan – the SEP IRA. What’s even better is that not only was this contribution above and beyond everything I was already saving with my 401k and Roth IRA, but it also accomplished one VERY important task – saving me a boat load of money in the amount of taxes we owed for year on our Federal return. This year the story is even better!  With all the money my online business made, I’m going to end up contributing close to $4,000 this … [Read more...]

Our Ultimate Plan to Retire at 45 – December 2014 Update

money plan

If you have any aspirations to retire early some day, then this is the post you’ve been waiting for.  It’s my annual update to our plan for financial freedom. Trust me – you’re not going to find another plan like this anywhere else. For some time now I’ve been saying that my wife and I plan to retire when I turn 45 years old.  How do we plan to pull off such an ambitious goal?  That’s what this plan is all about.  We put numbers to paper and actually see what our cash flow will look like all throughout the future.  Hence the name of the blog, this is our “money design”. If you have … [Read more...]

Should I Go for a Pension Purchase Option or Invest the Money? – A Reader Question

Pension Purchase Option

A few weeks ago I receive a really great question from a friend of mine (we’ll call him LJ) regarding whether or not he should take a pension purchase option that his employer is offering him.  Here’s the email he sent me: I'm thinking about buying 5 years of generic pension service time. Seems like a no brainer, right? Not quite. I've had the actuarial done and it will cost me $37,800. A good chunk. I have the money in a 457 account and can roll it over to my pension administrator. I plan to retire in 22 years at 60 when I am eligible to draw the pension. I have 13.5 years of service … [Read more...]

2015 Maximum 401k Contribution Increases to $18,000 – How You Can Get There

2015 Maximum 401k Contribution

If you’re one of those people who are really good at saving their money diligently for retirement, then the IRS has some good news for you next year:  The 2015 maximum 401k contribution has just been increased to $18,000 (up $500 from 2014). For those people 50 and older, the $5,500 catch-up limit was also bumped up to $6,000. I’ve personally been saving up to the 401k maximum for a while now and am looking forward to bumping up my contributions.  By saving so much I know that I’m not only helping my family to get closer to reaching financial freedom, but we’re also taking advantage of a … [Read more...]

How Much Should I Put in My 401k Plan? My Surprising Answer

save money for retirement

It’s one of the most commonly asked questions of employees when they start saving for retirement: How much should I put in my 401k?  5%?  10%?  15%? Especially when you’re young (in your 20’s and 30’s) and just starting out, retirement can feel like such a long ways away.  You know that you should be contributing, but at the same time you want to enjoy your earnings and save towards other goals like a house and family needs too. To simply answer this question with “save as much as you can afford” feels too much like an easy-out.  I’ve recommended that advice to friends in the past only … [Read more...]

Should I Do a 401k to IRA Rollover?  The Benefits and Drawbacks

401k to ira rollover

Recently during a discussion with my money coach client there was a very important question that came up:  “I have an old 401k with a former employer that is still sitting right where I left it.  I’m wondering if I should make a 401k to IRA rollover or simply leave the money right where it is?” That’s a really good question. I’m sure for a lot of people (myself included) that the money you have in your 401k account is probably the largest percentage of your wealth you have saved up – anywhere!  Even if you’ve got nothing more than the average 401k balance of $81,000 as reported by … [Read more...]