If you're wondering "Can I contribute to an IRA and a 401(k) this year?", then you'll be delighted to know that the answer is most likely: Yes. For most middle income families, the good news is that both spouses can usually contribute to both types of retirement plans. With a 401(k), eligibility is pretty straight-forward. Your employer will either offer one or they won't. The employee generally just has to meet the employer's requirements which might be being 21 years of age (or older) and having worked with the company for a minimum amount of time (such as one year). IRAs, on the other hand, are accounts that you set up yourself. If you want to start one, you simply pick a reputable financial institution and apply. Its … [Read more...] about Can I Contribute to Both an IRA and a 401(k)?
So you want to save for retirement, and you've heard good things about both 401(k)’s and IRA’s. You'd love to save your money into both types of retirement accounts. But unfortunately, that might not be possible. First, there's the big question: Are you even eligible? Maybe you work at a place that doesn't offer a 401(k) plan. Or maybe you have no idea if you qualify to open an IRA. Next, if your finances are anything like most American households, then there's only so much money to go around. Your paycheck is only so big, and you might only be saving somewhere around 10 percent of it. There might be enough to spread around. Finally, there's the debate of what's best for you and your money. Do any amount of searches in … [Read more...] about Should I Put Money in a 401(k) or IRA First?
After reading enough personal finance blogs, this whole financial independence thing starts to sound pretty good! But what exactly are the steps to retire early? How does someone acquire enough money to never have to work again (if they choose)? What was the path that got them there? And more importantly, what are the habits and routines in our daily lives that we can adopt that will help make early retirement an option? You might be surprised to learn that much of achieving financial independence has less to do with earning a lot of money and more to do with how you go about getting it. Your ticket to freedom doesn’t necessarily have to include some fancy high-paid position. Although it might help accelerate … [Read more...] about 10 Steps to Retire Early – What You Should Be Doing Right Now!
Do you pay taxes on the money you earn from your side hustle? If so, then he's a hack you'll want to know: Contributing to a SEP IRA can help lower your taxes as well as allow you to stash away more money for retirement! For years I’ve enjoyed making money on the side from blogging. But in the eyes of the government, that money is “business income”, and therefore taxable. So while it was fun to earn several thousand dollars per year, it wasn’t so great having to pay roughly a quarter of that money back into taxes every year. Just like all the steps I’ve taken to reduce my personal taxes down as much as possible, I knew there had to be a way to do the same with my business income. That’s when I discovered the SEP IRA. By … [Read more...] about How We’ve Saved $1,000’s in Taxes By Contributing to Our SEP IRA
Admit it ... You’ve probably asked yourself “How do I become a millionaire?” more than once in your life. Don’t be shy! I can certainly tell you that I have. With all the images of happiness and security we see associated with wealth, how could you (or most anyone) not wonder about such a thing. Regardless of what your actual financial goals are, the act of having a net worth of one million dollars or more is still heavily regarded as quite an accomplishment! In fact, in a survey conducted by investment service Charles Schwab, less than 10% of Americans had accumulated a net worth of $1 to $5 million. So while 10% may sound like a small sliver of the population, keep in mind that this represents 9.4 million individuals. Is … [Read more...] about How to Become a Millionaire – The Simple Way to Save $1,000,000
If you’ve got questions about how 401(k) matching works, there’s only one phrase you need to remember: Don’t leave free money on the table! 401(k) employer matching contributions are one of the biggest reasons why American workers should utilize their 401(k) plans. Simply put, they are an opportunity to earn more money from your employer without any extra effort. When some generous employers match their employees’ 401(k) plans dollar for dollar, this is effectively the same thing as getting a 100% return on your investment! When was the last time you found an investment opportunity like that? And what’s crazy is that all you have to do to take advantage o this opportunity is to merely participate in your company’s … [Read more...] about How 401(k) Matching Works – Don’t Leave Free Money on the Table!
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 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 responsibility of saving for retirement having shifted from company-sponsored pensions to individuals, the shocking truth for many people will soon be … [Read more...] about How to Retire on $500,000 In Your 50’s or 60’s
Saving your money into a 401(k) or IRA can have some very powerful wealth-building benefits. But clearly one of the biggest drawbacks is that you’re not allowed to access your money for years or even decades. If you try to take it out sooner, than you'll have to pay a penalty! So what happens if you need the money now? What if life becomes difficult and you need to pull the money out for some kind of emergency? Or what if you have done an excellent job of managing your finances and would like to retire early? How can you work around this problem and gain early access to your savings? Don't worry. The IRS knows that sometimes life can throw you curve-balls, and because of this they've made several exceptions … [Read more...] about When Can You Withdraw From Your 401(k), IRA, and Other Retirement Savings?