Question: What happens to your 401(k) when you quit your job or switch to a new one? Your retirement security used to be a BIG consideration when it came to changing employers. In the old days of pension plans, if someone were to quit their job early, they could be potentially giving up life-long future monthly checks worth thousands of dollars! But that was then, and this is now. According to the website The Balance, the average person changes jobs 10-15 times during their career. What changed? A lot. But in terms of the future of your retirement savings, a big … [Read more...] about What Happens to Your 401(k) When You Quit Your Job?
Did you know that you can use a 72t distribution to get early access to your 401(k) or most any other retirement account before age 59-1/2 ... WITHOUT having to pay a penalty? One of the biggest obstacles we face when we're saving for retirement is the rule that we have to wait so long in order to finally use it. For years, I had a goal to retire early (long before age 60). But I was completely stumped by how I was actually going to be able to take money out of it. I remember being in my young 20's and thinking "what good is using a 401(k) if I have to wait almost 40 years to get … [Read more...] about How to Use a 72t Distribution to Get Money Out of Your 401(k) and Retire Early!
If you’re looking to retire in your mid 50’s and want to be able access your retirement nest egg, then I’ve got some good news for you: The 401(k) Age 55 Rule might allow you to accomplish your goal of early retirement! As most people in the U.S. know, when it comes to retirement planning, the IRS says you have to wait until at least age 59-1/2 to start withdrawing funds from any tax-deferred retirement accounts such as your 401(k) or IRA. Otherwise, you’ll have to pay a pesky 10% penalty along with any applicable taxes. If you’re an early retirement seeker like, then this … [Read more...] about The 401(k) Age 55 Rule for Early Retirement Income
When it comes to retirement accounts, there's one debate that almost everyone must consider: A Roth IRA vs. Traditional IRA - Which one is better? What are the differences, and how do I know which one is the right one for me? As someone who has both a Roth and a Traditional account, let me tell you: Each one has traits that can be very valuable to you in their own way! In general, no matter which one you choose, you’re doing a great thing by 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, … [Read more...] about Roth IRA vs. Traditional IRA – Which One Is Better for You?
Have you ever thought to yourself: What's the least amount or minimum retirement savings I could get away with? Don't be bashful about asking it. It's a perfectly valid question to consider; especially when you think how little retirement savings most people actually have. (In case you're wondering, its $107,000 for Americans between the ages of 55 and 64 according to data from the Government Accountability Office (GAO).) While the major media outlets would have you believe that you need somewhere between $2 and $3 million dollars, you might be pleasantly surprised to learn that … [Read more...] about What is the Minimum Retirement Savings You Could Comfortably Live On?
Are you wondering how to maximize your 401(k) contribution without feeling like you won't have any money leftover to spend? Hey, I get it! When I was just starting out as a young professional, I started off by contributing what I thought was a decent amount to my 401(k) retirement plan (10 percent or so) ... But as we started really defining how much money we'd eventually need to retire, especially as our goal timeline transitioned from our 60's down to our 40's, it quickly became apparent that our savings rate wasn't enough. If we were going to retire early successfully, then we … [Read more...] about How To Maximize Your 401(k) Contribution
If there's one question about retirement planning that many people feel unsure about, it's this: How much should I contribute to my 401(k) each year? Seriously ... what's the magic answer? Is it 5%? 10%? 15%? Take a stroll around the Internet, and you're bound to find a number of opinions from reputable sites. For example, Investopedia is quoted as saying that "a good sweet spot is between 10% to 15%". That's not surprising; especially when you consider that 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 you … [Read more...] about How Much Should I Contribute to My 401(k) Plan? This is the Number You Need to Hit!
Do you think you need 30 years of saving to make your retirement happen? Do you think you need to make a lot of money? Or know what the best stocks are to invest in each year? Of course not! I’m a huge fan of early retirement stories of the everyday-man; stories that prove that good-ole fashioned saving, simple investing, and living within your means CAN and WILL provide you with not just the means to enjoy a healthy retirement, but (when used correctly) the opportunity to retire 20 years ahead of the typical schedule! One incredible example of this has been captured in the … [Read more...] about How This Couple Was Able to Retire Early After Just 15 Years of Saving
Can you “buy” passive income? Of course you can! Essentially this is the whole point of saving your money and stashing it away for financial freedom (or retirement). "A dollar saved is a dollar earned" ... or so the old saying goes. But is this really true? How much is a dollar saved really worth in 10, 20, or even 30 years? Or to be even more practical, how much financial freedom can this dollar actually produce for me every year in retirement? In this post, we’re going to go through an analysis of the savings process and see just exactly how much each dollar translates … [Read more...] about How Much Passive Income Will a Dollar Saved Today Buy Me in the Future?
Whenever I first get talking to someone about personal finances, one of the first questions they have is: How much do I need to save for retirement? It's a heavy question, I know! Save too little and you might end up having to go back to work when you don't want to. But set your target too high, and you might end up working harder and saving longer than you really need to. Believe it or not, the math behind figuring out how much you need to save to retire is actually amazing simple! ... As in just one calculation ... That's right. You can go online and find some complex … [Read more...] about How Much Do I Need to Save for Retirement? The Incredibly Simple Answer