If you’ve got dreams of retiring early by age 55 or sooner, then you’ll be very delighted to know: This is a goal that is definitely well within your reach! Believe it or not, our ability to reach financial independence is something that is completely dependent upon our own decisions. It doesn't matter if you're in your 30's, 40's, or any age. If you want to make working optional and retire by age 55, then you just have to be willing to stick to a strategy that will get you there. Forget about the things you think are holding you back. In no place do we see this more than … [Read more...] about How to Retire By 55 (or Sooner) on a Salary of $50,000 or Less
If you’re already contributing the IRS maximum amount to your 401(k) and would like to keep reaping the tax benefits, then I have good news for you: After-tax 401(k) contributions may be your ticket to the next level! It’s not very well known, but what most of us think of as the IRS max is actually just one piece of the puzzle. The actual total amount of money that the IRS will allow both you and your employer to contribute to your 401(k) plan is actually quite a bit higher: $55,000 (for 2018). For high-percentage savers and early retirement seekers, this information can be … [Read more...] about How After-Tax 401(k) Contributions Can Take Your Retirement Savings Even Further
Question: “Can I contribute to an IRA this year?” IRA’s are great tools for your retirement savings. Not only do they offer you the opportunity to pay less taxes now, but they can also offer the same benefit in the future. So what happens if you’re already covered by a retirement plan at work, such as a 401(k), 403(b), etc.? Do you still get to contribute to one? Or will the IRS consider this double-dipping? In this post, we’ll sort through the facts and see what it takes to be able to contribute to an IRA. (If you’d like to first learn more about traditional and Roth … [Read more...] about Can I Contribute to An IRA This Year?
One of the most confusing aspects of participating in an employer sponsored retirement plan is with understanding what percentage of the money is actually yours to keep. Namely, this idea of "vesting". Yes ... believe it or not, not everything in your 401(k) is yours to keep! "How does 401(k) vesting work?" was one of the more complicated concepts for me to grasp. I can still recall opening my first 401(k) statement and seeing two amounts: One for the total and one for the vested amount. "Wait, what? … Why are there two amounts?" I thought. Does this mean that some of the money I just … [Read more...] about How Does 401(k) Vesting Work? An Easy to Follow Explanation
Is it possible to withdraw money out of your 401(k) retirement plan before age 59-1/2? The short answer is "yes" - of course! But the 401(k) withdrawal rules are not without their obstacles. Remember that the IRS intends these plans to be a way for U.S. employees to save their money for one day when they are ready to retire. And in exchange, savers get a break on paying the taxes on these earnings now by deferring them to the future when the money is used. Therefore, because of this design, the rules that come along with making a 401(k) withdrawals can get a little tricky. This is … [Read more...] about What Are the 401(k) Withdrawal Rules for Early, Penalty-Free Access?
Have you ever wondered what kind of impact Social Security makes on the retirement safe withdrawal rate you choose? When it comes to retirement planning, lots of people know that there exists some withdrawal rate that is considered "safe". The most popular of these rates is of course the 4 Percent Rule. This was popularized in the 1990's by Bill Bengen and The Trinity Study. However, one very important point to consider is the fact these studies did NOT account for Social Security. They merely only considered retirement savings. Since most U.S. tax-payers will stand to receive at … [Read more...] about How Does Social Security Factor Into Your Retirement Safe Withdrawal Rate?
Have you ever wondered about the differences between a 403(b) vs 401(k)? In our house, we have both. I work as an engineer and have a 401(k). My wife is a teacher and has a 403(b). Early on when we first got our jobs, I honestly knew nothing about either plan. We each just simply filled out the forms and really thought nothing of it. A few years later when I started taking more and more of an interest in personal finance, I became more curious about how each one of the plans works. How are they the same? How are they different? More importantly, as we started crafting our … [Read more...] about What’s the Difference Between a 403(b) vs 401(k)?
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...] about Roth IRA Contribution Limits and Using the Backdoor Conversion to Get Around Them
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...] about How to Turn $50 Dollars Per Paycheck Into $163,732
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...] about The Power of Saving More and Spending Less – The Double-Ended Approach to Retire Early