HI KG, for 2014, the maximum you can contribute to all of your traditional and Roth IRAs is the smaller of $5,500 ($6,500 if you’re age 50 or older), or your taxable compensation for the year.
So if you have maxed out your 401(k)s and IRA options, you may have to save in a taxable brokerage account unless your company provides a non-qualified deferred compensation plan.
Dennis, countries outside the US are capturing a larger percentage of world GDP each year. How much to put into them depends on your specific circumstances, but it is a good idea. Remember, however, that the companies in the S&P 500 do a tremendous amount of business worldwide so that alone provides international exposure. I would sit down with a financial advisor to determine the asset allocation that is right for you.
DJ, don't fall for that whole life investment trick. Life ins is for those who have dependents. Maximize your 401k, When you have a wife of kids consider a 30 yr term policy.
Simon -- Will you give that a try? I might have gotten cut off. Thanks!
Hi Carlos, you are on the right track with retirement with $112k saved in your 401(k) and $28k in ROTH. Keep up with the savings and work with a financial advisor to make sure that your savings are invested wisely
DJ. As a 24 year old, don't bother with whole life insurance. Focus on getting the maximum employer match in your 401(k). If your 401(k) offers a Roth 401(k) option, consider that assuming you are in a lower tax bracket. Beyond the employer match in a 401(k), open and fund a Roth IRA. Both the Roth IRA and Roth 401(k) grow tax free for retirement. A life insurance policy grows tax deferred and may have some tax free benefits, but the fees and insurance expenses will eat into your returns. When you need life insurance to provide for a spouse or kids, purchase a 20-30 year term policy.
Carlos, you're not giving us the whole picture. Other considerations include how much are you spending (or will spend), your expected retirement age, how much you plan to add to retirement in future years. A financial advisor could help you with it or you could try the retirement calculator featured at Kiplinger's.
Jason, so you do owe the money but are concerned about the interest rate. Have you checked to see if you can refinance these loans?
Hi Chris. I found your original question to Walt. Yes a personal account is like something you would set up with a discout broker like TD Ameritrade. You can buy stocks bonds and just about anything else but I suggest you stick to well diversified mutual funds like the KIP 25. As for cap gain rates, short term rates on securities held for less than a year are the same as your ordinary income tax rates. Long term rates on securities held for more than a year are taxed at 15% for somebody in your brackett.
Laurie, the fund I mentioned can be liquidated just about any time, but your time horizon is important here. If you can handle the volatility and you have 5 yrs or more
Jason B. It sounds like the loans were used for your education, so you owe the money. Check on what type of loans you have (Stafford, etc.) and refinance to a lower interest rate.
KG, there are different ways that fee only planners could get compensated. They could charge an hourly fee or charge a % of assets under management. I would call around a few planners in your area to get an understanding of these fees. You can find contact information for fee only planners at NAPFA.org
KG, check out the Garrett planning network or napfa.org
Sarah, I'm working on you. Just a minute
JP, no you cannot wait on the RMDs, you must take them. but you don't have to from current employer
Sarah, it appears you and your husband may have a different view on risk. The plan is not too aggressive as long as you both can stomach the sometimes harsh downturns in the equity markets. If there is any chance you would bale out due to a market decline, then yes your plan is too aggressive. You have a long enough time horizon to weather market storms at this point. Your plan should be reviewed as you get closer to retirement.
Hi Lara, it is best to have atleast six months to a year in living expenses set aside in an emergency fund and to maximize your retirement contributions into your 403b
JP: It may be possible for you to roll your previous plans into one at your new employer and avoid taking RMD. Natalie Choate in Life & Death Planning for Retirement Benefits explains this. To work it has to be allowed by your new employer and if you have reached the time for RMD you will have to take the distribution before moving the accounts.
Lara, your will does not control your IRAs or 403b, the beneficiaries control where the money goes
Hi Simon. For every advisor on this chat room, you will get a different answer.Here's mine. Tax efficient funds in a 403(b) plan don't matter because taxes are deferred until you take them out and then everything is taxed as ordinary income. As for your fund selection, I like the first three but I'm not crazy about sector funds. I do think you should introduce a little fixed income into your overall allocation. Regarding International funds, I seldom suggest more than 20% even for my youngest clients. 15% might be good for you. I see a lot of advisors suggesting higher percentages but International funds have more risk than domestic funds because of currency exchange rates and, besides, the large domestic companies like those found in the Contra Fund have international operations that take advantage of the world economy. Let them worry about currency exchange rates.
Laurie, we're so happy to help!
Hi NEF, you get a tax deduction for the contributions that you make to your traditional 401k but not for the contributions to your ROTH 401k. However, distributions in retirement on your ROTH 401(k) are tax free while distributions from your traditional IRA are fully taxable. If you don't need the immediate tax deduction from the contributions to your ROTH 401(k), I would continue to diversify your contributions into both the traditional and the ROTH 401(k)
Nef, at age 32 I think putting enough into the 401(k) to get the match and then switching to the Roth is a good idea. Time is on your side. The cost of taxes will be overcome over time by return on your investments (assuming you are smart there).
Michelle, she may have to go on a cash basis and cut up that credit card.
Michelle: Can she speak to the credit card company? She should explain her situation and let them know she is willing to pay. Perhaps they'll consider reducing the interest she pays. She should try to find a job that will cover her expenses.