Snapdragon, thank you and same to you and yours.
@PG article re: tax diversification or income limits on Roth contributions or something else?
Hi Don, That's a lot for an online forum and I know none of us want to steer you in the wrong direction given your interest in getting the right plan or group of plans in place. I suggest you seek out a fee-only planner to go over your earnings, options, time horizon, risk profile (which includes risk capacity, risk tolerance, and risk required) so that you get great advice for your specific situation.
IrrationalConstant, the short answer is they spend a lot of time and money on actuarial studies which are right more often than they are wrong so the odds are in their favor. They are doing math they believe they can live with under most market conditions and remember, they write the contracts. They also are paid with in many cases very high fees which can take some of the heat off the math. Now, where to grow your money without fear or loss? Not sure that investment exists but I can tell you that if you take the time to diligently learn about risk in the context of capacity, tolerance and required risk, you may find your fears lessen. Your library may carry (or you can ask them to get it) the 4 pillars of investing by william bernstein - very helpful Also any books by Rick Ferri -
Sarahbb, my own firm is offering a robo-advising solution in January but for now check out a colleague's offering at fingot.com.
Hi DK - A will directs what happens to your non-IRA/life insurance assets at your death. A trust is a separate entity that can own assets, often times included as a beneficiary in a will to hold assets for the benefit of others that for one reason or another are best to not own the property outright. I would recommend you seek an attorney to help you properly set up your will given your unique situation, as well as discuss powers-of-attorney and health care proxy.
In most cases, simultaneously working on paying down student debt and saving some amount for retirement is a good idea. Your student loans are designed to be paid off over 10 years or so from your new employment income. Also, it's likely that the student loan interest that you pay may be tax deductible (depending on your income). When, you get your first job, it's a good idea to start saving something for your retirement. There is a huge value in long term compounding on your retirement funds, even with small contributions. The action that is most helpful on retirement savings is to start now with an amount that is automatically deducted from each paycheck. A key issue to look for in your employers retirement plan is...do they match any part of your contributions? If they do, this is a huge benefit. Consider saving up to the match amount. If being able to save up to the match amount is too high, save whatever amount you can now and consider increasing it over the next few years.
Sarahbb, please consider the library for investing advice before friends unless that's their day job. Good intentions are not reliable in investing :) Try the 4 Pillars of Investing by William Bernstein or any books by Rick Ferri - you can do this and will likely do it well.
@Sam I would consider using a custodian such as Vanguard and using their mutual fund offerings.
Hi Adambrovo, I'm not real estate attorney but I can give you some general thoughts.
Mrk, opening that account or any other can be as simple as calling Vanguard's 800 # on their site to seeking out a fee only planner to do the same thing. Today we have automated much of the process and look/feel similar to the Vanguards but can also offer great fund families like Dimensional (which are only available through advisors and for which no commission is charged because we are paid only by the client)
sarahbb, You're welcome and Happy Holidays to you as well!
Good luck to you IrrationalConstant and promise me you'll read those contracts.
DK - It means that if you convert your whole traditional IRA and that was your only IRA, and 25% of the money you contributed was not tax-deductible when you contributed it, you won't be taxed on the entire conversion, but only 75% because you already paid tax on the 25% before you contributed. Not the simplest to explain, but I hope it helps.
That's what we're here for, DK!
DK - You are right to question this often used phrase. It all depends on the make up of your income in retirement. You might go from earning a salary of $60,000 and transition to social security of $25,000 with the rest of your income coming from liquidating investments. If this is your situation you might
be in a different bracket.
Oh, Ashish, you have fallen into a deadly trap: selling low and waiting for a market rebound to start investing again. We are at records highs and there is certainly a chance for near term corrections. Know that you are not alone . Between 1986 and 2002, the S&P 500 made 12.2% while large cap mutual fund investors only made 2.8%. The reason? The individuals bought high and sold low. It is likely that if you had stayed in investments when it was uncomfortable, you would have more than made up your losses by now. NONE of this is meant to make you feel uncomfortable. As I said you have lots of company. My intention is to encourage you to make a commitment to whatever investment strategy you employ and STICK WITH IT. I don't know what age you are and what allocation would be suitable for you (an advisor can help with that) but a portfolio that was 54% stock and 46% cash and bonds lost 21% from Nov 2007 and Feb 2009. You need to be ready for that. Make a pledge to yourself that whatever level of risk you take, you will stay with it. Now, as I said, the market as at record levels but it has been making new records for years. History tells us that from a pure numbers point of view, it is best to put the money in all at once. But give your temperament, I suggest you strongly consider dividing that 80K by 12 and investing the result at regular monthly intervals. You won't get the best price but you won't get the worst. As for the rollover loss, I have clients that will just retire a loss they have from the early 2000s this year. It will happen. I wish you all the best.
Drex88, you're going to get a form telling you (and the IRS) the withdrawal was made and then you (or your accountant) will get to complete the applicable form to say why. Please make sure you are following the rules for making that withdrawal so that it is in fact tax-free for you.
Real Estate Law is governed by the state you live in. So, it may make sense here for you and your brother to take all of the documents to a local Real Estate Attorney and have them reviewed to fully understand your potential liability here.
If when your Dad dies, and there is still an outstanding balance on the Home Equity Line of Credit, then my belief is the mortgage lender still must be paid. If all of your Dad's retirement funds are gone, then you may need to make the mortgage payments until you get a chance to sell the home. The proceeds from the sale of the home would first go to payoff the Home Equity Line of Credit and any related costs.
Drex88, BEWARE as the rules for withdrawing conversions (which is what it sounds like you did) instead of annual contributions are MUCH different. You need to talk to a CPA before you do anything.