Mike T, sorry my tech fingers are wearing out. Yes your IRA would become hers unless something were to happen to you before she is 59.5. Then she would keep it as an inherited IRA so she could get to the money without penalty. Good question. Thank you for attending!
Mike T-Please see answer below.
Mike, I am not sure what you are asking. Sounds like you are going to take out your entire IRA in 2015. If so, you can take out in multiple pieces, monthly, etc during the year. you have until December 31st to complete the RMD. Of course, you can take other money out as needed.
Another big thank you our NAPFA experts who have been with us the last two hours.
Joining us now are Therese Govern, Raj Prashad, Bobbie Munroe and Robert Dowling. Welcome!
Hi Patricia -- You sure do!
Good afternoon! I'm Bobbie Munroe CFP, a NAPFA registered fee-only advisor. My firm, Supporting Your Choices, is located in Atlanta, GA and Havana, FL and we work with clients all over the United States. I look forward to spending time with Kiplinger readers today and thank Kiplinger for hosting this wonderful event.
hi Carla. Congrats on recovering from bankruptcy. It sounds like you are doing all of the right things. By far the most important element in your credit rating is paying your bills on time. it's true that having more credit and using only a portion of it will hel p your score but only marginally. Having gone bankrupt you already understand on how having too much available credit can hurt you esppecially when life throws you a spitball. My advice is to ony have the cards that you actualy need.
Cheyene: Having health care covered until age 65 is a great deal. Unless the old employer has some unique investment options, you might consider rolling the funds to an IRA. One caveat, do you have any creditor issues that would subject your personal assets to a claim? If not, an IRA would give you lots of flexibility to invest your funds. Also, it is difficult to comment on your asset allocation, but 95% in any type of asset class is risky. How does your spouse feel about your financial situation?
@JR - If this is a true definition of "profit sharing", then this may simply be an addition to your 401k, and will therefore not be taxable. But, if this is more of a "bonus" where you will be paid by a check, then I see your concern. Unfortunately, there are not too many options. A few come to mind: if you are 50 or older, you have the option to use a catch-up on your respective 401ks; if you are saving for college, you may be able to invest in your state sponsored plan, which MAY offer a state tax deduction; or, the most remote, as your employer if you have an option to defer this compensation to next year. Also, put a call in to your accountant for ideas, since he knows your tax situation best.
Mike I agree you need maximum coverage for your purpose Insurance is In my opinion should first be
Hi Mary. Yes, there are indeed rules of thumb for taking distributions from different buckets in retirement. In general, one is best served by drawing down taxable accounts first, and letting the tax-deferred IRAs run as long as possible. And the Roth, the best account of all from a tax perspective, is best left as the last account to tap. That being said, there can be very good reasons for taking some distributions from an IRA first -- for people who are retired, with low taxable income before Required Minimum Distributions and Social Security benefits hit the tax return. To really get a handle on this sit down with your CPA and run some tax projections to see if you are in a lower tax bracket now than you are likely to be in the future, and can get some IRA dollars out in a low tax bracket.
Mike T, go with the 20 year level term and get the coverage you need for your family
a source to replace lost income so go for the Term first it is within your budget also.
Hi David: How is your health? and how long until retirement
John: Yes, however, it may be a bit more cumbersome to manage several accounts.
John: If the grandchildren are minors it may be better to use your estate plan to manage the distributions/bequests to your heirs upon your death.
Patricia, a pension that inflates and heath insurance until retirement? Bravo!
David: Yes. I believe you are more heavily weighted in stocks.
Thanks for joining Cheyene!
I would suggest reducing your equity exposure by adding foreign bonds, and alternatives that include maybe real estate, commodities, convertibles, hedged strategies to name a few.
Hi Marvin. I'll answer this in two parts. Your first question is the most important one any person faces as an investor: how to allocate the nest egg between low risk assets (cash, bonds) and high risk assets (stocks). There are only three factors to consider: your tolerance for risk (at what point are you going to run screaming from stock market losses), your time horizon for use of the funds (sounds like you're not taking any distributions from the portfolio at this point, so maybe your nest egg is being saved for health care costs later on, or to pass on to someone else when you die), and your required rate of return (do you need a high return to see you through, or will a conservative rate of return suffice given what you want this money to do?). Take a look at the asset allocation materials on Vanguard's website; they will walk you through the risk/reward tradeoffs of a range of allocations so you can make a decision you're comfortable with. Fundamentally, you have to pick the risk/reward tradeoff that works for your stomach and your financial goals.
Lloyd, let's think about this. The ROTH will grow TAX FREE so you should let it accumulate earnings for as long as possible. Unlike a traditional IRA, you never HAVE to take distributions. Therefore, I often have clients have their grandchildren (rather than their children) as beneficiaries of the Roth IRA. The beneficiaries WILL have to take distributions but over their entire lifetimes. So, lets say a client dies at age 90 with a ROTH IRA and their grandchild is 30. That means that at least some of that money will continue to grow tax free through out the grandchild's life which, when added to the time YOU have had the ROTH could be 100 years. Does that make sense? Even if you do spend it yourself, you want it to grow tax free for as long as possible.
David: I would review Vanguards website in order to research different bond funds.
You could also include High Yield (Junk) funds.
Hi Rc good question, I think what you need to ascertain is what you income needs will be when you retire . That how much money will you need to enjoy a comfortable lifestyle. You also need to understand your risk tolerance level your time horizon and you needs . My experience suggest that you should re-evaluate your allocation I think you may be underweighted in small cap, international etc , It all has to do with your goals and what would make you sleep at night
David: For your age, I would suggest about a 60/40 to 55/45 mix - depending on your risk tolerance and your cash flow.