If you were born in 1960 or later, your full retirement age is 67 for Social Security. For most people born in 1960, the retirement window starts in 2022, when they can begin taking Social Security benefits early, or as late as 2030, when benefits hit their peak. Of course, if your finances permit, you... Liz Weston is a writer at NerdWallet. Email: firstname.lastname@example.org. Twitter: @lizweston. The article When Can I Retire If I Was Born in 1960? originally appeared on NerdWallet.
Jessica Ellerm is a thought leader specializing in Small Business and the Gig Economy and is the CEO and Co-Founder of Zuper, a neowealth disruptor in Australia. Payments processor Adyen has prized eBay away from PayPal and a high profile customer from Square. Is there a changing of the guard afoot in the global fintech […]
The post Payments giants battle it out for the new breed of retail customer appeared first on Daily Fintech. [...]
Daily Fintech brings fresh daily fintech insights from people just like you – senior executives, entrepreneurs & investors working in the fintech revolution. Our weekly summaries give you a look at what you will get by reading the whole article. Bernard Lunn is a Fintech deal-maker, investor, entrepreneur and advisor. He is CEO and Editor […]
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Order this super deal on the Play-Doh Cranky the Octopus while it is available. You can purchase this now and use it as a gift idea later in the year. You can order the Play-Doh Cranky the Octopus for only $8.39. You will be saving 51% because it is usually $16.99. Be sure that you ... Read More about Play-Doh Cranky the Octopus
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Chase has landed another airline as a travel transfer partner. As of Aug. 25, 2019, cardholders with eligible Chase credit cards have the option of transferring their Chase Ultimate Rewards® points into Emirates Skywards miles at a 1:1 ratio. Emirates Skywards is the loyalty program for Emirates and flydubai, two airlines based in Dubai. The addition gives...
Claire Tsosie is a writer at NerdWallet. Email: email@example.com. Twitter: @ideclaire7.
The article Chase Adds Emirates Skywards as Airline Transfer Partner originally appeared on NerdWallet. [...]
Knowing how to plan for retirement is a must-have for any soon-to-be retiree. It’s especially important if you’d like to keep a steady income stream, travel and enjoy your golden years. Having a plan in place will ensure that you’re ready for what’s ahead. If you need help with your own retirement plan, consider The Only Retirement Guide You’ll Ever Need... [...]
imtmphoto / Shutterstock.com Books and websites are filled with lists and quizzes to help you choose a new location for retirement. We’ve got plenty of our own: the best county to retire abroad, the best state for retirees and more. But when it comes to making your own decisions, things get personal. The wrong choice can tarnish your golden years. If the following factors describe your city & [...]
Sometimes the most lucrative sign-up bonuses aren’t available online. We spotted this sign-up bonus for the Southwest Rapid Rewards® Priority Credit Card in the wild world of in-flight reading materials. • Offer: Earn 50,000 points after you spend $2,000 on purchases in the first 3 months your account is open. • Seen: June 15, 2019,...
Meghan Coyle is a writer at NerdWallet. Email: firstname.lastname@example.org.
The article Spotted: A Bigger Southwest Credit Card Bonus for In-Flight Applicants originally appeared on NerdWallet. [...]
Bank of America® and Alaska Airlines recently rolled out new perks for cardholders of the Alaska Airlines Visa Signature® credit card. New and existing cardholders get 20% back on Alaska Airlines in-flight purchases and a 50% discount on lounge day passes when they pay with their Alaska Airlines Visa Signature® credit card. Here’s what you...
Meghan Coyle is a writer at NerdWallet. Email: email@example.com.
The article Alaska Airlines Credit Card Adds Discounts for Lounge Access, In-Flight Purchases originally appeared on NerdWallet. [...]
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The post 8 Things Private Equity Firms Look for in Companies appeared first on ONEtoONE Corporate Finance. [...]
Several programs forgive or repay a portion of your pharmacy school loans if you meet the requirements, such as working in the public sector or in an underserved area for a certain amount of time. A pharmacist loan forgiveness program may be the right option if your career plans align with one of these program’s...
Teddy Nykiel is a writer at NerdWallet. Email: firstname.lastname@example.org. Twitter: @teddynykiel.
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When you’re trying to decide between a Roth IRA vs. 401(k), the personal finance gods often have an easy answer for you: Do both, they decree.
Well, that’s easy if you’re swimming in so much cash that you can go on a retirement savings binge — yet don’t earn enough to disqualify you from contributing to a Roth IRA.
In 2019, someone under age 50 would need to contribute $25,000 to reach the limits for both retirement accounts. Mere chump change, right?
We get it: Most of us don’t have the resources to max out both a Roth IRA and a 401(k).
So when you decide how to allocate your retirement dollars, you have to make tough choices.
What Is a Roth IRA?
A Roth IRA is a type of individual retirement account. That means you, Dear Reader, as an individual, open the account — whether it’s a Roth IRA or a traditional IRA — and decide how to allocate your investments.
What makes a Roth IRA unique compared with traditional IRAs and most 401(k)s is that you fund it with money you’ve already paid taxes on. That means that when you withdraw it, typically once you’ve reached age 59 ½ and have had the account for at least five years, the money is yours tax-free.
Another sweet feature of Roth IRAs: While you generally have to wait to access your earnings, your contributions are yours to take at any time. While we’d never recommend taking money out of a retirement account unless absolutely necessary — and no, a dream wedding or vacation doesn’t count — your Roth IRA contributions can be a source you tap in an emergency.
What Is a 401(k)?
A 401(k) is a retirement account that’s sponsored by an employer. You can’t open a 401(k) on your own.
Unlike a Roth IRA, a traditional 401(k) is tax-deferred. That means you invest part of your paycheck before you’ve paid taxes on it and then pay taxes when you withdraw money in retirement.
A growing number of companies are now offering a Roth 401(k) option, which shares most of the same rules as a traditional 401(k) but is funded like a Roth IRA, with money that’s already been taxed.
What makes a 401(k) — either kind — especially attractive is that many employers will match your contributions — in whole or in part — up to a certain percentage of your earnings.
Whatever the amount, it’s basically free money to pad your retirement savings.
Roth IRA vs. 401(k): The Ultimate Showdown
At this point, the Roth IRA vs. 401(k) question is probably sounding complicated, because they both have some pretty sweet features. Now let’s see how they compare across six categories.
1. Who’s Eligible?
While anyone can open a regular old investment account, not everyone can open a Roth IRA or 401(k). Here are the requirements.
You don’t need a traditional job to contribute to any type of IRA, but you do need taxable income. A salary, wages, tips, bonuses, and freelance and self-employment income all count. If you’re married but don’t work, your spouse can also set up a spousal Roth IRA for you.
While you can fund a traditional IRA no matter how much you earn, a Roth IRA has income limits. (We’ll get to the contribution limits next.)
For single people, or if you’re head of household or married filing separately:
If your income is under $122,000, you can contribute the maximum amount.
If your income is between $122,000 and $136,999, you can contribute an amount that becomes gradually less the higher your income.
If your income is $137,000 or higher, you’re not eligible.
If you’re married filing jointly:
If your combined income is under $193,000, you can contribute the maximum amount.
If your combined income is between $193,000 and $202,999, you can contribute an amount that becomes gradually less the higher your income.
If your income is $203,000 or higher, you’re not eligible.
To contribute to a 401(k), you have to work for an employer that offers a 401(k). However, your employer can exclude you from participating in its 401(k) for certain reasons, such as if you’re under 21 or have worked for the company for less than a year.
Unlike a Roth IRA, a 401(k) has no income limits.
2. How Much Can You Contribute?
Both a Roth IRA and a 401(k) have limits on how much you can contribute — but the limits are much higher for a 401(k).
The maximum contribution for 2019 is $6,000 if you’re under age 50, or $7,000 if you’re 50 or older. The limits are the same for traditional IRAs. Note that if you have both a Roth and traditional IRA, your total contributions to both accounts can’t be higher than $6,000, or $7,000 if you’re over 50.
You can contribute up to $19,000 to your 401(k) if you’re under 50, or $25,000 if you’re 50 or older.
Your employer can contribute up to $37,000 or 100% of your salary, whichever is less. But hold up, money bags: The most common employer match is 50% of your contributions up to 6% of your salary.
Your employer may also make you wait to access the money it’s putting in your account, which is known as vesting. The money you contribute will always be yours, but if you leave your job before the vesting period is up, you may not be able to take the money your employer matched with you.
3. How Do the Tax Breaks Compare?
Taxes are a major factor when you’re considering a Roth IRA vs. 401(k). Here are some key differences in how the accounts are taxed.
If you were hoping to beef up your tax refund, a Roth IRA will leave you disappointed. But remember: Once you withdraw that money at age 59 ½, as long as you’ve had the account for at least five years, it’s all yours tax-free.
Suppose you earn $50,000 and contribute $5,000 to a traditional 401(k). Your taxable income for the year is now $45,000. Because you get the tax break upfront with most 401(k)s, you’ll pay taxes when you withdraw your money.
Because you fund a Roth 401(k) with after-tax dollars, it won’t change your taxable income, but you can withdraw your money tax-free when you retire.
If you expect to pay taxes in a higher bracket once you reach age 59 ½ or if you think tax rates in general will increase, maxing out your Roth IRA is smart because you lock in a lower tax rate.
4. How Do You Invest?
A Roth IRA will give you more flexibility to choose your own investments, but a 401(k) gets points for convenience.
You can open a Roth IRA through a brokerage firm or a robo-advising service. You could set it up in person if you opt for a brokerage with a brick-and-mortar location or by applying online.
You can invest your Roth IRA money however you want — in mutual funds, individual stocks, bonds and annuities.
If you prefer to choose your own investments, you’ll want to open a brokerage account. Consult with a financial adviser if you aren’t sure what investments to choose. If you prefer a set-it-and-forget-it approach, you’ll probably prefer a robo-adviser, which uses super-smart software, instead of humans, to manage your investments.
You can set up automatic transfers from your bank to make investing more convenient.
If your employer offers a 401(k), you may have to sign up for it or you may be automatically enrolled. Most companies let you enroll when you’re hired, though some smaller companies will make you wait as much as a year.
Once you’ve signed up, you’ll have to decide how much to invest and what you want to invest in. Your investment options will be limited compared with your options for a Roth IRA, but you can usually choose from several categories of mutual funds.
You can change the amount you’re contributing and your investment allocations at any time.
Find lower-cost mutual fund options by checking the fee disclosure statement, which your 401(k) plan is required to send you every year.
5. When Can You Withdraw Your Money?
Your retirement accounts aren’t supposed to be a source of quick cash, so the rules around withdrawing money can get complicated.
In general, the [...]
Diego Cervo / Shutterstock.com Dollar stores lure us in with rock-bottom prices. Sometimes you get what you pay for, but often the things they sell are good products at a tremendous discount — a real bargain. Here’s what bargain-shopping experts say are among the best buys at dollar stores. [...]
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Lazy days in the hammock, bucket list trips to Europe, leisurely drives in your sports car.
Wait, you’ve spent more time jettisoning ideas than planning jet-setting excursions?
Despite your best savings efforts — and unexpected expenses — those idyllic retirement plans may have run into the stark reality that you didn’t end up with the nest egg you had planned on. In fact, you’re headed toward your golden years with credit card debt. Employee Benefit Research Institute.
In 1992, 53.8% of families with the head of household ages 55 or older had debt. By 2016, that number had climbed to 68%.
Unfortunately, it’s a nationwide trend, as families just reaching retirement or those recently retired are more likely to have debt — and higher levels of it — than past generations, according to a study by the
Without your former income, you may be starting to worry about making the growing credit card payments on a fixed income, particularly when the average Social Security monthly benefit is $1,461.
Putting a dent — permanently — in credit card debt when you’re retired is possible, and we have seven ways to help pay off your debt so you can enjoy that hammock.
8 Ways to Help Pay Down Credit Card Debt in Retirement
Retirement offers unique opportunities and challenges when you’re paying off debt.
You may have new sources of income, like Social Security or a pension, and new expenses, like increased healthcare costs or fun stuff like travel.
So here are eight post-employment strategies that can help you pay down debt.
1. Make a Budget
Tackling credit card payment as you approach retirement starts by re-examining your budget.
Making changes to your lifestyle and using your free time to save money is a good place to start, according to Joseph Valenti, senior policy advisor with the AARP Public Policy Institute, in Washington, D.C.
“One thing we know from studies of retirement is that people have fewer set costs typically compared to when they were working,” he said. “If they have more time, maybe they will be preparing more meals at home.”
If you need help creating your budget, check out our step-by-step guide to budgeting or learn the basics in our Budgeting 101 Academy course.
Once you know where you stand financially, you can start looking for ways to cut the credit card balance.
2. Negotiate With Credit Card Companies
The best way to know where you stand is to look at the numbers — in this case, the interest rate on your cards. It’s easier to pay down a debt if you’re accumulating less interest on top of the original amount (learn more about compound interest in our Credit Cards 101 Academy course).
Asking your credit card company for a new rate is one option, particularly if you’re ready to commit to living credit card-free going forward, Valenti said.
“In some cases, even if you close that card, they will let you pay it down for little or no interest over a period of time,” Valenti said. “That’s assuming you don’t need the card again.”
When you call the credit card company, the first person you talk to may not be able to help you, even if they think they can. Ask to speak with a manager who handles settlement arrangements.
Check out this post for more tips on negotiating credit card debt.
And if you’re too overwhelmed to deal with the creditors themselves, consider reaching out to a credit counselor, who can help you organize your accounts and may negotiate a lower interest rate for you.
3. Transfer Your Balance to a New Card
Loyalty isn’t necessarily rewarding. If you’ve had the same card for years, transferring your balance to a new card could give you a lower interest rate than you current provider can offer. Reap the most benefits by paying down as much debt as you can during the promotional period.
When you’re considering which card to go with, compare this information for all offers:
Fees (typically at least $5 to $10 or 3% to 5% of the balance)
Interest (look for 0%)
Duration of the promotional APR (usually 12 to 18 months)
Credit score requirements (generally good or excellent)
Credit limits (make sure it’s more than your current balance)
Here’s what else to consider before transferring a balance.
4. Cut (Former) Work-Related Expenses
Still hanging on to that gym membership, even though you only signed up because it was close to your office?
By reviewing your monthly, periodic and annual budgets, you may discover work-related expenses that have become so habitual you’ve forgotten about them, according to Valenti, who gave transportation, clothing and cell phone expenses as examples.
Cancel subscriptions to professional associations and other automatic billings associated with work (an ink cartridge subscription, for instance) to avoid unwanted surprises at the end of the month. If you have trouble keeping up with recurring payments, try using a subscription tracking tool.
And if you still enjoy hitting the gym, cut costs by asking about senior discounts — AARP has many for its members.
5. Set Up Self-Imposed Limits
Before retirement, those little expenses that broke your budget one month may have been easier to cushion with your regular paycheck. And remembering them all may have been a little easier a few years ago.
To help you track the expenses and avoid unwanted surprises at the end of the month, Valenti suggested setting up alerts from your bank or credit card provider.
“It’s one thing to find out instantly through a text that you’ve reached a limit — even if it’s a self-imposed limit — as opposed to a statement that’s going to shock you at the end of a cycle,” Valenti said.
6. Ask for Professional (Financial) Help
If you’re overwhelmed by managing your day-to-day finances or fear forgetting to pay bills and sinking further in debt, consider hiring a daily money manager.
In addition to tracking bills, daily money managers can help you with balancing your checkbook, collecting tax documents, dealing with medical bills and even avoiding scams.
Your bank must protect two months’ worth of Social Security benefits from a credit card collector’s garnishment. If your account has more than that, the bank can garnish or freeze the extra money.
Depending on where you live, a daily money manager may charge $75 to $150 an hour. However, the American Association of Daily Money Managers provides a list of state agencies that provide services to low-income and disabled seniors.
7. Make Extra Money on Your Empty Nest
Now that the kids have moved out (hopefully), you’re stuck with that big, empty house.
One option for making money is to sell it and downsize to a smaller place, then use the profits to pay off credit card debt. But moving still requires an outlay of cash and can add additional stress as you’re adjusting to retired life.
If you’re seeking something a little less drastic, think about new ways to use your house — and its contents — to earn some cash today, advises Moira Somers, a wealth psychologist based in Winnipeg, Canada, and the author of “Advice That Sticks: How to Give Financial Advice That People Will Follow.”
“Look at the resources you have and say, ‘Could this turn into money somehow?’” she said. “One of the cool things about this period in our life is that there are sometimes ways we can make extra money that wouldn’t have been possible even 10 years ago — the whole AirBnb thing, for example.”
If you’re looking to make some money on your extra bedrooms, check out our post about how to become an Airbnb host.
And don’t forget about all those buried treasures in the attic. (Did you know that Urban Outfitters sells five-packs of random VHS tapes for $40? Yeah. That’s a thing.)
One of the cool things about this period in our life is that there are sometimes ways we can make extra money that wouldn’t have been possible even 10 years ago.
Somers notes ta [...]
Millions of Americans depend on Social Security as the financial foundation of their retirement. Yet, nearly 70% percent of older people cannot correctly identify the age at which they are eligible for full retirement benefits. That finding — courtesy of a recent survey by the Nationwide Retirement Institute — has profound implications for how well people will live in retirement. [...]
It marks the 12 consecutive year in which the large wireless operator has hiked its dividend. [...]