retirement

Retirement moves which you should start taking during your 20s and 30s

Retirement moves

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Though you might be decades away from quitting your job forever, planning your retirement is everything about taking the proper start. During each stage of your journey towards retirement, you will require knowing about the most vital money moves that you should make, the target for savings that you should set an aim for and the ideal way in which you can mix and create the best investment portfolio.

These change when you reach your peak years of earning and when you reach the pre-retirement red zone. If you’re someone who is all set to take the best money moves while you’re in your 20s and 30s, we will offer you some of the best techniques that you should follow in order to stay debt free post retirement. Check them out.

#1: Collect the entire company match for you 401(k)

In case you’re beginning to save money at the age of 35, you will require putting aside 17% of the income for 30 years so that you can retire properly at the age of 65, as per researches done by the American College. You start at the age of 30 and then your target will decrease by 12%. If you begin at 25, the target will drop to 8.8% in a year till you reach the age of 65. Usually, you should save 6% to earn the entire amount. If you think that’s too much, you can start with 3%.

#2: Demand $5000 more in your salary

The amount that you earn during the initial 10 years of your job will always have a long-lasting impact on the wealth that you accumulate. As per studies done by the Federal Reserve Bank of New York, the typical wage of the worker grows between the age of 25 and 35. So, if you can get a boost in your pay of $5000 when you are of the age of 25, this can sum up to $635,000 more in the earnings that you make over the lifetime. You should negotiate irrespective of whether you’re grabbing a job offer or you’re looking for a raise. It is sad enough to note that just 35% of the millennials have ever asked for a raise.

#3: Be smart about paying low investment costs

It is always a smart and a wise decision to keep investing costs down. When you’re still young, you should lock in on the low-fund expenses and this is also a rewarding experience. In case you invest $1000 in a month in a retirement fund for long 30 years, you will end up having $762,000 keeping in mind the average annual returns and mutual fund fees.



#4: Try to know yourself in the future

You should picture yourself in the future and this will give you a clear idea of your savings mindset. There are several kiosks which allow workers to get an idea of how you can look when you’re 65, the number of people who enrolled in a retirement plan rose to 65% as compared to the previous year.

Therefore, whenever you’re worried about the ways in which you can systematically save for your retirement, you can take into account the above mentioned strategies and techniques.


Capitalize on your retirement sweet spot years – What steps to take

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While you’re heading towards your retirement, there are high chances that you’re also stepping into a special time to do some really worthy tax planning. What is the sweet spot? It is the stretch of time in between when you retire from your full time job and when you begin to take the minimum distributions from the 401(k) plan or the traditional IRA account by the age of 70 and half.

Given the fact that full-time work is behind you and the mandated distributions are lying in front of you, this is also the time when you seem to be included within the lower tax bracket. This is why it is the best time to take a look at whether or not the strategies can work well along with the taxes. You will definitely get ways in which you can seek benefits of low rates on taxes but it is vital for you to ensure that any move that you make are in line with you personal retirement goals. How are you supposed to monetize on your lower tax bracket? Here are few ways.

Adopt the ROTH way

How about converting your conventional IRA or your traditional 401(k) plan into a Roth IRA? Though you will still be liable to pay taxes on the amount which you converted, yet the rate will definitely be lower. As against converting them, if you left these assets in a conventional 401(k) or IRA plan and not do anything with them till you started taking the minimum distributions, such withdrawals could possibly push you within an increased tax bracket. This is why. The tax rate that would be applicable to the assets would definitely be higher. If you withdraw an amount from your Roth IRA, this is tax-free and there aren’t any minimum distributions which come with them. In case you convert, you will be locked in.

Sell off few winning financial assets

In case you have any asset like stocks which are in your taxable account, it is rather an advisable option to look at whether or not it would make sense to sell them off so that you could be included in a lower tax bracket. This is one of the best opportunities through which you can monetize on the gains on which you’ve been sitting. The rate of tax on long-term capital gains is entirely based on the adjusted gross income. For instance, in case a married couple has income that’s under $77,200, they won’t have to pay any taxes on the gains. You also need to be aware that the people who fall under the category of high earners like married couples with adjusted gross income which is more than $250,000 are usually subject to an added 3.8% of investment income.



Employee stock options should be determined

For all the people who are heading towards their golden years with certain employee stock options, they can exercise such options at their lower tax bracket which could possibly be a smart option. What if the value of the stock is high and the exercise price is low, you will get too many in-built gains. You could use lower tax to exercise few of the other options which you have at hand.

Therefore, if you wish to maximize those retirement sweet spot years, you should take into account the above mentioned options and lead your golden years in peace.


3 Signs that you’re ready to retire in 2018 – How to know it’s the right time

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There are many who tend to time their retirement and try to retire in such a manner that they reach a definite milestone like ‘complete 35 years on job’ or ‘saved $1million’ or ‘reached 65 years of age’. Little do they realise that more than reaching any milestone, one has to be psychologically and financially ready for a retirement. When you were tied up with deadlines, when you had to commute through a large distance and when you didn’t have time to check your pending work e-mails, all you may have been thinking about in your mind is the perfect time for retiring from work.

But how are you supposed to know which is the right time for retirement? Who will tell you about the most common signs? Well, we’re here to help you with the few signs that will prompt you about the best time to retire from your 10-5 cubicle and embrace a life of freedom.

Sign #1: You are debt free and you’ve repaid all your high interest debts

The financial professionals usually don’t agree on the merits of paying off their mortgage before they retire. For majority of the retirees, the emotional advantages of repaying their mortgage can outshine the fiscal benefits of staying in debt. Retirees can still reap benefit from mortgage-interest deduction and grow the nest egg by investing dollars on the money they would have utilized to pay off the principal. There is broad acceptance of the fact that people should first repay their high interest credit card debt before they take care of anything else. So, if you find yourself debt free, you can think of retiring.

Sign #2: You have too many activities to fill up your day

When you’re planning to retire, you know what you’re retiring from but are you sure about what you’re retiring to? You’ll require few activities to fill up your days and whatever plans you may have, they should have a definite purpose in your life. As long as you were employed, it gave you an identity and a status that you enjoyed but when you step away from your career, this can lead to an identity loss. If you want to combat these, you can watch out for opportunities like volunteering which can give you a sense of recognition and belonging with the organization. Also consider the impact of your retirement on your spouse as they might find it uncomfortable when the bread-earning member suddenly starts staying around all the time.



Sign #3: You’ve built a strong financial safe

There are few advisers who say that amalgamating a huge amount like $1.5 million is much less vital than deciding how much you’re going to spend on your retirement. Take into account your annual expenses and multiply the amount by 25. In case you spend $75,000 in an entire year, you will then need $1.88 million to live on; keeping mind you will live for 25 years of retirement. From the total amount, subtract what you get from pensions and Social Security and the remaining amount is what you would have to fund on your own.

Therefore, do you think you’ve faced the above mentioned 3 signs in your life? If you’ve repaid all your high interest debts but you still didn’t save enough to retire, wait for the right time and keep saving religiously.


Everything you Didn’t Know about Retirement Taxes

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Nobody has actually told you this – but do be duly informed about the fact that you’ll be paying up more “complicated” taxes during your retirement than what you are paying up now – while you’re working. So, anyone who’s on the verge of retiring should consider a thorough perusal of this write-up – because, here, we’ll explore one of the little-known nuances of retirement – i.e. taxes. Documented below are details.

How Much do you Know about Retirement Taxes?

The key is to understand what is taxed while you’re retired and what is not! Do let us tell you that when it comes to money – a couple of “loose” statements don’t really help. For instance, how many of you know that Social Security checks are not taxed? The answer is many. However, on further education, you will actually come to know that a lot depends on your income! While most of the retirement withdrawals involve Federal Taxes—the amount of tax that you will have to shell out depends on where you live. The tax rates on your investment will vary widely as well.

Taxes as Per States

There are 13 states, for instance, where residents have to pay State Income Tax as well! Kansas, Colorado, Missouri, Connecticut, Montana, Nebraska, New Mexico, Vermont, North Dakota, West Virginia, Rhode Island, Utah and Minnesota are among these states. The seven states that don’t charge you State Income Tax are Florida, Nevada, Alaska, South Dakota, Washington, Texas and Wyoming.

However, if you’re staying either in Tennessee or New Hampshire you will have to pay taxes only on the interest and dividends. So, retirement income might as well be exempt or partly exempt or just offset or just fully taxable.

What Should you Know about Social Security Taxes?

As far as your Social Security is concerned, it’s your combined income which determines whether at all it will be taxed or not. Your combined income is the result of your adjusted gross income along with any non-taxable interest and around half of your Social Security benefit. For instance, if your Combine Income is below $25,000 and you’re single then you will not really be taxed. If your combined income is something around $25,000 – $34,000 then you might as well have to pay taxes on around half of your taxes. If your combined income exceeds $34,000 then around 85% of your benefits are taxable.

Retirement taxes also entail estate taxes. Yes! There are around 12 states and the District of Columbia that also end up levying estate taxes. Maine, Hawaii and District of Columbia use the Federal exemption amount. However, if you’re in Massachusetts or Oregon, your estate worth $ 1 million or more might as well be taxed.


Don’t Make These Mistakes When Planning For Retirement

Don’t Make These Mistakes When Planning For Retirement

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Ready to start planning for your retirement? Even if you are only just in your twenties or thirties, this is certainly something that should be on your mind in order for you to put aside plenty of money for a comfortable retirement.

Think saving for retirement is as simple as paying into a pension and making a few other key investments? If only it were that easy! There are actually a few pitfalls that many young people fall into when planning for their later years, and it is incredibly important that you try not to get stuck in these yourself. You will certainly manage that as long as you try to avoid these very common mistakes!

Getting Organized Straight Away

One of the most important things about saving for retirement is that you need to start as soon as you start earning. The longer you leave things, the smaller your retirement pot of cash will be by the time you leave work. So, don’t make the mistake of continually putting this off or else you will get a nasty surprise when you retire! It doesn’t matter if you can’t afford to save a huge amount each month – every little helps!

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Forgetting About Property

Lots of people put some of their retirement cash into savings, such as stocks and shares. However, it’s also necessary to consider investing in property as well. This is a very safe investment as there isn’t too much chance of the value of your property fluctuating. There are various ways you can use property to boost your retirement savings. First of all, you could sell your house once you hit retirement age for a nice lump sum. Or, you might want to get a second property to rent out for a steady income that can be put towards your savings.

Relying On Your Credit Card

So, you’ve got a credit card which makes it a little easier for you to get to the end of the month and your next paycheck. But do you think you rely on your credit card a little too much? If you do, it’s time to ease back from using it. If you don’t, you might find that your retirement savings suffer. That’s because, you will have to focus on paying back your credit card debt rather than on your retirement savings. And, as a result, you won’t have quite as much to add to your retirement pot.

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Raiding Your Savings

One of the worst things you can do is raid your retirement savings. Ideally, you should set up an extra pot of savings that you aren’t keeping for your retirement – these are there for you to raid whenever you see fit. If you do need to use some savings and only have your retirement ones, you should see if you can get money from elsewhere. Perhaps a family member would be able to help you out? Or, if possible, why not take on some overtime at work? Anything other than raiding your savings!

Be sure to not make these mistakes!


A Financial Survival Guide To Retirement

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People are living longer – and state pensions are getting smaller. Retirement ought to be the time in your life where you finally have the ultimate freedom to do as you desire. Planning ahead and knowing your rights as a retiree can all ensure you aren’t left restricted by your finances. Here are just a few ways to make and save money during retirement.

Boosting your pension

You qualify for a state pension at the age of 65 – although this age is rising. You can defer your pension, which allows you to earn more. In fact, for every nine weeks that you defer, your future weekly allowance goes up by 1%. Alternatively, you can defer and then be paid everything you owe plus 2% interest in one big lump sum (after this you will continue to receive regular weekly payments).

If you’re not at retirement age yet, you may be able to take some last minute measures to boost it. If you’ve missed any national insurance payments over the years, you may be able to compensate these off with a one-off payment, which could boost your pension by thousands. You can also make extra contributions with the help of your employer at any time, certain to further boost your retirement earnings.

Creating an emergency fund

Some people may opt to save up an emergency fund for retirement. This can help pay for medical costs and other large payments that can strike in latter years. Paying small contributions each week could cover this and could allow you to raise your deductibles on insurance schemes such as medical insurance, life insurance, property insurance and vehicle insurance, lowering your premiums.

Where to retire?

Many people choose to pursue their dreams of moving away in retirement. Where you retire can have a big effect on your finances. Those willing to sell their current home may be able to move to a less expensive home and then have extra funds to play with which can be used to live out retirement in a little more luxury.

Downsizing is a popular option. If the kids have moved out – or in more tragic circumstances a spouse has died – there may not be any physical need for your current home. Selling up and moving to somewhere smaller could give you a lot of money to spend at your leisure. Excess possessions can be kept in self-storage if you don’t want to part with them.

Another option may simply be to move to a cheaper location. Those living in or near cities may be able to move somewhere more rural and make a huge profit when selling up. Without the needs to easily commute to work, location becomes less of a barrier.

For those that have grown an attachment to their current home and don’t want to move, there are still ways of financially bettering oneself. Many people that have been living in their current home for years may choose to release the equity in their property. Another option may be to rent a room out to a lodger.

Retirement bonuses and perks

There are all kinds of bonuses and perks that accompany retirement. Making use of these could cut costs from your everyday living expenses.

Free bus travel is one of the major perks of getting older. If you drive and own a car, you may be able to cut costs of fuel by using your vehicle less often and taking advantage of your local bus service. It can also come in use when travelling elsewhere in the country, allowing you to get around major cities for free.

Those that are avid TV watchers or like a good film can also get bonuses. At the age of 75, you can apply for a free TV license. Many discounts for theatre and cinema tickets can also be found online available only to senior citizens (you may be able to get some theatre tickets for a third of the price).

As for medical costs, you may be eligible for free prescriptions and sight tests over the age of 60. Opticians and pharmacies may also often provide massive discounts, worth taking advantage of.

Finally you may be able to save money on studies. There are all kinds of bursaries, award funds, grants and free courses open to mature students. It’s never too late to learn new things.

Are you eligible for benefits?

Billions in benefits go unclaimed every year by pensioners. Pension credit may be available to those under a certain income, giving you more to live on during retirement. Meanwhile, if you’re a carer looking after someone else, you may also be entitled to carer’s credit.
Similarly, for those born before 1953, winter fuel payments may be an option. This could allow you a grant to pay for gas and electricity when the cold winter months set in, although often requires you to be under a certain income.

Working through retirement

Not everyone chooses to quit work in retirement. Whether you go part-time or reduce your responsibilities, you may be able to loosen the burden of your current job whilst still earning some extra income. Some people may choose to work closer to home to cut out commuting costs, whether it be doing a couple shifts at a local shop or helping out with the community in some way.

There are also many methods of working from home thanks to the wonders of the internet – you could put your passion into a creative hobby such as carpentry, knitting, pottery or art and then sell your work online. Alternatively, for those that aren’t as web savvy, there are plenty of local opportunities to lend your services – you may be able to grow fruit or vegetables and sell them locally, or even write a book and see if you can get it published. By having the extra time to invest in your hobbies and the ability to work at your own rate, you could be able to make money doing what you love.

Should you plan your own funeral?

Death is costly – whilst it may be a gloomy to have to pay for, many people will choose to put some money aside or spend ahead in order to cut the cost for their children and relatives.
One method is life insurance. There are now some companies such as lifeinsuranceforseniorsover80.com that even provide life insurance for those in their eighties. Making small regular payments could provide a large payout when you die that could pay for funeral costs and inheritance tax.

Another option is to pre-plan your own funeral. As with every services, rates are constantly going up. By paying now, you could save huge costs compared to rates further down the line and be eligible for various discounts.

It also pays to deal with the outcome of your possessions beforehand. Writing up a will with the help of a solicitor could prevent all kinds of legal costs for your loved ones when inheriting your belongings. You should also check how much inheritance tax your loved ones may be likely to pay on your property. The government assesses the worth of your property when you die – a tax of 40% of its value could have to be paid by whoever inherits your home.

Fortunately there are inheritance tax planning services such as wealthinvestment.investec.co.uk that could help lower these costs – well worth looking into to ensure your loved ones get what they deserve.


Retirement In The Future Could Be A Disaster

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When you retire, it’s the end of your fixed income. This means you will have to survive on whatever you have saved over the years or whatever the government provides. But there are a few issues here. First, it’s fair to say that the money people have for retirement from the government could run out as social security is being stretched to its limit with a growing elderly population. Second, people aren’t saving as much as they should and when they are they dip into their pension pot long before they retire. Need a home renovation? Crack open the pension pot? Want a luxury holiday? There’s more than enough money in the pension fund. This is a dangerous way to live as it can leave people with nothing when they finally do retire. So, how can you make sure that your finances are still strong when you do finally throw in the towel.

Invest A Little Now, Save A Lot In The Future

You should be looking at investments as early as your twenties. It’s important that you do think about how to make your money fund grow, no matter how small it might be. One of the best investments to consider would be penny stocks. Penny stocks are great because while they are cheap to buy, they also have massive potential for the future. You do need to know which company stocks to invest in, though. To find out about that, you should think about speaking to a stock broker.

Another possibility for a simple yet effective investment would be to ask your employer about their pension scheme. They should have one, and if they don’t, you can encourage them to set one up. An employer controlled pension pot might be the best option to ensure you can retire comfortably twenty or thirty years from now.

Keep Working

You can continue working after you retire. There’s no set rule that says you need to stop working completely. After the 2008 crash, a lot of people who were retired went back to work full time to right their financial situation. But that’s not what we’re suggesting. Instead, you can think about completing side hustles in your spare time. You can use these jobs to earn yourself a little extra cash and keep your financial situation healthy. This one of the extra ways to make money in retirement. An example of this would be working as a tutor. Tutors can make quite a comfortable part time income with more than enough money to guarantee pleasant years after you retire.

Get On That Property Ladder

Finally, you should think about buying some property as this is one of the easiest ways to keep your money safe. When you own property, you can invest in it and improve it, increasing the value. As the value increases, you’ll find that you’re sitting on a nice pot of cash that you can use at any time. In fact, if you have a large enough property this can amount to the money you need for your pension. Sell it, move to a smaller home and you can use the money you make in the sale to get by.


Retirement trends seen among baby boomers – Bracing yourself against all odds

You seem to be a baby boomer when you were born between 1946 and 1964 which means you’re now in between the age of 51-70. There’s good news for this entire gang of baby boomers as you’re probably going to live longer and not only that you will probably also lead a better life than your grandparents and your great-grandparents. In other words, you need to arm yourself to face issues and decisions which your grandparents and parents never faced before. Did you save enough to finance yourself and your spouse during your retired life? Were you someone who has been saving throughout his life both in his workplace retirement fund and emergency fund? Or are you preparing yourself for a financial doom once you’re retired?

Baby boomers are the unusually large generation which is soon to enter into their retirement and reinvent what it actually means to be retired. The trend of retirement is changing here in America and if you want to see the drastic changes of the present generation than what they saw before, here are some retirement trends to check out in 2017.

Higher life expectancy rate: All those men who are going to turn 65 in 2030 can definitely predict 6 years of more life expectancy rate than those who turned 65 in 1970, as per the Urban Institute research of Social Security Administration information. At the same time, the life expectancy rate among women at the age of 65 increased by 4 years throughout the same period of time. Previously, there was enough gap in between 2 genders with respect to longevity but now this gap is gradually shrinking. But something that needs to be understood is that longer life expectancy rate will definitely mean that you have to save even more for your retirement years since you may live for a longer time now.

Improved health conditions: Another new trend that has been noticed is that majority of the people are not only living longer but they are also enjoying perfect health conditions during their lifetime. There has been a steep fall in the proportion of adults who reported poor health after aging and this clearly implies that health conditions have improved among the Americans. With better health, you can also curb your out-of-pocket medical expenses and you may even see a rise in income as you can still keep on working even after reaching old age. However, one disease you should protect yourself from is diabetes as this is eating up majority of the Americans.

Retirement planning, the DIY way: Majority of the baby boomers will rely heavily on the savings which they have racked on their workplace funds like 401(k) or Roth IRAs rather than their traditional pension plan. The conventional pension plans constitute over 30% of adults who were born in 1940s but these plans are expected to cover only 10% of the adults who were born in 1980s. Therefore it seems that 401(k) accounts are pretty more generous and huge and with the perfect kind of nest egg and by taking the right steps to adjust your investment portfolio, you can save a considerably large amount. Avoid spending, invest wisely and reduce fees as much as possible.

Therefore, if you’re keen enough on spending a hazard-free retired life, you need to be careful about the ongoing trends in the industry. In case you’re a baby boomer, make sure you follow the trends mentioned above and accordingly adjust your finances so that you don’t make a wrong financial decision for your long run.

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Millions freak over retirement but don’t take any noteworthy steps – Word of caution

Currently the young workers can’t even dream of retiring at the age of 40-50 years. Prospect of weak investment returns and extended mortality rates probably mean that millennials will require saving money as compared to their parents. The sooner they start saving, the easier it will be for them to accumulate nest egg. Yet, what the millennials think is that it’s tough to sacrifice their present for something that will only happen until the 2060s.

Retirement is the biggest priority for the millennials; at least they say so when they’re asked. As per a recent survey, retirement was by far the top most concern of all age groups. Millennials even give higher priority to saving for retirement, much ahead of saving for student loans, job security and credit card debt.

If millennials are so worried, why don’t they do something about it?

Yes, this is the million-dollar question which arises after seeing the way in which millennials simply waste their time in doing nothing about saving for retirement. Do they need a hard nudge to make the best financial decisions? Millennials don’t seem to be seriously thinking about retirement. There are numerous companies which run 401(k) style plans for around 1.9 million people. But when it comes to getting started, filling out all the documents to enroll yourself in a retirement plan of your employer becomes a big obstacle. It is indeed shocking enough to see that when the employees are left to their own, only 30% of the young adults end up signing themselves for 401(k)s.

There are many companies which have automatically signed up workers for their 401(k)s. Employees are allowed to deny participating but the main idea is that very few of them will even bother about saving money. Among the workers aged between 20-something, 85% of them go with being auto-enrolled in a retirement plan. Young workers contribute a very small percentage of their salaries to their workplace retirement funds. This is a good sign as workers who save early don’t require saving as much as their older workers. Young workers typically pay less than their elders and usually have a tough time in finding money that they can put away.

Are some millennials taking smarter decisions than the old savers?

There are some areas in which millennials are taking smarter steps than their older counterparts. For instance, workers under the age of 40 are more likely using Roth IRA and Roth 401(k) accounts, as per recent survey. Roth accounts take away after-tax money and hence they don’t offer similar immediate tax break as conventional accounts which take away pre-tax money. Investment profits in a Roth aren’t usually taxed and on the other hand, retirees need to pay income taxes when they withdraw money from their 401(k) accounts.

Only 7.7% of all contributions from workers went to Roth accounts in 2015 but that figure is up by 45% within just 2 years. Employees in their 20s make 8.2% of contribution to Roth options. Moreover millennials are less likely to raid their 401(k) accounts as they have different other kinds of savings as well. Workers above the age of 40 have taken out more 401(k) loans and young workers borrow less often.

The younger workers are usually more lured to cash out their 401(k) balances when they switch from one job to another. Although early withdrawals are attached with a 10% penalty, yet they feel like withdrawing money. However, now it is seen that more and more workers go through the obstacles of rolling balances into new 401(k)s and IRAs. The share of 20-something participants who cash out their 401(k) is already down by 10% since the last 2 years.

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New changes to the retirement account rules to know of – Retire debt-free

Did you know that contributing a portion of your income to retirement accounts can help you qualify for tax breaks and sometimes even for employer contributions? Another new and lucrative perk which retirement accounts like 401(k) or IRA will now have is a legal necessity for investment advice which isn’t biased. Apart from this one, there have been some more tweaks and changes to retirement account which is definitely going to have an impact on the people who are eligible to contribute and how big or huge their tax savings are going to be. If you’re a baby boomer, you should know about the recent changes that may affect your tax savings. Check them out.

Change #1: Legal unbiased advice in your best interest

This new rule is all set to start in April 2017 and according to it, a financial professional who makes recommendations on investment about your IRA or 401(k) is legally obligated to offer you advice in your best interests. He should recommend you the funds which provide highest compensation to the financial advisor. This is a part of the fiduciary level of care where the advisor is asked to act as according to the best interest of the client. However, this new rule will only be applicable to retirement account and advice on any other kinds of tax or financial issues won’t be held under this rule.

Change #2: Charitable contributions on IRA

Withdrawing money from the conventional IRA account is necessary after attaining the age of 70 and half and income tax remains due on every single contribution. But in case you donate a portion or the entire part of the distribution to a qualified charity organization and you’ve crossed 70 and half years of age, you won’t be liable to pay taxes on this transaction. Such IRA tax-free charity contributions have always been a temporary feature of IRAs since the year 2006 but it was recently that it was made permanent.

Change #3: Income limits of Roth IRA become higher

You can easily earn an added $1000 in the year 2016 and yet save for retirement. The eligibility of Roth IRA will phase out for people whose gross income is between $117,000 and $132,000. Usually it is a rule that Roth deposits are done with after-tax dollars but the earnings that you make every year aren’t taxes. Withdrawing money after attaining 59 and half years of age from Roth accounts which are more than 5 years old are also considered as tax free. Though it won’t help you with the present tax picture but it will definitely assist you in the long run.

Change #4: The new retirement account, myRA

There’s a new retirement account, the myRA which was launched throughout the nation in November, 2015. This new account has been targeted at people who don’t have access to 401(k) plans. Individuals who want to save can contribute $5500 per annum to this new Roth account and if they’re more than 50 years of age, the amount can be $6500. There’s only 1 investment option, a variable interest paying Treasury savings bond. However, as soon as you hit the maximum balance that you can maintain on your myRA account ($15,000) or if the account turns more than 30 years old, the money will automatically be transferred to the private sector Roth IRA.

Hence, if you’re a retirement investor, you need to be up to date with the changes that are happening within the industry. Take into account the above mentioned changes brought about to the retirement accounts and measure your steps according to the rules.

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