Posts by SmartAsset Team
Retirement Taxes
I’m 63 With $1 Million in an IRA. Should I Convert $100,000 a Year to a Roth to Avoid RMDs?
If you’re 63 years old with $1 million in a traditional IRA, you may be wondering whether converting $100,000 per year to a Roth IRA makes sense. Doing so could help you avoid required minimum distributions (RMDs) later on. This strategy may reduce your future tax burden and give you more control over your retirement… read more…
Legislation & Policy
Trump 401(k): Investment Options to Include Alternative Assets
President Donald Trump is paving the way for a significant shift in retirement investing by permitting 401(k) plans to include alternative investments like private equity, real estate and digital assets. Trump’s recent executive order aims to provide 401(k) participants with greater access to diversified investment opportunities, potentially enhancing retirement outcomes. However, these alternative investments come… read more…
Derivatives Markets
Futures vs. Forex: Key Differences and Market Examples
Futures and forex markets are both popular options for investors looking to trade financial assets, but they differ in key ways. Futures involve standardized contracts to buy or sell assets at a set price on a future date, while forex focuses on the exchange of currencies. Each market offers unique opportunities, risk factors and trading… read more…
Retirement Planning
Can a Couple Retire With $1 Million?
Retiring with $1 million is a common goal for couples, but how long it lasts depends on where they live and the lifestyle they want. For some, low housing costs, manageable healthcare expenses, and reliable Social Security benefits can help make $1 million last. Investment returns also influence how far the money will go. Others… read more…
Tax Planning
Do Capital Gains Count as Income? Tax Definition and Examples
Capital gains count as taxable income and can affect your tax bracket, deductions and rates. They are taxed as short-term or long-term gains depending on how long you owned the asset and your total income. Short-term gains are taxed at regular income rates, while long-term gains often have lower rates. A financial advisor can help… read more…
Trusts
Can You Set up a Trust Without an Attorney?
With today’s rising costs, some people consider setting up a trust without an attorney. But while online tools or DIY templates can work for simple revocable living trusts, more complex estates could benefit from professional legal help. Doing this could help you avoid potential mistakes that might delay distributions or create legal disputes among beneficiaries.… read more…
Trusts
Trustee vs. Beneficiary vs. Grantor: Estate Planning Guide
When a trust is created, three distinct roles define how it functions: the grantor, the trustee and the beneficiary. The grantor sets up the trust and contributes the assets. The trustee manages those assets according to the trust’s terms. The beneficiary receives the benefits from the trust, either through income, principal or both. Understanding how… read more…
Pensions & Other Retirement Accounts
How to Collect a Pension From a Former Employer
Many people leave behind pension benefits when they change jobs, and claiming them later can feel complicated. Fortunately, with the right information and preparation, collecting your pension is usually straightforward. The process involves confirming your eligibility, tracking down your plan if it has changed hands and selecting the best payout option for your needs. Knowing… read more…
Tax Planning
Can You Deduct Mortgage Interest on a Second Home?
Under the One Big Beautiful Bill Act of 2025, the mortgage interest deduction limits established by the Tax Cuts and Jobs Act were made permanent. For loans taken out after December 15, 2017, taxpayers may deduct interest on up to $750,000 of combined mortgage debt across primary and secondary residences. Mortgages originated prior to that date… read more…
Tax Planning
Do You Have to Pay Taxes on Tips? Trump Tax Changes
Traditionally, all tip income was taxable, and workers had to report any cash tips exceeding $20 per month to their employer. But in 2025, the One Big Beautiful Bill introduced temporary exemptions: individuals can deduct up to $25,000 in tips from their income if they meet all the qualifications (though tips will still be subject… read more…
Tax Filing
SALT Write-Offs: Trump Tax Changes and Requirements
The state and local tax (SALT) deduction lets taxpayers write off certain state and local taxes from their federal taxable income. Under the One Big Beautiful Bill Act, signed into law by President Trump on July 4, 2025, the annual SALT write-off cap was raised from $10,000 to $40,000 for tax years 2025 through 2029.… read more…
401(k)
How Much Should I Have in My 401(k) at 25?
Figuring out how much you should have in your 401(k) at 25 depends on your income, savings rate and when you started contributing. A common benchmark from financial planners is to aim for one year’s worth of salary saved by age 30, which could translate to about 50% of your annual income by 25. Factors… read more…
Retirement Planning
I Have $500k in a Roth IRA and Will Receive $3,000 Monthly From Social Security. Can I Retire at 70?
Waiting until age 70 to retire can offer you some clear financial advantages, including maximum Social Security payments and more time for your investments to grow. But even with those benefits and a half-million-dollar nest egg, determining whether you have enough to retire at age 70 will depend on your lifestyle, health, investment strategy and… read more…
Retirement Planning
These Are Americans’ Top Questions About Retirement. Do You Know the Answers?
Many Americans are unsure how to approach retirement planning, and new data helps explain why. In Northwestern Mutual’s 2025 Planning & Progress Study,1 43% of adults said that one of their top questions is how much money they’ll need to retire comfortably. Others worry about the future of Social Security, inflation during retirement and the… read more…
401(k)
Cash Balance Plan vs. 401(k): Key Differences for Retirement
Cash balance plans and 401(k)s are both employer-sponsored retirement options, but they work differently. A cash balance plan is a type of pension that promises a set payout at retirement based on a formula, while a 401(k) depends on how much you contribute and how your investments perform. The choice between both affects your savings… read more…
Retirement Taxes
Provisional Income: What Is It and How Is It Taxed?
Your Social Security benefits may be taxable depending on your provisional income. This is calculated by adding your adjusted gross income (AGI), any tax-exempt interest and half of your Social Security benefits. The IRS compares this total to set income limits to decide if 0%, up to 50%, or up to 85% of your benefits… read more…
Medicaid & Long-Term Care
Trump Obamacare Changes: Requirements and Coverage
Under the One Big Beautiful Act, sweeping reductions to Medicaid and modifications to Affordable Care Act enrollment rules have been enacted. The alterations promise to reshape federal healthcare requirements and change who qualifies for coverage. These shifts could impact millions of Americans, especially those in affordable care markets. Here’s what’s changing and how it may… read more…
Tax Planning
Can You Deduct Charitable Donations Without Itemizing Taxes?
For many taxpayers, the standard deduction makes it unnecessary to itemize. However, this also limits which deductions you can claim, including donations to charity. Recent tax changes have affected claiming and qualifying for charitable deductions if you don’t itemize your return. Knowing the current rules can help you plan your donations and potentially reduce your… read more…
Financial Planning
Savings Account vs. CD vs. Money Market: Pros and Cons
Savings accounts, certificates of deposit (CDs) and money market accounts serve different purposes for managing cash. Savings accounts offer flexibility and quick access to funds, making them useful for emergency savings or short-term needs. CDs typically pay higher interest but require you to keep your money locked in for a set period, with penalties for… read more…
Tax Planning
HSA vs. FSA vs. HRA: Tax Benefits and Requirements
Health savings accounts (HSAs), flexible spending accounts (FSAs) and health reimbursement arrangements (HRAs) offer tax benefits. But each has its own rules about who can contribute, how funds are used, who owns the account and whether unused money can carry over to the next year. Some accounts are only offered through employers, while others can… read more…
401(k)
Roth 401(k) vs. After-Tax 401(k) Contributions
Contributions to Roth 401(k) accounts and after-tax contributions to regular 401(k) accounts both involve after-tax dollars, but they follow different tax and distribution rules. Roth 401(k) contributions grow tax-free and allow tax-free withdrawals of both contributions and earnings in retirement if conditions are met. After-tax 401(k) contributions, by contrast, may be withdrawn tax-free but earnings… read more…
Retirement Planning
Can You Retire at 35 If You’ve Saved $1 Million?
The idea of retiring early with $1 million by age 35 is appealing. But, whether that is enough depends on how long you will need it to stretch your nest egg and how you plan to live. If you withdraw around 3% to 4% annually, that gives you between $30,000 and $40,000 each year. This… read more…
Retirement Planning
I Have $1.2 Million in an IRA and Will Receive $2,000 Monthly From Social Security. Can I Retire at 67?
If you’re sitting on $1.2 million in a traditional IRA and expect to receive $2,000 per month from Social Security, you may be wondering if that’s enough to retire at age 67. The answer, as always, depends on several factors, such as how long you expect to live, how much you’ll spend and how you… read more…
401(k)
How Much Should I Have in My 401(k) at Age 40?
By age 40, many people begin to evaluate whether their retirement savings are on track. While there’s no single benchmark that fits everyone, national data offers a reference point. Factors like income, years in the workforce and access to retirement plans all influence how much someone may have saved by this stage. However, according to… read more…
401(k)
How Much Should I Have in My 401(k) at Age 35?
You may be well into your career by age 35 but still years away from retirement, making it a common checkpoint for assessing your 401(k) progress. According to Fidelity, the average 401(k) balance for people in their mid-to-late thirties was $73,200 at the end of 20241. But averages don’t tell the whole story: how much… read more…