- We Will Make Over $300,000 Combined This Year. Can We Use a Backdoor Roth to Reduce Taxes?
High-income households can use what’s called a “backdoor Roth” to utilize a Roth IRA despite the program’s standard income restrictions. This can be an effective way to build a tax-free stream of income for your retirement, and it is a completely legal strategy. Whether this method will reduce your taxes depends heavily on your tax… read more…
- How to Hire a Retirement Advisor
A retirement advisor can help clients plan, manage and optimize their financial resources to reach retirement goals. They do so by offering expertise in areas such as investment strategies, tax planning and creating a comprehensive retirement income plan. A financial advisor can also help you create a long-term retirement plan for your specific needs. Here’s… read more…
- I Was Planning on Taking My RMDs and Converting Them to a Roth, But Was Told I Can’t. Is That True?
Many retirees wonder if they can take their required minimum distributions (RMDs) and move them into a Roth IRA. The IRS does not allow RMD amounts to be converted directly, since those withdrawals must be taken as taxable income. What you can do, however, is withdraw the required amount and then convert additional funds from… read more…
- Required Minimum Distribution (RMD) Calculator
Use SmartAsset’s RMD calculator to see what your required minimum distributions look like now and in the future. Enter your retirement account balance at the end of the previous year, your age at the end of this year and the expected rate of return on the account to calculate your RMDs. Do you have questions… read more…
- 5 Common Retirement Tax Traps and How to Avoid Them
Tax management can be complex, particularly for those who are not well-versed in tax laws and regulations. A variety of tax traps may await you in retirement, which could significantly eat into your income and savings. Common traps include taxes on Social Security benefits, Medicare surcharges, required minimum distributions (RMDs), real estate sales and estimated… read more…
- We’re 64 Years Old With $750k in an IRA and Social Security. Is It Too Late to Convert to a Roth IRA?
If you’re nearing retirement and you have a sizeable IRA balance, you face some significant decisions surrounding required withdrawals and taxes. Converting a traditional IRA into a Roth account is one move that can increase your planning flexibility. And even at 64 years old, shifting an account from a tax-deferred to tax-free status can result… read more…
- Is It Better to Take My RMD Later or Earlier in the Year? How Do I Decide?
People often think they don’t have any choice when it comes to taking the IRS-mandated required minimum distributions (RMDs) from their retirement accounts, but you do. While you can’t skip making these withdrawals, you can choose when and how to take the distribution, whether that’s at the beginning of the year, the end of the… read more…
- I’m 60 With $1.5 Million in an IRA. How Do I Make Sure This Money Lasts the Rest of My Life?
Making your savings last through retirement can be complex in practice, but all it really comes down to is your income vs. spending. In other words, you need to compare how much your portfolio can generate in a more risk-averse time in your life against how much it costs each year to maintain your lifestyle.… read more…
- What Is a Guaranteed Lifetime Annuity?
Ensuring that you have enough income to cover your living expenses and support your lifestyle is one of the central financial challenges of retirement planning. Guaranteed lifetime annuities are designed to help retirees do just that, providing a stream of guaranteed income for life. However, like all investment products, they come with their own set… read more…
- We’re 60 and Have $2.5 Million in Our 401(k)s. Should We Pivot to Roth Contributions?
For the right person, a Roth IRA can be a fantastic retirement savings vehicle over the long term. So much so that it might seem to some that it’s always the right choice, no matter what. After all, tax-free income does sound pretty great. However, like anything in your retirement planning journey, this decision on pre- vs.… read more…
- I’m 62 With $1.5 Million in an IRA. Should I Convert $150k Per Year to a Roth to Avoid RMDs?
A 62-year-old with $1.5 million in a traditional IRA may be wise to consider converting $150,000 per year to a Roth IRA to avoid required minimum distributions (RMDs). The annual withdrawals from retirement accounts that are mandated by RMD rules can raise your tax bill in retirement by adding to your taxable income, even if… read more…
- How Long Your Money Could Last Using the 4% Rule
The 4% rule offers a straightforward framework to estimate your financial runway. This widely referenced guideline suggests withdrawing 4% of your retirement portfolio in your first year of retirement, then adjusting that amount annually for inflation in subsequent years. Originally developed in the 1990s by financial advisor William Bengen, the rule aims to create a… read more…
- How to Write a Retirement Letter
A retirement letter serves as an official declaration of your departure from a job, giving your employer ample time to find a replacement or allocate your duties elsewhere. This strategy ensures a smooth transition and minimum disruptions in the workflow. However, what are the key components of a retirement letter? Let’s explore together how to… read more…
- 10 Ways to Properly Plan for Retirement
Planning for retirement can be a daunting task. You have to figure out how much to save, determine the right ways to save that money and then make sure you’re consistent while constantly making adjustments to your approach over time. If you’re not experienced in investing and managing finances then you might not know where… read more…
- Is It Better to Take Annuity Payments Monthly or Once Per Year?
A lot of retirees use annuities to simplify their income stream in retirement but that doesn’t mean annuities are simple. Beyond choosing what kind of annuity to purchase – immediate vs. deferred and fixed, indexed or variable, you’ll also need to consider how to receive your annuity payments. You can receive a lump sum from… read more…
- I’m 59 With a $1.4 Million Net Worth and $5k in Monthly Expenses. Can I Retire Now?
When thinking about whether you’re financially prepared to retire or not, you’ll want to think about it in a certain way. You have a lifestyle that you would like to maintain, and a portfolio that can safely generate a specific amount of income each year. Once your costs and means overlap, you can afford to… read more…
- Differences of Immediate vs. Deferred Annuities
The guaranteed income of an annuity makes it a valuable retirement product for many households. While there are many different types of annuities, two of the most popular are immediate vs. deferred contracts. With an immediate annuity, you buy the contract in a single lump sum and begin receiving payments immediately. A deferred annuity, on… read more…
- I Want to Roll Over $720k to a Roth IRA. How Do I Avoid Paying Taxes?
Taxes are a valid concern if you want to roll over $720,000 from your retirement fund into a Roth IRA. While you won’t pay any taxes if the assets you’re rolling over are held in another Roth account, there’s typically no way to completely avoid paying taxes when rolling pre-tax money into a Roth IRA.… read more…
- I’m 65 Years Old With $1.2 Million in an IRA. I’m Taking Social Security – Is It Too Late to Convert to a Roth IRA?
Imagine you’re 65 with $1.2 million in an IRA and a lingering question: should you convert your account into a Roth IRA? The answer may depend on how you go about it. A Roth conversion can provide some sizable advantages, including tax-free withdrawals and freedom from mandated distributions – but that doesn’t mean it’s always… read more…
- I Will Make $200k This Year. How Can I Use a Backdoor Roth to Avoid Taxes in Retirement?
If you’re a relatively high earner, you might be locked out of making Roth IRA contributions due to the account’s associated income caps. In that case, you can instead consider a conversion, otherwise known as a “backdoor Roth.” The advantage to doing this is that you will avoid all income taxes on withdrawals from the… read more…
- We’re 63, Have $1.5 Million in IRAs and Will Receive $4,500 Monthly From Social Security. What’s Our Retirement Budget?
As you make your retirement budget, it’s important to keep two issues in mind. First, understand your needs — what budget will you need to pay your bills, and what budget will you want to afford your lifestyle? And second, understand your capacity — what income can your portfolio comfortably and reliably generate for you? … read more…
- Which of These Retirement Savings Trends Fit Your Financial Situation?
Despite recent years of inflationary spikes and stock market volatility, most Americans haven’t cut their retirement savings rate. They also don’t plan to sell assets or investments and are taking action to get professional advice to plan their retirement. If you need help saving and planning for retirement, consider working with a financial advisor. Those… read more…
- Pros and Cons of Tax-Deferred Annuities
Retirement planning involves a lot of decisions, including whether or not to include annuities in your portfolio. The type of annuity you choose can impact your taxes and income streams in a variety of ways. The major advantages to a tax-deferred annuity are accumulation and security. By putting off taxes until retirement, your annuity portfolio… read more…
- I’m a 48-Year-Old Divorcee With $550K in an IRA and $110K in My 401(k). Can I Retire in 10 Years?
Planning for an early retirement requires wrestling with complex variables, including healthcare costs, portfolio returns and withdrawal rates. As a 48-year-old divorcee with a $550,000 IRA and $110,000 in a 401(k), it may be possible to retire in 10 years. Making reasonable assumptions, these assets could potentially generate enough income to maintain an adequate living… read more…
- I’m 55 With a $2 Million Net Worth and $6k in Monthly Expenses. Can I Retire Now?
Retiring early raises a series of questions around both income and spending. You will need to manage your portfolio for longer-term drawdowns, an early end to new earnings, and a long wait for Social Security to kick in. You will need to manage your spending around new needs, particularly health insurance, long-term care insurance and… read more…