Defanging the fiduciary rule could cost investors billions of dollars. Critics of the rule say it does more harm than good.
Charitable donations are an easy way to get a tax deduction, and the most obvious way to make a donation is to write a check. According to the IRS, a donor claiming a deduction of $250 or more is required to obtain and keep a written acknowledgment for a charitable contribution, so be sure to get a donation receipt. Your tax bracket depends on your income.
Here's how to make the most of your Medicare benefit. Hospital care is covered by Medicare Part A. Medicare Part B is medical insurance that covers doctor's visits and outpatient services. Medicare Advantage Plans or Medicare Part C are an alternative to traditional Medicare offered by private insurance companies, typically with different premiums and restrictions.
WASHINGTON (AP) — Medicare has announced the "Part B" premium for 2017, and for most beneficiaries it's a modest increase.
Republican Donald Trump's victory in the U.S. presidential race puts a new rule on retirement advice in limbo, even after Wall Street's biggest wealth management firms have spent millions preparing for it, lawyers and analysts said on Wednesday. The U.S. Department of Labor fiduciary rule, which is set to start taking effect in April, is meant to promote the best interests of retirement savers by eliminating conflicts of interest for brokers. The financial services industry has tried to stop the rule in the courts, arguing that the Labor Department overreached and that the rule would result in high costs that will ultimately make small accounts unprofitable.
How much you earn and your age when you sign up play a big role in how much you will receive from Social Security. Workers who familiarize themselves with the Social Security rules will be better able to maximize their payments. Pay close attention to these aspects of the program when making Social Security decisions.
Financial advisors managing 401(k)s and individual retirement accounts will be required to act in the best interest of their clients beginning in April 2017. There will also be several small tweaks in the rules regarding who qualifies for tax breaks for saving in retirement accounts. Here's a look at some of the important ways retirement benefits will change next year.
It's not just Detroit and Puerto Rico with financial problems. The pressure is rising on local governments around the country that are struggling with big pension obligations and other debts. Five states ...
Indeed, 401(k)s and their menus of funds often are so complex that employees investing in them incur administrative, record-keeping and adviser fees. The 401(k) was “invented by accident,” as a Morningstar report says. Then it morphed into a savings plan when companies decided to get out of the pension business.
What will you receive in Social Security benefits compared with the taxes you pay in? By one estimate, the turning point is currently around $65,000 for a single worker and double that for couples earning similar pay. This question has come up since the Social Security Administration last week announced a payroll-tax increase affecting 12 million higher-income workers.
CHICAGO (AP) — It was a striking image. A photo of an 89-year-old man hunched over, struggling to push his cart with frozen treats. Fidencio Sanchez works long hours every day selling the treats because he couldn't afford to retire. The photo and his story went viral and thousands of people donated more than $384,000 for his retirement.
Meanwhile, these days more people are waiting until their 30s to take big plunges like marriage and children. In their 40s, people often fail to pay down a mortgage quickly enough, leaving them covering the costs into retirement. Finally, in our retirement years, we often don’t make an uncomfortable but necessary move—giving family members the power to make big financial decisions for us—even though research shows most of us need that help a lot sooner than we realize.
Are you keeping a close eye on your 401(k) and other retirement plans? You should, because employers and plan managers make mistakes—and that can lead to big headaches and out-of-pocket costs for you. Just ask Benjamin Levy, a retired information-technology professional whose former employer erroneously deposited in his 401(k) a portion of a bonus that he received after he retired.
Broadway’s brightest star, Alexander Hamilton, summarized the problem neatly. “In common life, to retract an error even in the beginning is no easy task,” Mr. Hamilton once wrote, according to Ron Chernow’s biography of the nation’s first Treasury secretary. While Mr. Hamilton wasn’t writing about income-tax bloopers, his words undoubtedly will resonate with millions of modern-day taxpayers.
Higher-income workers will pay more in payroll taxes next year to support Social Security, while retirees and other program beneficiaries see a scant increase in their monthly benefits. Nearly 66 million people, or roughly 1 in 5 Americans, receive Social Security and Supplemental Security Income payments from the U.S. government. Based on subdued inflation over the past two years, their benefits will see a 0.3% cost-of-living increase for 2017 following no adjustment this year, the Social Security Administration said Tuesday.
WASHINGTON (AP) — Millions of Social Security recipients and federal retirees will get a 0.3 percent increase in monthly benefits next year, the fifth year in a row that older Americans will have to settle for historically low raises. The adjustment adds up to a monthly increase of less than $4 a month for an average recipient.
The future could be a lot less happy than the past.
A my Social Security account allows you to review your contributions to the Social Security program. You can also get a personalized estimate of how much you will receive if you claim Social Security at various ages. Periodically reviewing your Social Security statement allows you to make sure your earnings are recorded correctly and to factor the likely payout into your retirement plans.
As life transitions go, retirement ranks way up there among the most challenging, both financially and emotionally. After a lifetime of work, you may have mixed emotions about retirement -- looking forward to not working but nervous about leaving your work identity behind. Because retirement can be so stressful, Jeff Vollmer, a financial adviser with Hyde Park Wealth Management in Cincinnati, advises clients to begin planning 5 years in advance.
If Social Security is going to be your only or a major source of retirement income, it's particularly important to maximize your monthly payments. Here's how to make sure your Social Security payments will cover your retirement expenses. Housing is likely to be one of your largest expenses in retirement.
• Expenses: The importance of drafting a retirement budget is a theme that pops up regularly in these pages. If we include that figure in the bond portion of the retiree’s savings—and if the nest egg, as a result, is “bond heavy”—that would argue (as the questions above indicate) for reallocating this portfolio and adding more stocks.
Merrill Lynch will no longer give retirement savers the option of paying a commission for trades, a wholesale exit from the traditional Wall Street sales model in accounts that stand to be affected by new conflict-of-interest rules on retirement accounts. The Bank of America Corp. brokerage unit told its more than 14,000 brokers on Thursday that after April 10, when the new rules take effect, investors who want a retirement account at Merrill will need to pay a fee based on a percentage of their assets, instead of having the option of being charged for each transaction made in their account. The announced move, coming six months since the unveiling of the Obama administration’s fiduciary rule requiring brokers to put the interests of retirement savers ahead of their own, is roiling firms across the investing world as they look to comply and even capitalize on the changes.
Low return forecasts aren't a reason to skip investing, but they do have an impact on saving and withdrawal rates and asset allocation.
Many adults say saving for retirement is like saving for a stranger
If you're part of the sandwich generation, you're taking care of your child and have an aging parent. If one or both need financial support, it can be pretty tough to save for your retirement. The dilemma is quite common, since nearly half (47 percent) of adults in their 40s and 50s have a parent age 65 or older living in their home and are either raising a young child or financially supporting a grown child (age 18 or older), according to the Pew Research Center.
Nearly 60% of those polled for TIAA’s recently released 2016 Lifetime Income Survey said they’re confident they’ll be able to turn their savings into income that can support them in retirement. Unfortunately, fewer than half of the people surveyed know how much they have in those accounts or have tried to assess how much retirement income their savings can actually generate. Here are three key questions you should ask yourself to ensure your planning reflects a realistic assessment of your retirement prospects.
WASHINGTON (AP) — THE ISSUE: More than 60 million retirees, disabled workers, spouses and children rely on monthly Social Security benefits. That's nearly one in five Americans. The trustees who oversee Social Security say the program has enough money to pay full benefits until 2034. But at that point, Social Security will collect only enough taxes to pay 79 percent of benefits. Unless Congress acts, millions of people on fixed incomes would get an automatic 21 percent cut in benefits.
Saving for retirement is especially difficult when you earn a small salary. Here's how to begin building wealth for retirement when you have a modest income. Find out how much you need to save to get the maximum possible 401(k) match, and then make every effort to deposit that amount in your retirement account.
Asset allocation, time horizons, and taxes can complicate withdrawal-rate planning.
Living off of current yields is just one way to extract the cash flow you need.
Note: This article is part of Morningstar’s September 2016 Retirement Matters Week special report. While retirees are often counseled to estimate that they’ll spend 75% to 80% of their working incomes in retirement, a paper by Morningstar’s head of retirement research, David Blanchett, demonstrated that there can be huge variations in income-replacement rates among retirees–with factors such as pre-retirement income and savings rates serving as key swing factors. Based on Blanchett’s findings, higher-income, higher-saving households may well need just 60% (or even less) of their pre-retirement income during retirement, while lower-earning, lower-saving households may need closer to 90%.
The complexity of the system, its evolution and a shift in demographics that threatens its solvency have created confusion over what Social Security can and will deliver . Social Security benefits are primarily based on two variables: your highest earnings over 35 years and your age when you file for benefits. The maximum benefit for someone retiring at full retirement age (66 for people born in 1943 through 1954) in 2016 is $2,639 a month.
For many people, retirement — never mind early retirement — seems out of reach. Social Security alone isn’t enough to have you living the good life during your golden years, and as we’ll discuss later, you’ll want to put off taking that money as long as you can. Once your rainy-day fund is full, put that 10 percent you’re not spending into a dedicated retirement fund.
The average interest rate on a six-month certificate of deposit was 9.1% in 1970 and 13.4% in 1980. But two decades worth of declining interest rates have dragged yields way down, dramatically compounding the challenge for retirees. The bucket approach to retirement-portfolio management, pioneered by financial-planning guru Harold Evensky, aims to meet those challenges, effectively helping retirees create a paycheck from their investment assets.
The typical investor has two long-term goals: retirement and kids' college expenses. "Retirement savings needs to outweigh college savings," says David Hryck, a tax attorney and personal finance expert with the Reed Smith law firm in New York. "The biggest issue is the fact that you can borrow for college, whereas you can't borrow for retirement," says Oscar Vives Ortiz, a planner with First Home Investment Services in Tampa Bay/St. Petersburg.
Involuntary retirement—or the possibility that you may be forced to exit the workforce sooner than you wanted—is a more common problem than you may think, and one that can wreak significant havoc with your post-career lifestyle. Some 46% of retirees polled for the Employee Benefit Research Institute’s 2016 Retirement Confidence Survey said they left their jobs before they had planned, usually because of a health issue or company downsizing or restructuring. One practical and effective way to minimize the effect of having to retire prematurely is to make a concerted effort to boost the size of your nest egg while you’re still working.
The following six steps tie together portfolio maintenance and rebalancing, RMDs, and more.
After a big financial loss, are people going to be more or less willing to take a big risk? “A person who hasn’t made peace with his losses is likely to accept gambles that would be unacceptable to him otherwise,” psychologist Daniel Kahneman, a Nobel laureate, and Amos Tversky wrote in a 1979 paper. “Losses that come on the heels of prior losses may be more painful than average…after a prior loss, the person becomes more loss-averse,” Nicholas Barberis, Ming Huang, and Tano Santos wrote in a 2001 paper in the Quarterly Journal of Economics.