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Tag Archives: retirement

How Job Hopping is Harmful to Your Retirement Savings

Job Hopping

While some people choose to stay at the same job for their entire career, others have a habit of changing jobs every year or two. This habit is known as job hopping. Job hopping may not be a bad thing if you are young and the positions you hop to are higher paying or with better benefits. However, there are times when job hopping can be harmful to your retirement savings. Cashing Out Should you choose to leave your job after only a year or two, you may think you should simply cash out your 401(k) when you leave. Think again. Cashing out your retirement plan early means you may only be able to receive a portion of it. The reason for this is because early withdrawal usually causes you to incur penalties and fees. A couple of better options would be to move it with you to your new employer, if they allow it, or to roll it into an IRA. Not Being Fully Vested When you are investing in a 401(k) plan, it usually takes three to five years before you are fully vested. If you choose to leave your current employer and go to work for a different company ...

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Retirement Savings Wake Up Call

choosing to save for retirement

I read an interesting article in response to a question about the need for a retirement savings wake up call. I’ve always enjoyed advice columns, even though I realize they should be viewed more as entertainment than fact. Just like with reality shows; boring and normal don’t make for great entertainment. Anyhow, this letter was from a father nearing retirement age who was facing a financial conundrum because he knew he and his wife didn’t have adequate retirement savings, yet he wanted to help his pregnant daughter with her own financial crisis. You can read the entire letter and response. I don’t think the semantics are that important, but what did strike me was the advice columnist’s take on why people can’t save for retirement, a thought many of us have probably had at one time or another. “Man, we spend too much on stuff we don’t need. Oh well, as long as we figure this out by retirement, we’ll be OK. It’s not like it affects us right now. Don’t Think It Can’t Happen to You Bam! That’s exactly why, at one time, we couldn’t stop ourselves from spending too much to make retirement savings a priority. We hadn’t had ...

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Why Aren’t More Young People Investing For Retirement?

investing early

There’s a lot of investment research that suggests that young people aren’t investing for retirement, at least not to the extent that economists would wish. A 2013 Wells Fargo Investment survey puts the number at 46%, but because this number includes people who are saving cash for retirement, it’s likely that the number is somewhat less. This can be a disconcerting thought for people concerned about financial security in the future. There are many reasons, good ones and otherwise, which are keeping millennials and other young investors out of the markets. We’ll look at a few of them below. Debts Young Americans are paying more money to service debt than they are paying into investment accounts. This is a big problem. Debt tends to accrue at faster rates than investments earn people dividends, so it makes a lot of sense that young people wouldn’t invest. Because debt often has a lot of concurrent factors which keeps people from having any or much extra money, this can be a truly difficult situation. Alternative Investment Forms Some people don’t invest in the big markets because they are involved in other kinds of investment. Forex and Real Estate are two good examples, though ...

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Retirement Smarts: What Everyone Should Know Before They Reach Their Golden Years

smart retirement moves

Most people make at least one financial mistake when they retire. In fact, it’s not uncommon to completely botch your finances once you stop working. Here are the most common mistakes, and how to avoid making them when it’s your time. Early Withdrawals One of the biggest mistakes retirees make is that they make withdrawals too early. The IRS imposes a 10 percent early withdrawal penalty on all withdrawals from retirement accounts prior to age 591/2. This is in addition to the normal income tax due on such withdrawals. According to Money Looms, even loans from 401(k) plans can be subject to the 10 percent penalty if you fail to repay them on schedule. So, to protect yourself, don’t make early withdrawals. And, if you do want to retire early, you will need to find a retirement advisor who specializes in IRS rule 72(t) withdrawals. These are special withdrawals that allow you to skirt the 10 percent penalty. But, the calculations and rules can be complex, and penalties are stiff if you mess up (which is why it pays to work with an advisor when you do this). For most people, it’s best to wait until your 60th birthday before ...

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What Are Baby Boomers Doing During Retirement?

Baby boomers in retirement

At 76 million strong, there’s no denying that the baby boomer generation is going to change the face of retirement. They are turning 65 at a rate of 10,000 each day, and while many Americans have rightly turned their attention to what impact so many people leaving the workforce at once will have on the economy, others are more interested in how the newly minted retirees are planning on spending their golden years. A large number of studies have shown that boomers are helping change the perception of retirement, and it’s something that financial professionals should keep in mind. Rather than being content with a relaxing lifestyle, many boomers are taking the opportunity to stay active and begin a new chapter in their lives. This has manifested itself in many different ways, here’s a look at how:

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