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Tag Archives: saving for 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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It’s Never Too Late to Invest for Retirement

get started on investing for retirement

While we’ve made our share of financial mistakes, I’m always amazed when I run across someone my age or older who has nothing saved for retirement. Considering that a third of workers have less than $1,000 saved for the future, I guess it shouldn’t be that surprising. The good news is that it’s never too late to invest for retirement. Even if you might never be a millionaire, that doesn’t mean all hope of a decent retirement is out of reach. Figure Our How Much You Need to Live On Determining how much money you need to retire is certainly a million dollar question. Most retirement calculators assume  you’ll need 70-80 percent of your current income and won’t let you add savings rates greater than 20-25 percent. My favorite retirement calculator is the one from Personal Capital. At least it lets you add and subtract variables more easily than the rest I’ve tried. You can actually get a ballpark on your own by determining how much you spend per year now and apply that to retirement years. Some costs like health care will likely increase while others, like clothing and transportation, should decrease. If you have kids, hopefully those expenses ...

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Personal Capital Retirement Calculator: Great for Early Retirement Planning

Using Personal Capital's retirement planner

In the past, my opinion of retirement calculators has been less than enthusiastic. For the most part, they assume that people will work until age 65 or longer, have one job, need at least 80% of their current income in retirement, and that no one will have income after retirement other than social security or a possible pension. Aside from Jim’s possible pension, none of that applies to us, so I’ve always been disappointed when the results show that we will need something like eight billion dollars to retire comfortably. That isn’t real world at all. My opinion has changed recently with the new Personal Capital Retirement Calculator. Finally, a plan that gives options for those of us who live a bit outside the traditional norms! Real World Assumptions A calculator can’t be perfect because there is no way to predict all expenses. We might be hit with big home repair or medical bill at any time, but what is nice about the Personal Capital calculator is that it pulls from current spending trends. Even if you do make eight billion dollars a year but only spend $50,000, the calculator is able to process that. Other nice things about Personal ...

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myRA, What Is It And Can It Work?

I’d be lying if I said I actually watched or paid much attention to the State of the Union address last week. However, one point of President Obama’s speech did spark some interest as I was looking at the highlights online. The President is putting a new retirement savings plan into place called myRA. It is supposed to be a take on I-R-A and is pronounced with three syllables, my-R-A, although I can see it being called Myra, like the name. I’m not sure which clever political mind came up with that title, but anyway, is myRA a good plan for retirement? Well, just like most government policies, it depends. You can get a good breakdown of the preliminary rules of myRA from CNN Money, but here are the highlights. -Available for employees making less than $191,000 whose employers agree to participate and offer direct payroll deposit. -Works like a Roth IRA, where contributions are not pre-tax or tax deductible, however, withdrawals of contributions and interest are tax free after age 59.5. -There are no fees. -Money is invested in government backed bonds similar to the Thrift Savings Plan G fund. Principal is guaranteed, meaning you might not earn much ...

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Don’t Be Happy With Average When It Comes To Retirement

how much do you need to retire?

I read an article last week from the Wall Street Journal that said three quarters of Americans nearing retirement had less than $27,000 in their retirement accounts, and one third of those have no sort of retirement account at all. One of my first thoughts after reading this was, “Wow, I must be doing pretty well with my retirement! ” On second thought, maybe I shouldn’t be so proud to be ahead of the pack when the pack is doing so poorly. It’s kind of like winning a weightlifting competetion against kindgergarteners. It really means little looking at how well prepared we are compared with the majority. If you don’t prepare for your own retirement needs, all the statistics in the world won’t matter. You can’t be happy with average when it comes to retirement. But How Much Do I Really Need For Retirement? Isn’t that the million dollar question? From experience with my own family, I can tell you that you can get by on very little, but you will probably have to live in a very low cost of living area. Plan on not traveling or having many hobby expenses, and I really hope you like to cook your ...

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