Is Social Security Really a Retirement Plan?

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Most of us commonly think of Social Security as almost synonymous with retirement — but it was never planned to be.

When it was established in the 1930s it was set up to be primarily an anti-poverty program—or “social insurance”—dealing with old age, poverty, unemployment, and the burdens of widows and fatherless children.

The stock market crash of 1929 and the onset of the Great Depression collapsed incomes across the board and wiped out the savings of many of the elderly.  The government responded by implementing Social Security to remedy many of these economic ills.

Strictly speaking, it was never intended to be a retirement plan as much as a supplement for lost wages.

The Depression is now deep in the history books and with it, the original intent of Social Security.  Today it’s mostly seen as a retirement plan.

But is it really?

Why you can’t rely on Social Security alone

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What is a Spousal IRA and How Does It Work?

The rules surrounding your ability to contribute to an IRA generally require you to have earned income in order to contribute at all.

This prevents people trying to exploit loopholes such as parents opening and funding an IRA for a child well before the child earns any income.

However, there is one exception available for married couples that can allow for both individuals to contribute to an IRA even when both do not earn an income.

This exception allows stay at home parents and other non-working spouses the ability to still contribute to an IRA despite not earning an income.

Spousal IRA Contributions

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Withdrawing Money From a Roth IRA: How Does It Work and When Can I Do It?

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Withdrawing money from your retirement account is something you only really want to do in retirement.

That’s obvious.

What is also obvious is there are definitely times in life when you find yourself with a significant cash crunch and that nest egg looks ripe for the harvest.

Unfortunately for a majority of your retirement account options any early withdrawals are disastrous.

You get hit with fees and taxes; your overall withdrawal can easily be reduced by 25-40%… which means you just have to withdraw even more money to get to the amount that you actually need to use.

It’s a lose-lose situation: you’re paying a lot in fees and taxes while also losing out on potential growth of the account in the future.

unless you’re using a Roth IRA.

Withdrawing Money from a Roth IRA

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Grow Your Nest Egg with Automatic Retirement Contributions

One of the essentials of preparing for the future is building your retirement nest egg.

The amount of money you save now can be a big help later, when you are ready to retire.  However, growing your nest egg can be a challenging task.

You might not remember to make regular contributions, and it can be difficult to put money away for retirement when you feel like you are struggling financially.

A great way to ensure that you save for retirement is to arrange for automatic contributions to your retirement account.

Setting Up Automatic Contributions

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What is the 403(b) Retirement Plan? – Overview

Even though the 401(k) is the most common retirement account in the United States, not everyone has access to such a plan.

Those who work for governments, schools and non-profit corporations don’t have access to an employer-sponsored 401(k).

If you don’t have access to a 401(k), you can, of course, open an IRA.  However, the contribution limits are fairly low, which can be discouraging if you want to contribute a higher amount toward a successful retirement.

The good news is that many hospitals, schools, non-profits (including churches), and governments have their own retirement account offering: The 403(b).

What is the 403(b)?

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New Federal Regulation for 401k Fee Transparency Rules

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Do you know how much it costs you on an annual basis to simply participate in an employer-sponsored 401k plan?

If you’re savvy, you probably already know that the mutual funds you select within your 401k plan have expense ratios.  That number shows how much out of every dollar invested you give to the mutual fund company to manage the fund.

On average actively managed mutual funds cost around 1% of invested assets (or $100 for every $10,000 invested).

But if you think that is the only fee being charged to you, prepare for a shock.

New 401k Fee Transparency Rules

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