A Personal Finance Blog for Regular Folks
When we think about frugality, many of us consider the here and now.
However, it doesn’t hurt to consider that you might need to be frugal during retirement as well.
While many of us hope to be able to forget about frugality during our golden years, the truth is that you never know what will happen in the future to create uncertainty in your finances.
It makes sense to be prepared to live frugally in retirement, if the need should arise.
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).
[Read more…] about What is the 403(b) Retirement Plan? – Overview
Imagine working 40 years to fund a retirement that will last for 30; does it sound impossible? Not if you live in a perfect world—but this isn’t, so that’s why we’ll be talking about whether your investments cover 30 years of retirement here.
A 30 year retirement is becoming the reality for more people all the time. It happens when people retire at 62 or even 65, and then live into their 90s. This is happening for more people than ever and by all indications it will be even more common in the future.
Even if you don’t think you’ll live into your 90s, prudence dictates that you be prepared anyway. Healthier living and stunning medical advances are causing people to live far longer than they ever expected and the possibility that you’ll be one of them is increasing steadily.
Will you be ready for it financially?
[Read more…] about Will Your Investments Cover 30 Years of Retirement?
At the end of last year, Congress hurried through a tax package.
One of the credits that was allowed to expire was the Making Work Pay tax credit. However, our representatives replaced the Making Work Pay tax credit with a reduction in the payroll tax paid by employees. This means that you should be seeing a paycheck that is a little bit bigger.
Our leaders, of course, want you to go out and spend that money, pumping it back into the economy. The whole point of tax cuts is to encourage you to spend so that we can keep the economy, which relies a great deal on consumer spending, moving in a direction of positive growth. However tempting it might be to spend that extra money, though, it is a good idea to consider how that money can help you down the road.
[Read more…] about What Are You Doing with Your Payroll Tax Cut?
I logged into my 401(k) plan. Ouch! It’s been taking a beating all year. In fact I mentioned that my 401(k) was hurting back in December when Hank over at MiB Smarter Money gave me a nice analysis of my portfolio. Now, I understand that I’m in this for the long haul as far as the investments are concerned. After all this is for my retirement which is still a ways off. There’s plenty of time for the investments to recover and do well. I’m not going to pull my money out because the market isn’t great. The only reason my contributions were lowered is because we’re a one-income family right now (I only lowered my contributions down to the company match).
So I accept that my 401(k) isn’t so hot. Now what? Well, I’ve been reading The Bogleheads’ Guide to Investing
This made me wonder what my portfolio looked like. I set up how I wanted my assets allocated when I started contributing and I’ve made a few adjustments from time to time. But reading the Boglehead book made me re-think what my allocations should be. Also, I haven’t re-balanced the portfolio in the longest time. I’ve changed my future contributions but rarely what was already in there.
So today I changed that. Looking at my portfolio I realized I had funds that I was no longer contributing to but still had large balances. I also saw that based on suggested portfolios in the book and my age that I should probably have a higher percentage of bonds in my investments. Other funds that I was contributing a higher % to really took up a very small % in my portfolio since I haven’t been re-balancing.
First, I changed where my future contributions will be going. This is money that comes out of my check as well as the company match. Next, I moved investments already in my portfolio to match my new asset allocation. Both processes were pretty easy on the Fidelity site (the company that manages the 401k). Remember, changing your future contributions isn’t the same as re-balancing your portfolio. You have to look at both if you want it truly balanced to the investments of your choice.
Here’s what the allocation is now:
Large Cap
Mid Cap
Small Cap
International
Before I started changing anything I made sure that there would be no fees for changing investments. Some funds charge a fee if you sell them before a certain time frame.
I also set up my account to send me an email if any of my percentages exceed 5% of what I set. This gives me a reminder to check if I want to re-balance the funds that changed.
I’m not expecting my portfolio to all of a sudden jump into the black but it will be interesting to look and see where it’s at year-end. Again, these funds are for the long haul as I won’t use them until I retire. That said, I still need to adjust my contributions and allocations as time goes on.
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