Yes, I Made It to Annuity Day!

Well, it finally happened. The check actually was in the mail and it came right on schedule, too. Twenty years ago, I decided to add an annuity to my retirement planning program and it kind of snuck right up on me. That was a really pleasant surprise. In a world where the annuity often has its detractors (and perhaps with good reason), I am pretty happy with it. I felt for me it was a good decision. Depositing that annuity check for $483.46 (the first of 240 for the next 20 years!) has comforted me quite a bit since February 1st. With the market in chaos, even more so in the past several weeks, I guess it’s congratulations to me! I made it to annuity day and now another of my nest eggs has hatched!

After opening an annuity 20 years ago, I finally made it to annuity day and received my first payment. Annuities can be a good idea in certain situations.

What Is an Annuity?

An annuity technically is not an investment. First and foremost, an annuity is an insurance product, which means you buy it because it reduces your risk. Some annuities, like variable annuities, do have a selection of stock and bond portfolios available as investment choices inside the insurance contract, but the one I bought was a fixed rate annuity which for me had no investment risk on my return and payout. I knew 20 years ago what I would be getting back to the penny when I bought it.

Continue reading“Yes, I Made It to Annuity Day!”

The Screwed-Up Social Security System

Based on what you earn throughout your lifetime, you become eligible for Social Security retirement benefits when the time comes. That time can vary from person to person for many reasons, because once you hit age 62 you become eligible to get it, but you can wait for years if you choose to, even up to age 70.

When it comes to the Social Security system, there are a few things that can keep you from maximizing your benefits. Here are some of the gotchas to beware.

But despite the success and importance of the Social Security plan, the system suffers from problems and mistakes. Sometimes mistakes are made by the Social Security Administration (SSA). And sometimes you make them yourself. Why?

Continue reading“The Screwed-Up Social Security System”

How to Avoid Paying Income Tax in Retirement

Everyone has to deal with taxes; they’re oftentimes unavoidable. But if you play your cards right, you can spend as little money as possible on them. You may even be so lucky as to avoid paying income tax altogether in retirement and get this… the government might actually give you money when tax season rolls around in a little something called the EITC, the Earned Income Tax Credit.

You can maximize your finances if you avoid paying income tax in retirement. Here are 9 types of money that aren't taxed, plus money you might get for free!

Retirement won’t save you from the tax forms and some headaches, but there is money you get that Uncle Sam can’t touch, as long as you play by the rules. And you have to know and understand the rules to win this game. So pay attention now and learn how you can actually avoid paying any income taxes on these things when you hit retirement!

Continue reading“How to Avoid Paying Income Tax in Retirement”

The SECURE Act: The New 2020 Retirement Plan Rules

With all the news we are bombarded with every day, you may have missed this information which is new and will affect every single person in some way in their life. It is the passage of the new SECURE Act which became the law effective January 1, 2020 and changes retirement plan rules.

The new SECURE Act has made some important changes to retirement plan rules that you need to know. Here are some of the details and how they may affect you.

The new law has 29 new provisions or major changes, but I want to focus on just a few major areas. Some of this news is good news and some of it could be bad.

Continue reading“The SECURE Act: The New 2020 Retirement Plan Rules”

“Will I Ever Be Able to Retire?”

Most people just took it for granted. What was it? The fact that when you’re young, you’ll go to college and get a great quality education that lands you a good job and starts a great working career. Or, perhaps you will take up some kind of trade after high school or even join the military and that will be your career path. The choices you make, they may eventually lead to—over the course of forty or so years (if you’re smart, frugal and make good money at your work)—your accumulation of enough money to retire comfortably at the age of 65 or so. That was then and this is now. Is it still true? You may wonder, “Will I ever be able to retire in the 21st century?”

If you're wondering, "Will I ever be able to retire?", you're not alone. But it's important to face where you're at and get started planning and saving!

A Cold, Hard Look at My Retirement – When It Happened

I made it. I am retired, albeit I didn’t do it with the full intention of retiring when I was forced to because of my health at the age of 62, eight years ago. A not-so-funny thing happened to me on my way to retirement and it’s called a heart attack, type 2 diabetes and CHF (congestive heart failure). Believe me when I tell you it wasn’t then—nor is it now—any fun.

Continue reading““Will I Ever Be Able to Retire?””

Everything You Need to Know About 401(k) Contribution Limits for 2020

When it comes to preparing for retirement, it’s very important to stay right up to speed with all the rules, regulations, and changes made by the IRS from year to year. With the next year looming just two months away, the IRS has made some 401(k) contribution limit changes for 2020 but still has left both Roth and traditional IRA contribution limits for 2020 flat.

The IRS has changed 401(k) contribution limits for 2020 and here's what you need to know about them to maximize your retirement savings.

The IRA limits are again unchanged from 2019’s $6,000, or $7,000 combined if you’re age 50 or older. This is the second straight year at those caps. The caps are the maximum amounts you can kick into those retirement accounts, whether you use just one type or in any combination. Before 2019, the IRA contribution limits stayed the same for six years in a row. So just in case you needed a refresher, today I thought I’d go over some of the things that you really need to know when you are saving in these accounts for your retirement!

Continue reading“Everything You Need to Know About 401(k) Contribution Limits for 2020”

Will Your Retirement Be Scarier Than Halloween?

It seems that before we start working for a living, all we can think about is getting a good job and earning lots of money. I am pretty sure that the vast majority of us think exactly like that when we get to a certain age and that’s probably by the time we near the end of high school or college. After all, we know we are going to be out on our own soon and we need a job. But then a funny thing happens.

If you don't pay attention to retirement planning basics, your retirement may be scarier than Halloween! Here are six strategies to help you plan.

Almost as soon as we start that “first great job”, some papers are shoved in front of our faces and one of them is all about benefits and retirement plans. Retirement planning? I mean, holy crap, I just started working and now I have to think and decide about retirement planning?

Continue reading“Will Your Retirement Be Scarier Than Halloween?”

2020 Social Security COLA May Not Be Good News

Update: The SSA has announced that the Social Security Cost-of-Living Adjustment (COLA) for 2020 will be 1.6% as predicted.

Every year around this time, anyone who gets a regular check from Social Security gets curious and also a bit nervous. That’s because they and I know that in just a few weeks, mid-October, the annual Social Security Cost-of-Living Adjustment (COLA) for 2020 will be announced. This comes as our lawmakers are looking for ways to expand and preserve Social Security, a task they have been avoiding now for decades. So perhaps for them, this news that Americans might be in for a smaller cost-of-living adjustment next year is good news. But not for anyone who depends on it.

For those relying on government benefits, the Social Security COLA 2020 may be a disappointment. While an increase is expected, it isn't very much.

According to a new estimate released by The Senior Citizens League on Thursday, the 2020 COLA is forecast to be a 1.6% increase which would come out to about $23.40 per month for the average beneficiary (the average beneficiary received $1,475 a month this year). That compares to the $40.90 beneficiaries received in 2019 which was a 2.8% COLA.

Continue reading“2020 Social Security COLA May Not Be Good News”