Tag: Retirement Planning
2024 Changes that Would Impact Your Retirement Finances
April 1, 2024
Changes to retirement regulations are making 2024 out to be the perfect time to reexamine your retirement planning and make sure you’re getting the most out of your savings.
“The rules are constantly changing,” says director of Personal Retirement Product Management at Bank of America Debra Greenberg. “It’s always a good idea to familiarize yourself with what’s new to see whether it makes sense to take advantage of it.”
Here’s what you should know about several changes to retirement regulations in 2024.
It Pays to Plan for Retirement
While the changes to retirement regulations may seem small, Americans need all the help they can get right now. According to the National Council on Aging, up to 80% of older adults are at risk of dealing with economic insecurity as they age, while half of all Americans report being behind on their retirement savings goals.
“The IRS adjusts many things each year to reflect cost of living and inflation,” says Jackson Hewitt’s chief tax information officer Mark Steber. “It happens each year and taxpayers shouldn’t be alarmed — they might even have a bigger benefit.” Since retirement contributions are pre-tax, saving for retirement actually lowers your taxable income, which may even place you into a lower tax bracket. Plus, you may even be eligible for a tax credit of up to 50% of what you put into your retirement accounts.
Contribution Limits Will Increase
The contribution limits for a traditional or Roth IRA are increasing in 2024. The limit on annual contributions to an IRA will go up to $7,000, up from $6,500 last year.
Individuals will be able to contribute more to their 401(k) and employer-based plans as well. For those who have a 401(k), 403(b), most 457 plans, or the federal government’s Thrift Savings Plan, the contribution limit is increasing to $23,000 in 2024, which is $500 more than last year. Those who are 50 and older, can contribute up to $30,500 into the same accounts.
Starter 401k Plans are Possible
In 2024, employers who don’t sponsor a retirement plan may offer a Starter 401(k) deferral-only arrangement. A starter 401(k) is a simplified employer-sponsored retirement plan with lower saving limits than a standard 401(k). Employers are not allowed to make contributions, and employee auto-enrollment is required. In 2024, the annual contribution limit to this plan will be $6,000. Beginning this year, employees with certain qualifiable emergencies may also make penalty-free withdrawals from their 401(k) of up to $1,000, though they would still have to pay the income tax on those withdrawals.
529 Plans Can Now be Converted Into Roths
For parents who will no longer need their 529 funds for their children, the Secure 2.0 Act will allow for a portion of the 529 to be rolled into a Roth IRA. Beginning January 1st, the funds can either be used for educational expenses or put toward retirement, as a Roth IRA rollover. You may rollover up to $35,000, free of income tax or any tax penalties. The only limitations are that the 529 must have been in place for at least 15 years, and certain states may not allow the rollover.
Changes to Social Security and RMDs
In January, Social Security checks will increase by 3.2% due to the latest COLA, or cost-of-living adjustment. On average, Social Security monthly benefits will increase by $59 a month, from $1,848 to $1,907. Those who receive survivors or spousal benefits will receive even more.
For 2024, the maximum benefit for a worker who claims Social Security at FRA (Full Retirement Age)is $3,822 a month, which is up from $3,627 in 2023. For 2024, the FRA is 66 years and 6 months for those born in 1957 and 66 years and 8 months for those born in 1958. That means that anyone born between July 2, 1957 through May 1, 1958 will reach FRA in 2024.
The IRS uses a calculation based on the amount in your retirement account and your life expectancy to determine the minimum amount you are required to take out each year, known as RMDs (required minimum distributions). Secure 2.0 increased the age for starting RMDs from 72 to 73, effective in 2023. If you are subject to RMDs, then you must make your withdrawal by the end of this year or by April 1st next year if it’s your first year being eligible. So if you turn 73 in 2024, you’ll have until April 1, 2025 to make your first RMD.
Anyone receiving more Social Security but paying Medicare premiums may not feel much of a difference in their increased Social Security benefits since standard Medicare Part B premiums are rising by 6%. As many participants have their Medicare premium deducted right from their Social Security payment, the $9.80 increase will take a portion of the average $59 benefit increase. The annual deductible will also increase this year from $226 to $240.
Insureyouknow.org It will always be important to review your retirement savings every year, but this is becoming even more important to do in the face of rising costs and changing regulations. With Insureyouknow.org, storing all of your financial information in one easy-to-review place can help you ensure that you are still on track to meet your retirement goals at the start of each annual review.
How ChatGPT is Shaping Retirement
October 15, 2023
Chat GPT is an artificial intelligence program that can answer human questions. This chatbot is able to understand human language that is spoken or written and then uses algorithms to process and analyze this information in order to produce answers. For instance, you may ask ChatGPT informative questions such as how climate change is affecting endangered species, but Chat GPT can even be directed to write a poem. When it comes to finances, ChatGPT may even be able to help someone begin their retirement planning.
ChatGPT Provides Content, Not Human Advice
Anyone can ask ChatGPT anything, and they will receive a remarkably well-rounded response. If someone were to ask what their retirement plan should include, the chatbot will provide an outline of the basic elements of a common retirement plan. The problem with this is that ChatGPT won’t know the person asking the question and be able to understand the individual details of their life that would make a difference in their retirement planning.
While Chat GPT may not completely replace the value of a human financial advisor, that doesn’t mean that financial advisors won’t need to change the way in which they advise clients to plan for their retirement. If anyone can get a basic plan through ChatGPT, then the services provided by an advisor need to become more about the one thing ChatGPT can’t provide: the human understanding and emotional side of advice. Despite having spent decades taking the emotion out of financial decisions, financial professionals will have to pivot to provide more humanity than ever.
How AI Can Improve an Advisor’s Abilities
Once upon a time, the internet threatened travel agents everywhere, as people could suddenly book their own plane tickets, hotel rooms, and rental cars themselves, from the comfort of their home computers. But travel agents are alive and well, and that’s because the internet still couldn’t do one thing that an agent could: understand a client’s needs and provide personal advice. Instead of mere transactional planning, personalized insight is the new premiere service that a travel agent can provide, and financial planners can grow to do the same.
While ChatGPT can provide concrete information, it cannot begin to factor in the unique preferences of an individual. True conversation is more than the exchange of information. It involves feelings and the confirmation that the person you’re speaking with understands you. A good financial advisor already understands this. Their job is about more than just offering retirement plans; people need empathy. Financial advisor Patti Brennan says her clients “are looking for someone who isn’t just focused on managing their money; that’s just table stakes. What they really want is to know they’ve got someone they can count on during times of crisis; someone who will be a trusted advocate for their future and quality of life.”
Mitchell Morrison, CEO and founder of Eyeballs Financial, says, “ChatGPT is like building a chassis for the financial plan. Its chief weakness is that the answers you get are only as good as the questions you ask.”
While a machine can provide the building blocks of a good plan, an advisor has the capability to understand the complexities of financial planning and the nuances of a person’s life. Together, ChatGPT and the advice from a professional can be used to formulate a plan that is more well-rounded than if someone just relied on one or the other. Rob Leiphart, a certified financial planner at RB Capital Management, adds that, “ChatGPT lacks one crucial step needed in financial planning and investment management: KYC,” or know your client. “It doesn’t begin by asking questions of its own in order to hone its responses. Instead, it provides generic or basic advice,” he says.
While AI ‘s abilities will evolve, financial advisors will be required to as well. Professionals should view ChatGPT as a tool and reevaluate their role in retirement planning. While clients can be well-versed through the framework that ChatGPT can provide them, financial planners can become educators, coaches, and navigators of their retirement plans.
What AI Can Do For You Now
ChatGPT can do more than provide information on how to begin planning for retirement. It can also be used as a resource to think outside of the box in terms of finances. Here are five ways anyone can use ChatGPT to improve their finances now.
Whether you’re interested in supplementing your income now or during retirement, you can ask ChatGPT, “What are the best side gigs for retirees, in my area, or in my field of work?” AI will provide a list of options ranging from consulting, house sitting, or personal errands.
2. Build a better resume
Perhaps you’d like to make more money in your working years or there are a handful of positions you’ve always wished you could land. ChatGPT can help make your resume stand out by suggesting which skills recruiters are looking for in certain positions.
3. Get your business off the ground
ChatGPT could tell you how much you’ll need to start that business you’ve always dreamed of starting, including what resources you’ll need to get going, projected earnings, and even help with sales copy. Whether you’re selling goods or services, you’ll need good advertising to attract potential clients. ChatGPT can provide you with a better idea of what your business idea will entail and help you to create a detailed plan of action.
4. Get tips for writing a better house listing
Planning to make money for retirement by selling your house or planning to move when you can retire are both common goals. An attractive house listing can help you get the best offer on your current property. Paired with gorgeous pictures of your home, ChatGPT can help you write the listing that will get you the most interest. You could even use ChatGPT to help you buy your home elsewhere by researching the most cost effective places to retire.
5. Find financial planners in your area
Once you’ve decided it’s time to start thinking about your retirement, ChatGPT can provide you with a list of qualified and highly-rated financial advisors in your area. Plus, educating yourself through ChatGPT on common retirement plans before you meet with your advisor will give you an idea of what to discuss at your meeting.
Retirement planning can be overwhelming, but you’ll benefit from using every resource available to you, including ChatGPT. For now ChatGPT is an excellent starting point but shouldn’t be the main resource of your final plan. Insureyouknow.org can help you compile your research, store your financial records, and serve as a valuable place to regularly revisit and fine tune your retirement plan.
What Constitutes a True “Emergency”?
May 28, 2018
You’re a responsible person. You’re saving for retirement. You have a 529 plan set up to help pay for your daughter’s college education. Your car is paid off. You have an adequate amount of life insurance. You’re using InsureYouKnow to make sure your loved ones know how to access your important documents and financial information if needed. And you have six months of living expenses set aside in an emergency fund.
Then the unexpected happens: The alternator goes out in your car. It’s going to cost $400 to replace it.
Where do you find the money to pay for it?
If you answered, “My emergency fund,” you may want to take another look at your definition of “emergency.”
Your emergency fund is money you have socked away in case of a major life event, such as a job loss, divorce, or medical issue. This money would be used to cover your day-to-day expenses and bills if needed.
Washington Post columnist Michelle Singletary advocates the use of a separate fund—the “life happens” fund—for those pesky but somewhat predictable expenses that crop up.
“You’ll withdraw money from this fund to pay for unexpected or major expenses that don’t quite fit the dire straits definition,” Singletary wrote. “Car repairs would come out of this account. Start with trying to save $500, ideally increasing to a few thousand.”
Whether you call it the “life happens” fund, the “just in case” fund, or some other term, this fund is for those immediate expenses that aren’t quite catastrophic. These are expenses that result from situations that people often treat as emergencies but that in reality are expected, if irregular, like a broken appliance.
In an ideal world, you’d never touch your emergency fund. You wouldn’t lose your job. You wouldn’t get diagnosed with a major medical condition. You would have a regular, steady income with no major disruptive events in your life. For many people, this is indeed the case. That money sits in an easily accessible savings account where it earns minimal interest but supplies maximum peace of mind.
But even in an ideal world, you’re probably going to tap into your life happens fund fairly regularly. Even the most budget-obsessed person can’t predict every expense that may appear, such as the following:
- A storm blows through, knocking large tree branches onto the roof of your house that have to be sawed apart and hauled away.
- Your dog swallows a tennis ball and needs emergency surgery to remove it.
- Your toddler climbs onto the dishwasher door one too many times and it finally breaks.
- Your aunt dies and you need to fly out for the funeral.
In many of these situations, life is already stressful enough without you needing to scramble to come up with money for the resulting expenses. And you don’t want to tap into your emergency fund because that’s money you never want to touch. The life happens fund is the perfect compromise. Like an emergency fund, it’s kept in a savings account where it’s accessible on a moment’s notice. But unlike an emergency fund, taking money out of it won’t potentially result in your water getting shut off when you suddenly find yourself without an income.
Keep in mind that because you do need to access this fund somewhat regularly, it’s important to replace any money you take out as soon as possible. After all, life happens—and you never know when the next storm is going to pass through town.
Rеtіrеmеnt Plаnnіng
August 31, 2016
Plаnnіng fоr уоur rеtіrеmеnt іѕ nо ѕmаll tаѕk. It rеԛuіrеѕ thаt уоu knоw hоw muсh mоnеу уоu wіll hаvе ѕаvеd uр, аnd hоw muсh уоu wіll nееd реr уеаr fоr еасh уеаr аftеr уоur rеtіrеmеnt. Bоth оf these fасtоrѕ аrе whаt mаkе rеtіrеmеnt fіnаnсіаl рlаnnіng ѕо dіffісult, ѕіnсе уоu hаvе tо kеер trасk оf уоur rеtіrеmеnt ѕаvіngѕ ассоuntѕ аnd іnvеѕtmеntѕ, аѕ wеll аѕ уоur ѕtаndаrd оf lіvіng аnd thе аmоunt іt соѕtѕ tо kеер іt uр.
Thе 403b retirement рlаn іѕ аvаіlаblе tо US rеѕіdеntѕ wоrkіng іn ѕресіfіс ѕесtоrѕ, аnd оffеrѕ аn аttrасtіvе аltеrnаtіvе tо thе uѕuаl 401k. Emрlоуееѕ whо аrе еlіgіblе fоr thе 403b wоrk іn оrgаnіzаtіоnѕ thаt аrе tаx еxеmрt, рublіс ѕсhооlѕ, оr аrе ѕеlf-еmрlоуеd аѕ a rеlіgіоuѕ mіnіѕtеr. Thеrе аrе bеnеfіtѕ fоr bоth thе еmрlоуее аnd thе еmрlоуеr іn сhооѕіng a 403b.
Mаnу соmраnіеѕ uѕе thеіr 403b рlаnѕ tо аttrасt аnd rеtаіn thе bеѕt саndіdаtеѕ fоr еmрlоуmеnt. Onе rеаѕоn whу еmрlоуееѕ bеnеfіt frоm thе 403b іѕ thаt іt hаѕ аn еxсеllеnt mаtсhіng рlаn. Thеrе іѕ аlѕо nо nееd fоr еіthеr thе соmраnу оr thе еmрlоуее tо рау tаx оn соntrіbutіоnѕ thаt аrе gоіng іntо a 403b. Thе recipient оnlу hаѕ tо ѕtаrt рауіng tаx whеn thеу bеgіn tо wіthdrаw fundѕ.
Thеrе is a mаxіmum аmоunt, whісh саn bе раіd іn thаt іѕ ѕеt fоr еvеrу уеаr, аnd employees wіll оnlу rесеіvе thіѕ mаxіmum іf thе соmраnу іѕ dоіng wеll.
It іѕ аlѕо роѕѕіblе tо tаkе оut a lоаn аgаіnѕt thе ассumulаtеd fundѕ іn a 403b, whісh саn bе uѕеful іn аn еmеrgеnсу. Tаkіng оut tуре оf lоаn аnd mаkіng rерауmеntѕ tо іt wіll hаvе tаx соnѕеԛuеnсеѕ, hоwеvеr.
If thе еmрlоуее wіѕhеѕ tо wіthdrаw fundѕ frоm thе 403b bеfоrе thеу hаvе rеасhеd thе еxресtеd аgе оf 59.5 уеаrѕ, thеrе wіll bе fіnаnсіаl реnаltіеѕ. Onсе thе rесіріеnt іѕ оvеr thе аgе lіmіt thеу wіll оnlу bе сhаrgеd tаx fоr thе аmоunt thаt іѕ tаkеn оut, but younger реорlе wіll аlѕо hаvе tо рау аn аddіtіоnаl реnаltу оf 10%.
Pеорlе whо оwn оvеr 5% оf thе соmраnу thаt thеу аrе wоrkіng fоr аrе ѕubjесt tо аddіtіоnаl rulеѕ. Thіѕ іѕ іn оrdеr tо рrеvеnt thе wеаlthіеѕt mеmbеrѕ оf ѕосіеtу frоm uѕіng thе 403b tо ассumulаtе vаѕt аmоuntѕ оf tаx-frее ѕаvіngѕ.
Onсе thе еmрlоуее іѕ оf rеtіrеmеnt аgе thе аmоunt thеу hаvе ѕаvеd іn thе 403b wіll bе dіѕtrіbutеd ассоrdіng tо hоw muсh thеу hаvе ѕаvеd аnd thеіr еѕtіmаtеd lіfе еxресtаnсу. Thіѕ аіdѕ іn dіѕtrіbutіng thе fund in a fаіr mаnnеr. However, іf уоu dо nоt tаkе аt lеаѕt thе mіnіmum рауmеnt аvаіlаblе, уоu wіll bе сhаrgеd tаx оn your 403b ѕаvіngѕ аt a vеrу hіgh rаtе.
Emрlоуееѕ whо аrе еlіgіblе fоr a 403b ѕhоuld tаkе thе tіmе tо mаkе ѕurе thеу undеrѕtаnd bоth thе ѕаvіngѕ thеу саn mаkе оn tаx whіlе thе funds аrе bеіng buіlt uр, аnd thе іntеrеѕt, саріtаl gаіnѕ аnd dіvіdеndѕ thеу саn rесеіvе frоm thе рlаn.
Retirement Planning Tool
August 13, 2016
Planning for retirement? Here’s what you need to know
When it comes to planning for retirement, most people recognize the importance of saving as early as possible but a majority of them do not get started for one reason or the other. Some just don’t have the right mindset for saving while others simply do not have the right knowledge on how to handle their financial planning for a happy retirement.
To address this, we have put together this guide that will help get your investment and retirement planning in order by taking advantage of financial resources and tools such as retirement planning calculator, stock calculator online and investment calculator online.
Let’s get started.
Pay off the expensive debt first
The best thing you can do to maximize your retirement savings is to pay off your debts especially the ones with high interest. This includes credit card debt and car loans which can be toxic for your finances. No matter how much you can possibly regain through savings and investing, this debt will always come out as a net negative for you. So, pay off your expensive credit card debts and car loan first if you really want to supercharge your retirement savings.
Have an emergency fund
A surefire way to put a dent in your savings plan is by not having an emergency fund in place. By doing this, you put yourself at the risk of turning to high-interest credit card debt when an emergency arises which, as mentioned earlier, is something you really don’t want to do. As a general rule of thumb, it is advisable to have at least three to six months’ worth of living expenses in your emergency fund. That way you won’t need to resort to expensive credit card loans in a time of crisis.
Make full use of employer match
If your job comes with a paid-for employer match for your 401k account, take full advantage of it by using it to full capacity. Let’s assume that your employer matches 50 cents for every $1 that you invest, up to a limit of 6 percent of salary meaning that if you invest the full 6 percent of your salary, the employer will invest an additional 3 percent.
In total, you will be putting a healthy 9 percent of your salary towards your retirement. You can use our Retirement Planning Tool to obtain a projection of how maximizing your 401k savings account can affect your retirement plan.
Make and follow a budget
Knowing all your expenses whether big or small and then adjusting them according to your income is a no-brainer if you really want to retire with financial freedom. This can be achieved by budgeting your finances and keeping a track of all your regular expenses and bills. When you know that you need to set aside a specific amount for these expenses each month, you are more likely to make room for savings.
One way to optimize your budget for retirement savings is to categorize your savings as a recurring monthly ‘expense’ rather than literal ‘savings’. You can do this by opening a separate savings account that automatically takes money from your main salary or business account ensuring that laziness or excessive spending doesn’t get the better of you.
Have a solid Financial Plan
While saving money is important, knowing where to invest the money you save for maximum returns is even more important. The process starts with figuring out your existing savings and knowing how much money you’ll need once you retire.
As a general rule, you should plan to have 80 percent of your current annual income in retirement. Adjust this amount with any projected retirement income such as pension or social security and you will get the exact amount you’ll need per year in retirement.
Next is to have a balanced asset allocation strategy and invest your money so that it continues to grow before and after retirement. The best way to achieve this is to diversify your assets in different avenues such as stocks, bonds, commodities and emerging market equities. This protects your investment against any potential volatility in the markets and helps you come out on top in the long run.
Use our online investment calculator to find out the approximate rate of return on your investments by testing a variety of asset allocation scenarios.
Revise your asset allocation over time
With time, your financial situation changes and as you edge closer to retirement you would want to have more easily accessible income. This can be achieved by tweaking your asset allocation as your needs change.
If you have started saving at a young age and don’t have a family to support for the initial few years of your career, it would be wise to keep a majority of your portfolio in growth assets with maximum return. As you grow older, you can move more of your assets to fixed income options such as bonds and high dividend stocks.
Having said that, by no means you should move all your investment away from growth assets as you want your money to do the work for you even after you retire.
Use our online stock calculator and online investment calculator if you need to figure out your ideal asset allocation based on your individual situation, preferences, and retirement goals.
Make use of tax-advantaged retirement accounts
When saving for retirement, one way to fast-track your progress is to make good use of special retirement accounts that are given a tax break from the government. These include 401(k), traditional IRA and Roth accounts allow of which allow you to contribute up to $5000 per year.
With these accounts, you have the option to take out contributions and earnings without paying any tax during retirement. In some cases, you have the option to pay income tax upfront and avoid capital gains and interest taxes in the future. In short, a 401(k), 403(b) and an IRA are all fantastic retirement account options.
Conclusion
To sum it up, starting out as early as possible, using the right retirement planning tools and some careful planning can go a long way towards comfortable retirement. Here at Insure You Know, we understand this fully which has led us to build powerful stock calculator and investment calculator that you can use online to plan your retirement.
InsureYouKnow
August 9, 2016
A New Website App Can Save Users Thousands of Dollars By Simply Keeping Track of Unknown Life Insurance Policies
AUSTIN, Texas, Aug. 4, 2016 – InsureYouKnow.org makes sure beneficiaries do not get separated from benefits by simply not knowing about existing policies.
Insure You Know dot Org’s APP creates a powerful tool to help stop billions of dollars of life insurance policy benefits from going unpaid. Major news outlets report that
courts recently forced 25 of the nation’s biggest life insurance companies to pay more than $7.5 billion in back death benefits. InsureYouKnow.Org stores and updates life’s critical information, saving a person days, weeks, months and possibly years of chasing down information like insurance policies, banking and retirement account information.
Founder Gerry Acuna, referring to a recent 60 Minutes investigation, says, “Audits of some well-known life insurance companies reveal that many beneficiaries go unpaid simply because beneficiaries are not aware of the policies. And because of this, the life insurance company does not have to pay if they are not notified by the beneficiary – we’re talking about billions of dollars in unpaid benefits.”
InsureYouKnow.Org can also record Deeds, Last Will and Testaments, Employment Contracts, Medical/Health Information, Pre-Nuptial Agreements and that’s just for starters. At your discretion, InsureYouKnow.Org will securely share some, or all, of this information with those you choose to share it with. You tell us which loved ones, family members, caretakers, or legal representatives to share your information with. We then send those you designated a monthly notice that helps you and them stay informed.
InsureYouKnow.Orgs’ encrypted site provides a safe and secure place for storing all of your critical time sensitive information that can assist your family, friends, caretakers or executor in meeting your needs at a critical moment.
InsureYouKnow.Org does not ask for your Social Security Number nor does it need complete account numbers. Any Documents you upload (such as Driver’s License, Passport, Last Will and Testament, Pre-Nuptial Agreement, Deeds, etc.) are password encrypted and the password is not known to the site. Only you, or someone you share your password with, can gain access.
Some additional InsureYouKnow.Org features are the ability to help our users locate the least expensive prescription drug prices and medical procedures in their area. The site can also provide a daily financial portfolio update to help you keep your retirement goals on track.
Media Contact:
Gerry Acuna
512-694-0667