Because you can always take out the money you contributed, it makes sense to put as much savings as you can here. Obviously, if possible, it's ideal to leave the money there for retirement and truly maximize the benefit of starting early, but even if you need the money later down the road, you can withdraw some of your contributions and still leave the interest you have earned in the account. Most importantly, I think this helps alleviate the fear of putting this money away that prevents people from putting money away for retirement.
Showing posts with label saving. Show all posts
Showing posts with label saving. Show all posts
Sunday, March 9, 2014
Last chance to set up a 2013 Roth IRA & a reason to do so
Have you filed your 2013 taxes? If not, you can still make a Roth IRA contribution for 2013. My post on saving for retirement outlines some of the benefits of a Roth IRA. However, I missed out on a compelling reason, especially for those who may be hesitant to commit the money. You can withdraw your contributions for any reason with no penalty at any time. How amazing is that?? You could incur penalties for withdrawing your earnings on that money, but you can withdraw up to the amount you contributed at any point in time, penalty free. (For full withdrawal rules on earnings, check out this post by the Oblivious Investor.)
Wednesday, February 5, 2014
Website Wednesday - TaskRabbit
Have you heard about TaskRabbit? This summer I was researching easy ways to save or make money, and I stumbled across an article from CNN Money that praised the site. Background checked (they require your social security number) Task Rabbits are eligible to bid on tasks posted. Posters can either set a fixed price or let Rabbits make offers. Rabbits are rated by Posters so Posters have information on past performance when selecting a Rabbit.
Tasks vary and can be skilled or unskilled but often include things like moving furniture, doing minor home repairs, event help, and online data collection. I joined the site this summer (after extensive research on them before giving them my social security number). All of the tasks I've completed so far have been virtual, but have included reading and reviewing books (discovered a great author that way!), trying and reviewing a beta version of a cell phone game app, and providing feedback for product reviews.
I've found it to be an easy way to generate some extra money without taking on a part time job. The screening process makes it safer than Craigslist. It can also be a great way to get odd jobs done for a reasonable price. A friend in another city bought a piece of furniture on Craigslist and then found a Task Rabbit with a truck to pick it up and transport it, resulting in big savings for her.
Check it out, and let me know what you think!
Saturday, January 4, 2014
Taking the Mystery Out of Retirement Saving
Happy New Year! This is the time of year that many people focus or refocus on getting their finances in better shape, and it's a great opportunity to take a quick inventory of your spending, saving, and investments to see where there can be improvement.
Disclaimer: I am not a financial advisor and all advice is just personal advice from me based on what I've learned and my research.
Retirement planning does not sound like the most exciting of topics, but it honestly is to me. It can be so incredibly rewarding to put money away and just watch it grow.
The biggest advice that I (or anyone else) can give is start early, and contribute what you can, even if it doesn't seem like much. Compounding returns can be a powerful thing over time. I was fortunate enough when I got my first full time job to have a (now ex)boyfriend in the accounting/finance field who instilled in me the fear of becoming a Walmart greeter if we didn't contribute enough to our retirement accounts, so I was stowing away 7% of my small nonprofit salary, which I'm now incredibly grateful for. The money is taken out of each paycheck automatically so you get used to what your take home pay is after this adjustment. There are a number of free online 401k calculators, like this one from Bloomberg that can show you how your contributions over time build up. There are also many articles like this one that explain the benefits of starting early. However, there is no time like the present to get going!
401k Plans
The beginning of the year (whether or not this coincides with a pay increase, but especially if it does) is a great time to look at your retirement contribution amounts. If your company offers a 401k (or a 403b), I highly encourage you to take advantage of it. These plans allow you to contribute pre-tax income, lowering your taxable income. You can contribute up to the maximum annual amount ($17,500 for 2014). An additional "catch up amount" is allowed for those 50 and over.
If you are fortunate enough to work somewhere that offers a 401k match (some employers will match up to a certain percentage of your income if you contribute that much or a part of that, for example Company A will match 100% of your contributions up to 5% of your salary and Company B will match 50% of your contributions up to 3% of your salary), take advantage of it if it's at all financially possible for you to contribute that amount. If you don't, you're leaving money on the table.
Roth IRA Plans
Roth IRAs allow you to contribute post tax money up to $5,500, but then you do not pay taxes in retirement on the growth. There are income limits to contributions (you can contribute up to the maximum if your adjusted gross income is $114,000 or less and you're single or $181,000 or less for a married couple), but check the guidelines if you're slightly over those numbers to see what you can contribute. You can contribute as soon as the new year starts, but you can also do your contribution any time before you file your taxes (ie you can do your 2013 contribution now before you file your 2014 taxes). I've always been encouraged to do the contribution earlier in the year just for longer amount of earnings, but depending on cash flow, do what makes sense for you. I started my Roth IRA a few years ago and I wish I would've started it much earlier. Even if your earnings are under $5,500 for the year, you can contribute up to the amount you learned. A friend in college encouraged me to set one up, but I didn't follow through with it. This would have been a great way to start retirement savings in high school or college when working a part time job. Parents, encourage your children to get started early if they can.
The basics in order:
1. If your employer offers a 401k or 403b match contribute enough to get the maximum match. Check with the HR department if you aren't sure what your employer offers.
2. After that if you can still contribute more(or if you don't have an employer match), contribute to a Roth IRA as much as you can up to the maximum allowed.
3. Still able to save more? Contribute to your 401k or 403b up to the maximum.
Happy saving!
Disclaimer: I am not a financial advisor and all advice is just personal advice from me based on what I've learned and my research.
Retirement planning does not sound like the most exciting of topics, but it honestly is to me. It can be so incredibly rewarding to put money away and just watch it grow.
The biggest advice that I (or anyone else) can give is start early, and contribute what you can, even if it doesn't seem like much. Compounding returns can be a powerful thing over time. I was fortunate enough when I got my first full time job to have a (now ex)boyfriend in the accounting/finance field who instilled in me the fear of becoming a Walmart greeter if we didn't contribute enough to our retirement accounts, so I was stowing away 7% of my small nonprofit salary, which I'm now incredibly grateful for. The money is taken out of each paycheck automatically so you get used to what your take home pay is after this adjustment. There are a number of free online 401k calculators, like this one from Bloomberg that can show you how your contributions over time build up. There are also many articles like this one that explain the benefits of starting early. However, there is no time like the present to get going!
401k Plans
The beginning of the year (whether or not this coincides with a pay increase, but especially if it does) is a great time to look at your retirement contribution amounts. If your company offers a 401k (or a 403b), I highly encourage you to take advantage of it. These plans allow you to contribute pre-tax income, lowering your taxable income. You can contribute up to the maximum annual amount ($17,500 for 2014). An additional "catch up amount" is allowed for those 50 and over.
If you are fortunate enough to work somewhere that offers a 401k match (some employers will match up to a certain percentage of your income if you contribute that much or a part of that, for example Company A will match 100% of your contributions up to 5% of your salary and Company B will match 50% of your contributions up to 3% of your salary), take advantage of it if it's at all financially possible for you to contribute that amount. If you don't, you're leaving money on the table.
Roth IRA Plans
Roth IRAs allow you to contribute post tax money up to $5,500, but then you do not pay taxes in retirement on the growth. There are income limits to contributions (you can contribute up to the maximum if your adjusted gross income is $114,000 or less and you're single or $181,000 or less for a married couple), but check the guidelines if you're slightly over those numbers to see what you can contribute. You can contribute as soon as the new year starts, but you can also do your contribution any time before you file your taxes (ie you can do your 2013 contribution now before you file your 2014 taxes). I've always been encouraged to do the contribution earlier in the year just for longer amount of earnings, but depending on cash flow, do what makes sense for you. I started my Roth IRA a few years ago and I wish I would've started it much earlier. Even if your earnings are under $5,500 for the year, you can contribute up to the amount you learned. A friend in college encouraged me to set one up, but I didn't follow through with it. This would have been a great way to start retirement savings in high school or college when working a part time job. Parents, encourage your children to get started early if they can.
The basics in order:
1. If your employer offers a 401k or 403b match contribute enough to get the maximum match. Check with the HR department if you aren't sure what your employer offers.
2. After that if you can still contribute more(or if you don't have an employer match), contribute to a Roth IRA as much as you can up to the maximum allowed.
3. Still able to save more? Contribute to your 401k or 403b up to the maximum.
Happy saving!
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