2019 IRA and 401(k) Contribution Limits Rise

 

The personal savings rate in the United States hit 6% in 2018.  Relatively speaking that’s not a bad number.  Unfortunately, it probably won’t get you to your long-term financial goals.

It may sound obvious, but if you want to have more money when you retire, you are going to have to save more money when you are working.

Fortunately, the annual limits on how much you can contribute to your IRA, 401k and other workplace retirement savings plans are pretty generous. What’s more, they’ve been increased for 2019.

Consider This Before Moving To A Warmer State

Outside the sun is bright, the skies are blue and it couldn’t be a more beautiful winter day.

It also happens to be -30. Factoring in the wind, it “feels like” -50.

Schools, some government offices and many private businesses are closed. The local power company has just announced an urgent request for homeowners to dial back their thermometers to 60 to reduce demand on the power grid.

To me it sounds like a perfect day to work from home, break out the fingerless gloves, and get a jump on my 2018 tax return.

Of course, life doesn’t have to be this way. Some states never see temps fall below freezing and there’s even a few where state income taxes don’t exist.

However, the move to a more weather and tax friendly state comes at a price.

Before you sell the ice shanty and move to a state where the taxes and temps are more favorable, consider this:

How Much Of Your Social Security Benefit Is Taxable?

4th in a series

Photo by rawpixel on Unsplash

For the past 40 years or more you have paid into the Social Security system with the promise that someday when you retire, you will receive a guaranteed monthly income for the rest of your life. Along the way, your employer has kicked in a matching contribution equal to 100% of your contribution.

At the end of your working life there should be a giant pile of cash with your name on it. And there is (figuratively speaking anyway). But it comes with a giant string attached.

In this case, the catch is that up to 85% of your monthly benefit is considered taxable income once it’s paid out to you. What’s more, depending on the state you live in, you may owe state income tax on those benefits as well. (Bad news fellow Minnesotans. We live in one of those states).

The following post will explain how much of your benefit is taxable and what, if anything, you can do about it.

How Your Social Security Benefits Are Calculated

1st in a series

August 14th marks the 83rd Anniversary of Social Security. To mark the milestone I will be posting additional content throughout the month of August regarding social security benefits and how it effects your retirement plan.

To kick things off, check out this short video describing how your social security retirement benefits are calculated and why it may pay to wait.

 

 

 

How Long Must Your Money Last In Retirement?

The Longevity Illustrator - a useful tool for estimating how long you may live

Photo by Alex Harvey 🤙🏻 on Unsplash

If you can tell me when you are going to die, I can answer a lot of questions for you.

Questions like whether or not you should take the pension or lump-sum option on your retirement plan. Or when to start Social Security. Or how long your money needs to last in retirement.

Of course, no one knows how long they will live or when they will die.

Nevertheless, my job as a financial planner is make sure my retired clients never run out of money during their lifetime, no matter how long that may be.