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Retirement Planning for Singles

Retirement is a big deal for anybody, and that's especially true for single people who may be retiring with just one income and who may have built up a nest egg solely off their own savings. So, we know that single people can and do retire comfortably. In fact, one quarter of people over age 60 are living alone in their household, and that number is slightly higher for women, and that's, of course, due to women's longevity. So what we're going to talk about here is retirement for single people. First, we'll go over some averages to give you a rough idea of what the landscape looks like for single people, then we'll get into how much money you might need as you go into retirement, then we'll talk about some tips that can help improve the chances of retiring comfortably.

Let's start with the average retirement income for single people. So it's $42,000 on average for an individual in retirement, and that comes from the US Census Bureau. The median is a little bit lower at $27,000. So a friendly reminder of how this works: The median is the middle, so if you line up all of the survey results, people telling you what their income is, for example, that arrow points at the middle observation, which would give us the median down at the bottom.

But if we go to the average, that is going to get skewed by, in this case, wealthy people, for example, they have a very high income. When it comes to Social Security, the average is about $1,500 a month or $18,000 per year.Your level depends, of course on your earnings, if you had higher earnings during your working years, then you tend to potentially have a bigger benefit than that, and it could be lower, and then of course, your claiming age is also an important thing. If you claim early at age 62, you get a reduced benefit. That's likely to bring down the amount you get. Next, we have pensions, some people get an income from a job they worked at. That might be in the public sector as a teacher, a firefighter, that sort of thing, or even in the private sector, you could have a pension from your job, and those incomes just are all over the board, it could be high, it could be low, but these are different sources of income that people might have in retirement.

This is just a friendly reminder that this is just one video and it may cover some interesting information, but it's not specific to you so I hope you'll do a lot more research, hopefully check with some professionals and get some individualized advice, and that way you can improve the chances of things going well for you. So now let's talk about how much you might need as you go into retirement. Unfortunately, there's no single answer on what you need because it depends.

So the first step is to figure out what sort of income you're going to need, and I've got other videos on that, I'll put links in the description to get you some more information, but you can look at replacing a portion of your income, or you can just say, I want X amount of dollars per year, or you can go with other approaches, but first we need to know how much income you are hoping for. Next, we tally up your income sources, so that might be some guaranteed income that comes in from Social Security, for example, or from your pension at your workplace, but that forms a base of income and that might or might not cover what you need. But it gives us a base and then if we need to fill that in, we can supplement withdrawals from your retirement savings, so that might be out of your IRA, your 401, 403, these accounts that you have built up over time can provide supplemental income to help fill the gap between that guaranteed income you get and the amount you actually want to spend. There are a number of ways to figure out how much to withdraw and to set up different strategies, there might be bucking strategies, there might be withdrawal strategies like the 4% rule.

Or if you don't like that, make it the 3% rule to be safer, or take out more if you think that's not enough and you're selling yourself short. Ultimately, there are a number of ways to approach this, so you just pick one that works well for you, and again, I can point you to some resources on figuring that out. And finally, you will want to look at taxes and inflation, so during your retirement years, it's reasonable to assume that prices may increase on many of the things you buy, so we want your income to be able to increase as well, Social Security typically does rise, but maybe not at the same rate as the things you're buying, so your withdrawals may need to account for that. Plus we've got taxes. You typically will owe taxes if you're taking distributions or you're taking withdrawals from pre tax retirement accounts. If you have a pension that might be taxable as well. We just want to look at all of these things and figure out what your ultimate money left over to spend each month is going to be.

For an over simplified example, let's just look at Jane Doe. She's 60 years old, she's single, she wants to retire in about five years, she makes about 80,000 a year and has 700,000. A lot of people retire with less than that, a lot of people retire with more. I'm going to bring up my financial planning software that I use with clients, and we'll just go over kind of why there's no single answer on how much you need. Now, if you can tell me exactly how long you'll live and what the markets will do and what inflation will look like, we can tell you exactly what you'll need. But there are a lot of unknowns, so a lot of times we start with a probability of success and I'll go over what that means, and then we look at little tweaks and how different changes might affect that probability of success, so working an extra year might bring her from…

Let's say 75% to 84% likely to succeed. Now, success and failure are pretty complicated. They don't necessarily mean that you go completely broke, but you may need to make some adjustments, so let's talk about what does the success mean? We, again, cannot predict the future, so we say, Let's look back and say, You get dealt 1,000 hands. You're playing a game of cards and you get 1,000 hands. Some of those are good and some of those are bad, so the very good ones tend to be up here, near the top. And you actually end up with a lot of money left over. Some of them are not as good and you end up running out of money early. The median is, again, that one that's right in the middle when we line them up in order for best to worst. And so you might say, you're probably not going to get the best, you're probably not going to get the worst, although anything is possible.

So that's how we go with this likelihood of success. Now, maybe she doesn't want to work an extra year, so we can look at different ways of accomplishing things here. By the way, we've built in some long term care in case she does get sick and needs that at the end of life. She's looking to spend about 4,000 a month, that's after some health care costs that are going to inflate each year, and she's saving a decent amount in some 401K and taxable accounts.

Let's say she goes ahead and maxes out that Roth, is it going to make a big difference? Not really, 'cause she only has five years left. So what we do here is we start looking at all of these different variables and playing with the pieces and figuring out what does it take to make her successful at her retirement, or at least successful enough that she's comfortable making that transition. So here are some tips to improve your chances.

The first is to plan for long term care. If you're living on your own, you don't have somebody in the house who can help you do things, and it's arguable if even a couple is capable of managing this on their own… I mean, if you think about a couple, is one of the people physically able to move the other person around and do they have the skills to provide health care, and the time and the energy, frankly, to provide all that type of care? So it's important for everybody, but it's especially important for single people to plan for this care.

So you can look at getting insurance, you can look at budgeting for some costs, like we showed you in the software, you might want to budget for a much bigger number if you go into memory care or something like that with 24 hour supervision, it can get really expensive quickly. And you can explore different living arrangements, maybe doing things with friends or certain communities that might be a good fit for you. Next is to avoid leaving money on the table so if you were previously married and your spouse passed away or you've been divorced, you may be eligible for benefits. That's maybe from Social Security, you can potentially get a survivor's benefit, or if you were married for at least 10 years and you've been divorced, you can potentially get spousal benefits on your ex spouse's work record.

It's just important to explore all of these to see if there are any resources available for you. Next is to make a plan, and I am of course biased as a financial planner, but I think it is really helpful to go through the process, and the main goal isn't to get a big document that tells you what your financial plan is. Instead, really, the benefit is going through that process and learning a lot about your finances as you do it, and in that process, you get an idea of what the risks are, how you're doing, you might get confidence and clarity on whether or not you can go ahead and retire, if you should do certain things or not.

It's just a very valuable process for a lot of people, but I'll leave that for you to decide. If you found this video helpful, please leave a quick thumbs up. That gives me feedback that this is something you might enjoy more of, so thanks for watching and take care..

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Your Tell-All Guide to Saving for Retirement

I'm Britt, the co-founder of Dow Janes, and 
every single week I have someone asked me   how they can start saving for retirement 
or how much they need or if it's too late   to start saving. Today, I'm going to share my 
top tips for starting to save for retirement.   And don't worry; it's easier than you think.
If you want more ideas for saving, investing,   and making the most of your money, 
don't forget to hit the subscribe button   and the bell so you don't miss any new 
videos. And if you liked this video,   definitely give it a thumbs up.
All right. So, there are some misconceptions   about retirement saving that I want to address. 
First, one thing people often ask us is how much   do I need for retirement? What's the magic number? 
And the truth is it varies widely.

It depends on   where you want to live or what lifestyle you 
want to have or when you want to retire. Are   you trying to retire at 40 or at 70?0.
If you take anything away from today, I want   you to just start saving 20% of your pre-tax 
income for your retirement, and you'll be fine.   To learn more though, keep listening.
Okay. So how do you start saving for   retirement? What you do is you follow the roadmap 
steps. You make sure you're doing things in the   right order. So we have a whole nother video 
on the roadmap steps, but just to recap,   the first thing you want to do is make sure 
you're spending less than you make each month.
  The second thing is to pay off any 
high-interest rate debt you have, which is   anything with an interest rate over 7%, then 
you want to build up an emergency fund.

And   then once you have those three things in place, 
you're ready to start saving for retirement.   So, to do that, you're going to find your monthly 
savings number. You can use a simple retirement   calculator to figure out how much you want to have 
in retirement. I'll link to one in the description   below. What you'll do is you'll add in your 
current savings, anything you've already saved   for retirement already, anything you expect to get 
from social security, and then you'll adjust the   savings amount to see exactly how much you need 
to save each month to be on track, to meet your   retirement goals. It's a super easy calculator, 
you just enter the numbers. It'll spit out exactly   what you need to do, and that number, that savings 
amount, that's going to be your monthly goal.
  So, if you don't already have an account, 
you'll open up a retirement account,   and that's where you'll begin to transfer that 
savings amount to that account each month.
  Where should you save your money? There are 
different types of retirement accounts.

So,   if your employer offers matching, then you'll 
want to open a 401(k) or 403(b). In addition,   you can open a Roth IRA or a traditional IRA. 
IRA stands for Individual Retirement Account.   If you're self-employed, you can also open a SEP 
IRA. So for the Roth traditional or SEP IRAs,   you can open those at any brokerage places 
like Vanguard, Charles Schwab, Fidelity,   or with a robo-advisor like Wealthfront or 
Betterment. Any of those places offer retirement   accounts. So, it's super easy to get started. 
Then if your employer offers 401(k) matching,   you definitely want to advantage of that.
So, what is 401(k) matching? It's when you   save money for your retirement and your company 
contributes the same amount that you save.   They'll often match up to a certain amount 
or a certain percentage of your salary.
  So, if your company matches 4% of your 
salary and you make $5,000 per month,   you could contribute $200 per month towards your 
retirement, and your company would contribute an   additional $200 per month.

So you basically get 
$200 in retirement money for free each month.
  It's a way for companies to incentivize 
their employees to save for retirement.   So, if your employer offers this, definitely take 
advantage of it. It's the easiest free money out   there. And make sure you're contributing the 
maximum amount that they're willing to match.
  Okay. The next thing you'll do, if your employer 
doesn't offer matching, or if you're, um, if   you've already maxed that out, the next thing 
you want to do is max out your contribution to   your Roth or your traditional IRA. So, each year, 
the IRS limits the amount that you're allowed to   contribute. In 2021, the amount is $6,000.
If you're over 50, you have an extra bonus. You   can contribute $7,000. So, try to contribute the 
maximum amount to those accounts each year. So,   max out your 401(k) to where your company matches 
max out your Roth or your traditional IRA. If   you're self-employed, you could also contribute to 
your SEP IRA. If you're a great saver and you're   saving more than those amounts, you can open 
your own brokerage account.

So, a non-retirement   account, and save the money there. You can use 
that money for whatever you want, but you can   know that you're saving that for retirement.
Once you've saved the money in those accounts,   what you're going to do is invest that savings. So 
for the easiest and simplest way to get invested,   you'll invest in target date funds. These 
are pre-made portfolios that allocate your   money to a mix of stocks and bonds that 
are appropriate based on your age.
  If you want to invest in index funds yourself, 
or if you're picking a fund that your employer   offers, then you can use these rules of thumb. 
Generally, you want your portfolio to be invested   in the percentage of stocks that is equal to 
120 minus your age.

So if you're 20 or younger,   you want to have 100% of your portfolio 
in stocks. If you're 30, you want 90%   in stocks, for example. And just a quick 
note that if you invest in target date funds,   that will do that for you. The allocation 
changes the allocation of stocks and bonds   changes over time as you get older.
One quick thing to know is that you   actually don't need to take your money, your 
retirement money, out the year that you retire.   You can leave it invested while you're in 
retirement and just take out what you need,   which means you actually have more time 
than you think for your money to grow.
  So, hopefully that gives you some peace of mind. 
If you're getting started later in the game,   if you're wondering how much you should be 
saving in retirement savings each month,   we have a couple of rules of thumb for you.

And 
the bottom line is the sooner you start saving for   retirement, the less you actually have to save, 
because if you start sooner and you invest that   money, it will grow and it will grow over a longer 
period of time. If you're starting later in life,   you have to save more because it has less 
time to grow. So, if you're in your twenties,   you can save 15% of your pre-tax income each 
month and you'll be set. If you're starting   in your thirties, you want to save 20% of your 
pre-tax income. If you don't have anything saved   and you're just starting to save for retirement in 
your forties or your fifties, you'll need to save   even more since you're starting later and your 
money has less time to grow. If this is you, watch   out for our next video on how to start saving 
for retirement if you're in your fifties.
  All right, the sooner you start saving for 
retirement, the easier it is.

So, here's a recap   of the steps: One, follow our wealth building 
roadmap, so you know what to do in what order.   Two, find your monthly savings. Number three, open 
a retirement account. Four, take advantage of free   money. Five, max out your contributions. Six, 
invest your retirement savings, and seven,   contribute to your retirement savings each 
month. If you want to learn more about how   to build your wealth and invest your retirement 
savings, then definitely check out our webinar,   Think Like an Investor. The link's in the comment 
below.

All right. Thanks for watching..

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How 2024’s Record Retirement Numbers Could Spark a Recession | WSJ

– [Narrator] You're looking at
a chart of the US population, and these are the baby boomers. This year, a record number of them will reach
traditional retirement age. By 2030, they'll all be 65 or older. This is creating a fiscal problem because fewer taxable
workers means less money for social security. – If Congress does nothing,
we're gonna hit a major crisis.

– [Narrator] Here's how
this demographic shift threatens the future of one of the country's most
important government programs and what can be done to fix it. Baby boomers or those born between 1946 and 1964 have been propping
up the US economy for decades. – Their mere numbers
contributed for a long time to rapid economic growth and because every worker
contributed social security that made social security
look very healthy. – [Narrator] But as boomers
started exiting the workforce in 2008, the number of
retirees grew rapidly. – Not only do you have more
retirees collecting benefits for more years, you
have fewer young people entering the workforce
because birth rates were lower for their parents' generation, and that creates a squeeze
on both directions.

Higher expenses from all
those retirees living longer, lower payroll tax revenue from fewer people entering the labor force because of those declining birth rates. – [Narrator] This puts a lot
of pressure on social security and without policy change, projections show the trust
funds will be depleted in 2034. – There's a misconception out there that when the social security
trust fund is exhausted, the system is somehow
bankrupt and there's no money. Social security is an integral part of the federal government, and as long as the federal
government is not bankrupt, social security is not bankrupt. – What's really happening is
the program is running out of treasury bonds, which are basically IOUs
from the government. For many years, social security
was taking in more money than it needed to pay out in
benefits, so it lent money to the government to
use for other programs, and it got IOUs in return. – Around 10 years ago though,
that situation flipped around.

For the last decade, we've been
paying out more in benefits than we've been collecting
in social security revenue. – [Narrator] But because the program had so many IOUs stashed
away from previous years, it's been able to keep
paying benefits in full by cashing in on those IOUs. – Right now, there's
roughly $3 trillion in IOUs, but each year that $3 trillion stash gets a little bit smaller. By the year 2034, all of the
IOUs will have been cashed in. – That means retirees would see overnight about a 25% benefit cut. – [Narrator] This number will
likely increase as the number of workers per retiree continues to fall. – Simply because we're not about to go bankrupt doesn't
mean there's no problem.

There very much is a problem. – [Narrator] Studies
show that the majority of Americans rely on these
monthly benefits checks for retirement income. According to census bureau
data, about 50% of people between 55 and 66 years old
have no retirement savings. – Can you imagine right now if you had to take a 25% reduction
in your take home pay, you still have to pay rent. You gotta buy groceries,
you gotta pay utilities. – It's especially important for those who don't have college degrees, people on the lower end
of the income spectrum. – [Narrator] Fichtner says, when retirees have less retirement income, they also generally spend less money. – That means less economic activity. That means less employment because employers have to lay off people 'cause no longer is that money coming in. It's a ripple effect that could be basically a
senior induced recession. – But social security is only
meant to replace a percentage of a worker's pre-retirement income based on lifetime earnings. So as much as 78% for very
low earners to about 42% for medium earners and
28% for maximum earners. – This is three legged stool
we talk about all the time.

It's supposed to be social
security is one leg, your employer provided pension is a second leg and your
personal savings a third. Well, social security
is financial challenges. We don't have pensions really anymore. About 10% of the population has pensions and then it's hard to save on your own when you've gotta pay off student loans and housing costs are so high. – [Narrator] About half of Americans do have retirement accounts
like 401Ks and IRAs, but those are all subject to market risk. – I hear a lot, well,
those are 65 year olds.

Why do I have to worry
about the boomers today? Well, this impacts every
generation that's coming up behind. – They might not be asked to pay a slightly higher payroll tax. More important, they might be asked to work a little bit longer. – [Narrator] And like most
things in the economy, social security's funding
shortfall isn't an isolated issue. – It's one of the reasons
the federal budget deficits is as large as it is. It means that we have to borrow money, which means issuing bonds. That tends to put up
pressure on interest rates, which means it's harder to afford a house. It means that Congress might have to cut spending on other
programs like the military or the environment in order to make sure that there's enough money
for social security. – [Narrator] So what needs to
happen to put social security on more sound footing? Congress needs to pass a law. – Congress has stood still and not enhanced social
security since Richard Nixon.

– [Narrator] When and what kind of law, that we still don't know. There's been a number of proposed
solutions over the years. – This legislation demands that the wealthiest people in this country start paying their fair share of taxes, – But policymakers generally
disagree on whether to raise taxes or cut benefits. – You'll have two approaches
to how to solve this problem, and you're not gonna do it. – There's probably no single magic bullet, which will put social security
on a long-term footing. Instead, Congress is
probably going to have to look at a variety of steps which will collectively fix the problem.

– [Narrator] But economists
don't expect action to be taken anytime soon. – Everybody, including on Capitol Hill, knows that social security has a problem. Nobody, especially those in Capitol Hill, are prepared to do anything about it. – As we all apparently
agree, social security and Medicare is off the books now, right? They're not to be smart.
(clapping and cheering) – We all would wish that
politicians would show the political courage
necessary to tackle this now and not wait until the 11th hour. Benefits and changes to retirement programs
take a while to phase in. One of the last major reforms we had for social security were the 1983 reforms. – [Narrator] Those amendments
raised the retirement age to 67, but it took nearly
40 years to phase them in.

– There is a 10 year window, but we don't have 10 years to act. – There has to be some kind
of a legislative solution that comes along between now and then. By law, the program can't
borrow anywhere else. The program's too important,
too popular for it to basically be allowed
to run out of money..

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Retirement Planning for Singles

Retirement is a big deal for anybody, and that's especially true for single people who may be retiring with just one income and who may have built up a nest egg solely off their own savings. So, we know that single people can and do retire comfortably. In fact, one quarter of people over age 60 are living alone in their household, and that number is slightly higher for women, and that's, of course, due to women's longevity. So what we're going to talk about here is retirement for single people. First, we'll go over some averages to give you a rough idea of what the landscape looks like for single people, then we'll get into how much money you might need as you go into retirement, then we'll talk about some tips that can help improve the chances of retiring comfortably. Let's start with the average retirement income for single people. So it's $42,000 on average for an individual in retirement, and that comes from the US Census Bureau. The median is a little bit lower at $27,000.

So a friendly reminder of how this works: The median is the middle, so if you line up all of the survey results, people telling you what their income is, for example, that arrow points at the middle observation, which would give us the median down at the bottom. But if we go to the average, that is going to get skewed by, in this case, wealthy people, for example, they have a very high income. When it comes to Social Security, the average is about $1,500 a month or $18,000 per year.Your level depends, of course on your earnings, if you had higher earnings during your working years, then you tend to potentially have a bigger benefit than that, and it could be lower, and then of course, your claiming age is also an important thing. If you claim early at age 62, you get a reduced benefit. That's likely to bring down the amount you get.

Next, we have pensions, some people get an income from a job they worked at. That might be in the public sector as a teacher, a firefighter, that sort of thing, or even in the private sector, you could have a pension from your job, and those incomes just are all over the board, it could be high, it could be low, but these are different sources of income that people might have in retirement. This is just a friendly reminder that this is just one video and it may cover some interesting information, but it's not specific to you so I hope you'll do a lot more research, hopefully check with some professionals and get some individualized advice, and that way you can improve the chances of things going well for you.

So now let's talk about how much you might need as you go into retirement. Unfortunately, there's no single answer on what you need because it depends. So the first step is to figure out what sort of income you're going to need, and I've got other videos on that, I'll put links in the description to get you some more information, but you can look at replacing a portion of your income, or you can just say, I want X amount of dollars per year, or you can go with other approaches, but first we need to know how much income you are hoping for. Next, we tally up your income sources, so that might be some guaranteed income that comes in from Social Security, for example, or from your pension at your workplace, but that forms a base of income and that might or might not cover what you need. But it gives us a base and then if we need to fill that in, we can supplement withdrawals from your retirement savings, so that might be out of your IRA, your 401, 403, these accounts that you have built up over time can provide supplemental income to help fill the gap between that guaranteed income you get and the amount you actually want to spend.

There are a number of ways to figure out how much to withdraw and to set up different strategies, there might be bucking strategies, there might be withdrawal strategies like the 4% rule. Or if you don't like that, make it the 3% rule to be safer, or take out more if you think that's not enough and you're selling yourself short. Ultimately, there are a number of ways to approach this, so you just pick one that works well for you, and again, I can point you to some resources on figuring that out. And finally, you will want to look at taxes and inflation, so during your retirement years, it's reasonable to assume that prices may increase on many of the things you buy, so we want your income to be able to increase as well, Social Security typically does rise, but maybe not at the same rate as the things you're buying, so your withdrawals may need to account for that.

Plus we've got taxes. You typically will owe taxes if you're taking distributions or you're taking withdrawals from pre tax retirement accounts. If you have a pension that might be taxable as well. We just want to look at all of these things and figure out what your ultimate money left over to spend each month is going to be. For an over simplified example, let's just look at Jane Doe.

She's 60 years old, she's single, she wants to retire in about five years, she makes about 80,000 a year and has 700,000. A lot of people retire with less than that, a lot of people retire with more. I'm going to bring up my financial planning software that I use with clients, and we'll just go over kind of why there's no single answer on how much you need. Now, if you can tell me exactly how long you'll live and what the markets will do and what inflation will look like, we can tell you exactly what you'll need. But there are a lot of unknowns, so a lot of times we start with a probability of success and I'll go over what that means, and then we look at little tweaks and how different changes might affect that probability of success, so working an extra year might bring her from…

Let's say 75% to 84% likely to succeed. Now, success and failure are pretty complicated. They don't necessarily mean that you go completely broke, but you may need to make some adjustments, so let's talk about what does the success mean? We, again, cannot predict the future, so we say, Let's look back and say, You get dealt 1,000 hands. You're playing a game of cards and you get 1,000 hands. Some of those are good and some of those are bad, so the very good ones tend to be up here, near the top. And you actually end up with a lot of money left over. Some of them are not as good and you end up running out of money early. The median is, again, that one that's right in the middle when we line them up in order for best to worst.

And so you might say, you're probably not going to get the best, you're probably not going to get the worst, although anything is possible. So that's how we go with this likelihood of success. Now, maybe she doesn't want to work an extra year, so we can look at different ways of accomplishing things here. By the way, we've built in some long term care in case she does get sick and needs that at the end of life. She's looking to spend about 4,000 a month, that's after some health care costs that are going to inflate each year, and she's saving a decent amount in some 401K and taxable accounts. Let's say she goes ahead and maxes out that Roth, is it going to make a big difference? Not really, 'cause she only has five years left. So what we do here is we start looking at all of these different variables and playing with the pieces and figuring out what does it take to make her successful at her retirement, or at least successful enough that she's comfortable making that transition.

So here are some tips to improve your chances. The first is to plan for long term care. If you're living on your own, you don't have somebody in the house who can help you do things, and it's arguable if even a couple is capable of managing this on their own… I mean, if you think about a couple, is one of the people physically able to move the other person around and do they have the skills to provide health care, and the time and the energy, frankly, to provide all that type of care? So it's important for everybody, but it's especially important for single people to plan for this care. So you can look at getting insurance, you can look at budgeting for some costs, like we showed you in the software, you might want to budget for a much bigger number if you go into memory care or something like that with 24 hour supervision, it can get really expensive quickly.

And you can explore different living arrangements, maybe doing things with friends or certain communities that might be a good fit for you. Next is to avoid leaving money on the table so if you were previously married and your spouse passed away or you've been divorced, you may be eligible for benefits. That's maybe from Social Security, you can potentially get a survivor's benefit, or if you were married for at least 10 years and you've been divorced, you can potentially get spousal benefits on your ex spouse's work record. It's just important to explore all of these to see if there are any resources available for you.

Next is to make a plan, and I am of course biased as a financial planner, but I think it is really helpful to go through the process, and the main goal isn't to get a big document that tells you what your financial plan is. Instead, really, the benefit is going through that process and learning a lot about your finances as you do it, and in that process, you get an idea of what the risks are, how you're doing, you might get confidence and clarity on whether or not you can go ahead and retire, if you should do certain things or not. It's just a very valuable process for a lot of people, but I'll leave that for you to decide. If you found this video helpful, please leave a quick thumbs up. That gives me feedback that this is something you might enjoy more of, so thanks for watching and take care..

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3 Retirement Savings Tips Before Year-End (Full Webinar)

Welcome, everyone, thank you for joining us today. My name is Ewelina Caplap, Wealth Management operations manager at Coastal Credit Union, where we bank better to live better. Today, we will be sharing with you three retirement savings tips before year end. So hopefully today you will come out of this session with some great action items. Joining me today are David Burk, CFS financial advisor, and Drew Snider, CFP, director of financial planning here at Coastal Credit Union. Welcome to you both. So before we get into our exciting conversation, we will very quickly cover our disclosure slide. Coastal Credit Union contracts with CUSO Financial Services to offer investment products to its members, which can fluctuate with market activity and potentially have some risk. So getting into our exciting conversation today about three retirement savings tips for year end. At this time, let's talk about tip one. Tip one, Roth IRAs. We hear about Roth IRAs quite a lot and the potential tax free income they provide. David, why don't you start us off with a little bit about what this tip is? Thanks, Ewelina.

A Roth IRA is an IRA that you're actually using after-tax dollars to invest in a credit union or an investment Roth IRA and letting that grow tax deferred so that after age 59 and a half, you'll be able to withdraw money out of that account that is 100 percent tax free. That's a huge financial and tax benefit that you should certainly consider before year end. Why don't you add a little bit more to that, Drew? Yeah, the Roth IRA is is definitely the greatest savings tool we have for retirement. As the illustration shows, the seed for our tree is what's getting taxed. And then you grow this beautiful tree with all this great money on it and you get to take the money off and you don't pay taxes on the money.

So it's fantastic and everyone should consider if they can do it or not. The beauty of looking at a Roth IRA going into December is you have a vision of what your income is for the year and you have limitations on contributions based on what your income was for twenty twenty one. So if your income is basically under about one hundred twenty five thousand dollars as a single person or one hundred ninety eight thousand dollars as joint filers, you should definitely be looking at a Roth IRA and coming into the credit union and talking to us to see if it'll work for you. That's excellent. What a great first tip to consider taking care of before the year end. So we're now going to move over to tip number two, and we're going to talk about some 401(k)s. What can you tell us here, David? 401(k)s are offered typically through an employer or as an employer sponsored retirement plan. They've been around for quite some time now, and many employees should be taking full advantage of this retirement savings.

And again, since we're now getting towards the end of the year, it's always a benefit to evaluate your income at this year, like Drew mentioned in the previous slide. But then also what your income will be next year and give yourself a savings raise of trying to increase your savings. Drew, I'll let you expand more about the comparison of Nick versus Maria and what their savings has done over time. Sure, I'd be happy to. This is a very simple graphic of two individuals who make the same amount of money and started off saving the same amount of money, the same percentage to their 401k plan. Nick maintained that savings rate, whereas Maria, each year, increased her savings rate by one percent or her contribution rate by one percent to her 401k plan until it maxed out at 15 percent.

And you can see that over time, Maria had quite a bit more money. This is after 30 years. She had twice as much money for retirement as did Nick. And you know what? You don't really need to concentrate on anything other than the fact that that right bar looks a lot bigger than the left bar. So with proper planning, we can help our viewers get there. Yeah, just one more comment here. Before year end, everyone should take a look at their 401k statement and see if they maximized. If they're trying to maximize the amount that they can contribute, they should take a look at that and see if they've been able to do that this year, because a lot of people may think that they are maximizing their contributions when in fact they haven't.

Right? Good point. And another thing, I'm not sure if we mentioned it, if you have a Roth 401k option on your plan, if we're talking about a Roth IRAs, certainly Roth 401k option is something that our viewers should be looking into. Can either one of you speak to that for a minute? Yeah, that's an interesting comment, Ewelina, because that's still relatively new in the marketplace and offered through employer 401k plans, but the numbers are astounding how few people are really taking full advantage of that Roth opportunity in their 401k. And what that means is, you can actually contribute more towards your Roth 401k than you can a Roth IRA outside of your employer-sponsored plan. Plus, your income is not a restrictive factor in being able to contribute to the Roth 401K plan. And just add to that, I would encourage anybody, even high income people who really do like the tax deduction that they're getting from their traditional 401k contributions. It's not an either/or situation. You know, if you're not doing either traditional or Roth, you can do some in both.

Personally, I do some in both of mine. I do some in the traditional and I do some in the Roth in my contributions. I do the same thing on my own planning as well. Well, certainly a lot to take in and consider for year end. So we're going to move on to our final tip. Tip three. Health savings accounts, right? HSAs. And who doesn't like the sound of triple tax savings? So, David, what don't you tell us a little bit about that first? The triple tax saving on a health savings account is phenomenal, and many people have completely overlooked this opportunity for their own household and and being able to save tax free money. So what ends up happening. If your employer offers you a high deductible health account, then you can participate in an HSA.

And what you're able to do is contribute on an individual basis or as a family, and that money can be tax deductible as far as the contribution. Once that money is in your HSA, it grows tax deferred. And then when you're ready to start withdrawing money from an HSA for a qualifying medical or health care expense, it's one hundred percent tax free as a distribution. And I want to comment here. As as you come to the year end, some employers are going to contribute some money to your HSA for you. You can add the rest up to the maximum. And you have until April 15th to do that. But the year end is a great time to take a look to see how much your employer has put into that plan for you. And then what is the calculation? What's the amount that you can add to it? Because you can reduce your taxes in your 2021 tax return, you get tax deferral and you can take the money out tax free for qualified health care expenses.

Excellent. So it sounds like there's a lot to get done here working with Team Coastal. So who are we right? Who is Team Coastal? Drew, can you talk to us about how we can help our viewers in meeting these three tips? Putting them into action? Yeah. Whether you're talking to Coastal Wealth Management about these concepts that we talked about today, or if you go into the branch, the credit union, you're going to get a team of experienced people that are going to be able to help you make your contributions, maximize your retirement. At Coastal, they're going to talk to you about your savings account options and Wealth Management.

If you have a more longer term perspective, we're going to show you some investment options for your IRAs. And then, you know, one thing about Coastal Wealth Management is, you know, we have lots of options to help you to find a great solution that you're comfortable with. That fits your risk tolerance and your needs, and we're all working together. So whether you talk to someone at the branch and you tell them, Hey, I'd like to get a better rate of return, than you're offering in that savings account, they're going to bring us into the conversation with Wealth Management so we can talk to you about how we can help. So we're all working together at Team Coastal. And then obviously, if you want to do a financial plan with us, we'd be happy to help you with that. Absolutely. And speaking of that financial plan, for our viewers, if they are not aware, it is a complimentary financial review to meet with our team and discover all the options available to you with Team Coastal, whether that be something that our retail team can help you or our Wealth Management department specifically, we all work together and can hopefully help you reach your goals.

Schedule your complimentary Financial Review with us today. You can call us at 919-882-6655. You can certainly send us an email [email protected]. And of course, you can find us online as well. There are some action items to take here with these three tips before year end. We're happy to help you with that. Thank you again… David Burke, CFS financial advisor, one of our dedicated advisors for being with me here today, and of course, Drew Snider, our financial planning director here at Coastal Credit Union. Thank you for your time today and thank you to our viewers for joining us.

And reach out to us. We'll be happy to help you..

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New IRA & 401K Early Withdrawal Rules Starting in 2024 | Early Retirement Guide

President Biden just signed a 1.7 trillion dollar government spending bill on December 29th which includes the 53 billion retirement bill that will have a lot of changes starting in 2023 24 and 25. a few weeks ago I did a video on the new 401K perks and Rule changes this video is to focus on the withdrawal rule changes for tax penalties for your IRA and 401K generally speaking if you touch your retirement before you turn 59 and a half there will be a 10 tax penalty and there are already exceptions to the 401k or IRA 10 penalty rule If you experience a significant life event but there are four new rules that I want to make sure that you're aware of however unless it is a matter of life and death I would never recommend or encourage you to make an early withdrawal from your retirement accounts taking money out of your retirement accounts should be your very last resort my wife and I have a fully funded emergency fund that will cover at least six months of expenses if one of us loses job becomes physically incapacitated or has any significant life event and we will always deplete our cash and investment accounts before we touch our retirement accounts because every dollar I withdrawal now will have severe consequences and possibly even delay my retirement but I want I want to make sure you guys are aware of the rule changes so you can educate yourselves about your retirement accounts but anyway I'm gonna put chapters in this video so you can feel free to jump into the video that applies to your financial situation and if you need help with your personal finances like creating a budget or savings plan to achieve your financial Independence you can't schedule a free one-on-one 20-minute Financial coaching session by visiting fivestarchy.com coaching the first provision that got added under secure act 2.0 was a terminal illness and it surprises me that it took Congress this long to waive the 10 penalty for people with terminal illnesses the law defines terminally ill as an illness or physical condition that can be be expected to result in death within 84 months of a doctor's assessment which will be substituted for 24 months so if you haven't reached the regular retirement age of 59 and a half and you're diagnosed with a terminal illness with a qualified physician then the IRS will forgive the 10 penalty but you'll still owe federal and state income taxes this is on page 2280 of the 4100 page Consolidated Appropriations Act of 2023 the next provision they added was to allow domestic abuse victims from a spouse or domestic partner to withdraw up to ten thousand dollars in retirement funds within a year of the incident this rule will take effect in 2024 and I'm not sure why we can't start this now but this is on page 2253 of the spending bill in section 314.

It's up to ten thousand dollars or fifty percent of the present value of the non-forfeitable accrued benefit of the employee under the plan and the one-year period begins on any date on which the individual is a victim of domestic abuse by a spouse or domestic partner the definition of domestic abuse is on page 2254 under subparagraph two now I've seen comments in the in a past video about how stay home spouses or parents can't have any retirement funds as a stay-at-home parent or spouse you can actually set up what's called a spousal Roth IRA if you and your spouse are filing your taxes jointly I did a video on that and I encourage you to share that video with people you know and look if you're a victim of domestic violence or abuse please call the National Domestic Violence Hotline at 1-800-799-7233 people who have physically abuse their spouses or partners are some of the biggest pieces of crap or just scums and I witnessed domestic abuse as a child growing up and no one ever deserves to be abused and you should never be responsible for your partner or spouse's abuse of actions let me move on to the next topic before I get all spun up the next two Provisions are pretty much the same but starting in 2024 you won't get penalized with joining retirement funds for certain emergency expenses and these emergency expenses must be considered unforeseeable or immediate costs related to personal or family emergencies you can withdraw up to one thousand dollars a year and I mentioned that in the 401K video but you're going to be waived to 10 penalty as well you still have to repay the initial distribution of one thousand dollars within three years unless you make regular contributions to your 401k that eventually reach your withdrawal amount and the other one is allowing Americans to withdraw up to twenty two thousand dollars without the 10 penalty in the case of a federally declared disaster so hopefully you don't have to go through this but if you ever experience a loss of Home due to a tornado hurricane or earthquake and need more than what you you're having your emergency fund the 22 000 is taxed as gross income over the next three years instead of one year so instead of being taxed twenty two thousand dollars you could be taxed for just seventy seven thousand three hundred every year for the next three years starting on page uh 2285 of the spending bill it tells you that it needs to be a federally declared disaster so if you had a flood like I did last year for my broken toilet bowl you're not going to be qualified for the special distribution so we came home from a four day vacation to a flood at home because our toilet bowl cracked right down the middle and I will show you the video right here and it took us about four months to completely replace the flooring drywalls and painting and this is why I strongly encourage you to get my financial Independence resources including spreadsheets for savings and Investments for absolutely free by visiting.com contact you can also check out the fire such as shop if you're looking to start your own YouTube channel and I have all of my books and equipment at 5 shopping and here are the existing exceptions to the 10 penalty for those under the age of 59 and a half the first one is using your IRA for higher education expenses the IRS will actually waive your 10 penalty uh if you use your IRA funds to pay qualifying higher education costs for you your spouse your children or even your grandchildren the eligible cost will include tuition fees books and other school or education related expenses and keep in mind that this is for students in a college University or Vocational School in my opinion you should not use your IRA to fund your you or your children's education who have the 529 College savings plan to do exactly that you should treat your IRA as your retirement account right just remember that your children's College will last four years but your retirement is forever the next one is the first time home buyer exemption with your IRA and the definition of a first-time homebuyer is actually someone who hasn't owned a home in the last two tax years you can withdraw up to a lifetime maximum of ten thousand dollars without the ten percent penalty from your IRA and according to the IRS you have to use ten thousand dollars within 120 days of the distribution you can use the money for yourself your spouse or your child if you and your spouse are both first-time homebuyers you can each withdraw up to ten thousand dollars from your IRAs without penalties my advice is not to use your IRA to buy a home because once again you could significantly delay your retirement if you withdraw that ten thousand dollars now the better question is how long will it take you for you to save ten thousand dollars in a high yield savings account the next existing provision is to use your IRA to pay for your health insurance premiums if you lose your job and you have to provide proof of unemployment compensation from the federal or state unemployment program for 12 consecutive weeks you owe also have to make the IRA withdrawal without the 10 penalty within the same year or the following year that you received unemployment compensation and the other waiver is a distribution to cover your medical expenses we all know how broken the U.S Health Care system is but you can't withdraw up to 7.5 percent of your annual adjusted gross income to pay for your unreimbursed medical expenses so for example if you your adjusted gross income was one hundred thousand dollars in 2022 then you can make a withdrawal of up to 7500 to cover your unreimbursed medical expenses if you got your medical statement in 2022 and you didn't make the payment until 2023 it will still count for the 2022 tax year so I just want to make sure you're aware of that the IRA withdrawal will also have to happen in the same year in 2022 to get the penalty waiver and if you just had a baby or adopted a child each parent can actually use up to five thousand dollars per birth or adoption from their retirement accounts the withdrawal just has to be the same year your child was born or the date you legally adopted your child and and the other provision that's been around for a while is waving a 10 penalty for reservists who got orders or called into active duty for at least 180 days if you need to make a withdrawal for some reason you have to provide proof of your military orders and make sure the withdrawal day happens on or after the first date of your orders let me know in the comment section down below if you are a veteran I'm an Air Force veteran myself and I've helped many veterans get out of debt budget and save for their future if you ever have any questions you can always hit me up on Instagram and just say hi on Instagram or go to Fireside chat.com contact to schedule a one-time private coaching session for completely free but if you want to just stay on YouTube and you want to watch more videos about the new 401K rules and how I'm saving to retire early by age 45 be sure to check out these two videos so with that said I appreciate you watch my video don't forget to subscribe and I hope to see you in the next video have a good one [Music] thank you

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3 Retirement Savings Tips Before Year-End (Full Webinar)

Welcome, everyone, thank you for joining us today. My name is Ewelina Caplap, Wealth Management operations manager at Coastal Credit Union, where we bank better to live better. Today, we will be sharing with you three retirement savings tips before year end. So hopefully today you will come out of this session with some great action items. Joining me today are David Burk, CFS financial advisor, and Drew Snider, CFP, director of financial planning here at Coastal Credit Union. Welcome to you both.

So before we get into our exciting conversation, we will very quickly cover our disclosure slide. Coastal Credit Union contracts with CUSO Financial Services to offer investment products to its members, which can fluctuate with market activity and potentially have some risk. So getting into our exciting conversation today about three retirement savings tips for year end. At this time, let's talk about tip one. Tip one, Roth IRAs. We hear about Roth IRAs quite a lot and the potential tax free income they provide. David, why don't you start us off with a little bit about what this tip is? Thanks, Ewelina.

A Roth IRA is an IRA that you're actually using after-tax dollars to invest in a credit union or an investment Roth IRA and letting that grow tax deferred so that after age 59 and a half, you'll be able to withdraw money out of that account that is 100 percent tax free. That's a huge financial and tax benefit that you should certainly consider before year end. Why don't you add a little bit more to that, Drew? Yeah, the Roth IRA is is definitely the greatest savings tool we have for retirement.

As the illustration shows, the seed for our tree is what's getting taxed. And then you grow this beautiful tree with all this great money on it and you get to take the money off and you don't pay taxes on the money. So it's fantastic and everyone should consider if they can do it or not. The beauty of looking at a Roth IRA going into December is you have a vision of what your income is for the year and you have limitations on contributions based on what your income was for twenty twenty one.

So if your income is basically under about one hundred twenty five thousand dollars as a single person or one hundred ninety eight thousand dollars as joint filers, you should definitely be looking at a Roth IRA and coming into the credit union and talking to us to see if it'll work for you. That's excellent. What a great first tip to consider taking care of before the year end. So we're now going to move over to tip number two, and we're going to talk about some 401(k)s. What can you tell us here, David? 401(k)s are offered typically through an employer or as an employer sponsored retirement plan.

They've been around for quite some time now, and many employees should be taking full advantage of this retirement savings. And again, since we're now getting towards the end of the year, it's always a benefit to evaluate your income at this year, like Drew mentioned in the previous slide. But then also what your income will be next year and give yourself a savings raise of trying to increase your savings. Drew, I'll let you expand more about the comparison of Nick versus Maria and what their savings has done over time. Sure, I'd be happy to. This is a very simple graphic of two individuals who make the same amount of money and started off saving the same amount of money, the same percentage to their 401k plan. Nick maintained that savings rate, whereas Maria, each year, increased her savings rate by one percent or her contribution rate by one percent to her 401k plan until it maxed out at 15 percent.

And you can see that over time, Maria had quite a bit more money. This is after 30 years. She had twice as much money for retirement as did Nick. And you know what? You don't really need to concentrate on anything other than the fact that that right bar looks a lot bigger than the left bar. So with proper planning, we can help our viewers get there. Yeah, just one more comment here.

Before year end, everyone should take a look at their 401k statement and see if they maximized. If they're trying to maximize the amount that they can contribute, they should take a look at that and see if they've been able to do that this year, because a lot of people may think that they are maximizing their contributions when in fact they haven't. Right? Good point. And another thing, I'm not sure if we mentioned it, if you have a Roth 401k option on your plan, if we're talking about a Roth IRAs, certainly Roth 401k option is something that our viewers should be looking into. Can either one of you speak to that for a minute? Yeah, that's an interesting comment, Ewelina, because that's still relatively new in the marketplace and offered through employer 401k plans, but the numbers are astounding how few people are really taking full advantage of that Roth opportunity in their 401k.

And what that means is, you can actually contribute more towards your Roth 401k than you can a Roth IRA outside of your employer-sponsored plan. Plus, your income is not a restrictive factor in being able to contribute to the Roth 401K plan. And just add to that, I would encourage anybody, even high income people who really do like the tax deduction that they're getting from their traditional 401k contributions. It's not an either/or situation. You know, if you're not doing either traditional or Roth, you can do some in both. Personally, I do some in both of mine. I do some in the traditional and I do some in the Roth in my contributions.

I do the same thing on my own planning as well. Well, certainly a lot to take in and consider for year end. So we're going to move on to our final tip. Tip three. Health savings accounts, right? HSAs. And who doesn't like the sound of triple tax savings? So, David, what don't you tell us a little bit about that first? The triple tax saving on a health savings account is phenomenal, and many people have completely overlooked this opportunity for their own household and and being able to save tax free money.

So what ends up happening. If your employer offers you a high deductible health account, then you can participate in an HSA. And what you're able to do is contribute on an individual basis or as a family, and that money can be tax deductible as far as the contribution. Once that money is in your HSA, it grows tax deferred. And then when you're ready to start withdrawing money from an HSA for a qualifying medical or health care expense, it's one hundred percent tax free as a distribution. And I want to comment here. As as you come to the year end, some employers are going to contribute some money to your HSA for you. You can add the rest up to the maximum. And you have until April 15th to do that. But the year end is a great time to take a look to see how much your employer has put into that plan for you. And then what is the calculation? What's the amount that you can add to it? Because you can reduce your taxes in your 2021 tax return, you get tax deferral and you can take the money out tax free for qualified health care expenses.

Excellent. So it sounds like there's a lot to get done here working with Team Coastal. So who are we right? Who is Team Coastal? Drew, can you talk to us about how we can help our viewers in meeting these three tips? Putting them into action? Yeah. Whether you're talking to Coastal Wealth Management about these concepts that we talked about today, or if you go into the branch, the credit union, you're going to get a team of experienced people that are going to be able to help you make your contributions, maximize your retirement. At Coastal, they're going to talk to you about your savings account options and Wealth Management. If you have a more longer term perspective, we're going to show you some investment options for your IRAs. And then, you know, one thing about Coastal Wealth Management is, you know, we have lots of options to help you to find a great solution that you're comfortable with.

That fits your risk tolerance and your needs, and we're all working together. So whether you talk to someone at the branch and you tell them, Hey, I'd like to get a better rate of return, than you're offering in that savings account, they're going to bring us into the conversation with Wealth Management so we can talk to you about how we can help. So we're all working together at Team Coastal. And then obviously, if you want to do a financial plan with us, we'd be happy to help you with that. Absolutely. And speaking of that financial plan, for our viewers, if they are not aware, it is a complimentary financial review to meet with our team and discover all the options available to you with Team Coastal, whether that be something that our retail team can help you or our Wealth Management department specifically, we all work together and can hopefully help you reach your goals. Schedule your complimentary Financial Review with us today. You can call us at 919-882-6655. You can certainly send us an email [email protected]. And of course, you can find us online as well.

There are some action items to take here with these three tips before year end. We're happy to help you with that. Thank you again… David Burke, CFS financial advisor, one of our dedicated advisors for being with me here today, and of course, Drew Snider, our financial planning director here at Coastal Credit Union. Thank you for your time today and thank you to our viewers for joining us. And reach out to us. We'll be happy to help you..

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👉Retirement Planning At 60 in 2024 – 6 Tips💥

imagine this you're approaching your 60s and starting to think about retirement you've worked hard all your life and it's time to enjoy the fruits of your labor but before you kick back and relax it's time to get laser focused on your retirement plan in this video we'll cover six important tips to help you plan for your retirement at 60. tip one assess your financial situation Jane has a woman who's been working as a nurse for 30 years she's always been Frugal and saved as much as she could but she's not sure she's accumulated enough for a comfortable retirement to assess her financial situation she makes a list of all her assets and her expenses she realizes that she needs to save more if she wants to maintain her lifestyle in retirement tip two explore different retirement options Bob's a 62 year old man has been working as an engineer for the last 40 years his employer has a 401k and he's been contributing to it for years Bob also explores other retirement options such as an IRA to maximize his retirement savings tip three diversify your Investments Mike is a 65 year old man who's been retired for a few years he Diversified his portfolio by investing in many different stock and bond index funds by diversifying his Investments might minimize risk and ensure a stable retirement income tip 4 plan for health care costs Sarah is a 63 year old woman who's been working as a teacher for the last 35 years she's healthy now but she knows health care costs can be expensive in retirement to plan for health care costs Sarah bought long-term care insurance to cover any medical expenses that could arise in the future tip five consider your Social Security benefits Tom is a 64 year old man's been working in construction for the last 45 years he's not sure when to start receiving his social security benefits he decides to wait till 67 to start taking his social security so he'll get a higher benefit which will give him a more comfortable retirement tip six have an actual retirement plan in place Lisa is a 61 year old woman has been working as a sales manager for the last 25 years she has a plan in place that includes a budget for her retirement expenses and a plan for Hospital spend her time in retirement Lisa plans to travel volunteer and take up a new hobby in retirement to stay active and engaged following these tips and learning from the experience of others you can ensure a comfortable and fulfilling retirement it's a great idea to consult with a good financial advisor click on the link in the description if you'd like to set a time to talk with us

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New IRA & 401K Early Withdrawal Rules Starting in 2023 | Early Retirement Guide

President Biden just signed a 1.7 trillion dollar government spending bill on December 29th which includes the 53 billion retirement bill that will have a lot of changes starting in 2023 24 and 25. a few weeks ago I did a video on the new 401K perks and Rule changes this video is to focus on the withdrawal rule changes for tax penalties for your IRA and 401K generally speaking if you touch your retirement before you turn 59 and a half there will be a 10 tax penalty and there are already exceptions to the 401k or IRA 10 penalty rule If you experience a significant life event but there are four new rules that I want to make sure that you're aware of however unless it is a matter of life and death I would never recommend or encourage you to make an early withdrawal from your retirement accounts taking money out of your retirement accounts should be your very last resort my wife and I have a fully funded emergency fund that will cover at least six months of expenses if one of us loses job becomes physically incapacitated or has any significant life event and we will always deplete our cash and investment accounts before we touch our retirement accounts because every dollar I withdrawal now will have severe consequences and possibly even delay my retirement but I want I want to make sure you guys are aware of the rule changes so you can educate yourselves about your retirement accounts but anyway I'm gonna put chapters in this video so you can feel free to jump into the video that applies to your financial situation and if you need help with your personal finances like creating a budget or savings plan to achieve your financial Independence you can't schedule a free one-on-one 20-minute Financial coaching session by visiting fivestarchy.com coaching the first provision that got added under secure act 2.0 was a terminal illness and it surprises me that it took Congress this long to waive the 10 penalty for people with terminal illnesses the law defines terminally ill as an illness or physical condition that can be be expected to result in death within 84 months of a doctor's assessment which will be substituted for 24 months so if you haven't reached the regular retirement age of 59 and a half and you're diagnosed with a terminal illness with a qualified physician then the IRS will forgive the 10 penalty but you'll still owe federal and state income taxes this is on page 2280 of the 4100 page Consolidated Appropriations Act of 2023 the next provision they added was to allow domestic abuse victims from a spouse or domestic partner to withdraw up to ten thousand dollars in retirement funds within a year of the incident this rule will take effect in 2024 and I'm not sure why we can't start this now but this is on page 2253 of the spending bill in section 314.

It's up to ten thousand dollars or fifty percent of the present value of the non-forfeitable accrued benefit of the employee under the plan and the one-year period begins on any date on which the individual is a victim of domestic abuse by a spouse or domestic partner the definition of domestic abuse is on page 2254 under subparagraph two now I've seen comments in the in a past video about how stay home spouses or parents can't have any retirement funds as a stay-at-home parent or spouse you can actually set up what's called a spousal Roth IRA if you and your spouse are filing your taxes jointly I did a video on that and I encourage you to share that video with people you know and look if you're a victim of domestic violence or abuse please call the National Domestic Violence Hotline at 1-800-799-7233 people who have physically abuse their spouses or partners are some of the biggest pieces of crap or just scums and I witnessed domestic abuse as a child growing up and no one ever deserves to be abused and you should never be responsible for your partner or spouse's abuse of actions let me move on to the next topic before I get all spun up the next two Provisions are pretty much the same but starting in 2024 you won't get penalized with joining retirement funds for certain emergency expenses and these emergency expenses must be considered unforeseeable or immediate costs related to personal or family emergencies you can withdraw up to one thousand dollars a year and I mentioned that in the 401K video but you're going to be waived to 10 penalty as well you still have to repay the initial distribution of one thousand dollars within three years unless you make regular contributions to your 401k that eventually reach your withdrawal amount and the other one is allowing Americans to withdraw up to twenty two thousand dollars without the 10 penalty in the case of a federally declared disaster so hopefully you don't have to go through this but if you ever experience a loss of Home due to a tornado hurricane or earthquake and need more than what you you're having your emergency fund the 22 000 is taxed as gross income over the next three years instead of one year so instead of being taxed twenty two thousand dollars you could be taxed for just seventy seven thousand three hundred every year for the next three years starting on page uh 2285 of the spending bill it tells you that it needs to be a federally declared disaster so if you had a flood like I did last year for my broken toilet bowl you're not going to be qualified for the special distribution so we came home from a four day vacation to a flood at home because our toilet bowl cracked right down the middle and I will show you the video right here and it took us about four months to completely replace the flooring drywalls and painting and this is why I strongly encourage you to get my financial Independence resources including spreadsheets for savings and Investments for absolutely free by visiting.com contact you can also check out the fire such as shop if you're looking to start your own YouTube channel and I have all of my books and equipment at 5 shopping and here are the existing exceptions to the 10 penalty for those under the age of 59 and a half the first one is using your IRA for higher education expenses the IRS will actually waive your 10 penalty uh if you use your IRA funds to pay qualifying higher education costs for you your spouse your children or even your grandchildren the eligible cost will include tuition fees books and other school or education related expenses and keep in mind that this is for students in a college University or Vocational School in my opinion you should not use your IRA to fund your you or your children's education who have the 529 College savings plan to do exactly that you should treat your IRA as your retirement account right just remember that your children's College will last four years but your retirement is forever the next one is the first time home buyer exemption with your IRA and the definition of a first-time homebuyer is actually someone who hasn't owned a home in the last two tax years you can withdraw up to a lifetime maximum of ten thousand dollars without the ten percent penalty from your IRA and according to the IRS you have to use ten thousand dollars within 120 days of the distribution you can use the money for yourself your spouse or your child if you and your spouse are both first-time homebuyers you can each withdraw up to ten thousand dollars from your IRAs without penalties my advice is not to use your IRA to buy a home because once again you could significantly delay your retirement if you withdraw that ten thousand dollars now the better question is how long will it take you for you to save ten thousand dollars in a high yield savings account the next existing provision is to use your IRA to pay for your health insurance premiums if you lose your job and you have to provide proof of unemployment compensation from the federal or state unemployment program for 12 consecutive weeks you owe also have to make the IRA withdrawal without the 10 penalty within the same year or the following year that you received unemployment compensation and the other waiver is a distribution to cover your medical expenses we all know how broken the U.S Health Care system is but you can't withdraw up to 7.5 percent of your annual adjusted gross income to pay for your unreimbursed medical expenses so for example if you your adjusted gross income was one hundred thousand dollars in 2022 then you can make a withdrawal of up to 7500 to cover your unreimbursed medical expenses if you got your medical statement in 2022 and you didn't make the payment until 2023 it will still count for the 2022 tax year so I just want to make sure you're aware of that the IRA withdrawal will also have to happen in the same year in 2022 to get the penalty waiver and if you just had a baby or adopted a child each parent can actually use up to five thousand dollars per birth or adoption from their retirement accounts the withdrawal just has to be the same year your child was born or the date you legally adopted your child and and the other provision that's been around for a while is waving a 10 penalty for reservists who got orders or called into active duty for at least 180 days if you need to make a withdrawal for some reason you have to provide proof of your military orders and make sure the withdrawal day happens on or after the first date of your orders let me know in the comment section down below if you are a veteran I'm an Air Force veteran myself and I've helped many veterans get out of debt budget and save for their future if you ever have any questions you can always hit me up on Instagram and just say hi on Instagram or go to Fireside chat.com contact to schedule a one-time private coaching session for completely free but if you want to just stay on YouTube and you want to watch more videos about the new 401K rules and how I'm saving to retire early by age 45 be sure to check out these two videos so with that said I appreciate you watch my video don't forget to subscribe and I hope to see you in the next video have a good one [Music] thank you

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Retirement Planning FACTORS | Age and Income

what to look for when selecting the right 
retirement plan so age is a big factor when   it comes to deciding which plan is right for you 
if you're offered a pension that's fantastic not   many companies do offer those nowadays however 
if you have the benefit of getting one then yes   take it but I also think you should also have a 
retirement plan in addition to your pension just   to diversify your savings another situation to 
consider is your financial situation so someone   with a higher income level is most likely going 
to want to prefer choosing their own retirement   plan because then they're going to be able to 
not only write off those contributions but also   distribute it later in life so it maximizes their 
potential to not incur penalties or other taxable   income kind of situations essentially the more 
money you make you're looking for more write-offs   you're looking to claim less you're looking to 
you know have security but you got to be a little   more deaf and clever in how you're taking your 
distributions so to not trigger taxable events

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