When to start saving for Retirement

The Importance of Saving for Retirement at a Young Age

If you’re an adult in your 20s, you are entering an exciting stage of life. Whether you’ve just graduated from college or are starting a new career, you will encounter many opportunities and challenges as you create a life of your own.

As busy as you are, it’s no surprise that retirement may seem a long way off, especially if you’re just entering the workforce. What you may not realize, however, is that there are four very important advantages to begin planning and saving for retirement now.

1. Money management skills

Now that you’re out on your own, it’s important to start taking responsibility for your finances little by little. Part of developing financial responsibility is learning to balance future monetary needs with present expenses. Sometimes that means saving for a short-term goal (for example, buying a new car) and a … Read More

Social Security and Medicare Part B

In 2016, it is unlikely that Social Security “cost of living” benefits will increase. Conversely, there is a high probability that Medicare Part B premiums will increase steeply in for the same year. The combination of these two events has many people worried about an overall decrease in their net Social Security benefits.

For beneficiaries, Medicare Part B premiums are taken out of their monthly Social Security payment. The standard Medicare charge is 104.90 per month. In addition, there are varying Medicare premium tax brackets (based on the beneficiary’s Adjusted Gross Income), which deduct anywhere from $42 to $230.80 on top of the standard charge. An increase in these fees without a corresponding increase in Social Security COLA would result in a net reduction of Social Security benefits for many people.

The good news is that there is a “hold-harmless” provision in the United States Social Security Act. This provision states … Read More

Common 529 Plan Mistakes

As taxpayers work to fund college for their children, 529 plans can provide great benefits. These types of accounts are very easy to contribute too. However, parents who are not prepared may find it hard to spend the money that they have invested without being penalized.  In this article, we detail four common mistakes that people make with 529 plans.

First, some taxpayers attempt to use funds from a 529 plan to pay for expenses that are already claimed via tax credits such as the Lifetime Learning Credit or American Opportunity Credit. This is not allowed. In the same way, they cannot use these credits and deductions on expenses paid for from 529 plans.

Second, students should avoid using any distributions from grandparents’ accounts to pay tuition expenses. These distributions are viewed as giving non-taxed income to the student. This income could end up changing financial aid calculations, causing the student … Read More