Medal Winning Savings!

You have probably heard the advice that you should maximize contributions to your employer’s retirement savings plan. Because it lowers your current income taxation by deferring pre-tax dollars to the plan and grows tax-deferred until distributed, you are encouraged to save to your employer plan (401k, 403b, etc.). Employers may also match a percentage of what you contribute. This can be a powerful way to save, but it should not be the ONLY way you save for retirement. The following medal-winning strategies might add flexibility, potential retirement tax savings and a more secure future to your retirement savings mix. Bronze Medal Winner The bronze medal winner for savings might seem too simple to have an impact but can add versatility and flexibility when trying to increase tax efficiency in retirement. Many people step into retirement with inadequate non-IRA savings.  This forces them to distribute fully taxable income from their employer plan/IRA each time they need cash and increases their tax liability. For those individuals with a mix of IRA and non-IRA savings, more control can be gained over taxation in Read on! →

One positive outcome from Covid & 2020

While there are many aspects of 2020 which we might prefer be forgotten, there were a few positive outcomes from the year which need to be highlighted.  As a majority of individuals in the U.S. were sheltering-in-place during Covid-19 an interesting thing happened. Because we were unable to travel, dine out and generally entertain ourselves by spending lots of money, the U.S. personal savings rate jumped to a record 15% of gross income. As can be seen from the chart below, not since the early 80’s has the U.S. seen a savings rate even in excess of 10% and it has been as low as 3%, which occurred just prior to the Great Recession. Even though the jump in personal savings was not spread evenly throughout the population, it does represent a very positive change, one that shouldn’t be abandoned when the world returns to it’s new “normal”. It is interesting to note that in order to successfully fund retirement, it is recommended that a consistent annual savings rate of 10-15% is required. With this chart going back to 1960, Read on! →

Buckets of Savings!

When saving for retirement, most people save to their employer retirement plans, knowing they are reducing current taxable income, typically receiving an employer match on their contributions, and deferring taxation until retirement.  However, if this is the only place where retirement savings takes place, you can be in for a surprise when reaching retirement.  If all your usable savings resides in a tax-deferred bucket, every dollar you take out to meet expenses will be subject to income taxation at ordinary income rates, thereby forcing you to take additional money out to pay the taxes.  It can also be a shock to find that your retirement income tax bracket isn’t much different than your income tax bracket when you were working.  Additionally, higher taxable income levels in retirement will also impact the amount of your Social Security benefit which is subject to taxation and can also result in higher Medicare premiums. So what should you do differently to give yourself more flexibility and lower overall taxation in retirement?  There is great benefit in having multiple buckets of savings in retirement, each Read on! →

Cheryl Sherrard quoted in recent online article

Cheryl Sherrard was recently quoted in an article entitled “Here’s Why It’s Taking so Long to Hit your Money Goals”, in Grow Magazine.  She offered advice regarding employee deferrals to 401(k) plans, reminding readers that contributing only up to your employer match amount is not likely to be enough for your eventual retirement.  This is an area where employees can make changes to save more quickly for the future. To see the article in it’s entirety, click here.

3 Ways to Maximize Your Finances This Summer

Before you check out for summer vacation, consider taking advantage of your free time this summer to do a quick check-in on your financial health. Between packing up the beach chairs and planning your next family outing, see if you can fit these 3 action items onto your summer checklist. Doing so will help ensure you are on solid financial footing and pay benefits as you head into the second half of 2015. Set aside time with your significant other to talk about money Money is one of the leading causes of conflict in a marriage. It can cause anxiety, stress, regret and even shame. But if we get ahead of issues by establishing common goals and the steps to achieve them, your mindset around money can shift from negative feelings to feelings of joy, excitement and fulfillment. Try setting aside 30 minutes each week to talk about big expenses coming up, financial concerns, priorities, and goals. It may seem silly at first, but this exercise can quickly open the door to more healthy and natural conversations around money and Read on! →