Posts by Eric Reed
Financial Advisor
Thinking of an IRA Rollover? This New Rule Will Impact the Investment Advice You Receive
Financial professionals who give one-time investment advice will soon be legally required to act in their clients’ best interests under the Department of Labor’s new fiduciary rule. Are you looking to hire a fiduciary financial advisor, but don’t know where to start? SmartAsset’s free tool can connect you with up to three advisors who serve… read more…
Retirement
How Getting Married Impacts Your Roth IRA
Getting married does not automatically impact your Roth IRA. Your portfolio and its tax status are unaffected by your marital status. However, in some situations, getting married can make you income-ineligible for Roth contributions. Additionally, getting married can mean making different plans around your Roth IRA. Here’s what you need to know. If you and… read more…
Financial Advisor
How Is Alimony Calculated in California (CA)?
This alimony system was built around the idea that the job market significantly disfavored women, so a divorced wife could rarely support herself. As a result, alimony often required a significant division of future income for either life or until the recipient remarried. Most states have changed this system in whole or in part. Alimony, today,… read more…
Investing
What Are Single Stock ETFs?
A single stock ETF is an Exchange Traded Fund (ETF) designed to magnify the gains or losses of a single, underlying stock. This creates a risk profile that is inverse to a standard fund-based asset. Where ordinarily an ETF mitigates risk and reward through diversification, a single stock ETF significantly increases potential risks and rewards through… read more…
Insurance
How to Lower Retirement Taxes With Life Insurance
There are two main ways to use a permanent life insurance policy for retirement planning. The first is through cash value. You can take money from your policy’s cash account up to the amount of premiums paid tax-free. The second is through a loan. You can borrow against your policy’s death benefit tax-free. This loan will typically… read more…
Retirement
How to Invest in a Socially Responsible Roth IRA
Environmental, Social and Governance, or “ESG,” investing is getting bigger. According to a 2022 analysis from PricewaterhouseCoopers (PWC), “with a projected compound annual growth rate (CARG) of 12.9%, ESG assets are on pace to constitute 21.5% of total global [assets under management] in less than five years.” And, while one-fifth of all global investments seems improbably… read more…
Retirement
How Can I Reduce the Amount of My RMD Payments?
In the year that a required minimum distribution (RMD) is due from a 401(k), IRA or other pre-tax retirement account, you’re required to withdraw a certain amount and pay your taxes due to avoid a 50% penalty. But that doesn’t mean there’s nothing you can do about this, and the associated taxes. With proper planning,… read more…
Retirement
I’m 60 With $1.2 Million in a Roth IRA. How Do I Make Sure This Money Lasts the Rest of My Life?
Planning for a Roth IRA is a little different than with most other retirement assets. This tax-advantaged account generates entirely untaxed income, as long as effectively boosting the value of your withdrawals and your Social Security benefits. That changes your options compared to having a pre-tax 401(k) or other non-Roth account. For example, say that… read more…
Financial Advisor
I Have $900k in a Roth IRA and Would Receive $2,200 Monthly From Social Security. Can I Retire at 66?
Imagine that you have $900,000 in a Roth IRA and collect another $2,200 per month in Social Security. Can you afford to retire at age 66? A good way to answer this question is to start with your budget. What do you expect to spend on essentials, like housing and fixed monthly expenses, and what… read more…
Retirement
How Much Money the Average Person Has Saved at 50
The answer to this question will depend on your income, expenses and saving habits, among other factors. One reliable source to help you get an estimate could be the Federal Reserve. Here’s what the retirement account data shows and how you should use this benchmark for your retirement planning at age 50. If you’re falling… read more…
Retirement
We Have $1.2M in an IRA, Plus Another $750k and Social Security. Should We Shift Assets to a Target Date Fund or an Annuity?
Annuities and target date funds are popular assets for households who are either saving for retirement or already in their golden years. How useful each may be for you depends on your financial goals and where you are on your path to retirement. For example, John and Susan are both 67 and recently retired. They… read more…
Retirement
My RMDs Start Soon So I Want to Convert $900k to a Roth, but I’m Getting Conflicting Info About Having to Wait 5 Years to Use the Money
People with Roth IRAs generally have to wait five years before withdrawing earnings from their account. But the devil is in the details, and for this particular rule, getting those details can be surprisingly difficult. For starters, the IRS has three different five-year rules that apply to Roth IRAs. One of them, the conversion rule,… read more…
Retirement
When Does Social Security Increase?
Every year, the Social Security Administration (SSA) issues what is known as the Cost of Living Adjustment, or COLA. This is an annual increase intended to keep Social Security benefits in line with inflation. This increase is announced in October of each year and applies to all benefits starting in January of the following year. For… read more…
Estate Planning
5 Most Important Benefits of Estate Planning
For adults of any age, it’s important to make an estate plan. This can be no more complicated than a simple will, but it matters. It’s even more essential when you have spouses, children and other people who depend on you. While there are many important financial reasons to have a good estate plan, from… read more…
Estate Planning
How Long Does Probate Take in Florida?
On average, it takes four to 12 months to probate a standard estate in Florida. This is normal for most jurisdictions. A standard estate must be open for at least three months. This is the minimum amount of time required for creditor notification. As a result, with additional processing time and delays, a standard estate typically… read more…
Financial Advisor
How Is Debt Divided During a Divorce?
During a divorce, debt is handled the same as assets. This means, primarily, that courts will try to follow two rules. First, courts will distribute debt based on its marital and pre-marital status. Debt that someone held before the marriage will, in general, remain entirely with that individual. Debt the couple accrued during the marriage… read more…
Retirement
We’re 66 With $1.4 Million in IRAs, and $4,100 Monthly From Social Security. What’s Our Retirement Budget?
Say that, as a married couple, you have $1.4 million in your IRAs and, at age 66, expect about $4,100 per month in Social Security. Based on some typical rules of thumb, you might be able to plan on about $108,000 per year of retirement income, but how much you actually need and will be… read more…
Financial Advisor
I Have $2.2 Million Invested With My Advisor Who Charges a 1% Fee. Am I Paying Too Much?
When it comes to advisor fees, there are two numbers to keep in mind: 1% and 0.02%. The first is the average fee that financial advisors tend to charge. If you are looking for comprehensive financial management, in general you should expect to pay about 1%. The second is a representative fee for a well-indexed… read more…
Estate Planning
How Can I Receive Living Expenses as Grantor From an Irrevocable Trust?
Trusts are an independent legal entity, similar to a corporation. As a result any assets you contribute belong entirely to the trust itself, the same as if you gave your money to any other third party. If the trust is an irrevocable trust, there is no legitimate way for you to take this money back. You… read more…
Retirement
I’m 65, Taking Social Security and Have $830,000 in a 401(k). Is It Too Late to Convert to a Roth IRA?
There is no age limit on Roth conversions, so you can transfer pre-tax savings into a Roth IRA regardless of your age or retirement status. As long as you have qualifying funds in a pre-tax portfolio, you can move them to an after-tax Roth account. A financial advisor can help you make important decision surrounding… read more…
Retirement
What Is a Life Insurance Annuity?
A life insurance annuity is a benefit payment option for a life insurance policy. If you are a beneficiary of a life insurance policy, you may have the option to receive your payout in the form of a life insurance annuity. In this case, when the policyholder dies, the insurance company will place your payout… read more…
Debt
Are You Responsible for a Deceased Parent’s Debt?
You are not responsible for your parents’ debt. This is true regardless of whether you inherit assets under their estate. However, a parent’s estate must settle any debts before you can inherit. And children often share financial responsibilities with aging parents, often medical and housing costs. This can end up feeling like you are responsible… read more…
Retirement
Is it Wise to Convert 10% of My 401(k) into a Roth IRA Each Year to Avoid Taxes and RMDs?
A Roth IRA has a couple of significant advantages. Most notably, they allow your retirement savings to grow tax-free (as opposed to tax-deferred) and they have no required minimum distributions (RMDs). If your priority is to control your retirement savings, then a Roth IRA might be the right choice. However, Roth IRAs have their disadvantages… read more…
Estate Planning
My Dad Left Me $550k in an IRA, But I’m in the 32% Tax Bracket. How Should I Structure My Withdrawals?
If you inherit a tax-deferred retirement account, like an IRA or a 401(k), you’ll pay income taxes on the money when you withdraw it. Those withdrawals are subject to your marginal tax rate, not the original owners. This can reduce the value of your inheritance, potentially by quite a lot if you are in a… read more…
Retirement
I’m 70 Years Old With $1.2 Million in an IRA. Is It Too Late to Convert to a Roth IRA?
In retirement, it’s not too late to convert your money into a Roth IRA. The IRS will let you convert qualified funds at any time, as long as you pay the associated taxes. It might, however, be too late to get real benefit from that decision. A Roth IRA works best when it has time… read more…