A couple of weeks back, I received a call from a client couple, (who I’ll call ‘Z’) who have been happily retired for a few years. During our conversation, they let me know they needed to take out some extra money for a one-time expense that their regular retirement income won’t quite cover. However, this isn’t the first time; in fact, it seems for client couple Z there’s a different one-time request more years than not.
The Roth IRA has been one of the best tax planning techniques to come out of Washington, DC in a very long time. But because the Roth comes with income limit eligibility limitations; (maximum income for singles in *2017 - $133,000 ) and (maximum income for married couples - $196,000 ), lots of high income earners have been unable to take advantage of this option. *These dates and figures have been updated for 2017.
Like many of you, including yours truly, that have already received loads of info about the ‘backdoor Roth IRA’ from tax planning firms or your CPA, below is a consolidation of the best of the best that I have received recently on this topic. All due credit belongs to the numerous sources that kindly sent me info about the new ‘tax kid’ on the block - the backdoor Roth IRA - thank you!
For the next 19 years, close to 10,000 boomers will turn 65 everyday and the majority will also be heading into retirement.
I'll warn you up front, the article The Inadequacy Of Our National Savings, appearing in the current issue of Financial Advisers magazine is a long one, but information you really can't ignore.
When was the last time you talked, and I mean really opened up and spent some quality time, with your significant other about your dreams and aspirations for the eventual next phase of your life - retirement or early semi-retirement?
Based on a recent trip back east to visit my elderly parents and in-laws, I realized that for some, stressing over money never ends. Even though I have reviewed both sets of parent’s financials and showed them they are in fine shape, they still worry that they won’t have enough to last their lifetimes. The one difference is that for both of them, their first priority is making certain the kids get an inheritance. In our case, our parents have plenty of money to see them through the end of their lives, and the inheritances they planned on giving are a reserve to dip into should they need it. I imagine it is part of that generation in having a legacy of giving – so unlike the bumper stickers I often see affixed to RV’s stating “I’m spending my kids inheritances.”
During their working years, baby boomers have invested a significant portion of their retirement savings in stocks, boosting equity valuations above historical averages for the past 30 years. As the baby boom generation retires and begins spending from their investment portfolios, future equity returns could decrease. With that in mind, it’s crucial that boomers nearing retirement develop retirement income strategies with prudent as well as realistic expectations of future investment returns.
The Role Demographics Will Play
