IRAs are powerful savings tools which have favorable tax benefits while an account owner is alive. When the account owner dies and the assets pass to beneficiaries, the IRS has specific guidelines applying to distribution of these assets. If the timing rules for taking distributions from the IRA are not met a beneficiary can face a penalty of 50% on the amount of the distribution that should have been taken. Understanding how these rules apply to your specific situation can save you from incurring steep penalties and/or taxes.
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Having an emergency fund is important in nearly every stage of life, but having one in retirement is essential. Most retirees are no longer earning income and are living off a fixed income from retirement accounts and/or Social Security. Therefore, it could be argued that you should have a loftier savings fund in retirement than while you are working. Emergencies can happen to anyone at any age, but the things that are likely to come up in retirement years are usually more expensive, such as healthcare costs, dental work, and expenses associated with long-term care needs. Many retirees are still living in the home they purchased mid-life. This means their home may require more maintenance and the purchase of bigger ticket items: new roofs, appliances, and heating and cooling systems. There are also modifications for aging in the home to consider, if that is the goal.
The data is clear: Americans are not saving enough. Forty percent of all Americans are living paycheck to paycheck. Forty-three percent of Americans do not pay off credit cards every month with an average household credit card debt of $15,000. Of the 40% that live paycheck to paycheck, 24% make between $100,000-$150,000 a year. Forty five percent of Americans do not save at all. These statistics are alarming.
Tripping over piles of toys, and dusting around the must have item of Christmas past we find ourselves asking, What are some gift ideas that don’t include a “thing”? Senior Wealth Advisor Sarah Bird shares an idea each day for the twelve days of financial tools: