Amanda Stanhaus

Tag: retirement

403 (B)

401(k) for public employees.

(Originally published on Amanda Stanhaus’s financial literacy vocab blog: XO, Bettie Vocab.)

Roth IRA

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If the Traditional IRA is the good girl of the IRA family, the Roth IRA is the rebel of the family.

Fun Fact: Senator William V. Roth Jr. of Delaware led the legislative charge to create the Roth IRA in 1997.

Refresher: With Traditional IRAs, the tax man only cares about the $$ at the end when it is withdrawn. The perk is that I’ll be a lower tax bracket when I’m old, compared to when I originally contributed the money as a young money-making machine.

With Roth IRAs, the taxman wants to get his cut at the beginning, because he doesn’t know what will happen with the $$ and when it will be used.

Essentially, contributions to a Roth IRA are taxed initially and then never again taxed. The contribution can be withdrawn at anytime, without a tax or penalty. The rules get trickier with withdrawing earnings from investments. Time to talk to a professional!

As I understand it, the perk with Roth IRAs is that the contribution is initially taxed, can be withdrawn at any time tax-free, and earning—once past a certain age (as of now, 59 1/2)—are not taxed.

When money is in a Traditional IRA or a Roth IRA, the earnings of the investments are not taxed.

So the question becomes when picking between Traditional IRAs and Roth IRAs, do you want to pay the taxman later at a lower tax bracket (Traditional) or pay the taxman now and have my *fingers-crossed* tremendous investment growth untaxed (Roth)?

Watch this Khan Academy video and understand the math to answer this question.

Now that the confusion is cleared up, let’s save for retirement! Let the countdown to Boca begin!

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(Originally published on Amanda Stanhaus’s financial literacy blog: XO, Bettie.)

28 Keys to 2008

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Clueless about why 2008 made the rich and poor, poor alike? Click on the bold words to learn their meaning (or better yet, here is a list) and then repeat after me…

The buy side thought mortgages made invincible asset backed securities.  Mortgages were not created equally; they were not commodities. The bull market, lack of due diligence and aggressive investment style [eye-roll, mutter “Goldman”] clouded almost everyone’s view. Plus, lots of leverage with lack of worry about liability. The worst was the derivatives to cover the company’s, but not their client’s, asses. I mean assets….

Once the bear market began, boy did it roar with cyclical and defensive stocks alike taking a tumble. Default there.  Bankruptcy here. Magnified by balance sheets that were not diversified.

If only I had used my spare time for technical analysis of leading indicators, benchmarksbond ratings, decided to be contrarian and short sell REITs my retirement would have come early!

Now, with the market obviously inefficientfundamental analysis will help me pick the winners, just like Warren!

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(Originally published on Amanda Stanhaus’s financial literacy blog: XO, Bettie.)

RRSP

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A registered retirement savings plan (RRSP) is what Canadians need to set up if they want a become a snowbird in retirement. Can’t wait for my then-wrinkly skin to soak up le soleil!

(click on the bold-faced vocab words:))

RRSPs are so cool! My contributions reduce my taxable income. Yah, more $$ pour moi!

Plus, the $$ grows without the government taking a cut. Only upon withdrawal does the government get any of my $$.

Just like 401(k)s, unfortunately Porsche’s don’t count as an investment vehicle. Instead, I can fill my RRSP with stocksbondsGICs, shares of mutual funds.

RRSPs are available at banks. Single ladies, prepare yourself to check the “individual” box on the sign-up form. As usual, there are perks for those coupled up. And for those who like to be in control, there is a self-directed plan.

I’m planning to open a self-directed plan. No one else decides my ensembles, so why would I have someone else pick my investments?

I have a few more books to go before I take on the responsibility. My fave read so far has been The Wealthy Barber by Dave Chilton.

(Originally published on Amanda Stanhaus’s financial literacy blog: XO, Bettie.)

Belle

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Belle, my bestie north of the border in Montreal, was annoyed to see my 401(k) post without any mention of what she is to do about retirement savings.

She’s decided to join my fabulous & frugal journey!

Belle’s canadian-centric posts will be archived in the new category—O Canada—up top.

Welcome to my world, Belle!

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(Originally published on Amanda Stanhaus’s financial literacy blog: XO, Bettie.)

401 (k)

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40-what?

I hadn’t finished my first day and human resources (HR) already brought up how it’s going to end. Not already! But eventually, I’ll be retired and living off my 401(k).

(click on the bold-faced vocab words:))

Once I set it up, my 401 (k) will be automatically filled with a cut of my paycheck and invested in the vehicle of my choice.

Porsche? No…investment vehicle options include bondsstocksmutual funds and etfs.

Each company’s plan is different, but perks can include:

  • $ invested before Uncle Sam takes a bite from my paycheck.
  • $ made from the investments does not have to answer to Uncle Sam until withdrawn.
  • Each contribution can have an identical twin, courtesy of my company.

Never thought I would have a desktop clock counting down the seconds till I turn 65.

Hope I look as fabulous as Iris then!

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(Originally published on Amanda Stanhaus’s financial literacy blog: XO, Bettie.)

Registered Retirement Savings Plan

RRSP. Canadian’s tax-friendly way to save for retirement.

(Originally published on Amanda Stanhaus’s financial literacy vocab blog: XO, Bettie Vocab.)