A: Gifts are never taxable to the recipient, but they could be taxable to the gift giver. The current annual gift tax exclusion limit is $15,000. You can give away up to this amount to as many people as you would like each year without any taxes or reporting requirements. Each person also has a …View Article
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Q: How do I calculate my Required Minimum Distribution?
A: The company that holds your IRA usually calculates it for you, although it is your responsibility. The math is pretty simple: Step 1 – Find out your IRA account balance as of the previous December 31. Step 2 – Divide by the number from the Uniform Life Expectancy Table that corresponds with the age …View Article
Q: What is my Full Retirement Age for Social Security?
A: The table below shows your Full Retirement Age (FRA) based on when you were born: Birth Year Full Retirement Age 1943-1954: 66 1955: 66 and 2 months 1956: 66 and 4 months 1957: 66 and 6 months 1958: 66 and 8 months 1959: 66 and 10 months 1960 & later: 67
Q: How much are Social Security retirement benefits increased if I defer past my full retirement age?
A: You accrue “Delayed Retirement Credits,” which increase your benefits at a rate of 2/3rds of 1% for every month (8% per year, simple interest, not compounded) you wait beyond your full retirement age. Your benefits can increase by 32% if your full retirement age is 66 and you delay collecting until age 70.
Q: Should I get a will or a revocable living trust?
A: Most people with significant assets use a revocable living trust, in addition to a will. The main advantage of the trust (over a will) is your heirs get to avoid the ugly probate process (a potentially expensive and time-consuming legal process), your affairs remain private (financial affairs can become public record during the probate …View Article
Q: How does a reverse mortgage work?
A: A reverse mortgage is the only way to borrow money against the equity in your home without ever having to make a payment. A reverse mortgage can reduce financial stress and/or improve a retiree’s standard of living. The loan, plus interest, gets paid back when the last remaining homeowner passes away or moves out …View Article
Q: How will I know whether I have enough money to retire?
A: Some people obviously have more money than they will ever spend, but most retirees are not in that situation and, therefore, need a plan. Some people use spreadsheets, which can give a false sense of security because they assume a consistent return on investments each year. There are too many variables, such as one-time …View Article
Q: Do you have any advice for raising financially responsible children?
A: Yes! Although we specialize in retirement planning, we have written extensively about raising financially responsible children. Please read and share these: Financial Tips for Young Families, The Allowance Agreement, Teaching Kids About Money, Preparing Kids to Inherit Wealth, Parenting With Wealth – 5 Things To Never Tell Your Kids, Is College Worth the Costs, Budgeting …View Article
Q: What is a better investment: rental real estate or the stock market?
A: In any given time period, stocks can outperform real estate or vice versa. Our blog post: Rental Properties vs. The Stock Market goes through an example of an actual property based on actual expenses and anticipated growth rates. A balanced portfolio of stocks and bonds, held for 30 years with no leverage, is likely …View Article
Q: Do retirees need life insurance?
A: The short answer is that it depends on your retirement plan and financial situation. You need to consider whether your surviving spouse or family will need the money, and whether the potential benefits of your policy outweigh the ongoing costs. It makes sense for many retirees to exchange their current policy for one that …View Article