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How Women Can Narrow the Retirement Saving Gender Gap

how women can narrow the retirement saving gender gap

Steps toward saving more & revitalizing your retirement strategy.

Provided by TechGirl Financial

When it comes to retirement saving, many women lag behind many men

Historically, that has been the case. The 2015 edition of Financial Finesse’s annual survey, The Gender Gap in Financial Literacy, offers more evidence of the problem – along with a few encouraging signs that women may be catching up. (Financial Finesse is a financial education provider for more than 600 large U.S. companies sponsoring retirement plans.)1



Deep in the report, some disturbing statistics emerge

They concern the pace of retirement saving in mid-career. Using data from Vanguard and the Employee Benefit Research Institute, Financial Finesse found that the median IRA and workplace retirement plan savings balance for a 45-year-old woman was $43,446. For a 45-year-old man, it was $63,875.1

Obviously, you cannot retire on that. So Financial Finesse then gauged the additional amount of savings that the median 45-year-old male employee and the median 45-year-old female employee would need to replace 70% of pre-retirement income and pay for estimated medical expenses (long term care not included.) It found a 26% disparity: the median male employee saver needed $212,256 to reach that goal, while the median female employee needed $268,404.1


A gap in some aspects of financial literacy was also notable

Just 67% of pre-retiree women responded that they had a general knowledge of investment classes compared to 84% of their male peers. While 78% of men surveyed said that they had an emergency fund, merely 67% of women did. Just 34% of women were confident about the way their portfolios were allocated, versus 48% of men.2


How many women are able to work full-time at age 65?

Some women hope to keep working into their seventies, but that may not happen. Earlier in this decade, MetLife studied “leading edge” baby boomers born in 1946 as they turned 66 in 2012. It found that 52% were already retired, and 43% had claimed Social Security earlier than they anticipated.3


How can women plan to address this?

Here are a few positive steps you can take …


Find out where you stand in terms of savings now

A simple retirement planning calculator (there are many available online) can help you see how much more you need to save, per year and over the course of your career.


Save enough to get the match

If your employer will match a percentage of your retirement plan contributions per paycheck, strive to contribute enough to your plan each paycheck so that the match occurs.


Ask about automatic escalation

Some workplace retirement plans have this option, through which you can boost your retirement contributions by 1% a year. This is a nice “autopilot” way to promote larger retirement nest eggs.


Ask for a raise

You probably should be paid more than you currently are. A higher salary means more money to put toward your savings effort.


Cut credit card debt

Reduce it and you give yourself more money to save.


Make tax efficiency one of your goals

Consult a financial professional about this, for there are potential advantages to having your money in taxable, tax-deferred, and tax-exempt accounts. For example, when you contribute to a traditional IRA or a typical employer-sponsored retirement plan, you make tax-deferred contributions. This lowers your taxable income today, although the distributions from those accounts will be taxable in retirement. You defer after-tax dollars into Roth IRAs; those dollars are taxable today, but you will eventually get tax-free growth and tax-free withdrawals if you follow IRS rules. Taxable investment accounts may seem less preferable, but they too can potentially help you pursue financial goals.4


Determine an appropriate “glide path”

Many financial professionals caution retirement savers to gradually reduce the risk in their portfolio as they age – to “glide” from a portfolio mainly invested in equities to one less invested in them. (Some retirement plan accounts will actually adjust your investment mix for you as you age.) Glide paths are different for everyone, however. If you really need to accelerate your retirement savings effort, then you may need to accept more risk in your portfolio in exchange for the possibility of greater returns. (Again, this is a good topic for a conversation with a financial professional.)


In some ways, women are narrowing the retirement saving gender gap

Financial Finesse found that 4.2% more women had adopted an investment strategy in the 2015 survey compared to the 2012 edition, and 2% more had done a basic retirement savings projection. In passing, it also noted that the percentage of women who said they were on track to meet their retirement savings goal rose 4.2% from 2012 to 2014.2


1– 2015_Gender_Gap_report_final_brief_v2.pdf [12/3/15]
2 – forbes.com/sites/nextavenue/2015/09/17/the-unexpected-news-about-women-men-and-retirement/ [9/17/15]
3 – metlife.com/mmi/research/oldest-boomers.html#graphic [12/3/15]
4 – nerdwallet.com/blog/advisorvoices/prioritize-key-retirement-savings-steps/ [12/1/15]

How Gen Xers Can Get Their Retirement Saving Back on Track

how gen xers can get their retirement saving back on track

Steps that may help to address a savings shortfall.

Provided by TechGirl Financial

Were you born within the years 1965-1980?

That makes you a member of Generation X, and it means you are between ages 35-50. Gen Xers now constitute “the sandwich generation” – how time flies.1

Broadly speaking, GenX is the first generation that has had to save for retirement without traditional pension plans. In addition, most Gen Xers will probably retire after 2033 – the year in which Social Security predicts its trust funds will run dry, barring federal government intervention.1



With eldercare responsibilities, kids, and student loans, this demographic is challenged to save for retirement. In fact, 34% of Gen Xers participating in a recent Northwestern Mutual survey stated they had no idea how much retirement income would be sufficient for them. In April, Bankrate found that just 12% of Gen Xers direct more than 15% of their incomes into savings; about 40% were saving 5% or less of their incomes. More disturbingly, 46% of Gen Xers who responded to a May Allianz Life retirement preparedness survey indicated that they would “just figure it out when I get there.”1,2

What steps can Gen Xers take to keep up or catch up for retirement?

First of all, meet with a financial professional to talk about your savings effort so far. That kind of conversation should help to illuminate just how far you have to go in terms of attaining a comfortable retirement. Maybe the distance toward that goal is shorter than you think; maybe it is longer. It must not be casually guessed.

Here are some other steps toward greater retirement savings…


Max out your retirement plan contributions

If you are already doing this, great. Many Gen Xers are not doing this. Perhaps the contribution is thought of as a lump sum that is hard to part with every year, rather than a series of incremental salary deferrals. Arrange monthly or per-paycheck contributions, and things look more manageable within the household budget. Some employer-sponsored retirement plans offer employees the option of automatically increasing their contributions with time, which helps.3

If you own a business or work as a solopreneur, consider SIMPLE plans, SEP-IRAs, or Solo(k)s. As these plans allow employee and employer contributions, business owners have used them to dramatically increase their retirement savings. In 2016, the maximum employee deferral for a SIMPLE plan is $12,500 with a $3,000 catch-up contribution allowed. As much as $53,000 can be contributed to a Solo(k) annually.4,5

Vow to make those additional $1,000 catch-up contributions when you turn 50

They should not be scoffed at. Every dollar counts, and the extra $1,000 you pour into your workplace retirement plan or IRA means greater yearly contributions that can foster greater yearly compounding.

Attack debts

The money you save has to come from somewhere else in your life, and if you cannot immediately find some additional dollars to save, debt is likely the reason. There are many debts you cannot eliminate within a year, but there are other debts you can. Attacking the smallest first still frees up some money per month and means fewer per-debt interest charges in your financial life. Put an extra $30 a week into a retirement account, and you put $1,560 more into your retirement savings per year.

A debt-free retirement ought to be one of your financial objectives. Perhaps you will become debt-free by age 65, perhaps you not – but that goal is certainly worth striving to realize.


Revise your monthly budget

Take a second look and see how many needs there are, then how many wants you are accommodating. Recognize the little things: if you spend $6 a day on coffee, that money ($180/month) has effectively become one of your “fixed” monthly expenses.


Tell your kids they will have to pay for their college education

Refrain from providing “college aid” out of the Bank of Mom & Dad. Helping your kids with their college costs (or tacitly agreeing to help them with their college loans) is a path toward retirement insecurity. There is no “retiree financial aid” and you may still have outstanding education debt of your own to tackle.

As a Gen Xer, you have a real challenge to save adequately for retirement, but you also have some time on your side. Make the most of it. You definitely do not want the task of figuring it out “when you get there.”


1– usatoday.com/story/money/2015/06/06/generation-x-retirement/28571965/ [6/6/15]
2 – nextavenue.org/gen-x-sleeping-through-their-retirement-wake-up-call/ [8/27/15]
3 – usatoday.com/story/money/personalfinance/2015/10/10/gen-x-retirement-saving-investing-generationx-401k/73227036/ [10/10/15]
4 – shrm.org/hrdisciplines/benefits/articles/pages/2016-irs-401k-contribution-limits.aspx [10/22/15]
5 – irs.gov/Retirement-Plans/One-Participant-401%28k%29-Plans [10/26/15]

TOD or Living Trust?

tod or living trust

A look at two basic methods for shielding assets from probate.

Provided by TechGirl Financial

How do you keep assets out of probate?

If that estate planning question is on your mind, you should know that there are two basic ways to accomplish that objective.

One, you could create a revocable living trust. You can serve as its trustee, and you can fund it by retitling certain accounts and assets into the name of the trust. A properly written and properly implemented revocable living trust allows you to have complete control over those retitled assets during your lifetime. At your death, the trust becomes irrevocable and the assets within it can pass to your heirs without being probated (but they will be counted in your taxable estate). In most states, assets within a revocable living trust transfer privately, i.e., the trust documents do not have to be publicly filed.1

If that sounds like too much bother, an even simpler way exists. Transfer-on-death (TOD) arrangements may be used to pass certain assets to designated beneficiaries. A beneficiary form states who will directly inherit the asset at your death. Under a TOD arrangement, you keep full control of the asset during your lifetime and pay taxes on any income the asset generates as you own it outright. TOD arrangements require minimal paperwork to establish.2

This is not an either/or decision; you can use both of these estate planning moves in pursuit of the same goal. The question becomes: which assets should be transferred via a TOD arrangement versus a trust?


Many investment accounts can be made TOD accounts

Originally, that was not the case – for decades, only bank accounts and certain types of savings bonds could pass to beneficiaries through TOD arrangements. When the Uniform Transfer on Death Security Registration Act became law in the 1980s, the variety of assets that could be transferred through TOD language grew to include certificates of deposit and securities and brokerage accounts.2

Many investment & retirement savings accounts are TOD to begin with

Take IRAs and workplace retirement plans, for example. In the case of those assets, the beneficiary form legally precedes any bequest made in a will.3

The beauty of the TOD arrangement is that the beneficiary form establishes the simplest imaginable path for the asset as it transfers from one owner to another. The risk is that the instruction in the beneficiary form will contradict something you have stated in your will.

One common situation: a parent states in a will that her kids will receive equal percentages of her assets, but due to TOD language, the assets go to the kids not by equal percentage but by account, with the result that the heirs have slightly or even greatly unequal percentages of family wealth. Will they elect to redistribute the assets they have inherited this way, in fairness to one another? Perhaps, and perhaps not.

Placing valuable property items into a living trust makes sense

Real estate, ownership shares, precious metals, pricy collectibles such as fine art, classic cars, antiques, and rare stamps and coins – these are all worthy candidates for inclusion in a living trust. If your net worth happens to run well into the millions, these assets may constitute the bulk of it, and a trust offers a degree of protection for such assets that TOD language cannot. A trust also allows you to name a successor trustee, which TOD language cannot do for you.2

A “pour-over” will usually complements a revocable living trust

As your net worth will presumably keep growing after the trust is implemented, a “pour-over” will may be used to allow your executor to “pour over” assets not already in the trust at your death into the trust. That will mean added privacy for those assets in most states – but the downside is that these “poured-over” assets will be subject to probate.1

Of course, you can add and subtract from the original contents of a revocable living trust as you wish during your lifetime – you can remove assets retitled into it when it was originally created and retitle them again in your name, you can “pour in” new assets, and you can sell or give away specific assets in the trust.4


Is it ever wise to name a trust as the beneficiary of a retirement account?

Under three circumstances, it might be worth doing. If you worry about your heirs rapidly spending down your IRA assets, for example, naming a trust as the IRA beneficiary more or less forces them to abide by a stretch IRA strategy. Are there “predators and creditors” who want some of your net worth? That is another reason to consider this move. If you want to leave your retirement account assets to someone who is currently a minor, this idea may be worthwhile as well.4


How complex should your estate planning be?

A conversation with a trusted legal or financial professional may help you answer that question, and illuminate whether simple TOD language or a trust is right to keep certain assets away from probate.


1– individual.troweprice.com/public/Retail/Planning-&-Research/Estate-Planning/Considering-a-Trust/Revocable-Living-Trust [11/10/15]
2 – fdcpa.com/Tax/0807TaxNewsEstatePlanning.htm [11/10/15]
3 – forbes.com/sites/deborahljacobs/2014/01/03/how-to-leave-your-ira-to-those-you-love/ [1/3/14]
4 – nolo.com/legal-encyclopedia/free-books/avoid-probate-book/chapter7-7.html [11/9/15]

Coping With an Inheritance

coping with inheritance

A windfall from a loved one can be both rewarding and complicated.

Provided by TechGirl Financial

Inheriting wealth can be a burden and a blessing

Even if you have an inclination that a family member may remember you in their last will and testament, there are many facets to the process of inheritance that you may not have considered. Here are some things you may want to keep in mind if it comes to pass.





Take your time

If someone cared about you enough to leave you a sizable inheritance, then likely you will need time to grieve and cope with their loss. This is important, and many of the more major decisions about your inheritance can likely wait. And consider, too – when you’re dealing with so much already, you may be too overwhelmed to give your options the careful consideration they need and deserve. You may be able to make more rational decisions once some time has passed.


Don’t go it alone

There are so many laws, options and potential pitfalls – The knowledge an experienced professional can provide on this subject may prove to be vitally important. Unless you happen to have uncommon knowledge on the subject, seek help.


Do you have to accept it?

While it may sound ridiculous at first, in some cases refusing an inheritance may be a wise move. Depending on your situation and the amount of your bequest – it may be that estate taxes will drain a large amount. Depending on the amount that remains, disclaiming some (or all) of the gift is worth contemplation.


Think of your own family

When an inheritance is received, it may alter the course of your own estate plan. Be sure to take that into consideration. You may want to think about setting up trusts for your children – to help ensure their wealth is received at an age where the likelihood that they’ll misuse or waste it is decreased. Trust creation may also help you (and your spouse) maximize exemptions on personal estate tax.


The taxman will be visiting

If you’ve inherited an IRA, it is extremely important that you weigh the tax cost of cashing out against the need for instant funds. A cash out can mean you will have to pay (on every dollar you withdraw) full income tax rates. This can greatly reduce the worth of your bequest, whereas allowing the gains of the investment to continue to compound within the account, and continuing to defer taxes, may have the opposite effect and help to increase the value of what you’ve inherited.


Stay informed

The estate laws have seen many changes over the years, so what you thought you knew about them may no longer be correct. This is especially true with regard to the taxation on capital gains. The assistance of a seasoned financial professional may be more important than ever before.


Remember to do what’s right for YOU

All too often an inheritance is left in its original form, which may be a large holding of a single company – perhaps even one started by the relative who bestowed the gift. While it’s natural for emotion to play a part and you may wish to leave your inheritance as it is, out of respect for your relative, what happens if the value of that stock takes a nose dive? The old adage “never put all your eggs in one basket” may be words to live by. Remember that this money is now yours – and the way in which you allocate assets needs to be in line with YOUR needs and goals.


Seeing That Mom & Dad Take Their Medications

seeing that mom and dad take their medications

Part of a series on how to care for your aging parents.

Provided by TechGirl Financial

How can you make sure that your parents are following their medication schedules?

Can you check up on that without feeling as if you are snooping or violating their privacy?

You can, and you can do so respectfully. You may have to at some point.

Did your Mom tell you that her blood pressure is up? Does your Dad’s dementia seem to be progressing faster than expected? You may become one of those adult children who, out of curiosity, opens the bathroom medicine cabinet at Mom or Dad’s house and finds expired medication bottles that appear just half-empty. After your jaw drops, what do you do?

First, communicate your concern

This conversation should have three objectives. One, you want to tell your parent that you are really concerned that they are not taking their medication(s). Two, you want to find out why. Three, you want to learn what your parent is actually taking (and not taking) – the amount, the frequency of the drug.


Consult your parent’s doctor

In no way should you attempt to revise Mom or Dad’s medication schedule on your own. Share your concerns with their doctor, who has the knowledge to note alternatives and solutions. Talking to that physician should provide you with more insight into the how and why of their medication schedule.


Perhaps simplifying the medication schedule would make things easier

If Mom or Dad takes multiple medications a day, check with their doctor to see if equivalent drugs might be available that require fewer daily doses. Perhaps there are extended-release versions of a particular medication. Sometimes seniors absentmindedly ask for obsolete prescriptions to be refilled. If swallowing is a problem, large pills can be crushed (any medical supply store should have pill crushers for sale) and mixed with applesauce (which some people dislike) or pudding (which seemingly everyone likes).


Talk with the pharmacist who helps your parent refill medications

Obviously all medications have side effects, but certain drugs can also potentially interact with each other, and if your Mom or Dad takes multiple medications in a day, they might even have the same ingredients.

For example, some seniors take Tylenol for minor aches and pains. Tylenol contains acetaminophen. So do many cold and flu syrups. If your parent takes Tylenol and 1-2 doses of cold and flu syrup on the same day, they are probably taking 2-3 doses of acetaminophen (or more) in that day.1

Prozac is a commonly prescribed antidepressant. Occasionally, people taking Prozac will buy some St. John’s wort over the counter, thinking it will further help them counter depression. A pharmacist would call this a redundancy, and the medicines have the potential to interact.1


If a pillbox is needed, you have options

Some seniors are fine with the classic days-of-the-week, S-M-T-W-T-F-S pillbox. If Mom or Dad has poor eyesight, there are talking pillboxes available. Others have alarms. Can you find pillboxes noting the days of the week in languages other than English? Yes, online (and perhaps in your local medical supply store as well). There are color-coded pillboxes, and pillboxes that are larger and serve to hold multiple per-day medications. There are even day-of-the-week cups for liquid medications.1


You may want outside help

If you don’t live with your aging parent (or live close to them), it can be hard to check up on them with regard to adherence to medication schedules. You may want an RN or a caregiver service to visit your parent once a week for this purpose. The cost might be $20-100 per visit – an “extra” health care cost most of us can manage, a cost that might even be covered.


You may meet some resistance

Your Mom or Dad may feel as if you are micromanaging their daily activity. Let your parent know that this is not your intention. Tell your Mom or Dad that you are checking up on this because you care, and assure your parent that he/she is still the decision maker when it comes to medicines. You are trying to help them, and help maintain their health and quality of life.


Protecting Your Elderly Parents from Falls

protecting your elderly parents from falls

Part of a series on how to care for your aging parents.

Provided by TechGirl Financial

As Consumer Reports notes, half of Americans older than 65 will fall this year

Those over 80 are most at risk.1

Up to 30% of seniors that take a spill suffer “moderate” or “serious” injuries, according to the Centers for Disease Control. Some will even die as a result of a brain hemorrhage, a broken neck, or ensuing medical problems such as brain trauma or pneumonia linked to blood clots after a hip fracture.1,2

Can you tell if your Mom or Dad is especially susceptible to a fall?

There are two routine tests that may help you and your parent predict future fall risk.

One is the Functional Reach Test, in which you stand with your feet shoulder width apart or narrower, extend one arm out front at shoulder height, and reach forward as far as possible with that arm without falling. If Mom or Dad can’t reach forward more than 7” from that initial position, they are at definite risk for falls.1

The Get Up & Go Test is also a predictive indicator. In this test, Mom or Dad sits in an armless chair, rises and walks 10’ straight ahead, makes a U-turn, and then walks back to the chair and sits. If this takes more than 14 seconds, Mom or Dad is at considerable fall risk.1

Even without those tests, a senior with an off-balance gait or the inability to stand on one foot for at least half a minute faces sizable fall risk.1


Can you teach your Mom or Dad to guard against a fall?

Yes you can, though you may not be able to mitigate the behavioral or medical factors that lead to falling.

Some physical conditions lead to falls: poor vision, poor balance, and impairment due to strokes or arthritis, even a Vitamin B12 deficiency or low blood pressure. Some medications (or more properly, their side effects) can contribute to the problem.1

All that said, most falls can be traced to gait problems and balance problems. So improving gait and balance is the goal.

Ever wonder why there are so many tai chi classes at senior centers? Seniors practicing the Chinese martial art can improve their balance and lower their odds of falling – a 2012 study in the New England Journal of Medicine affirmed that. Other group exercise programs and physical therapy may help seniors strengthen muscles and improve coordination.2

Can Mom or Dad do some preventive exercises at home? Of course. Three that seem to help are all fairly simple. They can practice standing on one foot (with a spotter), they can hold onto the back of a chair and do leg lifts, and they can consciously do some heel-to-toe walking.1


When is it time for a cane or a walker?

Many older people are reluctant to use them, seeing them as symbols of weakness and dependence. In reality, they are smart choices that affirm the safety of the senior and help him or her maintain ambulatory independence.3

For help answering this question, you and/or your parent should visit a physical therapist for a balance assessment, where one or both of the aforementioned tests may be used to predict the chances of fall risk. The PT may recommend a walker if the risk is great, a cane if the risk is relatively minor. Not all canes are alike, and neither are all walkers. Some are sportier than the rote, institutional-looking models. Some are taller, some are shorter, some have different bases and some have different grips. Mom or Dad should have the opportunity to try a few models out, perhaps in a medical supply store.3


How can you make Mom or Dad’s home safer?

You can take little steps such as getting rid of rugs that could snag a walker or cane, clutter on or near the floor and narrow passages between furniture. They should have space to maneuver within a room, and grab bars or railings to help them as they enter or exit a room, a toilet seat, or a bath are handy. A sturdy shower seat or transfer bench may be needed, even a “European style” bathtub with a door that opens nearly at floor level. Interior designers know that seniors want style, not a house that looks like a hospital or a municipal building – so these days, safeguards such as these may be installed with style, although the more style you want the more it will cost.


Your concern & gentle encouragement might keep Mom or Dad on their feet longer

If you worry about your Mom or Dad falling, act on that worry. Discuss the matter, in a loving and caring way.


Your Year-End Financial Checklist – 2015


Seven aspects of your financial life to review as the year draws to a close.

Provided by TechGirl Financial

The end of a year makes us think about last-minute things we need to address and good habits we want to start keeping. To that end, here are seven aspects of your financial life to think about as this year leads into the next…

Your investments

Review your approach to investing and make sure it suits your objectives. Look over your portfolio positions and revisit your asset allocation.

Your retirement planning strategy

Does it seem as practical as it did a few years ago? Are you able to max out contributions to IRAs and workplace retirement plans like 401(k)s? Is it time to make catch-up contributions? Finally, consider Roth IRA conversion scenarios, and whether the potential tax-free retirement distributions tomorrow seem worth the taxes you may incur today. Be sure to take your Required Minimum Distribution (RMD) from your traditional IRA(s) by December 31. If you don’t, the IRS will assess a penalty of 50% of the RMD amount on top of the taxes you will already pay on that income. (While you can postpone your very first IRA RMD until April 1, 2016, that forces you into taking two RMDs next year, both taxable events.)1


Your tax situation

In years past, high-earning business owners and executives didn’t always look deeply into deductions and credits because they assumed they would be hit by the Alternative Minimum Tax (AMT). The recent rise in the top marginal tax bracket (to 39.6%) made fewer of them subject to the AMT – their ordinary income tax liabilities grew. This calls for a closer look at accelerated depreciation, R&D credits, the Work Opportunity Tax Credit, incentive stock options, and certain types of tax-advantaged investments.

Review any sales of appreciated property and both realized and unrealized losses and gains. Take a look back at last year’s loss carry-forwards. If you’ve sold securities, gather up cost-basis information. Look for any transactions that could potentially enhance your circumstances.


Your charitable gifting goals

Plan contributions to charities or education accounts, and make any desired cash gifts to family members. The annual federal gift tax exclusion is $14,000 per individual for 2015, so you can gift up to $14,000 to as many individuals as you like this year without tax consequences. A married couple can gift up to $28,000 tax-free to as many individuals as they wish. The gifts do count against the lifetime estate tax exemption amount ($5.43 million per individual, $10.86 per married couple in 2015).

You can choose to gift appreciated securities to a charity. If you have owned them for more than a year, you can deduct 100% of their fair market value and legally avoid capital gains tax you would normally incur from selling them.4

Besides outright gifts, you can plan other financial moves for your family – you can create and fund trusts, for example. The end of a year is a good time to review trusts you have in place.


Your life insurance coverage

Are your policies and beneficiaries up-to-date? Review premium costs, beneficiaries, and any and all life events that may have altered your coverage needs.


Speaking of life events…

Did you happen to get married or divorced in 2015? Did you move or change jobs? Buy a home or business? Did you lose a family member, or see a severe illness or ailment affect a loved one? Did you reach the point at which Mom or Dad needed assisted living? Was there a new addition to your family? Did you receive an inheritance or a gift? All of these circumstances can financially impact on your life, and even the way you invest and plan for retirement and wind down your career or business. They are worth discussing with the financial or tax professional you know and trust.

Lastly, did you reach any of these financially important ages in 2015?

If so, act accordingly.

Did you turn 70½ this year? If so, you must now take Required Minimum Distributions (RMDs) from your IRA(s).

Did you turn 65 this year? If so, you’re now eligible to apply for Medicare.

Did you turn 62 this year? If so, you’re now eligible to apply for Social Security benefits.

Did you turn 59½ this year? If so, you may take IRA distributions without a 10% penalty.

Did you turn 55 this year? If so, and you retired during this year, you may now take distributions from your 401(k) account without penalty.

Did you turn 50 this year? If so, “catch-up” contributions may now be made to IRAs (and certain qualified retirement plans).1,5


The end of the year is a key time to review your financial “health” & well-being

If you feel you need to address any of the items above, please feel free to give me a call.


Why DIY Investment Management Is Such a Risk

why diy investment

Paying attention to the wrong things becomes all too easy.

Provided by TechGirl Financial

If you ever have the inkling to manage your investments on your own, that inkling is worth reconsidering. Do-it-yourself investment management is generally a bad idea for the retail investor for myriad reasons.

Getting caught up in the moment

When you are watching your investments day to day, you can lose a sense of historical perspective – 2011 begins to seem like ancient history, let alone 2008. This is especially true in longstanding bull markets, in which investors are sometimes lulled into assuming that the big indexes will move in only one direction.

Historically speaking, things have been so abnormal for so long that many investors – especially younger investors – cannot personally recall a time when things were different. If you are under 30, it is very possible you have invested without ever seeing the Federal Reserve raise interest rates. The last rate hike happened before there was an iPhone, before there was an Uber or an Airbnb.

In addition to our country’s recent, exceptional monetary policy, we just saw a bull market go nearly four years without a correction. In fact, the recent correction disrupted what was shaping up as the most placid year in the history of the Dow Jones Industrial Average.1

Listening too closely to talking heads

The noise of Wall Street is never-ending, and can breed a kind of shortsightedness that may lead you to focus on the micro rather than the macro. As an example, the hot issue affecting a particular sector today may pale in comparison to the developments affecting it across the next ten years or the past ten years.


Looking only to make money in the market

Wall Street represents only avenue for potentially building your retirement savings or wealth. When you are caught up in the excitement of a rally, that truth may be obscured. You can build savings by spending less. You can receive “free money” from an employer willing to match your retirement plan contributions to some degree. You can grow a hobby into a business, or switch jobs or careers.


Saving too little

For a DIY investor, the art of investing equals making money in the markets, not necessarily saving the money you have made. Subscribing to that mentality may dissuade you from saving as much as you should for retirement and other goals.


Paying too little attention to taxes

A 10% return is less sweet if federal and state taxes claim 3% of it. This routinely occurs, however, because just as many DIY investors tend to play the market in one direction, they also have a tendency to skimp on playing defense. Tax management is an important factor in wealth retention.


Failing to pay attention to your emergency fund

On average, an unemployed person stays jobless in the U.S. for more than six months. According to research compiled by the Federal Reserve Bank of St. Louis, the mean duration for U.S. unemployment was 28.4 weeks at the end of August. Consider also that the current U-6 “total” unemployment rate shows more than 10% of the country working less than a 40-hour week or not at all. So you may need more than six months of cash reserves. Most people do not have anywhere near that, and some DIY investors give scant attention to their cash position.2,3

Overreacting to a bad year

Sometimes the bears appear. Sometimes stocks do not rise 10% annually. Fortunately, you have more than one year in which to plan for retirement (and other goals). Your long-run retirement saving and investing approach – aided by compounding – matters more than what the market does during a particular 12 months. Dramatically altering your investment strategy in reaction to present conditions can backfire.


Equating the economy with the market

They are not one and the same. In fact, there have been periods (think back to 2006-2007) when stocks hit historical peaks even when key indicators flashed recession signals. Moreover, some investments and market sectors can do well or show promise when the economy goes through a rough stretch.


Focusing more on money than on the overall quality of life

Managing investments – or the entirety of a very complex financial life – on your own takes time. More time than many people want to devote, more time than many people initially assume. That kind of time investment can subtract from your quality of life – another reason to turn to other resources for help and insight.



Planning for Retirement When You Are Single

planning for retirement while single

If you aren’t married, you should consider these potential expenses & needs.

Provided by TechGirl Financial

How does retirement planning differ for single people?

At a glance, there would seem to be no difference in the retirement saving effort of an individual versus the retirement saving effort of a couple: start early, save consistently, and use vehicles that allow tax-advantaged growth and compounding of invested assets.

On closer inspection, differences do appear – factors that single adults should pay attention to while planning for the future.

Retirement savings must be built off one income

Unmarried adults should save for retirement early and avidly. Most couples have the luxury of creating retirement nest eggs from either or both of two incomes. They can plan to build wealth with a degree of flexibility and synchronization that is unavailable to a single saver. So when it comes to building retirement assets, a single adult has to start early, save big and never let up, as there is no spouse around to help in the effort and only one income from which savings can emerge.


The Social Security claiming decision takes on more importance

An unmarried person’s Social Security benefits are calculated off his or her lifetime earnings record. Simple, cut and dried.1

Married people, however, have an option that the unmarried lack. Once their spouses begin to collect Social Security, they have a chance to claim a spousal benefit as early as age 62 rather than wait for benefits based solely on their own earnings. In fact, they may be able to claim this spousal benefit at age 62 even if they are widowed or divorced. If they are caring for a son or daughter from that marriage who is also receiving some form of Social Security benefits, they may be eligible for a spousal benefit before age 62.2,3

All this means that a couple can potentially rely on two Social Security incomes before both spouses reach what the program deems full retirement age. An unmarried person cannot exploit that opportunity, so the decision to claim Social Security early at reduced monthly benefits or postpone claiming to receive greater benefits becomes critical.


An unmarried person may someday have a huge need for long term care insurance

If there are no adult children or spouse around to serve as caretakers in the event of a debilitating mental or physical breakdown, an unmarried individual may eventually become destitute from costs linked to that sad consequence. LTC coverage is growing more expensive and fewer carriers are offering it these days, so many married baby boomers are wondering if it is really worth the expense; in the case of a single, unmarried baby boomer retiring solo, it may be.

Housing is often the largest expense for the unmarried

In an ideal world, a single adult could pay half of the monthly housing expense of a married couple. That seldom happens. Relatively speaking, housing costs usually consume much more of a sole individual’s income than the income of a couple. This is true even early in life: according to Bureau of Labor Statistics data, married folks in their late twenties spend $7,200 per person less on housing expenses annually. So a single person would do well to find ways to cut down housing expenses, as this frees up more money that can be potentially assigned to retirement saving.1

Saving when single presents distinct challenges

In fact, saving for retirement (or any other financial goal) as a single, unmarried person is often more challenging than it is for a married couple – especially in light of the fact that spouses are given some distinct federal tax advantages. Still, the effort must be made. Start as early as you can, and save consistently.


Why Does the Wage Gap Between Men & Women Persist?

why does the wage gap between

While it has narrowed, a notable inequality remains.

Provided by TechGirl Financial

Last year, the median weekly earnings for an American woman came to $719

Bureau of Labor Statistics data shows that the median weekly earnings for an American man were $152 higher, or 21.1% more.1

Calculated over the course of 52 weeks, that means the median yearly pay for a man in America was $45,292 in 2014. Median yearly pay for a woman: $37,388.1

The good news, relatively speaking: in the past 35 years, this gap has narrowed. In 1980, women working full-time earned only about 65% of the wages of their male counterparts.2



After all these years, why is there still such wage inequality?

Two quick explanations are often put forth. One, there is still appreciable wage discrimination against women in the workforce, with mothers being perhaps most affected. Two, some women accept lower-paying jobs or leave work altogether while staying at home with their kids or taking care of ailing relatives.

These factors are certainly present in wage inequality, yet so are others that get less media notice.



More women work for low pay than men

Citing BLS data, the National Women’s Law Center notes that more than two-thirds of minimum-wage jobs in this country are held by women. In fact, the NWLC found in 2014 that women made up 76% of employees in the ten most common occupations with hourly wages of $10.10 or lower. Even in these low-salaried jobs, full-time working women still made an average of 10% less than their male co-workers.3,4

As the Great Recession ebbed, these entry-level jobs were an immediate source of work for many women: 35% of the net employment gain for women from 2009-13 occurred in these fields, compared to 18% of the net employment gain for men. As the number of women in these low-wage occupations markedly exceeds the number of men, this is one of the underpublicized reasons for the continuing wage gap by gender.4



Careers in which women predominate pay less than careers in which men predominate

As an example, more than 75% of classroom teachers in America are women (and the median pay for classroom teachers, adjusted for inflation, is essentially where it was in 1970). Only recently have initiatives emerged to encourage women to enter “STEM” career fields (careers rooted in science, technology, math and engineering), which are male-dominated and comparatively high-salaried.5

It may be argued that a teacher contributes much more to society than a software engineer, but that argument is not bolstered by the pay gap between those careers. Looking at Payscale.com, the average salary for an elementary school teacher is $40,311 while the average software engineer earns $63,080.6


Women do a lot of unpaid work

A mother earns no salary for raising children; a wife earns no salary for taking care of a disabled or seriously ill spouse or partner. Historically, women have left the office to perform this work to greater degree than men have. This tendency also contributes to the wage gap, as the woman involved may end up choosing lower-paying work or not work at all.

Wage discrimination still exists, and is partly accountable for the differential in median wages between the sexes. There is more to the story, however; the career and life choices women are encouraged or impelled to make also influence the numbers.


Lean In To Retirement

Check out TechGirl Financial's Article Series on how to "Lean In To Retirement".

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