Personal Economics 101

From Charles Schwab, Inc . If you've already gone from saving for retirement to living off your savings—or you're still making this shift—it probably doesn't surprise you to hear that retirement doesn't mean an end to your financial responsibilities. "In some ways, they become more important," says Rob Williams, managing director of retirement income and wealth management at the Schwab Center for Financial Research. "As your focus shifts from work to enjoying the fruits of your labor, your planning needs also change," Rob says. "If the priority before was to save enough to retire, the main job now is to preserve and protect—but also use your savings so you can enjoy the retirement you dreamed about." Here are nine things you can do after you retire (or partially retire), to keep your goals on track. 1. Review your spending and income plan at least once a year After years of working and saving, you likely started retirement with a plan for h...

Taxes Biden has proposed sweeping changes to the tax code, including returning the top income tax rate to 39.6% from its current level of 37%. He has pledged to not raise taxes on anyone making less than $400,000. Yet, he wants to raise taxes on long-term capital gains from investments and qualified dividends. Taxpayers with income above $1 million would be subject to a capital gains tax rate of 39.6%, instead of the current 20%. Meanwhile, the corporate tax rate would jump to 28% from 21% and there would be a 15% minimum tax on book income for corporations that have profits of $100 million or higher. Bank of America Securities estimates that Biden's tax plan would reduce S&P 500 earnings by 7%, mostly because of the higher corporate taxes. In addition, the wealthy will face a higher estate tax bill. Currently, under the Tax Cuts and Jobs Act, individuals can gift or make a bequest of $11.7 million, or $23.4 million for a married couple, before facing the 40% estate or gift tax...

States compete with each other in a variety of ways, including in attracting (and retaining) residents. Sustained periods of inbound migration lead to (and reflect) greater economic output and growth. On the other hand, prolonged periods of net outbound migration can strain state coffers, contributing to revenue declines as economic activity and tax revenue follow individuals out of state. The 2020 National Movers Study, while showing only a subset of all moves, still provides a targeted look at the types of interstate migration patterns we can expect to see in government-issued data once it becomes available.

In one of the smallest annual cost-of-living adjustments on record, Social Security benefits will increase by 1.3% in 2021, boosting average benefits by $20 per month to $1,553 and increasing the maximum benefit for someone retiring at full retirement age in 2021 to $3,148 compared to this year’s maximum of $3,011 per month. The standard Medicare Part B premium, which covers doctor’s visits and other outpatient services, will increase to $148.50 per month in 2021, up $3.90 from this year’s monthly premium of $144.60. Of course, it's not just Part B premiums that are rising. The annual deductible for Part B is also going up from $198 in 2020 to $203 in 2021. And the Part A deductible per hospital benefit period is increasing, too, from $1,408 to $1,484 -- a $76 jump. Higher-income Medicare beneficiaries will pay more. In 2021, individuals with modified adjusted gross income of $88,000 or more and married couples with MAGIs of $176,000 or more will pay additional surcharges ranging f...

This is a good video explaining the principles of dividend investing. In my own portfolio, my own focus has been on dividend, or income, investing for the last few years. I'm getting $12,000 in dividends annually on less total assets than this video says you need, but with more risk. Check it out.

Spoiler alert: Savings rate.  https://youtu.be/Y0cibIa1N38

Originally published by Schwab, Inc. -- Even in the best of times, money concerns can cause a lot of stress. But according to a recent survey by the National Foundation for Financial Education, nearly 9 in 10 Americans say that COVID-19 is making money a primary cause of anxiety. Add to that the need to juggle working from home, child care, home schooling and health concerns and people are being stretched to the limit. Understandably, people are worried about their financial future. Equally understandably, they often don't feel like they have the energy to deal with it. But as overwhelming as it can seem, there are strategies to help you cope and stay calm. As I wrote recently, you may have to think differently to get through these times , but there are ways to do it. And it starts with awareness. Be aware of what you can control First realize that no matter how uncertain you may feel, there are some financial things you can still control. That in itself will help ease your stre...

Both traditional and Roth IRAs can be effective retirement savings tools, but eligibility limitations mean one or both may not be right for you. Here’s a guide to help you choose. What’s the difference between a traditional and Roth IRA? A traditional IRA is an individual retirement account that allows you to make contributions on a pre-tax basis (if your income is below a certain level) and pay no taxes until you withdraw the money. This makes a traditional IRA an attractive option for investors who expect to be in a lower tax bracket during retirement than they are now. On the other hand, Roth IRA contributions are made with after-tax dollars. The benefit of a Roth IRA is that you can withdraw your contributions and earnings tax-free after age 59½, if you’ve had the account for at least five years, or you meet certain other conditions.² In addition, your after-tax contributions to the Roth account can be withdrawn at any time, tax- and penalty-free. However, if you make an earl...

It takes time and discipline to become money smart. It doesn't happen overnight. Some people go through life never saving and living paycheck to paycheck. Learning how to be able to handle your money at an early age may not seem sexy, but it will certainly put you down the right path. But if you think you have enough time to become serious about your finances, think again. You may still feel young and invincible even when you hit your 30s, but the scary truth is that you are halfway to retirement. It is time to put the financial foolhardiness of your 20s behind you and become more frugal with your cash by mastering these top financial habits. 1. Actually Stick to a Budget Most 20-somethings have played around with the idea of a budget, have used a budgeting app, and have even read an article or two about the importance of creating a budget. However, very few individuals actually stick to that budget, or any budget at all. Once you turn 30, it's time to ditch the wishy-wash...

Every year thousands of people lose millions of dollars to investment fraud. One conservative estimate is that one in 10 investors will be victimized at some point in their lives, and seniors are targeted more often than younger people. The number and sophistication of investment scams is ever-growing—but by maintaining a healthy dose of skepticism and training yourself to spot some common red flags, you may be able to protect yourself and your loved ones from becoming victims. The come-ons Be skeptical if investment opportunities come with any of the following features: Guaranteed high returns Low or no risks Invitations to join exclusive investment organizations The ability to “get in on the ground floor” Claims of breakthrough technologies Penny stocks Seminars, free meals or travel offers The tactics Be particularly alert to these types of strategies: Unsolicited approaches by phone, email or text or in person A hard sell and lofty promises No way to call back or ...

From my point of view -- or as they say, IMHO -- none of the above "reasons" -- I'd like to call them "excuses" -- are valid for not having retirement savings. All of them can be overcome by following basic financial principles. The following are time-tested principles, which have been repeated over and over again. What most people lack is the willingness to actually do them, rather than just think about them.  1. Set SMART financial goals The first step toward achieving your financial goals is to set parameters against which you can measure your progress. That means ensuring your goals are Specific, Measurable, Achievable, Relevant and Time-bound, or SMART. Using the SMART approach will force you to be more precise about what you want to achieve and give you less room to make excuses should you fall short. Here’s an example to get you started: Vague goal: Contribute to my 401(k) each month. SMART goal: Contribute 5% of my salary to my 401(k) e...

From Gary Halbert : A sweeping new retirement bill is working its way through Congress that is aimed at helping the country overcome its retirement savings crisis. That’s what many lawmakers in Washington envision with the Setting Every Community Up for Retirement Enhancement Act of 2019 – better known as the “SECURE Act.” The far-reaching bill includes 29 provisions aimed at increasing access to tax-advantaged retirement accounts and preventing older Americans from outliving their assets. The SECURE Act includes numerous new retirement account benefits including making it easier for small businesses to set up retirement plans such as 401(k)s that will be less expensive and easier to administer. Many part-time workers would be eligible to participate in employer retirement plans under the bill. And the SECURE Act would also push back the age at which retirement plan participants must take “required minimum distributions” (RMDs) from 70½ to 72. These are just a few of the new bene...

From time to time, I participate on Quora, providing answers to personal finance questions. This one came across my desk last night: "Is self-directed IRA a good idea?" I'm not sure the person asking this question really understood the question, so I provided this answer: First, let’s define the difference between self-directed and custodial account. The previous answer would leave you to believe that in a custodial (or custodian) IRA is directed by someone else and this is not necessarily true. It’s a matter of terminology. A  Custodial  IRA is an Individual Retirement Account that a custodian (typically a parent) holds for a minor with an earned income. Once the Custodial IRA is open, all assets are managed by the custodian until the child reaches age 18 or 21 (varies by state). All funds in the account belong to the child, allowing them to get started early on saving money and reap the benefits of compounded growth. You can open either a Custodial Roth ...