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The Three Most Important Letters In Retirement R M D

What is a required minimum distribution? (*) You’ll sometimes hear that you have important financial decisions to make when you turn the age of 70 ½.  The IRS has never seen a nickel of tax revenue on account you may have started in your early 20’s, so now they are wanting to get their due.  An RMD or required minimum distribution is the amount that the tax laws require you to take out of certain types of retirement accounts once you reach the age of 70 ½. If you have a traditional IRA, a 401(k) account, 403(b), or other types of retirement plans, then you’ll generally have to start taking RMDs once the provisions of the law kick in. The rules apply to certain inherited retirement accounts as well, so be very careful when you inherit an IRA. Required minimum distributions must be made in cash, and you’re generally required to complete the withdrawal by the end of the calendar ...

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How Much Should You Be Tipping?

There was an excellent story written a few years ago interviewing Michael Lynn, who had written more than 50 papers on tipping.  In his excerpts (source: PBS) he said there are five basic motives for tipping. Some people tip to show off. Some people tip to help the server, to supplement their income and make them happy. Some people tip to get future service. And then other people tip to avoid disapproval: You don’t want the server to think badly of you. And some people tip out of a sense of duty. There are people who tip to reward servers for service. If the server does a great job, I want to express my gratitude so that is another motivation for tipping. But how strong is that motivation? My research suggests it’s not terribly strong. I find the relationship is so weak that it would be wrong to use tipping as a measure of service quality. People often say that’s ...

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35 Billion Ways to not be Jeff Bezos

You might have seen recently that the King of Amazon, Jeff Bezos got into some trouble and ended up in divorce.  While the details of the settlement are not disclosed, it looks like he did not have his wealth in a trust.  And all of his Amazon shares seems to be in his personal name.  This means his ex-wife is going to end up with around $35 Billion.  But don’t cry too much for Jeff, he should still be worth over $100 Billion when it’s done.  His mistress has now announced she is also getting divorced, so you know Jeff will be making some post-divorce moves before he ties the knot again. While you might not have billions on the line, here are a few things you should do after a divorce. 1. Check Your Beneficiaries– Most people list the beneficiaries on their 401(k), IRA’s, and insurance policies when they set up the accounts and forget all about them.  While ...

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Four Ways Your Kids Can Ruin Your Retirement

Retirement generally only happens one time in our life.  It is that transition period where we hope our work, parental, and personal responsibilities dissipate to the point where we only have to worry about ourselves.  It is a time in our lives where we don’t have to be on a time clock, don’t have to worry about checking e-mail, and there are no meetings that we have to be at on the schedule of someone else. Nobody really tells you what kinds of responsibilities come with having children until you actually have a child.  You work hard to raise your child the right way, and you hope one day that they will be a fully self-sufficient individual.  Your greatest fear may be your own children’s failure to launch.  Here are four ways your children can ruin your retirement: Their Debt Becomes Your Guilt Many parents believe it is their responsibility to make sure their child graduates college with no debt.  ...

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What Is A Financial Bubble?

A lot of clients ask me: When is the bubble going to pop? What is the next bubble on the horizon? How do we prepare for the next bubble? My question back to them is always: Do you know what a bubble is and how it works? A bubble, in the financial and economic sense, is a fast rise in an asset’s price followed by a contraction. Bubbles typically happen when the price of an asset is not justified by the asset itself but rather by the over-exuberant behavior of investors. When there are no more investors willing to pay the overinflated price, people panic and sell and the bubble bursts. We have seen countless examples of this over decades of economic events in the United States. Heck, even in the last 15 years we’ve seen multiple bubbles. 2005: An asset bubble occurred in real estate. Hedge fund managers created a huge demand for credit default swaps that insured mortgage-backed ...

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Financial Moves To Make When You Become A Freelancer

Imagine this: You recently lost your job or your job lost you, and now you have decided to take some freelance consulting job to pick up some spare cash. Or, you are finally starting that side hustle you’ve always dreamed of and your Etsy store is about to be up and running. Sound familiar? You fill out a W-9 in order to get paid, and a few weeks later a check comes in the mail made out to you.  You are overwhelmed with excitement because this is the first time no taxes have been taken out of your paycheck and you are feeling flush with cash.  At some point in 2020, you’ll be getting your first 1099’s in the mail, but what should you be doing here in 2019 to make sure your ducks are in a row come tax filing time? The reality is that most of you who earned your first 1099 will likely file Schedule C (sole ...

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How NOT To Cheat When Getting Your Kid Into A Great School

Over this past week, one of the largest cheating scandals in history got cracked wide open uncovering bribery and other illegal acts committed by celebrity stars such as Felicity Huffman and Lori Loughlin.  This may be the straw that breaks the camel’s back and opens up the real investigations into how much parents ‘donate’ in order to help their children get the edge to get into the school of their choice. It does beg the question about whether it’s our children that are feeling the peer pressure about getting into college or is it us the parents who are feeling the peer pressure to compete with our neighbors, our co-workers, and our college friends.  Do you as the parent feel less self-worth when that banner in the front of the neighborhood gets put up for everyone to see or when your friends post where their kid is going to school on Facebook? I’m actually amazed by how people are surprised ...

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Five Things You Need To Know Before You Buy Your Next Airline Ticket

There are certain purchases in our lives that always seem to be nerve-racking.  Buying a home, buying a car, and how about pressing that button to officially purchase an airline ticket.  While you are truly excited about that skiing trip in Vail or your next worldwide adventure starting in Amsterdam, you might just be concerned about whether or not you got ripped off on the airfare.  Sometimes, it may feel like the airfare websites are tracking your IP address just jacking up the prices until they squeeze you in or out of buying that ticket. So, here’s the insider’s guide to five things you should know before you purchase that next ticket. Non-Stop Is Cheaper Than A Connector Flight – Actually, here’s an interesting tip. Sometimes, booking two one-way flights might be cheaper than booking the round trip, and that is where I recommend you start the search. What airlines care about most is that their flights are full. Look ...

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