fbpx

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 ...

Read More →

Why Your Saving Rate Is More Important Than Your Investment Return

Investors love to focus on their investment return. From 2009 to 2017, it was hard not to get excited about the double digit returns even the average investor could achieve. While it was nice to see those large returns, it really just made up for the 40% drop in the 2008 Market Crisis. And it is highly unlikely that we will repeat those returns over the next 10 years. So that brings us back to the expectation that over a long period of time we should hit the S&P 500 historical market average of 7% (1950 to 2009 adjusted for inflation and dividends). What about the savings rate. Well, Americans suck at saving. Personal savings in the United States averaged 8.82 percent from 1959 until 2018, reaching an all time high of 17.30 percent in May of 1975 and a record low of 2.20 percent in July of 2005. In 2018 we are saving only about 6%. (US Bureau of ...

Read More →