529 plans were created in 1996 to give families a tax-advantaged way to save for college. Roth IRAs were created a year later to give people another tax-advantaged way to save for retirement. Along the way, some parents began using Roth IRAs as a college savings tool. And now, starting in 2024, extra funds in a 529 plan can be rolled over to a Roth IRA for the same beneficiary. Here's how the two options compare in a few key areas. Contribution rules 529 plan: Anyone can open a … [Read more...]
Should You Buy or Lease Your Next Vehicle?
New vehicle prices have skyrocketed these past few years, with the cost averaging well over $48,000 toward the end of 2023.1 These increased costs, coupled with rising interest rates, mean that buying a vehicle can take a significant bite out of your budget. If you are in the market for a new vehicle, you might be wondering if leasing it would save you money. As a rule, if you plan on keeping a vehicle for a long period of time, it makes more sense to buy it. But if having the latest … [Read more...]
Birthday Benefits Quiz
Remember when you turned 16 and rushed to get your driver's license? Or earned the right to vote at 18 and enjoyed the privileges and responsibilities of adulthood at 21? There aren't many legal changes associated with birthdays after that until you turn 50, and then there are plenty. Can you match these ages to the related federal benefits and tax responsibilities? One age will be used twice. 50 55 59½ 62 65 67 70 73 75 ___ 1. Eligible for full Social … [Read more...]
Health Insurance Premiums Jumped in 2023
In 2023, the average total annual premium for employer-sponsored health insurance coverage was $8,435 for single coverage and $23,968 for family coverage, with average worker contributions of $1,401 and $6,575, respectively. Total premiums for both types of coverage increased a little more than 6.5% over 2022, the highest annual increase since 2011. The increase in worker contributions was 5.6% for single coverage and 7.7% for family coverage, the highest since 2017 and 2019, respectively. On … [Read more...]
Investor, Know Thyself: How Your Biases Can Affect Investment Decisions
Traditional economic models are based on the premise that people make rational decisions to maximize economic and financial benefits. In reality, most humans don't make decisions like robots. While logic does guide us, feelings and emotions — such as fear, excitement, and a desire to be part of the "in" crowd — are also at work. In recent decades, another school of thought has emerged. This field — known as behavioral economics or behavioral finance — has identified unconscious cognitive … [Read more...]
Social Security 101
Social Security is complex, and the details are often misunderstood even by those who are already receiving benefits. It's important to understand some of the basic rules and options and how they might affect your financial future. Full retirement age (FRA) Once you reach full retirement age, you can claim your full Social Security retirement benefit, also called your primary insurance amount or PIA. FRA ranges from 66 to 67, depending on your birth year (see chart). Claiming … [Read more...]
Do You Need to Adjust Your Tax Withholding?
Once you've filed last year's tax return and can see where your finances are headed this year, it may be a good time to adjust your income tax withholding to help make sure you're having the right amount withheld from your paycheck. Tax withholding is a balancing act. If you have too much tax withheld, you will receive a refund when you file your income tax return. If you prefer to receive more in your paycheck instead, you will need to reduce your withholding. However, if you have too … [Read more...]
When Do People Start Collecting Social Security?
There's no "right" age to begin receiving Social Security retirement benefits. It's a personal decision based on multiple factors, including how long someone wants to work and how much retirement income is needed. Workers are entitled to full benefits at their full retirement age (FRA) — 66 to 67, depending on year of birth. Claiming before FRA (as early as age 62) will result in a permanently reduced benefit, while claiming later will result in a permanently increased benefit due to delayed … [Read more...]
Market Measures: Beyond the Dow
When you hear or read that the market is up or down, what does that really mean? More often than not, it reflects movement in the two best-known stock market indexes, the Dow Jones Industrial Average and the S&P 500. In fact, there are hundreds of indexes that track various categories of investments. While you cannot invest directly in an index, you can buy funds that track specific indexes, and you can look at indexes as a benchmark for certain portions of your portfolio. For example, … [Read more...]
New SAVE Repayment Plan Offers Key Benefits
In July 2023, the Department of Education launched a new income-driven repayment (IDR) plan for federal student loans called the Saving on a Valuable Education (SAVE) Plan. The SAVE Plan is the most generous IDR plan to date, and like all IDR plans, it calculates a borrower's monthly payment amount based on income and family size. The SAVE Plan replaces the existing Revised Pay As You Earn (REPAYE) Plan, and all borrowers who are currently enrolled in REPAYE will be automatically transferred … [Read more...]
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