Starting a Roth IRA for a Child or Grandchild

This early financial decision could prove profoundly positive over time. Do you have a child or grandchild earning some income? Indirectly, that after-school or summer job might present a savings opportunity for that teenager. You could help your child or grandchild save for future goals by assisting them to create and fund a Roth IRA. So many people wish they had begun saving for retirement sooner. Imagine how your child or grandchild’s prospects for building lifetime retirement savings might improve by starting as soon as possible. Here is a little math to illustrate the potential. Suppose $1,000 goes into a Roth IRA when a child is 17, with $100 per month going into the account ther

Tax Moves to Consider in Summer

Now is a good time to think about a few financial matters. Making changes earlier rather than later. If you own a business, earn a good deal of investment income, are recently married or divorced, or have a Flexible Savings Account (FSA), you may want to think about making some tax moves now rather than in December or April. Do you now need to pay estimated income tax? If you are newly self-employed or are really starting to see significant passive income, you may need to quickly acquaint yourself with Form 1040-ES and the quarterly deadlines. Every year, estimated tax payments to the Internal Revenue Service are due on or before the following dates: January 15, April 15, June 15, and Sept

Build Your Rainy Day Fund

Like an emergency fund, it can come in handy. Sometimes, life gets expensive. A little bad luck or a twist of fate can hit us right in the checkbook and challenge us to live within our budget. An emergency fund may help us handle major financial disruptions. For the minor ones, a rainy day fund may suffice. A rainy day fund and an emergency fund differ in scale, but not purpose. Both funds are designed to fully or partly absorb sudden costs. An emergency fund contains enough cash to help a household through a sudden financial crisis: a serious illness, a job loss. A rainy day fund is built in anticipation of certain expenses, rather than as a response to unforeseen emergencies. It may

Are Changes Ahead for Retirement Accounts?

A bill now in Congress proposes to alter some longstanding rules. Most Americans are not saving enough for retirement, despite ongoing encouragement to do so (and recurring warnings about what may happen if they do not). This year, lawmakers are also addressing this problem, with a bill proposing big changes to IRAs and workplace retirement plans. The Retirement Enhancement and Savings Act (RESA), introduced by Senator Orrin Hatch, would amend the Internal Revenue Code and the Employee Retirement Income Security Act (ERISA) in some significant ways. Contributions to traditional IRA accounts would be allowed after age 70½. Today, only Roth IRAs permit inflows after the owner reaches this

Save & Invest Even if Money Is Tight

For millennials, today is the right time. If you are under 30, you have likely heard that now is the ideal time to save and invest. You know that the power of compound interest is on your side; you recognize the potential advantages of an early start. There is only one problem: you do not earn enough money to invest. You are barely getting by as it is. Regardless, the saving and investing effort can still be made. Even a minimal effort could have a meaningful impact later. Can you invest $20 a week? There are 52 weeks in a year. What would saving and investing $1,040 a year do for you at age 25? Suppose the invested assets earn 7% a year, an assumption that is not unreasonable. (The a

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