I recently read about a family earning too much to qualify for health insurance subsidies through the ACA (Affordable Care Act aka Obamacare) but too little to afford the premiums. While it seems absurd that a family earning $113,000/year cannot afford health insurance, this is the plight for millions of Americans who do not have…
Personal Finance
New Year, New Limits
In 2019, the IRS will allow you to save more for retirement than in prior years. Contribution limits for IRA accounts are increasing for the first time since 2013. While 401(k) contributions increased $500 last year, they held steady at $18,000 between 2015-2017. The base contribution limits increased, but the catch-up provisions for those age…
Cracks in the System
Charles Ellis wrote an article in the Financial Analysts Journal called, “Our #1 Challenge: Retirement Insecurity”. The retirement crisis isn’t creeping up on us, it’s here. Americans do not have enough money saved for retirement, and they can’t all work until they die. Social Security does not cover the basics. Pensions are gone, and less than…
Annuities are Sold, Not Bought
I spoke to a reporter earlier this week who asked, “What’s the number one reason people buy annuities?” My answer, “because someone sold it to them”. When you slap a 7%-12% sales commission on any financial product, a hungry salesforce is going to find a way to sell it. Nobody wakes up in the morning…
One Million Dollars
I have bad news, a million dollars is not a lot of money. Let me rephrase that, a million dollars is not worth as much as it used to be. In the context of saving for a 30-year retirement, a million dollars won’t be enough. It all depends on how much you need to withdraw…
Living to 100
How long do you think you will live? This is the greatest area of uncertainty when creating a financial plan. We know that people are living longer, but we don’t know how much longer that will be in 30 to 40 years. Former President George HW Bush was 94 when he died last week. The…
What if Your Goal Isn’t the Max?
Many responses to my post on how few families save in 529 plans focused on the inability to max retirement contributions. But what if your goal isn’t to max your 401(k)? I’m sure FIRE movement advocates will disagree, but most people do not need to max their 401(k) to save enough for retirement. Median household…
Why Are So Few Using 529s?
Last week, Morningstar published a report on the use of 529 accounts for college savings. It found that only 16% of families with young children are using 529 plans. While this number is not necessarily shocking, it is unfortunate that families are leaving money on the table. Morningstar’s report, authored by Head of Behavioral Science,…
