GEORGETOWN (CBS) Police escorts are reserved for important people, and the woman driving the Georgetown school bus is so special all the high school students lined the street cheering her on. After 18 and half years, bus driver Betty Langlais is now retired.

As if those surprises werent enough, Betty was in for another treat. But throughout the day she kept on saying, I am just a bus driver. But ask anyone who knows her and they will tell you she is so much more.

Friday night, a surprise party capped off Bettys last day.

In recognition of 18 years of outstanding service, one man read from an award.

Betty received a proclamation from the Massachusetts House of Representatives.

I am surprised about everything, but I love them all, Langlais said.

She is like a combination of mother earth and mother superior. She just loves everybody but you cannot pull anything over on her, said Sylvia Leonard, another Georgetown bus driver and friend of Langlais.

Betty drove bus number two, carrying up to 70 students of all ages, like Makayla Manning.

She had a saying Put your tushie on your cushie, Manning said.

Langlais started driving the school bus to fill the time after her husband passed away.

The kids. I love the kids, she said.

With her 80th birthday coming up, Betty decided it was time to hang up the bus keys.

I lost it. Thats why my face is red. I have been crying all day, Langlais said.

Everybody is going to be missing her and she should come for visits, Manning said.

That is a definite as Langlaiss nickname proves just how much she means to the community. They call her Georgetown Betty.

Read this article:
Beloved Georgetown Bus Driver Treated To Surprises Before Retirement - CBS Boston

Americans are losing a popular retirement tax strategy next year that allows the wealthy to leave large inheritances in retirement accounts.

The Senate passed legislation on Thursday that eliminates a popular financial planning tactic called the "stretch IRA."

The retirement bill, the Secure Act, was tucked into a bipartisan $1.4 trillion spending package that federal lawmakers had to pass by Friday to avoid a government shutdown. The House passed the spending package earlier this week. It now heads to the desk of President Donald J. Trump, who is expected to sign it.

The stretch IRA used primarily by Americans who have saved a substantial amount of money in their retirement accounts applies to beneficiaries of individual retirement accounts and certain workplace retirement plans like 401(k) plans.

Current tax rules state that beneficiaries, such as children and grandchildren, who inherit retirement accounts when the account owner dies must take distributions from those accounts over a certain time period.

Today, that timeframe can be lengthy since it's based on the beneficiary's age and life expectancy. A 40-year-old inheriting a deceased parent's IRA, for example, could theoretically take distributions from the account over a period lasting more than three decades.

However, the Secure Act significantly compresses the window of time for beneficiaries to take such distributions, which will have broad implications for many Americans, potentially even those of more modest incomes.

The new rules around the stretch IRA require beneficiaries of 401(k) plans and IRAs to withdraw all the money from inherited retirement accounts over 10 years. Taxpayers would have flexibility around when they take the distributions they could withdraw an equal amount of money each year from the account or decide to withdraw all funds in year 10, for example.

This would be true for both traditional, pretax retirement accounts and tax-free Roth accounts. Failing to withdraw funds within the 10-year period would result in a 50% tax penalty on assets remaining in the account.

The elimination of the stretch IRA has been hotly contested in Washington. Opponents of curtailing the strategy contend the new rules are punitive for taxpayers who have structured their financial plans to leave large inheritances in retirement accounts for children and grandchildren. Proponents of upending the status quo say retirement accounts were never meant for estate-planning.

New rules cut tax benefits to consumers in two primary ways, according to Jamie Hopkins, the director of retirement research and vice president of private client services at Carson Group, a financial advisory firm based in Omaha, Nebraska.

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Assets held in an inherited retirement account would have a shorter amount of time to grow on a tax-deferred basis, meaning overall account size would be smaller in most cases. Withdrawals will also be larger, since they're compressed into a shorter frame of time, making it more likely that beneficiaries of a pre-tax account will be pushed into a higher income-tax bracket when they take distributions.

For example, the beneficiary of a $1 million account could withdraw roughly $33,000 a year over 30 years under current rules; however, that would be $100,000 a year under new rules.

"For most people, that would push them into a higher tax rate," Hopkins said.

The Congressional Budget Office in April projected the elimination of stretch IRAs and workplace retirement plans would raise nearly $16 billion for the federal government over a decade.

Significantly, individuals affected by this change in tax law only have a short time to amend their financial plans. Taxpayers who inherit a retirement account from an account owner who dies after Dec. 31, 2019 would be subject to the new distribution rules. Accounts of those who die before the end of the year would be subject to the old distribution rules.

"In some cases it may be better to die on Dec. 31, 2019 than Jan. 1, 2020," said David Levine, an attorney at Groom Law Group.

The stretch IRA doesn't necessarily apply only to wealthy Americans, Levine said. It could apply to those who've saved diligently over several decades and have relied primarily on Social Security and other retirement assets such as a pension for retirement income.

There are exemptions for certain beneficiaries, however. The new rules wouldn't apply to a surviving spouse, a minor child, disabled or chronically ill individuals, or anyone within 10 years of age of the deceased account holder.

401(k) and IRA owners should consider reviewing their beneficiary designations before the end of the year due to the change in law, Hopkins said. Some may wish to spread the wealth to multiple beneficiaries instead of just one to reduce the overall tax burden.

They may also consider converting a traditional IRA to a Roth. The account holder would have to pay the associated income tax to convert the account, but would spare beneficiaries from having to pay the tax in the future.

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Lawmakers are killing this popular retirement tax break for the wealthy - CNBC

Democratic presidential candidates do not seem particularly concerned about Americans' retirement savings accounts, CNBC's Jim Cramer said Friday.

"I listened to the Democratic debate last night. None of those candidates, I find, is really interested in your 401(k)," Cramer said on "Squawk on the Street."

Seven candidates qualified for Thursday's primary debate in Los Angeles, spending nearly three hours going back and forth on topics such as Trump impeachment, climate change, the role of money in politics and how the contenders would approach foreign policy with China.

It was the conversation on China that caught Cramer's attention the most, the "Mad Money" host said.

Pete Buttigieg, mayor of South Bend, Indiana, took one of the strongest stances toward China, whose poor human-rights record has been spotlighted in recent months by protests in Hong Kong and by Beijing's treatment of minority Uighur Muslims.

Cramer said Chinese leader Xi Jinping should agree to a definitive trade deal with the U.S. because a potential Democratic administration would likely be tougher than President Donald Trump.

"They're talking about a titanic struggle between two great nations," Cramer said of the Democrats.

It was also Buttigieg considered one of the top-tier candidates alongside former Vice President Joe Biden, Vermont Sen. Bernie Sanders and Massachusetts Sen. Elizabeth Warren who took explicit aim at the stock market.

He argued the Dow Jones Industrial Average isn't the way to measure how Americans are doing financially, and instead the focus should be on how people feel when it comes time to pay the bills each month.

Some people who share Buttigieg's view may point to the fact only half of Americans have access to 401(k)s.

Many experts agree that the stock market shouldn't be the sole measuring stick for the broader economy.

When trying to gauge the stock market, others such as CNBC's David Faber also note that the S&P 500 provides a better read than the Dow, which consists of just 30 large companies.

"But I think there is a component that does matter because of 401(k)s," Cramer said, noting the "trillions of dollars in wealth being created."

In addition to Biden, Sanders, Warren and Buttigieg, Minnesota Sen. Amy Klobuchar, entrepreneur Andrew Yang and billionaire businessman Tom Steyer rounded out the seven candidates at the Los Angeles debate.

Excerpt from:
Cramer: None of the Democrats at the debate seem to care about your retirement savings - CNBC

Do you know how much money you need to save for retirement? If you do, you're part of a small minority of Americans. Employee Benefit Research Institute's recent survey found just 42% of all Americans had attempted to calculate the amount of money they'll need to support themselves in their senior years.

One reason why so few Americans have figured out their magic number: It's complicated to estimate the amount of income you'll need to support yourself decades from now for an indeterminate length of time. But while it can be difficult to set a clear retirement savings goal, there are some tried-and-true techniques you can use to figure out how much to save.

Image source: Getty Images.

The most accurate -- but most complicated -- method of figuring out your retirement savings goal is to determine the amount of cash you'll need as a senior and then figure out how much savings you'll need to produce it.

This technique works best if you'll be retiring soon, as it can be almost impossible to anticipate expenses decades from now. But if you're pretty close to retirement, you can look at your current expenses, figure out which will remain when you retire, and add in any new spending you anticipate.

Say you're spending $50,000 per year -- but that includes $10,000 on a mortgage that'll be paid off before you retire, as well as $1,500 in commuting costs and clothing for the office. Your spending would go down to $38,500, but you might want to add in an extra $2,000 for a big vacation you plan to take each year. In this case, you'd need $40,500. And of course, you can't forget to add in money for additional healthcare costs you might need as you age -- the costs of which could be over $4,000 per year or more.

Once you have an estimate of how much you'll need, figure out the amount you'll get from Social Security and other sources of funds, such as a pension. You can estimate your Social Security benefits using a calculator on the SSA website, but keep in mind that the calculator won't be exact.

To determine how much money you'll require your investments to produce, subtract the income you'll get from these other sources from the amount of income you'll need.If you need $45,000 and get around$17,500 from Social Security, you'd need your retirement accounts to produce $27,500 in income.

Then use the 4% rule to see how much you need in savings. The 4% rule estimates a safe withdrawal rate of 4% of your savings in the first year of retirement (you'll then increase this amount by inflation each year). If you needyour retirement account to produce $27,500, multiply that number by 25 to see that you'd need $687,500 saved.

If you don't want to figure out your exact retirement budget or can't do so because retirement is too far away, you can estimate the amount of money you'll need as a retiree based on a percentage of what you're earning before you leave the workforce.

Most financial experts recommend you have 70% to 80% of your final salary available to spend in retirement if you want to maintain your standard of living. If you anticipate being a big spender, err on the side of a larger percentage of pre-retirement funds.

To use this approach, first estimate what your final salary will be by using your current salary and anticipating a 2% annual raise. So if you're earning $45,000, add 2% to $45,000 to figure out your likely salary a year from now -- then repeat this for each year until retirement. The chart below shows what that would look like.

Years to Retirement

Current Salary

Salary 1 Year Later After 2% Raise

10

$45,000

$45,900

9

$45,900

$46,818

8

$46,818

$47,754

7

$47,754

$48,709

6

$48,709

$49,684

5

$49,684

$50,677

4

$50,677

$51,691

3

$51,691

$52,725

2

$52,725

$53,779

1

$53,779

$54,855

0

$54,855

$55,952

Chart by author.

In this example, you'd have a final salary of $55,952. If you decide you need 80% of that amount for retirement, you'd need an income of $44,761. If your Social Security benefits are around $17,500, you'll need your investmentsto produce $27,261. Using the 4% rule, multiply this number by 25 to see you'd need about $681,525 invested to produce the desired retirement income.

Finally, financial experts recommend saving 10 times your final salary to have a secure retirement. You can figure out your final salary as described above -- use your current salary and assume a 2% annual raise for each year until retirement. Then multiply that number by 10.

If your final salary is $55,952 based on the above calculations, this approach would indicate you need about $559,520 saved to support yourself as a senior. This is less than the amount you determined using the two methods above. But if you'd planned to spend 70% of your final salary instead of 80%, you'd have determined you need $541,660 -- so it's pretty close.

As you can see, the three different approaches to calculating retirement income give you somewhat divergent answers to the amount of money you'd need, depending on the assumptions you make. Think about which approach makes sense for you, or try all three and choose the highest amount if you want to be sure you'll have cash to support you for the rest of your life.

Continued here:
3 Ways to Calculate How Much to Save for Retirement - The Motley Fool

John HAAGA, Director, Division of Behavioral and Social Research, Division of Behavioral and Social Research (DBSR).

Years ago, when my oldest child was getting ready to leave for college, I was enjoying some family time with him and his two younger siblings, and wistfully said, There are so many things I should have told you and so much good advice I would have given you, but now youre leaving and I wont have the chance. To our surprise, our youngest piped up, Yeah, me too!

Now Im about to retire from federal service, and fortunately my friends who manage this blog gave me a chance to offer some appreciation and advice while Im still Inside NIA.

First, thanks to all of you for your essential contributions that make the NIH system work. Throughout my service, it has been deeply gratifying to see the care, thought and time that researchers provide, helping us to review applications, serving on advisory committees including the NIA council, and participating in workshops that we or the National Academies organized to inform our work. We all learned a lot from these discussions.

Next, I must express my appreciation for your research. Demographers have predicted the aging of the population quite accurately since the 1930s. We are now right in the middle of the big run-up of the oldest-old population those in their 80s and 90s to whom my predecessor Richard Suzman called the attention of researchers and policy makers.

Our readiness for aging, both as families and as a society, is due in large part to the contributions of researchers in the behavioral and social sciences who have done so much to overturn stereotypes and point out opportunities. An earlier director of DBSR, Matilda White Riley, developed the concept of structural lag, the tendency of institutions and policies developed under one demographic regime to persist into a changed situation to which they are no longer well adapted. We urgently need to reduce this lag to adapt to a new society, with more retirees, older workers, older taxpayers, older patients.older everyone.

Some advice: Please connect with your program officers you might check some of my earlier posts for ideas on how to do that efficiently! They are public servants who are here to serve. Also, please consider public service at NIH as part of your own scientific career. NIH, and NIA in particular, is comprised of a great group of people using their training and experience to advance an important mission: Turning discovery into health.

One regret: In recent years in the U.S., our discoveries are too often not bringing broader, better health. During my 16 years at NIA, U.S. life expectancy at birth improved by just one year and life expectancy at age 65 improved by a shade more than one year. In 2004, the U.S. tied on both measures with Portugal, a much poorer country, yet Portugal has gained more than four years of life expectancy since.

Life expectancy is a sort of average of death rates at all ages; the extra time is not tacked on at the end like injury time in soccer. If we could only keep up with Portugal (and Korea, Slovenia, Chile, the United Kingdom, etc.), Americans would have lower mortality rates better health at every age. For Americans without college degrees, members of racial minorities, and those living in Appalachia and nonmetropolitan areas, the score is even worse. We know something of the reasons, and something about what to do, but we need both to learn more and to act on what we already know.

As I say farewell, I now get to participate more intensively in many of the roles I have been reading about in NIA-funded research: grandparenting, working in bridge jobs, civic engagement and volunteering. I feel very lucky to have worked at NIA and with so many of you. Best wishes to all for a happy holiday season, and thank you again for the many good memories!

Stay tuned for an early 2020 blog from Dr. Haaga's successor.

Submitted by Kyriakos Markides on December 18, 2019

Many thanks John for all that you have done for so many people and for our field. Happy retirement. Kokos

Submitted by Shripad Tuljapurkar on December 18, 2019

You've got to be too young to retire! Pleasure having known you, best wishes for the next phase.

Tulja

Submitted by Eric Larson on December 18, 2019

John - many thanks for your contributions and especially these words in your farewell blog - - We need to pay attention to these unfortunate trends in the US Eric

Submitted by Jennifer Manly on December 18, 2019

John, the research community is lucky to have benefited from your leadership - specifically, thank you for prioritizing disparities in aging within BSR. You are leaving an impressive legacy, and I wish you a satisfying retirement with plenty of time for friends and family.

Jennifer

Submitted by Rachel Pruchno on December 19, 2019

Thanks for your support and candid thoughts over the years. You will be missed!

Submitted by Nancy on December 19, 2019

John - Thanks for your leadership and strategic contributions to the Health Economics Common Fund. I appreciated your calm demeanor and thoughtful consideration about issue on the table. Enjoy your new adventure and keep in mind how lucky you are.

The rest is here:
Retirement: A chance to share gratitude, advice, regrets from my time at NIA - National Institute on Aging

Dec. 19, 2019, at 2:44 PM

North Carolina Rep. Mark Meadows announced on Thursday he will not seek reelection in 2020.

On Thursday, North Carolina Republican Rep. Mark Meadows announced he wont be seeking reelection in 2020, making him the 21st pure GOP retirement this cycle (in other words, excluding those who are leaving Congress to seek another office). But unlike many other GOP retirees, Meadowss motivation for leaving Congress isnt because he had reelection concerns, disagreements with President Trump or feared the loss of institutional clout if the GOP doesnt retake the House in 2020.

In fact, Meadows is one of the most powerful and highly influential members of the GOP caucus and is thought to have the presidents ear. And it might be that sway that is now taking him on to bigger and better things. In his announcement, Meadows hinted that he might soon take a job working for the president, although its unclear what that role might be.

Weve been tracking retirements over the past few months now, and although Meadowss retirement is different than many of the retirements weve seen so far, one thing that is readily apparent is just how lopsided the GOP retirements are. With Meadowss exit, roughly 10 percent of the 197 Republicans currently in the chamber are retiring and not running for something else. And since the start of December, five Republicans have announced their retirement, tying it with July for the busiest month this cycle. (By comparison, there have only been six pure retirements among the 233 Democrats in the House.)

Republicans who declined to seek reelection in the 2020 cycle, excluding those leaving to run for another office, as of Dec. 19, 2019

Highlighted names announced their retirements in December.

Sources: ABC News, U.S. House of Representatives, Media Reports

In terms of what we know about the recent spate of GOP retirements in December, one major factor is North Carolinas new House map, which was finalized in earlier this month. Along with Meadows, Republican Reps. George Holding and Mark Walker are also retiring, and for those two congressmen, its because the new district lines meant their formerly Republican-leaning seats were much more Democratic and they risked losing reelection. Meadows seat, on the other hand, didnt change all that much. About three-fourths of the voters in his old district are also in the new North Carolina 11th and its still 17 points more Republican than the country as a whole, according to FiveThirtyEights partisan lean metric.

As for the other two GOP members who retired in December, their retirements had nothing to do with redistricting, and, in fact, their departures were a bit of a surprise, considering how often they have both voted in line with the president. Georgia Rep. Tom Graves, in particular, was unexpected, considering he is young (49 years old) and according to FiveThirtyEights Trump Score one of the presidents most ardent backers. Graves had been floated to possibly fill Sen. Johnny Isaksons Senate seat, but he didnt officially apply for the post, and Georgia Gov. Brian Kemp ended up appointing businesswoman Kelly Loeffler instead. Florida Rep. Ted Yoho also has one of the highest Trump scores of any Republican in the 116th Congress, but his retirement was a bit less of a surprise as he had pledged to serve only four terms when he was first elected in 2012. Although, it wasnt entirely clear Yoho would stick to his pledge he actually filed with the Federal Election Commission for a 2020 bid but in the end, he decided to move on, even though at 64 he isnt that old by Congresss standards and hails from a safe Republican seat.

But considering how influential Meadows has been since he won his House seat in 2012, his exit is definitely the most notable of the December retirements (so far). Its worth mentioning, though, that Meadowss departure may not end up counting as a pure retirement and thats because he could end up resigning before his term is over. He told Politico that he might not serve out the remainder of his term in order to take a position in Trumps administration or join the presidents reelection campaign. And if Meadows does resign, that could precipitate a special election.

For now, though, the North Carolina 11th is in line to be an open seat next November, but that might change by the time the general election rolls around. After all, its not unheard of for a representative to announce a retirement but later resign early to do something else Republican Rep. Charlie Dent of Pennsylvania did this last cycle, for example. The real question will be whether this spate of GOP retirements is a final flurry of sorts or if more are coming. With the count now at 21, the 2020 cycle is closing in on the 23 pure Republican retirements that happened ahead of the 2018 midterms, and as most state filing deadlines dont come up until next year, theres still plenty of time for at least a few more.

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Mark Meadows Is Now The 21st Republican To Retire From The House - FiveThirtyEight

Retirement will be here before you know it. Whether youre just starting out or are getting closer to your golden years, here are 11 tips to help you save, maximize tax incentives and put you squarely on the road to the retirement of your dreams.

1. Pick out the retirement savings vehicle for you.

This is one of the most important actions anyone can take, and it leads to all the other tips. Consider maxing out your 401(k) contributions, including allowable catch-ups, or maxing out your pension plan contributions. The tax laws in certain cases allow you to defer taxes on up to 100% of your annual income. Its great to do this if you have other assets, coming from money thats already been taxed that you can live on while your income grows tax- deferred. Doing this requires designing an individual retirement plan, in conjunction with your adviser. This should start during your first conversation with your adviser, depending on your age or circumstances. Possibilities include a company 401(k), a solo 401(k) if youre a small-business owner, a 401(k) with profit-sharing, a cash balance pension plan, or a Roth IRA to take advantage of all legal ways to minimize your tax bill when you retire.

Read: Your next big 401(k) decision: To Roth or not?

2. Take out a Qualified Longevity Annuity Contract (QLAC).

The tax code allows you to put up to $125,000 in a Quality Longevity Annuity Contract, which charges no fees and protects your money against taxes that will be charged when you turn 70 and are required to take a certain percentage of your IRA or 401(k) money. Required Minimum Distributions can be deferred until age 85 using the QLA. It protects you from running out of money, as the QLAC will give you an income for life andbonuskeeps a chunk of your money out of your taxable income. This is one of many things you can do now to make life richer when you retire.

3. Consider life insurance.

Yes, boring old vanilla life insurance, not universal life, not term life. These are policies that pay dividends and are issued by mutual companies, which mean they are owned by their policyholders. That means they are very conservative in how they manage your money. Most people do not realize that insurance companies diversify your money using the most elite bond-management firms in the world. Your adviser should shop at least three different policies for you to make sure you are getting the best deal. A life insurance policy is a great way to hedge not only the volatility of the market but also the uncertainty of rising taxes now and in retirement. If you have a portfolio divided 60% in stocks and 40% in bonds, you could take the 40% thats in bonds and buy life insurance. You get a comparable rate of return as some bond funds, but you also get principal protection (the face value never goes down), money goes tax-free to your heirs when you die, and the IRS doesnt care about this money. It also has an added benefit that few people consider: for most policies, the insurance company will pay your premiums if you become disabled through what is called the Waiver of Premium rider.

4. Incorporate yourself.

Lets say youre nearing retirement, ready to leave that 9-to-5 job. The tax code allows you a key benefit, the creation of your Limited Liability Corporation, or LLC. There are ads all over TV for websites that offer to form one for you. Your legal adviser can do it in less than an hour. It just means incorporating yourself to do something you enjoy: freelance writing, being a travel agent if you enjoy traveling, being a horticultural adviser if you like gardening. Under the recently passed tax rules, certain LLCs can legally avoid taxes on 20% of their income through what is called a pass-through. Consult your adviser on this one: rules can change quickly.

5. Form a C-Corp.

This is a variation of forming an LLC. A C-Corporation is simply a normal company, taxed separately from you as the owner. It can be your hobby yarn business or your consulting company, or virtually anything else. One of the main reasons to do this, instead of doing the LLC mentioned above, is that in many cases the company can pay for your long-term-care insurance and write this off as a business expense. Its worth asking your adviser whether its a good idea for you. If it is, you can save a lot of money while getting future health expenses covered.

6. Buy an IRA condo using cost segregation.

Lets say youve always wanted to buy that second house and youre approaching retirement but still working. You could pull money out of your IRA to buy an investment property through something called cost segregation. Any adviser can show you how to do this. One strategy is to take a distribution from your personal IRA, normally taxable, and then loan that money to your LLC. Your LLC can then use those funds to buy a property, maybe a mixed-use multi- family dwelling, or a building occupied by your small business, or even a vacation home. The rules allow you to potentially use cost segregation to write off 20% to 30% of the purchase price of that home. Say you take out a $500,000 mortgage at 4% interest. That $20,000 of interest may get you only a $10,000 deduction under new tax rules, but you get to use or rent out the second house.

7. Take advantage of the Qualified Charitable Distribution (QCD).

This one comes into its own once youve reached age 70 and must take the Required Minimum Distributions from your 401(k) or IRA. Since these are taxable, they can easily bump you into a higher bracket if youve got Social Security (also taxable) or dividend or interest earnings, the total of which can also affect things like how much you pay for Medicare. Virtually every retiree I see gripes about this requirement, and many take out the money, put it in their checking account, and pay taxes on the full amount on April 15. But there is a legal way to avoid part or all of this tax. One way is the Qualified Charitable Deduction. Under a QCD, you direct your IRA custodian (for example, Fidelity) to send your Required Minimum Distributions to the charity of your choice directly from your IRA in the amount of the Required Minimum Distribution. You get the tax deduction, and since the income never reaches you, you dont owe any taxes on it. Its fiddly, but important. As the ads for prescription drugs declare on TV, ask your adviser if this is right for you.

8. Get a part-time job at a charity.

If youve already retired and love volunteering at the library, food pantry, or church, consider proposing that they employ you part time. This can be a tax-efficient use of the funds the charity might get from donors or the government, and it can also make tax sense for you. It involves a type of retirement savings plan called a 403(b). Say you get a $24,000 yearly salary from the charity. You can put part or all of this directly into a 403(b) plan that works just like a 401(k). You dont pay any tax until you take it out.

9. Create a Charitable Remainder Unitrust (CRUT).

Say that you were prescient enough to buy 10,000 shares of Apple AAPL, -0.21% stock at $5 a share in the early 1990s. Say you were also smart enough to just hold on to it. That stock is now worth about $180 a share, or about $1.8 million. Great. Happy retirement. But you dont really want to pay income tax on a $1.8 million capital gain, do you? One solution for a highly appreciated asset, like that Apple stock, is to create a Charitable Remainder Unitrust. This involves setting up a trust for a charity, depositing the asset, and getting, say, a 5% to 7% payout a year for life. Youd pay taxes on the income, but you also get a whopping tax deduction based on the full value of the asset. It works for paintings, jewelry, antique cars, or stocks and funds that have gone way up in value since you bought or inherited it. As always, have your adviser explain this carefully to you before he or she sets it up.

10. Manage your Required Minimum Distribution (RMD).

The QCD is a good way to handle your required IRA distributions, but there are others. The required amount of money that you have to distribute from your 401(k) or IRA can be put into a cash-value life insurance policy, a long-term care policy, municipal bonds, or no-dividend stocks (think stocks like Berkshire BRK.A, +0.70% BRK.B, +0.49% that dont pay a dividend). That way you are not paying taxes twice on money youve already paid taxes on.

11. Turn a hobby into a business.

Paul and Tammy are a couple I know who are in the highest tax bracket of their life. They get pensions, Social Security, dividend, and annuity income. They have no child deduction, no mortgage deduction, and they dont own their convenience store anymore. What they love to do is make lamps and to travel. They set up an LLC for their lamp-making business, created a nice website, and now travel all over the country exploring and living it up, from Long Beach, Calif., to Long Beach Island, N.J., delivering lamps. Its a useful $25,000 yearly income and a great tax deduction. They can deduct expenses for lamp-making supplies, their home workshop, and car and hotel expenses on the road. They are happily seeing the USA on Uncle Sams dime.

Josh Jalinski is president of Advisory Group and author of Retirement Reality Check: How to Spend Your Money and Still Leave an Amazing Legacy. Jalinksi is the host of the Financial Quarterback radio show.

Read more:
Are you ready for retirement? 11 tips to put you on the right path - MarketWatch

The concept of early retirement has really taken off. Read the news, and you'll hear some story of a thirty- or fortysomething couple quitting their jobs to spend the rest of their lives traveling.

Retiring that early, however, is difficult to do, and it's something only a small percentage of workers manage to achieve. Retiring a few years early, on the other hand -- such as in your late 50s or early 60s -- is far more feasible, and you don't need to make the same extreme sacrifices, like living out of your van for a decade or more to save money on housing, to get there.

Those people who retire in their 30s or 40s? Often, they're able to do so because they earned a ridiculously high income for a period of time, or had a fantastic business idea that really took off.

IMAGE SOURCE: GETTY IMAGES.

But that's not always the case. Some people who retire very early do so by making extreme sacrifices -- buying those tiny homes that can barely squeeze in a family, spending virtually no money on leisure and entertainment, and skimping on services like utilities and transportation to the greatest extent possible.

There's nothing wrong with doing any of that if you really want to exit the workforce in your 30s or 40s. But if you reasonably enjoy your line of work, and your early retirement goal stems from a desire to have more time to travel, or perhaps pursue a business of your own without having to worry so much about its income potential, then it may not pay to limit yourself so extensively during your first 20 years or so in the workforce. Instead, a middle-ground approach might give you what you need -- a chance to enjoy life while you're working, and the opportunity to exit the workforce several years ahead of the typical American.

Retiring before your late 50s could pose some challenges -- namely, that you're not allowed to take withdrawals from your IRA or 401(k) prior to age 59 1/2 without risking a penalty. Furthermore, the earliest age you're allowed to claim Social Security benefits is 62, which means that if you're looking to leave the workforce much earlier, you'll need another source of income to cover your living costs.

This isn't to say that you can't retire before 59 1/2, or before 62. But if you aim to retire at, say, 55, the aforementioned income sources will be unavailable to you for a shorter period of time. You'll also only need to cover the cost of health insurance for 10 years until Medicare kicks in -- and to be clear, that's a long time, but a far cry from the folks who retire at 40 and need to fund their health insurance premiums for decades.

If you're hoping to retire early, it doesn't necessarily pay to force yourself to live in a box with your spouse and two kids for 15 years to get there. Instead, settle for living well below your means rather than extremely below your means. If you can afford a monthly mortgage payment of $1,500, buy a home that costs half that amount instead, but that's still comfortable. If you're fine driving a paid-off, 15-year-old car, hold off on getting a new one as long as possible. And if you're eager to save a lot for the future, stay away from restaurants for the most part and cook at home to avoid paying huge markups for food.

Imagine that doing these things allows you to save $2,000 a month over 25 years. If you invest that money at an average annual 7% return, which is doable with a stock-heavy portfolio, you'll be sitting on $1.5 million, which could make leaving the workforce early more than feasible. And while you could cut back even further to try to save, say, $2,500 a month, that extra savings might result in a situation where you no longer get to enjoy your life in a reasonable fashion.

It's one thing to live frugally, but it's another thing to make yourself miserable on the road to early retirement. If you slowly but surely build cash reserves rather than go to extremes, you may not get to retire at 35 or 45 -- but given the average life expectancy today, if you manage to retire before the age 60, you should still have plenty of time to enjoy your days on your own terms.

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The Unhealthy Extreme of Early Retirement: How Much Sacrifice Is Too Much? - The Motley Fool

Susan Dziubinski: Hi, I'm Susan Dziubinski for Morningstar. The SECURE Act passed through the House this week, and it's also expected to be approved by the Senate. It was part of a broader spending bill. Joining me to discuss some of the key aspects of the legislation that are likely to have the biggest impact on retirement is Christine Benz. She's Morningstar's director of personal finance.

Christine, thank you for being here today.

Christine Benz: Susan, it's great to be here.

Dziubinski: This is a pretty important piece of legislation.

Benz: It is.

Dziubinski: So, let's talk about some of the various aspects of it, starting with the changes to required minimum distributions. Now, if you've taken your RMDs in 2019, does this change apply to you and what is the change?

Benz: It doesn't. So, unless you have turned 70.5 by the end of 2019, this won't affect you. But for people turning 70.5 in 2019 and beyond, they'll now have a new higher required beginning date for their required minimum distributions. So, it's moving out to 72. So, this is good from the standpoint of affluent retirees. I'm sure a lot of our viewers fall into that bucket where they don't need their IRAs or their traditional 401(k)s for their ongoing spending. They would rather push them off and enjoy the tax deferral and enjoy deferring the tax bill as far as they possibly can. So, I think that this is a good development for them.

I think it's also a good development in light of the fact that we've got more and more people working longer. And if you're pushing your retirement date out, there's often not much space between the time retirement starts and when you have to start taking RMDs. This gives you a little bit more of what Vanguard's Maria Bruno has called the retirement sweet spot, which is kind of a planning opportunity where your income may be at a relatively low ebb. You can do some things like maybe accelerate your withdrawals from those tax-deferred accounts. So, I think that there are some opportunities, especially for wealthier retirees who don't need their IRAs imminently in retirement.

Dziubinski: And there are also implications for what we call the stretch IRA in this legislation. So, can you step back a little bit and talk about what the stretch IRA is, and then what's changing.

Benz: Right. So, the stretch IRA is something that beneficiaries could take advantage of if they inherited an IRA or some other account from a loved one. The idea was that they could take their required minimum distributions based on their own life expectancy. So, for a very young inheritor, that would allow the opportunity to stretch over many years potentially. Now, under the SECURE Act, assuming it gets passed into law, what will happen is that the person who inherits an account will have to take the proceeds from that account within 10 years of inheriting it. It's not saying that you have to space it out, take equal distributions over 10 years or anything like that. You just have to take all of the amount out by the end of 10 years. So, this is a change. Again, it's going to have a bigger impact on wealthier folks who are in a better position to not tap those inherited assets, who could let the tax benefits stack up.

Dziubinski: Now, the SECURE Act also allows for additional contributions to Traditional IRAs after age 70.5.

Benz: Right. So, these were previously off-limits. And I think this is a good development in that, as I said, we have more and more people working longer. And so the idea of being able to make ongoing contributions makes a lot of sense. Another thing that makes this I think a good development is that it gives Traditional IRA contributions parity with other account types. Because previously, for example, you could still contribute to Roth IRAs, even if you were older than age 70.5. So, I think that this is overall a good development.

Dziubinski: Now, the SECURE Act has a provision that's going to make it easier for workers who work for smaller companies to get retirement plan coverage. Can you talk a little bit about what that means, what a multiple employer plan is, which is on the table?

Benz: Right. So, these multiple employer plans are plans that smaller employers would be able to create. They might be able to band together with other small employers to field a plan for their employees. So, overall, I think this is a really encouraging development because when you look at our system on a broad basis, one thing you see is that a lot of our population, a lot of working people, are not covered by any type of plan at all. So, this would make plans more pervasive, I think. It's a good thing. I will say though, in an ideal world, I would rather have seen some sort of I still would rather see some sort of a federalized option, maybe similar to the Thrift Savings Plan, where you have a mega company retirement plan option, where it's vetted, where you can put some pressure on the providers to keep the costs down. I think there's just a little bit of inefficiency associated with having all of these different firms, even if they are banding together, field different plans.

Dziubinski: Another, maybe a little bit more controversial aspect of the SECURE Act is the idea it's going to be easier for company retirement plans to offer annuities.

Benz: That's right. So, companies are given safe harbor if they want to offer annuities. Essentially, that protects them from litigation if something happens with the insurance company offering the annuity. So, this has been seen as a big win for insurers. And I think it most certainly is. I will say there's a lot to be said for the very plain-vanilla immediate-type annuities. We've talked to a lot of retirement researchers over the years who have said that this is one of the best things that retirees can do to improve the viability of their plans. But it's an open question about the types of annuities that would be on offer within the context of plans. Some annuities are very high-cost, very opaque. They're not all good. So, I think that that's where things get a little bit murky. It has the potential to be a win for investors, but it really will come down to what type of annuity is chosen.

Dziubinski: It seems like with some of this, time will tell which are the wins for investors out of this. Christine, thank you so much for your time.

Benz: Thank you, Susan.

Dziubinski: I'm Susan Dziubinski for Morningstar. Thanks for tuning in.

See original here:
What the SECURE Act Means for Your Retirement - Morningstar.com

When it comes to preparing for retirement, many of us know that we could be doing more.

But now a new report has highlighted the extent of that shortcoming, with the majority of savers set to miss their retirement goals by at least 50%.

Standard Chartered, in its inaugural "Wealth Expectancy Report 2019," found that 56% of people in 10 of the world's fastest-growing economies have retirement goals around twice the size of their likely pension pots at age 60.

The findings highlight a sweeping mismatch in the current workforce's spending aspirations and the level of wealth they will realistically accrue over their careers, the bank said.

To calculate the results, Standard Chartered surveyed 10,000 so-called wealth creators those with disposal income to save and invest to find out the amount of money they believe they'd need to retire comfortably. That figure was taken as their "wealth aspiration." It then used economic modelling to determine their likely "wealth expectation" at age 60 based on their salary and other assets.

The resultant mismatch, dubbed the "wealth expectancy gap," was found to be deep and pervasive across the 10 fast-growing economies studied: China, Hong Kong, India, Kenya, Malaysia, Pakistan, Singapore, South Korea, Taiwan and the United Arab Emirates.

The respondents were divided into three groups: emerging affluent, or those with enough money to "spend, save and invest"; the affluent, or those who earn significantly above the average in their market; and high net worth individuals (HNWI), or those with investable assets over $1 million.

While the wealth expectancy gap was highest among the emerging affluent 62% of whom were forecast to fall below their wealth aspirations the gap was apparent across all wealth brackets.

Among the affluent, the gap was 53% while for the HNWIs it was 46%.

Standard Chartered's Fernando Morillo, global head of retail products and segments, told CNBC Make It the findings demonstrate that financial behaviors, more than incomes, impact wealth outcomes.

Though wealth creators across the 10 markets were taking steps to set money aside for their retirement, Morillo noted that many may not be using the most effective means to grow their wealth.

According to the report, 59% of people rely primarily on savings accounts to achieve their top financial goals, while just 37% invest in stocks or equities.

"Most people primarily use savings accounts to grow their wealth," said Morillo. "This potentially puts them at a disadvantage as the 'real' returns on these savings after inflation can often be disappointing compared to investments in the long run."

To counter that, Morillo encouraged savers to diversify their money across a variety of investment solutions.

"By diversifying their wealth across various investment solutions, people have the potential to generate better risk-adjusted returns, putting you on the path to financial freedom," Morillo said.

Savers should, of course, be aware of the possible downside risks of investing. But Morillo noted that the growing availability of online wealth managers has made it easier than ever to get access to free advice that suits individuals' long-term goals.

"Investing is unavoidable if you want to grow your wealth; the crux is taking risks that you are comfortable with. Again, a financial advisor can help people better understand their risk appetite and achieve a portfolio allocation with the right balance between risk and return," he said.

David-Prado | iStock | Getty Images

Here's how the stats breakdown across the 10 markets.

The wealth expectancy gap was at its lowest in China, where 44% of wealth creators were on track to meet their wealth aspirations.

Indeed, wealth accumulation was a high priority for respondents in China, who put an average of 48% of their monthly income into savings the highest proportion across the study.

Despite enjoying a high wealth expectancy, respondents in Hong Kong saw a greater disconnect with their aspirations. Meanwhile, high living costs in South Korea and Taiwan weighed on people's wealth expectations.

After China, Malaysia enjoyed the second-lowest wealth expectancy gap, thanks in part to high statutory pensions. However, as in Singapore, limited use of wealth management advice hampered overall wealth accumulation.

Elsewhere, in India the wealth gap remained high despite a growing use of digital financial products. Meanwhile, respondents in Pakistan showed strong signs of narrowing their wealth expectancy gap but a high tendency to distribute wealth to family members.

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Majority of savers in the world's fastest-growing economies set to miss their retirement goals by 50% - CNBC