For most of us, retiring someday is the ultimate financial goal.
How much will you really need for yourretirement budget?
Plus, how do you navigate the scores of complicated IRS rules for saving and spending your funds?
Here I answer six of your toughest questions about money and your golden years.
If you have a tricky question about retirement, email me at[email protected].
Theres no single savings percentage that works for everyone, but heres how Id prioritize.
Id focus first on contributing whatever you should probably get your employers full retirement match.
If you have a traditional401(k) plan, you do this pre-tax.
Probably not as good as youd like.
It always seems like an uphill battle to build (and keep) a decent amount in savings.
But what if your car breaks down, or you have a sudden medical bill?
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From there, Id focus on building a three-monthemergency fund.
Once youve done that, venture to max out yourRoth IRAcontribution, which youll make after taxes.
The 2020Roth IRA limitson contributions are $6,000 in 2020 or $7,000 if youre over 50.
An added bonus: TheRoth IRA withdrawal rulesare a lot more flexible than the401(k) withdrawal rules.
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But a lot of people dont think to rebalance until after astock market crash.
Reviewing your options when you might get top dollar for your investments is obviously the better strategy.
If you canwork part timeeven for a few hours a week, it can make a difference.
Any money that you dont have to withdraw from your savings is helpful.
For those who are truly strapped for cash, areverse mortgagemay be an option.
Also, whilebuying an annuitycertainly isnt something Id recommend to everyone, in some situations, it makes sense.
Q: My employer is no longer contributing to my 403(b).
I already have a Roth IRA, but Ill reach the $6,000 limit soon.
I would incur fewer fees and have more freedom with my investments.
Hopefully this is just a temporary setback.
Q: I contributed the maximum of $7,000 for 2020 to my Roth IRA in January.
Now it looks like I wont have enough earned income to contribute that amount.
What should I do?
Is there a penalty?
A: This is pretty easy to fix.
Contact your brokerage and tell them you overfunded your account.
Its a pretty common problem, so theyll be able to give you specific instructions.
Youll owe income taxes on the earnings (but not the amount you contributed).
Q: Im 39 with little savings and make less than $35,000 annually.
What pop in of IRA is best for me?
A: A Roth IRA is probably your best bet.
Of course you dont want to do this unless its absolutely necessary.
Robin Hartill is a certified financial planner and a senior editor at The Penny Hoarder.
Send your tricky money questions to[email protected].
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