Your Unbiased Advisor: Retirees will need to un-retire and go back to work

These money managers have “best” investments safeguards

These managers promise to safeguard your money for the next 10 years using Treasuries or high-yield bonds or gold or real estate. But what if equities regain their glow next year like they have in the past? Buffett’s strategy of buy and hold a low-cost S&P 500 index fund has proved his genius. This index is down 15% this year but in 2009 it was up 27.11% after being down in 2008 -37.22%; it was up in 2003 28.72% after down in 2002 -22.27%; it was up in 1991 30.95% after down in 1990 -3.42% and up in 1989 by 32%. This index provides over 11% over time and reflects every sector of the market. Recently it was dominated by the tech firms since it is structured along the current market capitalizations. But also recently, the Energy index soared. The index fund you pick must be a low-cost one so that you don’t give up HALF your gains to the seller over time.

No safeguards; just hype: https://www.amazon.com/Fact-based-Investing-first-million-hardest/dp/1977574270

Retirees will need to un-retire and go back to work

The National Institute on Retirement Security reports that almost 40 million households have no retirement savings. An October 2020 study by the Center for Retirement Research calculated median retirement account (401(k)/IRA) balances by age from Federal Reserve survey data. The average worker will receive about $412 a month by age 66. The average SS benefit is $1,544. Instead of investing in a ‘safe’ 5% investment option, you could use the low-cost S&P 500 index fund and receive $3,491 a month based on the historical average return of 10% a year. Starting late at age 35, you can easily cover your average expenses of $2,479 monthly. Here are the current numbers:

35 to 44: $51,000
45 to 54: $90,000
55 to 64: $120,000

The median retirement account balances will leave the average worker in need of another job during retirement. You could also use a special tax-FREE retirement account.

https://www.amazon.com/Tax-FREE-Retirement-code-lifetime-income/dp/1475206976

Options for your 401k, 403b retirement money if change jobs

To avoid ruining your retirement fund, there are several ways to preserve your tax advantaged accounts. You may be paying taxes and fees you don’t need to and thus canceling the Miracle of Compound. Buffett regards compounding as the key to his unparalleled asset accumulation of $109 Billion. Compounding is earning money on your money without doing a thing. You give up this strategy if you do not keep your nest egg growing AFTER you leave your job. Leaving your 401(k) account behind in a former-employer plan after changing jobs can cause participants to lose up to $7,000 in fees over the long term. If you keep your account’s tax-favored status by moving your funds from your old employer to a rollover IRA directly, you keep the Miracle working for you. Directly moving money from your old account to your new account by having your IRA trustee handle it, you avoid paying tax and fees on the balance. If you cash out or take possession of the lump sum, you will lose cash and also the Miracle. Example: your 401k is worth $150,000. You lose your job and take the money or you miss the deadline for a personal rollover. First your employer must deduct 10% and send it to the IRS. There may be a fee to close out your account and send you a check.

Use the Miracle: https://www.amazon.com/Miracle-Compounding-Turn-day-into/dp/1470176513/

Another way Congress lets billionaires avoid taxes we pay

Ray Dalio money manager and the industrialist Koch family have pioneered philanthropy through the 501(c)(4). More than just a charity, it can avoid punishing taxes so they can become multi-billionaires. They don’t pay their fair share as we must. Congress allows them to retain business control even though giving to charity is supposed to the opposite. When we give to a charity, we don’t get to control the assets we gave. Because the wealthy retain control of the assets they got a tax deduction for, they can use the asset values to influence politics. Corporations can now give unlimited money to candidates and Congressional lobbyists. This means they can control how and where they spread influence. This is the most effective “dark money” political giving tool. We are limited to $2,900 gifts and so don’t even get an audience from out representatives. The C4 structure allows Patagonia’s Chouinard, 84, donated his company to create a new $3 billion environmental nonprofit that will exert influence long after his lifetime. Senator Sheldon Whitehouse, a Rhode Island Democrat calls 501c4 an “increasingly powerful tool for mischief by the mega-rich.” We have one way to avoid paying their taxes.

https://www.amazon.com/New-American-Retirement-System-TaxFREE-ReserveTM/dp/1461030072

Is a Health Savings Account (HSA) right for you?

Many working people will enroll in a high-deductible health plan. That means that you are also eligible to contribute to a Health Savings Account (HSA), which has triple-tax-free benefits: tax-deductible contributions, tax-free earnings growth, and tax-free withdrawals when used for qualified medical expenses. This makes them better than even Traditional and Roth IRAs. You don’t give up your contributions each year (Flexible Spending Accounts) and you can use the funds in retirement to supplement your other retirement funds. There may be more health related expenses in retirement than when you were working. This makes this account very desirable. Find out more here.

Max out all your benefits: https://www.amazon.com/Maximize-Social-Security-Benefits-Retirement/dp/1495439224

How much should you invest for a decent retirement fund?

Most people have no idea how much and in which investment option they should be putting their hard-earned money into. Even though we never had a class about this important subject in high school, it becomes a critical and easily answered question. As a 30 year old in my first good job earning less than $10,000, I saved nothing. By 1988, I made about $15,000 and saved about 6% in Fidelity’s popular Magellan Fund because my boss showed me his statement’s gains. From then on I invested in stock growth funds inside my tax-advantaged 401k. Some employers matched my contributions and some did not. For those who did not, I put my now 8% into a tax-deferred IRA, taking the tax deduction which lowered my overall annual income tax. The stock market tumbled a few years but I did not know of any other alternative. Actually I tried to sell all my company fund shares during the beginning of the Gulf War but my broker did not follow my instructions. He tried to sell me a deferred annuity. This would have been a bad choice since the mutual funds soared 31% in 1991. I never used a broker after that. I moved everything to Vanguard since the fees were lower than all the other funds I owned. I stayed in growth stock funds for the rest of my working life. I owned about 10 different broad stock funds and really did well in 2021. I moved 50% of the total retirement funds to a balanced fund in 2000 and 2001 with no commissions. During my once-a-year review, I estimated my retirement income using Vanguard’s Retirement Income Calculator. Years before retirement, I used the Vanguard Nest Egg Calculator to make sure I would have enough to live on. If I started investing today, I would use the tax-FREE Roth IRA account instead. This would reduce my income taxes from other sources like Social Security benefits, which are taxable at my current income level.

Make sure you use all your credits and deductions

Certain credits may give you a refund even if you owe no taxes. Because the IRS does not tell you if you missed a credit or deduction and your preparer only looks for a refund of any size, you may be missing $hundreds in refunds. You need a basic knowledge to make sure you don’t overpay. In fact, you may avoid the tax prep fees if you can follow the basic pattern of your tax return from last year. Most people have the same income sources and expenses as previous years. So most income tax filings can be done by you for free with one of the sites authorized by the IRS: https://www.irs.gov/filing/free-file-do-your-federal-taxes-for-free or volunteers at https://www.irs.gov/individuals/free-tax-return-preparation-for-qualifying-taxpayers. Saves you $323 or more.

https://www.amazon.com/Tax-Credit-Class-your-credits-ZERO/dp/1539462382/

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