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3 reasons to retire as early as you can

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Planning young: a retirement roadmap

Would you love to retire early? So many people have that goal, and for a variety of reasons. For some, it’s a matter of escaping a tough work schedule and the pressures that come with it. For others, it’s an opportunity to spend quality time with family and pursue hobbies.

Many folks, however, have a hard time with the notion of retiring early, whether it be from a place of financial insecurity or guilt. But if early retirement appeals to you on any level, here are three reasons to go for it.

1. You can afford it

Many folks slack in the retirement savings department all their lives. Case in point: The average American aged 50 to 55 has $124,831 socked away for the future, according to the Economic Policy Institute, which isn’t a whole lot at that stage of life.

When we apply a 4% annual withdrawal rate to that balance, which is what countless financial experts recommend, that results in just under $5,000 of income per year. Of course, there’s also Social Security to factor in, but the point is that many older Americans are woefully unprepared for retirement from a savings perspective. If you’re not one of them, however, then there’s no reason you shouldn’t feel comfortable retiring ahead of your peers.

Let’s imagine that instead of being in your early to mid-50s with roughly $125,000, you’re sitting on $2 million instead. Now you don’t want to start withdrawing from your nest egg at a rate of 4% per year if you’re retiring in your 50s, because that formula is designed to ensure that your savings don’t run out for 30 years, and chances are, you’ll live into your 90s and will therefore need them to last longer than that. But even if we slash that withdrawal rate in half to 2%, you’re still looking at $40,000 per year in retirement income from your nest egg alone. And that, coupled with Social Security and other income sources, might allow you to live a very comfortable lifestyle.

2. You can still earn money

Many people view retirement as a period where you stop working. But actually, retirement is the ideal period to start a business or turn a favorite hobby into a money-making opportunity. If you’re worried that you can’t afford to retire because your nest egg isn’t all that robust, but want the ability to live on your own terms and control your own schedule, then it certainly pays to quit your job and do something else to make a living instead. And remember, the more fulfilling you find your work, the more motivated you’ll be to keep at it.

3. It’ll be good for your health

There are studies out there that show that working longer can lead to a longer life. Not only does going into an office offer mental and physical benefits, but the social aspect alone can make plugging away for longer a worthwhile option to consider.

On the other hand, the wrong job can easily put you in a situation where your work is harming your health. Excessive stress has been unequivocally linked to high blood pressure and heart disease, while being too sedentary (which tends to be the case for office workers chained to their desks for hours on end) can cause weight gain and other medical issues. Therefore, if you believe that your health will improve once you stop working, that’s reason enough to retire sooner rather than later. Or, to put it another way, the longer you stay at a job that’s harmful to your health, the more you risk passing away at an early age and missing out on retirement altogether.

Related links:

• Motley Fool Issues Rare Triple-Buy Alert

• This Stock Could Be Like Buying Amazon in 1997

• 7 of 8 People Are Clueless About This Trillion-Dollar Market

Early retirement isn’t for everyone, and for some folks, such as those without savings, it’s a tough goal to achieve. But if you have the power to make early retirement work for you, it certainly pays to leave the workforce prematurely and enjoy the lifestyle you’ve dreamed about for ages.

CNNMoney (New York) First published September 26, 2018: 9:42 AM ET

How can I simplify my retirement investments?

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Will your nest egg last?

I’m retired and currently manage my IRA portfolio of 10 different funds. But I’m thinking I’d like to simplify my portfolio and my life. Short of hiring an adviser to oversee my investments, what do you recommend?—Paul

It’s no surprise to me that you’d want to streamline your investment approach. After all, retirement is a time when you want to enjoy life, whether that means pursuing new interests, savoring the extra free time you have after calling it a career or both.

So if monitoring the performance of your retirement portfolio and periodically rebalancing your holdings to maintain the right balance between risk and return interferes with your ability to live retirement as you please, then by all means you should take steps to simplify your investing strategy.

Fortunately, there are several relatively easy ways you can do just that. One would be to simply invest your IRA money in a target-date retirement fund. The beauty of doing that you get not just a fund, but a fully diversified portfolio that’s appropriate for various stages of retirement.

That said, if you go with this option, you still have some decisions to make. For example, if you’re in your mid- to late-60s and already retired or planning to retire soon, you could choose a 2020 target-date fund, which might start with an asset mix of, say, 55% stocks and 45% bonds. The fund would then gradually scale back its stock holdings until it reaches, say, a 25% to 30% stock stake by the time you’re in your early- to mid-70s.

On the other hand, if you’re already in your 70s — or you just prefer a more conservative portfolio — you could go directly to a target retirement income fund, which maintains a steady asset mix, generally 25% to 30% stocks, with the rest in bonds and, perhaps, some cash.

The percentages above are by way of illustration only. Not all target date funds, even those geared toward investors of the same age, invest their assets exactly the same way. So before you buy a target-date fund, you’ll want to make sure you’re comfortable with how it divvies up its assets today as well as how that mix might change in the future.

Related: 3 ways to recover from a late start on retirement planning

You might also consider life-cycle funds, which are also known variously as life-strategy or target-risk funds. Unlike target-date funds, which with the exception of target retirement income funds ratchet down the fund’s risk level over time, life-cycle funds keep investing risk constant by setting an asset allocation and sticking to it. The idea is that you decide on the amount of investing risk you wish to maintain throughout retirement and then find a life-cycle fund with an asset mix to match.

Fund families that include life-cycle funds in their lineup typically offer a broad range of asset allocations to choose from: a very conservative, or income, fund that would limit its stock exposure to, say, 20% to 25% of assets; a conservative choice that might invest 40% to 45% in stocks; a moderate fund with a stock allocation of 60% to 65%; and, a growth fund that might invest upwards of 80% or more of its assets in equities.

I think it’s fair to say that most retirees would probably gravitate more toward a very conservative, conservative or moderate allocation with stock exposure somewhere between 20% and 60% of assets, as portfolios with higher percentages of stocks can easily lose 25% or more of their value during severe market downturns.

And, indeed, as long as you start with a reasonable withdrawal rate, you don’t have to go overboard on stocks to avoid running through your nest egg too soon. To get a sense of what stocks-bonds mix might be right for you — and to see how various blends of stocks and bonds have performed in good and bad markets in the past — you can check out this risk tolerance-asset allocation tool.

If you’re not comfortable picking a target-date or life-cycle fund, another possibility is to go with a robo-advisor, or a company that employs algorithms to create portfolios, typically consisting of exchange traded funds (ETFs), based on your financial goals and tolerance for risk. After creating your portfolio, robos will automatically rebalance your holdings and, in some cases, provide tax-loss harvesting to enhance the after-tax returns for savings invested in taxable accounts.

Be aware, though, that many robos deal with their clients primarily, if not exclusively, online, although some, including Betterment, Schwab Intelligent Advisory and Vanguard Personal Advisor Services provide access to humans and may also be able to help create a plan for withdrawing money from retirement accounts.

Related: Do I really need a financial adviser?

Whichever route you decide to take, be sure to check out fees, as they can vary widely. Take the case of target-date retirement funds. Although this 2017 Morningstar report shows that target-date funds’ overall asset-weighted annual expenses average 0.71%, you can easily find ones that charge much, much less. For example, the expense ratios for Vanguard’s target-date funds range from 0.13% to 0.15% a year, Fidelity’s Freedom Index target-date funds charge 0.14% of assets annually, while Schwab’s Target Index Funds have annual expenses of just 0.08% a year.

There’s no guarantee that lower expenses will lead to higher returns, but research shows low-cost funds tend to outperform their high-cost counterparts. So whether you’re going with a target-date, life-cycle fund or robo-adviser, it pays to compare costs. (And in the case of robo-advisers, that means looking into not just what the robo charges, but the cost of the underlying investments as well.)

Bottom line: There are plenty of choices out there that can help you simplify investing, although you’ll definitely need to take some time to assess the different options and come up with the one that makes the most sense for you. But once you no longer have that 10-fund portfolio competing for your attention, you should be able to better focus on what really matters at this stage of life, enjoying your time in retirement.

CNNMoney (New York) First published June 29, 2018: 10:21 AM ET

Here’s what people are saying

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Steven Mnuchin: Tax distribution 'staying very similar'

How do people feel about GOP tax bill? It depends on who you ask.

Some business, advocacy and trade groups have major concerns with it. Others say the tax plan will be boost the economy.

The plan isn’t law yet. Another round of votes is due in the coming days. Republican leaders on Capitol Hill have vowed to get it to President Trump for his signature by Christmas.

Here’s a breakdown of some responses, pro and con. The statements have been condensed in some cases for brevity.

It will leave millions uninsured

The bill rolls back a key provision of Obamacare known as the individual mandate. The nonpartisan Congressional Budget Office has forecast that 13 million fewer people would have health insurance coverage by 2027, and premiums would rise by about 10% in most years.

Families USA: “Republican leadership in the House and Senate have come up with a deal that will increase health insurance premiums, making millions of people — including those with pre-existing conditions like cancer or diabetes — pay more for their coverage, while causing millions more to lose their health coverage altogether. All of that to fund permanent tax cuts for their wealthy donors and corporations.” — Families USA Executive Director Frederick Isasi

Families USA is a left-leaning advocacy group that works on behalf of health care consumers.

Its lower corporate tax rates will boost the economy

The bill slices the corporate rate to 21% from 35% and lowers the tax burden for pass-through businesses, such as LLCs and partnerships.

Business Roundtable: “Business leaders applaud the conference committee for coming to an agreement that will promote U.S. competitiveness and spur economic growth.” –Business Roundtable statement

Business Roundtable is an association of CEOs from some of America’s largest corporations.

American Bankers Association: “ABA believes the significant reforms included in this legislation will help grow the economy and create jobs. We particularly applaud the provisions that significantly lower tax rates for all types of businesses beginning in 2018. Banks currently have one of the highest effective tax rates of any industry, and these important changes will allow our members to better serve their customers and the broader economy.” –ABA president and CEO Rob Nichols

ABA represents small, midsize, regional and large banks.

Americans for Prosperity: “This final tax reform plan delivers relief to the working class while unleashing opportunity and growth for America’s small business owners and job creators. … Although not perfect, the House and the Senate should be commended for their diligent work to significantly improve our broken system, and the Trump White House deserves credit for its relentless focus on getting tax reform done this year. –AFP President Tim Phillips.

AFP is a conservative advocacy group.

Financial Services Roundtable: “Tax reform will help deliver expanded opportunity for individuals and American businesses of all sizes. Congress should quickly move tax reform over the finish line and enable America to go on economic offense.” –Financial Services Roundtable CEO Tim Pawlenty

Financial Services Roundtable is an advocacy group that represents banks and credit card companies.

It will be bad for homeowners

The bill lowers the cap on mortgage interest deduction from $1 million to $750,000, and it eliminates the deduction for interest on home equity loans. Homeowners who already have a mortgage would be unaffected by the change.

California Association of Realtors: “The final tax reform bill released punishes homeowners and weakens homeownership. … Congress is touting this as a tax cut for middle-class families, but the reality is that thousands of California middle-class homeowners will be the first ones to face tax increases.” –CAR President Steve White

CAR is a trade group that represents 190,000 California brokers and other real estate professionals.

It will hurt states and cities

The bill will preserve the state and local tax deductions for anyone who itemizes, but it will cap the amount at $10,000.

National League of Cities: “Congress can’t pay for tax reform by stripping the tools that help build stronger, healthier and more economically vibrant communities. [The bill] preserves many key credits and partially protects the deduction for state and local taxes (SALT). Unfortunately, the final bill falls short on its promise to protect American families and the cities and towns in which they live.” –NLC President Mark Stodola, mayor of Little Rock, Arkansas

NLC is an advocacy group that works on behalf of 19,000 American cities and towns.

It will gut charitable giving

The tax bill roughly doubles the standard deduction. Taxpayers can only claim deductions for their charitable donations if they itemize. Nonprofits argue the higher standard deduction will abolish a key giving incentive.

National Council of Nonprofits: “The deal … will prove disastrous to the work of charitable nonprofits in communities across America. … If enacted, the bill would, among other things: damage charitable giving by $13 billion or more annually; destroy more than 220,000 nonprofit jobs; and impair the ability of nonprofits to address community needs. … Simplifying the tax code could have been a noble exercise, but this bill would do much more harm than good.” –National Council of Nonprofits President and CEO Tim Delaney

National Council of Nonprofits is an advocacy group that works on behalf of charitable nonprofits in the United States.

It will harm small businesses

The bill establishes new rules for businesses that file taxes on their individual returns, known as pass-throughs.

Businesses for Responsible Tax Reform: “The proposals also do little to simplify the code, and actually make it more complex for the more than 90% of small businesses that organize their firms as pass-through entities. This means [small business] owners will continue to sink time and money into complying with a byzantine and bewildering tax code, further tilting the playing field in favor of large corporations that can afford armies of accountants to search out every loophole and advantage. … A ballooning deficit is bad for business because it drives interest rates higher. –Letter to Congress from Businesses for Responsible Tax Reform, signed by nearly 2,000 entrepreneurs

Businesses for Responsible Tax Reform is an advocacy coalition that works on behalf of small business owners.

It will help the economy but add to federal debt

The bill, while lowering corporate taxes, would increase deficits by an estimated $1.46 trillion over a decade, according to the nonpartisan Joint Committee on Taxation.

American Enterprise Institute: “The bill features a long overdue reduction in the corporate tax rate that will draw investment to the United States, boosting workers’ productivity and wages. However, the bill will also increase government debt, threatening to drive up interest rates and counteract the increase in investment. A plan to address the long-run fiscal imbalance has become even more imperative.” –AEI Resident Scholar Alan D. Viard

AEI is a Washington, D.C.-based think tank that advocates for libertarian and free-enterprise causes.

CNNMoney (New York) First published December 17, 2017: 3:57 PM ET

Cyberbullying insurance now available for the rich

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cyber security espionage
Insurance giant Chubb is taking cyberbullying seriously.

You can insure your home, your car and your life. Now you can also insure against cyberbullies.

Global insurance giant Chubb (CB) recently launched a new cyberbullying insurance for wealthy clients across the U.K. and the Republic of Ireland.

This is the first time this type of insurance has been offered in the region, said Chubb.

Chubb said it will shell out as much as £50,000 ($74,600) to help clients and their families recover from online trolls.

As part of the package, Chubb will pay PR professionals to help a client repair reputational damage and will pay cyber-security professionals to help a client build a strong legal case if the matter is brought to court.

Plus, it will pay for lost income or tuition fees if a client has to miss work or school. And it will cover temporary relocation costs if a client has to move as a result of trolling.

“The intention is to cover any related costs that may occur as a result of cyberbullying,” said Tara Parchment, a client manager at Chubb.

But the new insurance can’t be purchased as a stand-alone product. It’s only included in Chubb’s top-of-the-line home insurance package, which costs at least £2,500 ($3,730) per year and is targeted at high-net-worth individuals.

Just how bad does the cyberbullying have to get before you call Chubb?

Parchment said a client can seek coverage after experiencing more than three acts of cyberbullying that resulted in a financial loss. The client would have to undergo harassment, intimidation and/or threats of libel, slander or violence. So run-of-the-mill online taunting wouldn’t be enough to trigger payouts.

CNNMoney (London) First published December 18, 2015: 10:11 AM ET

Student loan debt just hit $1.5 trillion. Women hold most of it

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Five student debt pitfalls

About four in ten people who’ve gone to college have taken out loans to pay for school. But some people are taking on a lot more debt than others.

Women hold nearly two-thirds of all student debt in the US, according to a report from the American Association of University Women, a group that advocates for equity and education for women and girls.

Part of the reason is that more women go to college. They represented 56% of students enrolled in the fall of 2016.

But that doesn’t explain the whole gender gap.

More women take out loans, and when they do, they borrow more money. The average woman owes $2,740 more than a man upon finishing a bachelor’s degree, the report said.

Women are also repaying their debt more slowly, which can mean they’re paying more in interest over time.

Related: Does saving for college mean you’ll get less financial aid?

Here are some other surprising stats about student loans.

Americans owe $1.5 trillion in student loans

We hit this milestone during the first quarter of 2018, according to Federal Reserve data.

Outstanding student debt currently exceeds auto loan debt ($1.1 trillion) and credit card debt ($977 billion).

42% of people who’ve gone to college took out debt

A majority of them took out student loans, but 30% had some other form of debt, like credit card debt or a home equity line of credit, according to a Federal Reserve report based on a 2017 survey.

A bigger percentage of recent grads are taking on debt. But borrowing has declined since its peak during the 2010-2011 school year.

Average new grad owes $28,400

Among those who finished a bachelor’s degree in 2016 with debt, the average amount was $28,400, according to The College Board. That’s up from $22,100 in 2001 (reported in 2016 dollars). It does not include those who went to a for-profit college.

20% of borrowers are behind on payments

Those who never finished their degrees are more likely to have trouble keeping up with their payments, the Federal Reserve report said. Just 11% of those who completed a bachelor’s degree were behind and 5% of those who had a graduate degree had fallen behind on payments.

CNNMoney (New York) First published June 5, 2018: 10:08 AM ET

Markets look frothy. Time for more short sellers

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caution investing

Harvard University is concerned about “frothy” markets. So it’s looking to hire short sellers — investors who bet that a stock will fall.

The head of Harvard’s massive endowment — worth nearly $38 billion — warned that current market conditions “present various challenges to investors.”

“This environment is likely to result in lower future returns than in the recent past,” wrote Stephen Blyth, who took over as Harvard’s chief investment officer in January, in a letter this week.

In his note, Blyth said he’s looking for managers with expertise in short selling to cope with a market that’s “potentially frothy.” He’s also worried about liquidity, pointing to the dramatic drop in U.S. Treasuries on October 15, 2014 as “a stark manifestation of the evaporation of liquidity.” He said that liquidity can vanish from the market even “when no material economic event has occurred.”

Related: Cause of Flash Crash is a mystery

The performance of Harvard’s endowment has been disappointing in recent years. Its returns have lagged behind Ivy League peers like Yale and Columbia.

Harvard’s endowment grew by 5.8% in fiscal year 2015, which ended in June, but Blyth noted that’s unlikely to vault Harvard back to the top.

Real estate and venture capital were Harvard’s top performing assets last year. Blyth said the endowment team will continue to look for opportunities in life sciences, laboratory space and the retail sector.

Harvard’s frothy markets comment comes on the heels of other prominent financial leaders’ warnings. Germany’s finance minister has gone as far as to use the word “bubble” about current market conditions.

The stock market is in the midst of a 6-year bull market where the S&P 500 has gained over 200%, but stocks fell sharply in August, sending the market in a 10% correction and the market has been extremely volatile ever since.

CNNMoney (New York) First published September 23, 2015: 10:32 AM ET

Investor tells Musk stock could be worth $4,000

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What happens if Tesla goes private?

Elon Musk thinks he could take Tesla private at $420 a share. But one Tesla investor thinks that’s a bad idea — because the stock could be worth nearly ten times that amount in the most optimistic of scenarios.

Cathie Wood, CEO of money management firm ARK Invest, wrote an open letter to Musk earlier this week saying that Tesla could be valued somewhere between $700 and $4,000 per share in five years.

Wood tweeted out a link for the letter to Elon Musk Wednesday night. Musk responded in less than an hour, telling Wood “thank you for the thoughtful letter.”

In an interview with CNNMoney Thursday, Wood said that Tesla’s investor relations responded quickly to her letter as well and passed it on to the board, but the board has not gotten back to her as of yet.

Tesla (TSLA) shares surged after Musk’s now infamous “funding secured” tweet earlier this month, hitting a peak of $387.46 in the process.

But the stock has since slid back to about $320 due to growing skepticism about Musk’s ability to actually get a deal done.

Going private now would be a mistake

Still, Wood argues that Musk should resist the urge to go private, even if he could pull a deal off.

“Taking Tesla private today at $420 per share would undervalue it greatly, depriving many investors of the opportunity to participate in its success,” she wrote.

Is Elon Musk taking Tesla private?

Wood argues that Tesla could evolve beyond the relatively low profit business of making electric cars. She envisions a Tesla that is generating fat profit margins from autonomous taxis, drones, energy storage services and a bigger presence in China.

If Tesla is able to do all that, the stock could eventually hit her $4,000 target. But Wood admits it will take time — and patience on the part of shareholders. She realizes that some Tesla shareholders are impatient.

“Because of the short-term investment time horizon of investors in the public markets and inflated valuations in the private markets today, I understand why you may want to take Tesla private, but I must try to dissuade you,” she said.

Tesla is either the largest or second largest holding in three ETFs run by ARK, according to Wood — the ARK Innovation (ARKK), ARK Industrial Innovation (ARKQ) and the ARK Web x.0 (ARKW) funds.

Shorter leash if Tesla went private?

Wood thinks there are other investors out there like her that would be willing to give Musk a chance to make his vision a reality.

“If you do not take Tesla private, you will be surprised and gratified at investor reaction once they realize and understand the scope and ramifications of your long-term vision,” she said, adding “with time, I believe that truth always wins out in the public markets.”

She pointed to Apple (AAPL), Amazon (AMZN), Netflix (NFLX) and Salesforce (CRM) as other companies with visionary leaders whose stock prices have soared. Wood also said if Tesla went private, it may have fewer investors, which actually could make life tougher for Musk.

“Please do not let the short-term thinking of professional public equity investors persuade you to take Tesla private,” she said.

“I believe you will be on a much shorter leash in the private markets and will deprive a broad and loyal investor base of one of the most important investment opportunities of their lifetimes,” Wood wrote at the end of the letter.

Wood added in the interview with CNNMoney that she understands many Tesla bears are skeptical of her extremely bullish $4,000 target. But she said that “even if we are half right, the stock could double.”

CNNMoney (New York) First published August 23, 2018: 4:25 PM ET

How do you know you’re ready to retire early?

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Planning young: a retirement roadmap

How do I know if I can retire early?

Some people go to great lengths to set up their spending, saving and investment goals so they can retire early.

For Justin McCurry — who retired at age 33 with $1.3 million so he could spend more time traveling with his wife and three kids — retirement came more than 30 years early. And not by accident.

While the main goal is figuring how much you’ll need and reaching that magic number, there are other considerations, too.

Hitting that number can be so exciting you want to launch right away, says McCurry. But not paying attention to details of your post-working life can undermine or even undo some of the hard work you’ve done, he says.

Check your math and your risk

First, you’re going to need to tally up your expenses, think about what kind of lifestyle you want to live, and come up with a number for how much yearly income you think you’ll need. But the tricky part is figuring out how big of a nest egg you need to save to provide that income.

A classic retirement rule of thumb is the “4% rule.” It means if you have 25 times your annual expenses saved, you can expect to withdraw 4% a year and not outlive your portfolio.

But that formula is based on someone retiring in their 60s and living for roughly another 30 years. Retiring early means you’ll be drawing down on your savings for many more years than a typical retirement.

“We looked at our spending and added and subtracted items for our budget,” McCurry says. Work clothes and commuting went out and travel came in. “We decided to use a 3.5% withdraw rate since we are in our 30’s, to be a more conservative.”

His family of five now lives on $40,000 a year.

Arrange for cash flow

Since early withdrawal from traditional retirement vehicles like IRAs and 401(k)s will incur penalty fees, early retirees need to figure out how to regularly get money with the least adversity.

A substantially equal periodic payment (SEPP) plan allows you to withdraw about 3-4% of your money annually before age 59½ without incurring tax or early withdrawal penalties. Although bound by a strict IRS formula, there are three methods used to determine the payout. These payments, once started, will continue for five years or until you are 59½, whichever is later.

While it can work well if you’re bridging a short gap between retiring and age 60, McCurry didn’t think it would work for him.

“I was 33 when I left work,” he says, “I didn’t want to lock myself into a fixed annual pay out for the next 27 years.”

Instead, he set up a Roth IRA conversion ladder.

The IRS allows money converted from a traditional IRA to a Roth IRA to be withdrawn penalty free and tax free. The catch is you need to wait five years. If you convert $30,000 in 2018 (and pay any tax owed), you can with draw $30,000 in 2023. By annually converting an amount to withdraw in five years, you can build a ladder of income.

Prepare for health care

Health care is not only a major expense, but it’s also unpredictable: both your health and the system.

With years to go before Medicare kicks in, you’ll need to purchase your own health insurance. That can be expensive. But retirement also reduces your income, which could qualify you for some kind of help.

McCurry and his family get coverage through the Affordable Care Act and, given their income and the size of their family, they even earn a subsidy of nearly $10,000 dollars.

Set up your housing

A change in where you live can make a huge difference in your costs, says McCurry.

“People usually live where they live because their job took them there,” he says. “But they say ‘I can’t afford to retire here.'”

Consider downsizing, or moving to where housing costs less.

Set up your new residence before retirement, McCurry advises. Even if you plan to travel for a while right after retiring, it could be worth it to arrange for your future home before you go — maybe even earn passive income from renting it out.

“Maybe you want to pay cash, but if not it will be easier to get a lease or a mortgage when you are working,” says McCurry. “Sure, you can show a $2 million balance sheet to a mortgage broker, but they can still say they need to see your income.”

Stress test your plan

Don’t forget to account for other unknowns, like inflation and market returns.

“We often run multiple scenarios with different assumptions — for inflation or growth rates, for example,” says Jennifer B. Harper, a certified financial planner and director of Bridge Financial Planning. Then she says she applies a “Monte Carlo” analysis, a model that looks at multiple outcomes to provide a probability distribution or risk assessment for an investment, to show ranges of potential projections.

“It’s not perfect,” she says, “but it’s a heck of a lot better than modeling straight line growth for everything.”

CNNMoney (New York) First published September 27, 2018: 2:12 PM ET

Why are women only saving half as much as men for retirement?

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Planning young: a retirement roadmap

All working Americans need retirement savings, regardless of gender. But the need is particularly strong for women, since they have a tendency to live longer than their male counterparts.

They’re also more likely to require paid care at some point — as a spouse may not be around to provide care.

It’s therefore unsettling to learn that women are only saving about half as much as men for the future. In a recent Student Loan Hero study, women had an average of $45,614 socked away for retirement, whereas men had $90,189. That sort of gap could put women at a severe disadvantage later in life.

Why are women falling behind savings-wise?

When asked why they’re struggling to save for retirement, women cited living paycheck to paycheck and having to pay back student loans as their greatest deterrents. Then again, so did men. So why is it that the average female saver only has about half as much as her male counterpart?

For one thing, in the aforementioned study, women were more likely than men to own up to a lack of knowledge about investing and retirement planning. Furthermore, women are generally more likely than men to take breaks in their careers to serve as caregivers, thereby reducing their savings ability. Finally, though some folks believe that the wage gap is narrowing, it still appears that women earn significantly less than men on an across-the-board basis. So it’s easy to see why their savings balances fail to keep up with men’s.

If you’re looking to retire comfortably, it’s crucial that you get a handle on your savings as early on in your career as possible. The good news? If you’re behind, there are several tactics you can use to catch up.

Boosting your retirement savings

One of the most effective ways to ramp up on retirement savings is to examine your budget and identify ways to cut corners. This could mean downsizing your living space, giving up a convenient but not needed car, or cutting back on leisure. The more cash you free up on a monthly basis, the more you’ll have available to contribute to a retirement plan.

Furthermore, if you have a 401(k), make sure to contribute enough to capitalize on whatever matching dollars your employer is willing to give you. This way, you’ll not only add to your savings balance, but the additional money you invested will boost your account’s overall growth.

And speaking of growth, you may want to change your approach to investing if your savings have been sluggish to date. Though stocks carry more risk than safer investments, like bonds, they’re a good way to score some sizable returns on your savings. And that could be the key to catching up and retiring with enough money to pay the bills.

Case in point: Saving $300 a month for the next 25 years will leave you with an additional $228,000 in your nest egg if your investments generate an average annual return of 7% during that time. But if you play it too safe and only manage to swing a 4% average return over the life of your investments, you’ll wind up with just $150,000. Incidentally, in a separate study by Merrill Lynch and Age Wave, women identified not investing more as their single greatest financial regret, so that’s reason enough to get a little bit braver with regard to your nest egg.

Finally, don’t hesitate to fight for raises throughout your career, because the more you earn, the easier it’ll be to aggressively fund your IRA or 401(k). Job site Glassdoor has a handy “Know Your Worth” tool that allows you to compare salary data by job title and geographic region. If you do your research and find that you’re being underpaid compared to your peers (male or otherwise), you can build a case for more money and use that additional cash to ramp up your savings.

Related links:

• Motley Fool Issues Rare Triple-Buy Alert

• This Stock Could Be Like Buying Amazon in 1997

• 7 of 8 People Are Clueless About This Trillion-Dollar Market

No matter what steps you take to catch up on retirement savings, be sure to make it a priority immediately. Otherwise, you may come to struggle financially when you’re older, and that’s the last thing you deserve.

CNNMoney (New York) First published July 12, 2018: 9:56 AM ET

New tax code will still be complicated despite GOP promise to simplify

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Steven Mnuchin: Taxes will go up for the rich

President Trump said H&R Block would go out of business because his tax overhaul would be so simple.

But the plan Republicans and Trump came up with almost certainly won’t put tax preparers out of business.

The final tax bill, released on Friday, does indeed deliver some simplification, but not as much as promised. And it adds plenty of complications, particularly for small businesses.

Republicans have said that under their tax plan your tax return could be filed on a postcard. That seems unlikely. But even if the IRS shrinks the 1040 you’d still need to check a bundle of instructions to fill it out.

The plan does get points for simplification, experts say, by nearly doubling the standard deduction to $12,000 for single filers and $24,000 for joint filers.

Doing that would drastically reduce the number of taxpayers who itemize since the only reason to do so is if all your deductions exceed the standard deduction.

To itemize, you have to keep lots of records to track eligible expenses, and then figure out if your income or other factors limit how much of a deduction you can take.

Related: Here’s what’s in the GOP’s final tax plan

All in, roughly 30 million households that itemize today are likely to take the nearly doubled standard deduction instead.

“[It] should simplify tax record-keeping and reporting. Taxpayers might not immediately notice this, but over time they should adjust their behavior,” said Mark Mazur, director of the Tax Policy Center.

But of those 30 million, many “will still have to do the computations to see if they will itemize or take the standard deduction,” said Martin Sullivan, chief economist at Tax Analysts.

Related: Changes to the child tax credit – What it means for families

Of course, deductions aren’t the only tax breaks with eligibility rules, income phaseouts and other mind-bending limitations.

The GOP tax plan keeps, and in some cases expands, several tax credits. And just as under today’s code, the rules for them aren’t intuitive. The ins-and-outs of the Earned Income Tax Credit and the Child Tax Credit, for instance, are complex and will remain so.

Even if taxes were easy enough to file on a postcard, every line item on it would have pages of instructions and forms backing up the number you report, said Kathy Pickering, executive director of The Tax Institute at H&R Block.

And let’s not forget the fact that the tax bill preserves the Alternative Minimum Tax for individuals. Yes, it reduces the number of people who would be hit by it by raising income exemption levels. But people will still have to figure out if they’re on the hit list. That requires calculating your tax burden twice — once under one set of rules, and once under a different set of rules — and pay whichever is highest.

Related: What’s in the tax bill for homeowners

Lastly, experts worry that the GOP tax plan actually would make tax filing a more complex experience for people who have business income from so-called pass-through entities, which are not taxed under the corporate code. Those include businesses and investment funds set up as sole proprietorships, partnerships and limited liability corporations. The owners, partners and shareholders pay the pass-through’s taxes on their individual returns.

Under the GOP tax bill, wages, pass-through business income, and corporate profits would be taxed at very different rates, whereas today wages and pass-through income are subject to the same rates. And the bill imposes a complicated calculation to determine how much of a pass-through business owner’s income may be taxed at the lower business rate and how much at the higher wage rate.

“The pass-through rules are really complicated,” Mazur of the Tax Policy Center says. “And I expect taxpayers and their advisers will try hard to find ways to exploit [them].”

CNNMoney (New York) First published December 17, 2017: 3:43 PM ET

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