Saving For Retirement: Budget Your Savings

By Patricia Uceda, Spring 2015 Graduate Research Assistant

Once you know how much you generally should be saving per month for retirement and where you will be putting that money, it’s time to do the hard part: Save! One way to make this easier is by setting a budget for yourself. Be aware of where your money is going and assess what areas you can cut back on, whether it’s giving up that Starbucks cappuccino every morning or eating out less. You’d be surprised how fast those little purchases add up. Continue reading

Saving For Retirement: Roth IRAs

By Patricia Uceda, Spring 2015 Graduate Research Assistant

Roth IRAs are nearly identical to IRAs, although the money contributed is after-tax income similar to Roth 401(k)s. The earnings on this type of account are tax-free, and you can leave your money in the account for as long as you want. However, Roth IRA contributions are not tax deductible, and you must meet certain income requirements in order to make contributions.

One benefit of Roth IRAs is that you may withdraw your contributions penalty-free at any time. You will only be charged the 10% penalty if you withdraw the earnings on your investment before age 59 ½.

Saving for Retirement: IRAs

By Patricia Uceda, Spring 2015 Graduate Research Assistant

An IRA, or Individual retirement Account, is another tax-favored retirement savings account. Unlike 401(k)s which are typically provided by your employer, IRAs are opened by individuals on their own. In addition, your savings grow tax-free, however if you withdraw money from your IRA before age 60, you will have to pay a 10% penalty.  Depending on your income, contributions to a traditional IRA might be tax deductible.

The government limits the amount of money you can put into an IRA each year. Generally you can contribute no more than $5,000 each year, although this limit raises if you are 50 or older. Additionally, you must take required minimum distributions starting the year you turn 70 ½.

Saving For Retirement: Roth 401(k) Accounts

By Patricia Uceda, Spring 2015 Graduate Research Assistant

Roth 401(k)s are different from traditional 401(k)s due to their tax treatment. You will pay tax on any income you contribute to the plan upfront, but you will not have to pay income tax when you make withdrawals at retirement. Roth 401(k) plans might be well suited for you if you believe you will be in a higher tax bracket at retirement and have a long investment horizon.  Some investors even split their investments between traditional and Roth 401(k)s.  Talk to your professional about which option is best for you.

Saving for Retirement: The Traditional 401(k)

By Patricia Uceda, Spring 2015 Graduate Research Assistant

A traditional 401(k) is a retirement savings plan that allows you to invest money now and defer paying income taxes on the saved money and earnings until you start withdrawing at retirement.  These accounts are typically provided by your employer and allow you to make contributions directly from your earnings.

You will decide what you want to contribute, and this amount will be automatically deducted from your paycheck. In a traditional 401(k) account, your contributions will not be taxed as income the year you earn them.  You pay taxes on the funds when you withdraw them at retirement. This can be beneficial to you because it allows you to invest more money and potentially pay a lower tax rate if you retire in a lower tax bracket.  However, if you withdraw from your retirement account before the age of 59 ½, you will have to pay a 10% penalty.

Saving For Retirement: Types of Retirement Savings Plans

By Patricia Uceda, Spring 2015 Graduate Research Assistant

Now that you know how much income you should be setting aside each month in order to retire comfortably, it’s time to start learning about where to put that money in order to watch it grow. Tax-favored retirement accounts, such as IRAs and 401(k)s, are two extremely good options.

This week will be spending each day taking a closer look at these, as well as variations on these retirement planning accounts, so stay tuned!



Options Trading: More Information

By Patricia Uceda, Spring 2015 Graduate Research Assistant

This past week you’ve learned about options, the common terminology used in options trading, the risks associated with options, and the steps you should take in order to open an options trading account with your broker-dealer. For our final post in this options series, we wanted to provide you with additional resources before you consider investing in options.  In addition to the SEC’s Investor Bulletins An Introduction to Options and Opening an Options Account, you may want to consider a publication from the Options Clearing Corporation called “Characteristics and Risks of Standardized Options,” which can be downloaded for free here and the NASDAQ Options Trading Guide located at here.