Significant changes to the tax law are coming with what is being billed as the Secure 2.0 Act. These tax changes will push required minimum distributions (RMDs) to age 75 for those born after 1960. The act will also allow 529 plans to be converted to a Roth account up to $35,000 if certain requirements are met. Read more here and here.The employee contribution to 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased to $22,500. The Standard Deduction was increased to $13,850 for individuals and $27,700 for married filing joint. IRA annual contribution limit was increased to $6,500. The Gift Tax exclusion was increased to $17,000 per year.
Portfolio Allocation Examples
Asset allocation is one of the most personal parts of investing. Every investor has their own risk tolerance and time horizon. Seeing a variety of examples can be helpful for clarifying your plans and seeing what other investors are doing. A neat new resource for that is called Portfolio Charts.
The Real Cost of Spending $100/Month
Spending decisions can feel irrelevant when they come in such small dollar amounts. Who cares if I spend an extra $100/month! Money with Katie explains that with each $1 spent per month that equals another $300 needed to sustain those expenses in retirement. This means that saving $100 per month actually saves you from needing an extra $30,000 in retirement. This math all comes back to the popular 4% rule-of-thumb used for retirement calculations. The biggest takeaway for me is that even little adjustments can make significant impacts on your target retirement amount.