The equity markets haven’t been kind to individual investors over the last decade. I always beware those sales pitches from investment firms that show equity growth over a specific time, choosing to show gains starting from a market bottom (2009).
Whether you begin your retirement at or before 65 or wait until you’re 68, you only have a few years before you are obligated to take money out of your accumulated retirement accounts. Failing to do so results in a hefty of 50% of the amount not withdrawn. The RMA applies to all tax-deferred retirement accounts (IRA, 401k, 403b, 457b, SEP, etc..)
We have a very mixed opinion about reverse mortgages. You spend most of your working years paying off your house, only to lose it again after you retire. It doesn’t seem like the smartest decision, but there are cases where it does make a lot of sense. Just be educated and beware of the pitfalls/risks.
A Reverse Mortgage, also called Home Equity Conversion Mortgage (HECM) are federally insured loans backed by the FHA. When researching mortgage companies, make sure they are FHA approved. That is your protection against the mortgage company going out of business.
Why would you want to convert from a traditional retirement account to a Roth? In our opinion, the only reason to perform a conversion is to realize a higher final return at the time of distribution, which is an unlikely scenario for most people.
When you convert from an existing retirement account to a Roth, you need to pay taxes on the earnings made in the account, and typically the taxes need to be paid in the year of conversion. That means you’re paying taxes this year, instead of when you take the money out.
We should all know that contributions to Roth IRAs are not tax-deductible. Since you’ve already paid tax on the money you put in, once you begin withdrawing, you don’t pay tax. Sounds good, right?
As with traditional IRAs/401ks, there are two types of Roth accounts: Roth IRAs and Designated Roth Accounts. The latter is similar to a 401k, in that it is typically employer sponsored and has a much higher contribution limit: