Dear Money Morning Reader,
My name is Keith Fitz-Gerald.
For more than 35 years, I've worked in the global markets as a consultant, analyst, and trader. I cut my teeth at some of Wall Street's biggest firms, including Wilshire Associates, which oversees more than $8 trillion for over 600 institutional investors.
But now I'm taking what I learned on Wall Street and bringing it straight to you as the Chief Investment Strategist at Money Morning and Editor of Total Wealth and Money Map Report.
My team and I work tirelessly to provide our readers with the guidance they need to protect and aggressively grow their wealth and retirements.
In This Briefing...
That's why today, I'm here to give you one of the most important tools you can use to secure your money, build a solid nest egg, and prepare for your golden years.
It's a simple, straightforward action plan that'll serve as your roadmap toward a successful retirement.
Whether you're in your 40s and just getting started, or someone who aims to retire at 65 and is just a year away...
The following pages will show you how to determine the amount of money you'll need to retire comfortably, along with a wealth of tax tips and tricks to maximize the value of your retirement account and ensure that your Golden Years are the best of your life.
It doesn't matter your age, income level, or experience - this guide will get you started toward the retirement you want and - more importantly - the one that you deserve.
Let's get started...
According to Time.com, more than 50% of Americans age 35 to 54 have less than $10,000 saved for retirement. How we got to this point over the last 15 years is hardly surprising.
In the wake of the Great Recession, many people saw their 401(k)s wiped out, and they lost a lot of faith in the financial markets. Members of Generation X lost 45% of their average net worth during the financial crisis, according to the Financial Times.
If you find yourself in this group, let me start by reminding you of two things:
First, you are not alone. Millions of Americans are in the same situation.
Second, you have plenty of time to start building or rebuilding a retirement nest egg that'll put you on your way. According to retirement experts, most Americans have time to catch up and reach their retirement goals.
If you've already started saving money, consider yourself ahead of the game. But you still need to set aggressive goals if you want to retire at 60.
Get started with these immediate steps.
A majority of Americans are making the mistake of not using their IRA and 401(k) options at work.
In 2017, you can put up to $18,000 into a 401(k) account - all of which does not count toward your adjusted gross income (AGI) when you file your taxes each year. Also, many employers have matching contributions in which they will meet as much money as you put into your account up to a specific percentage.
Simply put, this is free money for your retirement, and it can reduce your taxes.
On the IRA side, you have two options:
You can open a Traditional IRA or a Roth IRA (though the latter has income maximums to qualify). It is recommended that you put aside at least 10% to 20% of your income or more into an investment savings account. Remember, the sooner that you begin investing in these accounts, the sooner you will start to benefit from compound interest and long-term stock appreciation.
To reach this goal, you may want to start putting away 10% to 20% of your paycheck each month depending on where you are in your 40s.
If you have maxed out your 401(k) and IRA, you may also consider investing your money in another account and start investing in stocks and bonds that pay high yields.
This strategy will require discipline, so we advise that you consider an automatic payroll transfer into a retirement account.
If your money is not in your checking account, you'll face less temptation to spend it. Also, be sure to put away any additional raises or bonuses that might come along. This strategy will help reduce your annual tax burden and shore up the savings deficit you may find yourself in these days.
Each year, you should aim to boost your savings a little more. Here's the math:
While you're putting money in your retirement accounts, you also must balance your debt obligations. If you have large balances, it's critical to start paying off your highest-interest debts like credit cards or to find ways to refinance those loans and debts to reduce those interest costs.
Also in This Guide...
Harness an Extra $6,500 Tax-Free Over 50
Earn a Second Salary as a "Lazy Landlord"
How to Save $1,500 on Coffee and Other Non-Essential Purchases
The current average rate for a variable rate credit card is higher than 15% a year, according to BankRate.com. Also, student loans from decades ago could have interest rates higher than 8%, depending on when they were accessed. There's also the option of refinancing your mortgage loan.
According to Black Knight Financial Services, there were more than 8.7 million refinancing candidates nationwide in 2016, but only a fraction of those applied.
Remember that you don't need to make a huge push to pay off your mortgage. In addition to potential appreciation in your home price, you can also refinance your mortgage and subtract interest from your taxable income if you itemize your deductions.
A $250,000 mortgage from 2015, refinanced from 4.5% to 3.5% in 2016, would have saved $75,000 in mortgage interest costs over the life of the loan.
While you're looking for ways to shrink your debt burden, it's also important to consider the means to cut back on spending. Some Americans will spend $5 per day on a coffee drink from a local barista. That can add up to more than $1,500 a year.
That's a big chunk of change back in your pocket merely from cutting back on your daily Starbucks fix.
Or it could be as simple as swapping out a light bulb.
According to the latest data from the U.S. government, the annual energy bill for a typical single home is spent mostly on electricity. In fact, electricity accounts for roughly 9% of total household budgets. Luckily, there's an easy way to cut that number down.
Switching just one old-school incandescent bulb to a newer compact fluorescent (CFL) or light-emitting diode (LED) model can save you up to $95 or more over the lifespan of the bulb. If you're like the average American household, you may still have 50 or more money-wasting bulbs burning away your hard-earned cash. Switching all of them over to newer, more efficient technology can save you over $4,700 - more than enough to nicely pad your retirement portfolio.
Another simple method is to take advantage of one of the most lucrative "programs" I know. Not only can some of these "programs" be used as legal tax havens... but tapping into them the best way to add $2,000, $5,000, or more to your income each month. Click here to learn more about the program that's thousands of ordinary Americans retire as millionaires.
Most Americans see their annual wages peak in their late 30s to mid-40s. If you're one of 'em, then consider adding value to your education and skill sets to keep boosting your value as an employee - or make yourself more marketable to a new employer.
In today's digital economy, you can access inexpensive online classes that can teach you new skills and qualifications. In many cases, employers will offer up to $5,000 for continuing education.
The IRS has a dozen ways to offset educational expenses, ranging from the American Opportunity Credit to the Qualified Tuition Program - each with their own requirements and restrictions. All but one program is restricted to K-12 or undergraduate and graduate degree programs - and the IRS isn't about to shine a spotlight on it.
This little-known secret is called the Lifetime Learning Credit. It's different from all the other education tax benefits geared toward degree-earning programs. In fact, the IRS explicitly states that the "student does not need to be pursuing a program leading to a degree or other recognized education credential" to take the credit.
All you need to do is enroll at any eligible educational institution in courses to acquire or improve job skills. These job skills could be almost anything, from computer coding to woodworking - whether or not you ever pursue the career. Since virtually all accredited public, nonprofit, and for-profit postsecondary institutions are eligible, the possibilities are almost limitless.
Local community colleges offer a wealth of options, from photography to floral design. And yes, if golfing with clients is a regular part of your business, honing your skills may just earn you a payday from the government.
The Lifetime Learning Credit covers 20% of the first $10,000 of tuition, fees, books, and supplies required for the courses you enroll in. There is no limit to the number of years you can claim the credit (hence the term "lifetime learning").
For more information, contact your tax advisor or check out the IRS website at www.irs.gov and search for "Lifetime Learning Credit."
By staying on the cutting edge of best practices, development programs, and other skill-generating opportunities, you can give yourself an edge in the job market for the decades to come and help bolster your take-home pay and retirement income possibilities.
It's important to have good accounting software or access to someone who understands the benefits you can obtain each tax season.
For example, if you work full time and pay for childcare, you likely are eligible for thousands of dollars in tax credits. Depending on how much you earn each year, you can obtain up to 35% of the money you spend on child care. The IRS caps one eligible individual at $3,000, and $6,000 for two qualifying individuals.
But those aren't the only tax benefits you can harness. Your company may offer tax-free transportation benefits for public transit and parking. You may also be able to reduce your tax burden by thousands a year by contributing pre-tax dollars to a Health Savings Account (HSA) or Flexible Spending Account (FSA).
If your employer offers you a medical reimbursement account, go for it. It'll put extra cash in your pocket.
These plans, sometimes called flex plans, divert part of your salary into an account you can tap into to pay medical bills. The maximum you can contribute per year is $2,600, and you avoid paying both income and Social Security tax on the money. That saves you 20% to 35% more than if you'd paid for the medical care with out-of-pocket taxable income.
Action to Take: Contact your employer's Human Resources department regarding any health insurance benefits or other employee benefits you could be missing out on. Make sure you're fully capitalizing on any matching programs they provide, and consider an automatic payroll transfer if the opportunity is available to you.
At this point, I have some good news, and some bad news.
The good news is, there are plenty of ways for you to boost your income, make yourself marketable (and eligible for a salary increase at work), and regularly add money to your future retirement plans.
The bad news?
The more money you make, the more the IRS will try to take from you.
Fortunately, there's a way around that.
The U.S. tax code fills more than 74,600 pages. It may seem daunting at first, but I suggest looking at it as thousands of pages of opportunities you can use to slash your tax burden to the bone.
That's why I put together IRS-Proof Your Life, an exhaustive electronic guide to saving tens of thousands of dollars each year - or millions over the long term - by maximizing 100% legal tax exemptions for self-employed workers, small business owners, or anyone who's got kids to put through college, travel expenses, or even a business idea.
Because the truth is, you don't need an account in the Caymans to avoid a crushing tax burden; you can set up your own perfectly legal tax shelter at your neighborhood bank.
The report is just one component of our exclusive Seven-Figure Retirement Action Plan, at the core of which sits a unique class of Roosevelt-era investments created to ensure you a steady, tax-free income with huge monthly lump-sum payouts. Learn more here. Start with these strategies today if you're in your 50s...
By now, it would be beneficial to have some amount of money tucked away for your golden years. Your retirement accounts are designed to help you build a large nest egg, so it is vital that you do not start withdrawing money from these accounts sooner than the rules allow.
Any money withdrawn from a 401(k) or IRA before you hit retirement age is subject to a 10% fine (and that's before the taxes are deducted during the withdrawal of a traditional IRA).
Look for ways to save money, boost income, and improve your investments rather than tapping into money you've spent decades building for your retirement years.
If you're just getting started - but don't know what to do - keep reading.
If you don't have an IRA or 401(k) plan, you should seek those benefits through your employer or consider a SEP-IRA through a personal business. At this time it is critical that you put as much money as possible into these accounts.
Luckily, the U.S. government wants Americans to maximize their retirement savings after the age of 50. If you're in your 50s, you have one advantage that others paying into retirement plans do not:
You can bolster your retirement plans by making "catch-up" contributions each year. Since IRA contributions do not count toward your Adjusted Gross Income, it is critical that you embrace this added benefit.
If you're 50 or over, you can add an additional $6,000 a year to your 401(k) and an additional $1,000 into an IRA.
In total, that's $24,000 for your 401(k) and $6,500 for your IRA.
All combined, you can put away $30,500 total each year toward your retirement.
Americans in their early 50s are still enjoying better wages, and while many see their children depart for college or the workforce, that doesn't mean that retirement savings increase on their own. It's important for you to consider automatic transfers to your investment account to help you play catch up and bolster your savings over time.
If you're looking to add a little more juice to your retirement accounts, be sure to explore potential ways to make side money. Now, you could hold a garage sale and sell things around the house, but we're talking about side work that can provide rock-solid income.
The digital economy of the 21st century offers a wealth of ways to make money. You could explore a hobby like photography and sell your work. You might consider ride-sharing jobs with Uber or Lyft. Some part-time bookkeepers have earned as much as $60 per hour working from home, while dog walkers can make $240 by walking 12 dogs over a period of four hours.
Or, if you have a space in your home that you're not using, consider one of several home-sharing programs available today. Listing your space is free, you get the final say on who will be occupying the space (and when), and you get to decide the rate your guest will pay per night.
All you need to do is provide some basic amenities like soap and toilet paper, and you could be raking in weekly cash as a "lazy landlord" for Airbnb.
In Baltimore, for example, hosting a vacationer in one of your spare bedrooms will earn you $345 per week, on average.
In San Francisco, you could rake in $577 per week from professionals on a business trip...
That's just over $30,000 extra per year in your pocket.
Click here to see the going rate in your area.
Some individuals have made up to a six-figure salary... all by renting out spaces in their homes. And if you're worried about potential damages, Airbnb has those bases covered with an insurance program that'll take care of up to $1,000,000 in damages...
While you're looking for ways to boost your income, it's also important to consider the means to cut back on spending. Some Americans will spend $5 per day on a coffee drink from a local barista. That can add up to more than $1,500 a year - more than enough to fill your IRA account's catch-up allowance.
The adage is that you can be a producer or a consumer. If you're looking ahead to your retirement, you want to be producing more than you consume.
So look for ways to cut back. Make it a game if you can. Every dollar you save is a dollar that can be allocated to your retirement income, where it'll not only be saved, but continue to grow.
At a 6% return on investment, every dollar you save at 50 will be worth $2.54 at age 67.
There are hundreds of simple and high-saving ways to cut thousands off expenses you pay every day, week, and month.
For example, you could cut your phone bill by $500, save $300 every year on your utility bills, and even pay 80% less on brand-name prescription drugs. And those are just some of the savings tactics available to you...
Take prescription medicine, for example...
A cost of a prescription can vary dramatically between two pharmacies - even ones right next door to each other. Sometimes this price difference can be $100 or more for the exact same drug and dosage.
But now a little-known program that gives you access to deep discounts on name-brand drugs is available in all 50 states right now. You can compare prices, print free coupons, and save up to 80% on your prescriptions all through one simple website. No credit card required.
And you can save big bucks even if you already have insurance. The truth is that even your modest copay might not be the best price you can get. Hundreds of generic medications are available for $4 (or even free) without insurance. A $20 copay doesn't sound so great when you can get the same drug for 80% or 100% less. Plus many plans have high deductibles or limited formularies that don't cover the drugs you need.
If you're uninsured, you're probably paying top dollar for your meds at your local pharmacy and probably never realized you could get a drastically better deal with a couple of quick keystrokes.
Thankfully, there's a simple tool that figures out what pharmacy in your area has the best price. A powerful, but little-known site compares millions of prices and discounts from pharmacies and drug manufacturers across the country. By checking their easy-to-use website, you can search your area for the best deal - just like you would to find the best rate for a hotel.
A quick search for a common cholesterol-lowering drug showed a local big-box pharmacy giving the pills away for free - no strings attached - while the national drugstore chain across the street charges $154. That's a lot of free cash just to park in a different lot.
The site is www.Goodrx.com. Just enter the name of your prescription in the search box and the site instantly spits out prices, coupons, and savings tips for each pharmacy near you. You can even search on your smartphone by using their app.
While prices of life-saving prescriptions continue to go through the roof, Goodrx.com can help save you more than 80% with the click of a mouse.
It's critical that you look to every available opportunity to reduce your tax burden.
First off, it's important to have good accounting software or access to someone who understands the benefits you can obtain each tax season.
For example, if you work full time and pay for childcare, you likely are eligible for thousands of dollars in tax credits. Depending on how much you earn each year, you can obtain up to 35% of the money you spend on child care. The IRS caps one eligible individual at $3,000 - and $6,000 for two.
But those aren't the only tax benefits you can obtain. Your company may offer tax-free transportation benefits for public transit and parking. You may also be able to reduce your tax burden by thousands a year by contributing pre-tax dollars to a Health Savings Account (HSA) or Flexible Spending Account (FSA).
If your employer offers you a medical reimbursement account, go for it. It will put extra cash in your pocket. These plans, sometimes called flex plans, divert part of your salary into an account you can tap to pay medical bills. The maximum you can contribute per year is $2,600, and you avoid paying both income and Social Security tax on the money. That saves you 20% to 35% more than if you'd paid for the medical care with out-of-pocket taxable income.
Action to Take: Contact your employer's Human Resources department regarding any health insurance benefits you could be missing out on.
The report is just one component of our exclusive Seven-Figure Retirement Action Plan, at the core of which sits a unique class of Roosevelt-era investments created to ensure you a steady, tax-free income with huge monthly lump-sum payouts. Learn more here.
Many people dream of retiring to a beach in Florida, the obscure woods of Alaska, or the mountains of the Pacific Northwest. What they may not realize is that the dream life could also be a very responsible financial decision...
Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming, for example, all have no state income tax.
Then there are states with no sales tax or the lowest property taxes - Alaska, Montana, New Hampshire, Delaware, Hawaii, Alabama, Louisiana, Delaware, and South Carolina are just a few.
If you're a retiree living in one of those states, much of your income will be tax-protected.
But if you're not, moving to a state with low or no sales tax once you retire will make every cent of your retirement income last longer.
If you're able to move to one of these locations before your retirement years, the benefits could be even more exaggerated. Here's the math:
A couple that lives in Chicago, Ill., and earns $100,000 combined will pay $3,000 per year in state taxes and 10.5% in local sales taxes. If they spend just $10,000 per year on retail expenses, that is an additional $1,050. They would pay $4,050 per year and roughly $40,500 in taxes over a decade.
Meanwhile, that same couple in New Hampshire would pay $0 in state taxes and $0 in sales taxes.
Then, if all of that money were put into a retirement account over the period of that decade (assuming a 6% rate of return), the couple residing in New Hampshire would have $79,343 more than a couple who wasn't - just by avoiding these taxes.
Taxes are just one consideration of retirement. Other factors like affordability, quality of life, and healthcare costs all require your attention. You might even want to look into other factors like weather, crime, culture, and well-being scores.
Special Note: If you've exhausted all of your options and done all the math, it's important that you be honest with yourself. Do you have enough money to retire at 60? If not, that is entirely okay. Many Americans are in the same position. But the good news is that you have options to find work, cut costs, and empower yourself. As long as you're healthy, the best option may be to work for a few additional years. Stay optimistic, because building retirement wealth takes time. We want to make sure that you have a healthy retirement, not a rushed one.
Now that you're in your 60s, you must be honest about your goals, your finances, and your retirement.
You might be feeling anxious about your future, and that's understandable - the years right before retirement are exciting, but they can also be stress-inducing. Don't panic - we've got you covered.
The rule of thumb among most retirement planners is the 80% rule - that you'll need 80% of your current net income to retire. That is, your gross annual income minus your annual savings. (Basically, the amount of money you actually live on each year.)
You will need to take a hard look at your finances. Keep in mind that Social Security will provide a portion of the amount you'll need to live, although, as is the case with many Americans, Social Security alone is not enough to sustain you through a full retirement.
First, ask the important question: Can you retire right now... and if not, when?
A Nugget of Wisdom for Your Grandkids... It's never too early to start saving for retirement.
Naturally, there are very few people at the age of 23 or 24 who can max out their 401(k) and IRA accounts each year.
But a more reasonable goal is at hand.
You should aim to have one year's salary saved into a retirement account by the time that you hit 30.
This powerful strategy will give you the potential for decades of compound interest and appreciation of any stocks you hold in these accounts.
If you've done the math and the numbers don't quite add up, don't worry. There are plenty of ways to reduce retirement spending and increase income.
Your goal in retirement must be to stretch every dollar possible. Whether it's seeking a bargain meal or a discount trip, you want to make sure that every dollar you have can last as long as possible.
Of course, that's not just on your discretionary spending.
If you own a home, you'll want to decide if staying where you live is the right decision.
Consider a town in the United States or even abroad that has a lower cost of living and provides high scores in healthcare costs and overall well-being. Forbes has a thorough list here.
You might even consider other ways to save money - or make money. If space is not a concern for you, consider taking on a roommate (whether you rent or someone rents for you depends on your situation.) Or, if you'd prefer a shorter-term way to make money from extra space in your home, consider a home-sharing program like Airbnb.
Listing your space is free, you get the final say on who will be occupying the space (and when), and you get to decide the rate your guest will pay per night.
All you need to do is provide some basic amenities like soap and toilet paper, and you could be raking in weekly cash as a "lazy landlord" for Airbnb, for example.
That's just over $30,000 extra per year, in your pocket.
Remember, we're looking for creative ways to boost income and ensure that we have money for the long term.
For example, you could cut your phone bill by $500, save $300 every year on your utility bills, and even pay 80% less on brand-name prescription drugs. And those are just some of the savings you'll find in this report.
Discover how easy it is to save big money on insurance, groceries, your home costs, and so much more by following these simple and convenient tips.
Open your mind - sometimes the best ways to save money are the most unconventional.
For example, another simple method is to take advantage of one of the most lucrative "programs" I know. Not only can some of these "programs" be used as legal tax havens...But tapping into them the best way to add $2,000, $5,000, or more to your income each month. Click here to learn more about the investment program that's helping thousands of ordinary Americans retire as millionaires.
While you're planning strategies to reduce everyday spending, you also must balance your debt obligations. If you have large balances, it's critical to start paying off your highest-interest debts like credit cards or to find ways to refinance those loans and debts to reduce interest costs.
The current average rate for a variable rate credit card is higher than 15% a year, according to BankRate.com. Also, student loans from decades ago could have interest rates higher than 8% depending on when they were accessed.
One of the most popular ways for homeowners to save money is to consider a refinancing of their loans.
Of course, debt elimination plans will be different for each person, but a quick discussion with your financial adviser will put you on the right track.
If you want to maximize your Social Security benefits and put away more money, you may need to consider working a few more years.
As long as you're healthy, working longer will help you build up your savings while reducing the number of years you'll be dependent on it.
When you do decide to retire, a part-time gig will help supplement your income and make your savings stretch further.
It's not uncommon. The vast majority of self-made millionaires have at least three income streams that are constantly generating money.
It could be beachfront real estate, multifamily properties... maybe businesses like car washes. But these options all cost a lot of money and come with enormous risks.
However, you can get all of the benefits of these income streams by turning to Wall Street.
In Earn a Raise in Your Retirement, you'll learn about the opportunity to tap into a wealth of unconventional income streams, including:
Any of these opportunities could soon jumpstart regular installments of $4,000 (or more) a month in your account. Learn more here.
The difference between electing to take your Social Security payments at 62 and electing at 70 is significant.
Consider waiting as long as possible before you and your spouse begin taking your Social Security payments.
In your 60s, you also have the additional benefit of using catch-up rules on your 401(k) and IRA accounts. As noted in the previous chapter, you can put an additional $6,000 into your 401(k) account and another $1,000 into an IRA if you are working. Though you can begin withdrawing money from your retirement accounts at age 59.5, you can continue to build your money in these tax-preferred accounts until the age of 70.5.
When the time comes, though, make sure you're milking those payments for every dime you deserve. There are hundreds of pages in the Social Security Act - many of which are unknown to average investors.
Sitting back and assuming that Social Security is going to give you what you've earned is no longer a viable option.
A few years back, a Time magazine investigation determined that a married couple retiring after both spouses earned average income will receive $42,000 less in Social Security payments than they contributed to the system in taxes.
In a separate study, Social Security Advisors, a high-end consultancy firm in Manhattan, found that 71% of married couples are missing out on an average of $120,000.
Their clients were owed this money from Social Security, but for any number of reasons, they were never able to collect on it.
The only way to stop this is to take matters into your own hands. And we're going to help you.
Our report, Unleashing the Power of 26(f) Programs, outlines a select class of investments that can deliver you the income and retirement of your dreams.
I'm talking $5,000... $10,000... $15,000 every single month.
Click here to see if you're eligible for these opportunities that could put thousands in your pocket each month.
Keith Fitz-Gerald has a strategy for his High-Velocity Profits subscribers that sets them up for twice the profit potential of the "average" investor.
Subscribers who have been following along with his recommendations are racking up wins at a dizzying pace.
Nine gains in one week alone... 30 triple-digit gains this year... 46 triple-digit wins in the last 12 months...
Profits like that can be life-changing. Learn all about High-Velocity Profits here - and get in position for the next winner now.
