Latest news with #AmberSchiffert
Yahoo
6 days ago
- Business
- Yahoo
The Safest Place To Park Your Funds Short-Term in Every Major 401(k) Plan
The recent stock market volatility may have spooked some investors and prompted them to seek safer assets. While risk tolerance is personal, it's important to not make any rash decisions when it comes to investing, especially when dealing with long-term investing for retirement, like within your 401(k). Check Out: For You: That said, if you are looking for a short-term, safe place to park your funds for any reason, such as if you changed jobs and need time to decide where to invest or you're nearing retirement and want to reduce volatility, essentially every major 401(k) plan offers at least one stable option to store cash. Below is the safest place to park your funds short-term in every major 401(k) plan. 'The safest place to park cash in a 401(k) is typically a money market fund or any fund that is designed to preserve capital,' said Amber Schiffert, co-founder of Tara Wealth. A money market fund generally invests in high-quality, liquid assets such as short-term Treasuries, enabling you to earn a small return without taking on much risk, as the price of the fund is always meant to stay at $1 per share, with only the yield fluctuating. Note that these funds might not be directly available within a 401(k), but instead, many retirement plans offer what are known as cash sweep accounts. These accounts move your uninvested cash into money market funds or other low-risk, interest-bearing vehicles, like an FDIC-insured bank account. Read Next: 'This said, we generally wouldn't recommend strategically parking cash in your 401(k),' Schiffert said. While it's not necessarily a bad choice in terms of losing money, inflation could eat into your cash, not to mention missing out on potential long-term gains. 'The job of a 401(k) is to support your long-term retirement goals, not act as an emergency fund or a source for short-term purchases. Your financial plan should align your accounts with their intended purpose. If you're risk-averse or have a shorter time horizon, we'd recommend adjusting your overall asset allocation rather than moving to cash without a clear strategy,' Schiffert added. Keep in mind, however, that you might already have more funds parked in cash-like accounts than you realize. 'Most plans also offer target date funds in their lineup, which generally hold a small allocation to cash or cash equivalents, usually between 1% and 5%, depending on the target retirement year. For example, if you have $1 million in a target date fund, that could mean you already have $10,000 to $50,000 sitting in cash inside your portfolio,' Schiffert said. That cash buffer can provide some flexibility to these funds and might reduce the temptation for you to try de-risk on your own. Although putting money into a relatively safe vehicle like a money market fund typically isn't advisable for a long-term retirement strategy, there are situations where it could make sense to move some money there. For example, 'if someone is a year or two from retirement, with little or no cash reserves outside their 401(k), it might make sense to move a portion of their portfolio into cash or a cash equivalent. How long your money lasts in retirement can be greatly impacted by sequence of returns risk, so having one to two years of expenses in cash before retirement can be smart,' Schiffert said. 'This serves as an emergency reserve and as a buffer against market volatility, especially if you retire during a period of heightened uncertainty like we're seeing today,' she added. Still, this cash buffer would ideally be in a high-yield savings account while your retirement assets can stay invested, 'but if that's not the case, increasing your cash allocation within a traditional pre-tax 401(k) might make sense,' Schiffert said. 'If your plan includes traditional/pre-tax and Roth contributions, it's generally better to keep the Roth portion fully invested. Roth dollars grow tax-free, distributions are generally tax-free and they aren't subject to required minimum distributions, so you want them compounding as long as possible,' Schiffert said. For others, though, especially those with a long time until retirement, parking cash in a 401(k), such as within a money market fund or cash sweep account, probably isn't advisable unless it's simply part of a transfer and you'll invest those funds as soon as possible. But if you're considering the move because you're fearing what will happen in the stock market, for example, that probably isn't the way to go. 'We usually see people tempted to move to cash when there's heightened market uncertainty. We encourage people to remember, there's always going to be market volatility. That's just the nature of the stock market. It's best not to make decisions in a vacuum and instead, zoom out and think big picture,' Schiffert said. 'At the end of the day, the market is resilient. If your portfolio is already aligned with your risk tolerance, time horizon and goals, then there's usually no real reason to make sweeping changes,' she added. More From GOBankingRates Here's the Minimum Salary Required To Be Considered Upper Class in 2025 The 5 Car Brands Named the Least Reliable of 2025 This article originally appeared on The Safest Place To Park Your Funds Short-Term in Every Major 401(k) Plan
Yahoo
10-05-2025
- Business
- Yahoo
What $1 Million in Retirement Savings Looks Like in Monthly Spending
Building up a nest egg of $1 million in retirement savings might sound like a fortune, but it's within reach of many Americans who start saving and investing early in their careers. For example, if you invest 15% of a $60,000 salary into a retirement account for 30 years, earning an average of 8% in annual returns, you'd retire a millionaire. That said, $1 million doesn't go as far as it used to. While it can be a comfortable retirement, it still requires careful budgeting to make sure your money lasts the rest of your lifetime. Find Out: Learn More: 'Retiring with $1 million in savings is totally possible today, but it takes thoughtful planning,' said Amber Schiffert, co-founder of Tara Wealth. Here's what $1 million in retirement savings could look like on a monthly basis in retirement. There are a few ways to approach drawing down your retirement savings so you have enough to live comfortably. One strategy is the 4% rule, where you withdraw 4% of your portfolio each year, adjusting for inflation. With $1 million in retirement savings, 'using the 4% rule, that gives you about $40,000 a year to safely withdraw from your investments,' Schiffert said. That translates into about $3,333 per month, although taxes might reduce that amount, depending on your retirement accounts. Regardless, that amount alone may be enough for some retirees, such as those who have paid off their mortgage and car loans. Retiring with $1 million is possible, according to Chad Gammon, CFP, owner of Custom Fit Financial. 'I've seen people retire with even less than $1 million … They typically have very low living costs that are as low as $40,000 per year or lower. They might also work until age 65 or 70 to maximize their Social Security with benefits around $20,000 to $40,000 per year. They also typically do not have debt and enjoy the simple things in life,' Gammon said. However, not everyone can live on $3,333 per month. While other sources of income like Social Security might help, if you're trying to simply calculate what $1 million in retirement savings gets you, another option to consider is spending down your nest egg, rather than treading water with the 4% rule. For example, if you wanted to pull out $5,000 per month from your retirement savings and the balance still earned 4% per year after taxes, that would last you approximately 27 years (not factoring in inflation). That could be enough for many, although some might end up outliving this time frame. Dropping the withdrawal slightly to, say, $4,500 per month would make your savings last longer. 'To make sure this works for you, you'll also want to ensure your other sources of income such as Social Security, rental income and pensions combined with your investment withdrawals can support your lifestyle. And don't forget to account for rising healthcare costs and inflation. If overlooked, these two major factors can significantly impact your financial security and retirement portfolio,' Schiffert said. Read Next: Suppose you decide to draw down your retirement savings and took out $4,500 per month. That, combined with the average Social Security monthly benefit of nearly $2,000, would leave you with around $6,500 pretax. Post-tax amounts can vary significantly depending on your situation, but let's assume for simplicity in this scenario your blended federal and state tax rate is 15%, leaving you with about $5,525 per month. Using the 50/30/20 budget rule, that means 50%, or $2,762.50, could go toward your needs. That's much more feasible if you don't have monthly rent or a mortgage. Then, 30%, or $1,657.50, could go toward your wants, such as eating out and travel. Depending on your lifestyle, that 'wants' bucket could go quickly, but if you roll some over from month to month, it could be enough to take some significant trips in retirement. Lastly, 20%, or $1,105, could go toward savings. Since you're already pulling from retirement savings in the first place, this probably isn't going to be a long-term savings bucket. Instead, you might think of it as more of an unexpected expense category, like a doctor's bill that exceeds your needs budget or an unplanned home repair. As you can see, $1 million doesn't necessarily go all that far in retirement, but it's possible to still set yourself up for success, especially if you can supplement with other income sources, like Social Security, and plan your budget carefully. 'My top tip would be to delay Social Security as long as possible. Once you are past your full retirement age and wait one year, it is like getting an 8% raise. An example would be delaying from age 67 to 68. I ask clients how often they received a 8% raise at work and it is not common, and it resonates to wait,' Gammon said. And if you're not sure where your retirement savings stand or how to plan effectively, meeting with a financial advisor can help. 'It can also be a good idea to get low-cost financial help from hourly for flat fee advisors that can help create a dynamic withdrawal strategy to adjust on a yearly basis. You would spend less in a down market, and take out more after a good market year. The only thing I would note is that you have to be able to adjust your budget and that can be difficult for people,' Gammon said. More From GOBankingRates Mark Cuban: Trump's Tariffs Will Affect This Class of People the Most How Far $750K Plus Social Security Goes in Retirement in Every US Region How To Get the Most Value From Your Costco Membership in 2025 12 SUVs With the Most Reliable Engines Sources Amber Schiffert, Tara Wealth Chad Gammon, Custom Fit Financial This article originally appeared on What $1 Million in Retirement Savings Looks Like in Monthly Spending Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
09-05-2025
- Business
- Yahoo
What $1 Million in Retirement Savings Looks Like in Monthly Spending
Building up a nest egg of $1 million in retirement savings might sound like a fortune, but it's within reach of many Americans who start saving and investing early in their careers. For example, if you invest 15% of a $60,000 salary into a retirement account for 30 years, earning an average of 8% in annual returns, you'd retire a millionaire. That said, $1 million doesn't go as far as it used to. While it can be a comfortable retirement, it still requires careful budgeting to make sure your money lasts the rest of your lifetime. Find Out: Learn More: 'Retiring with $1 million in savings is totally possible today, but it takes thoughtful planning,' said Amber Schiffert, co-founder of Tara Wealth. Here's what $1 million in retirement savings could look like on a monthly basis in retirement. There are a few ways to approach drawing down your retirement savings so you have enough to live comfortably. One strategy is the 4% rule, where you withdraw 4% of your portfolio each year, adjusting for inflation. With $1 million in retirement savings, 'using the 4% rule, that gives you about $40,000 a year to safely withdraw from your investments,' Schiffert said. That translates into about $3,333 per month, although taxes might reduce that amount, depending on your retirement accounts. Regardless, that amount alone may be enough for some retirees, such as those who have paid off their mortgage and car loans. Retiring with $1 million is possible, according to Chad Gammon, CFP, owner of Custom Fit Financial. 'I've seen people retire with even less than $1 million … They typically have very low living costs that are as low as $40,000 per year or lower. They might also work until age 65 or 70 to maximize their Social Security with benefits around $20,000 to $40,000 per year. They also typically do not have debt and enjoy the simple things in life,' Gammon said. However, not everyone can live on $3,333 per month. While other sources of income like Social Security might help, if you're trying to simply calculate what $1 million in retirement savings gets you, another option to consider is spending down your nest egg, rather than treading water with the 4% rule. For example, if you wanted to pull out $5,000 per month from your retirement savings and the balance still earned 4% per year after taxes, that would last you approximately 27 years (not factoring in inflation). That could be enough for many, although some might end up outliving this time frame. Dropping the withdrawal slightly to, say, $4,500 per month would make your savings last longer. 'To make sure this works for you, you'll also want to ensure your other sources of income such as Social Security, rental income and pensions combined with your investment withdrawals can support your lifestyle. And don't forget to account for rising healthcare costs and inflation. If overlooked, these two major factors can significantly impact your financial security and retirement portfolio,' Schiffert said. Read Next: Suppose you decide to draw down your retirement savings and took out $4,500 per month. That, combined with the average Social Security monthly benefit of nearly $2,000, would leave you with around $6,500 pretax. Post-tax amounts can vary significantly depending on your situation, but let's assume for simplicity in this scenario your blended federal and state tax rate is 15%, leaving you with about $5,525 per month. Using the 50/30/20 budget rule, that means 50%, or $2,762.50, could go toward your needs. That's much more feasible if you don't have monthly rent or a mortgage. Then, 30%, or $1,657.50, could go toward your wants, such as eating out and travel. Depending on your lifestyle, that 'wants' bucket could go quickly, but if you roll some over from month to month, it could be enough to take some significant trips in retirement. Lastly, 20%, or $1,105, could go toward savings. Since you're already pulling from retirement savings in the first place, this probably isn't going to be a long-term savings bucket. Instead, you might think of it as more of an unexpected expense category, like a doctor's bill that exceeds your needs budget or an unplanned home repair. As you can see, $1 million doesn't necessarily go all that far in retirement, but it's possible to still set yourself up for success, especially if you can supplement with other income sources, like Social Security, and plan your budget carefully. 'My top tip would be to delay Social Security as long as possible. Once you are past your full retirement age and wait one year, it is like getting an 8% raise. An example would be delaying from age 67 to 68. I ask clients how often they received a 8% raise at work and it is not common, and it resonates to wait,' Gammon said. And if you're not sure where your retirement savings stand or how to plan effectively, meeting with a financial advisor can help. 'It can also be a good idea to get low-cost financial help from hourly for flat fee advisors that can help create a dynamic withdrawal strategy to adjust on a yearly basis. You would spend less in a down market, and take out more after a good market year. The only thing I would note is that you have to be able to adjust your budget and that can be difficult for people,' Gammon said. More From GOBankingRates Mark Cuban: Trump's Tariffs Will Affect This Class of People the Most How Far $750K Plus Social Security Goes in Retirement in Every US Region How To Get the Most Value From Your Costco Membership in 2025 12 SUVs With the Most Reliable Engines Sources Amber Schiffert, Tara Wealth Chad Gammon, Custom Fit Financial This article originally appeared on What $1 Million in Retirement Savings Looks Like in Monthly Spending
Yahoo
05-05-2025
- Business
- Yahoo
What If You Had a Plan To Retire Comfortably by Age 60?
For many Americans, retirement can be daunting. Not only do you face a major lifestyle change, but the financial aspect can be hard to manage. In fact, 55% of Americans worry they will not have financial security in retirement, according to a National Institute of Retirement Security survey. But what if you could put together a plan so that you not only can retire comfortably, but you can even do so a few years at age 60, before most people retire? Read Next: Try This: Studies vary, but one from the Center for Retirement Research at Boston College finds men retire on average at age 64.6, while women do so at age 62.6. Social Security also can not be claimed until 62 at the earliest and full retirement benefits don't start until age 67 for those born in 1960 or later. Consider the below main areas if you want to set yourself up for a slightly early retirement that can enable you to live comfortably. According to a Chinese proverb, the best time to plant a tree was 20 years ago and the second best time is now. The same idea applies if you're planning to retire at age 60, in the sense that starting from a young age is ideally best, but since you can't go back in time, the next best thing is to start planning right away. 'When it comes to planning for the future and retirement the short answer is the sooner, the better. The earlier you begin saving and investing, the more time your money has to grow and the less you need to save to hit your goals. When you have time and compound interest on your side it can be very powerful,' said Amber Schiffert, co-founder of Tara Wealth. Check Out: That said, sometimes saving more later in life is more realistic, particularly as you advance in your career and earn more. Many people's greatest financial achievements don't occur in their 20s and 30s. 'So there is hope if you are in your 40s or even early 50s. Just realize the later you wait you are going to need a higher savings rate and/or look at decreasing your spending,' said Chad Gammon, certified financial planner (CFP) and owner at Custom Fit Financial. Another key aspect to retiring comfortably at age 60 is figuring out how much you realistically need to cover your monthly spending so that you can save and invest accordingly. It's one thing to start early, but if you're not moving toward a particular goal, then you might not end up where you want to be. 'For example, if you want to retire in San Diego — where I'm located and many of our clients are — and you want to live a comfortable lifestyle you might need $120,000 a year, after taxes or $10,000 per month,' Schiffert said. From there, you can do some calculations, starting with estimating your Social Security income. If you assume you'll receive $4,000 per month from Social Security, that means you would need a retirement savings balance of $1.8 million to be able to stick to the relatively safe 4% withdrawal rule and take out $6,000 per month, Schiffert explained. Granted, this does not account for taxes, so you'll likely need more, but will have to calculate that based on factors such as where you live and if you have a Roth or traditional retirement account. Then, you can calculate what it would take to save $1.8 million (or whatever number applies to your situation) by using a compound interest or similar retirement calculator to determine how much you need to invest per month based on your age and expected average annual return. For example, if you're 30, you would roughly need to save almost $1,900 per month to reach $1.8 million by age 60 if earning a 6% annual return, but if you're 20, you could save less than $1,000 per month and still hit that mark, as Schiffert pointed out. This shows the power of starting early. If you're closer to age 60, you might not have the benefit of much time for compounding, so instead you might try to save tens of thousands of dollars per year if you have that luxury. That could mean saving and investing across both retirement and non-retirement accounts, while cutting back in other areas of spending, so you can reach your goal. 'To retire at 60, many of the clients I see have maximized contributions to their retirement accounts and start saving in their brokerage accounts. They also typically know their spending very well and can control costs outside of their fixed costs,' Gammon said. Lastly, retiring at age 60 means you're retiring before you can claim Social Security and Medicare benefits. So, you'll likely want to figure out ahead of time how you'll navigate the gap. 'The retirees at age 60 are typically not looking to take Social Security at the earliest age of 62. They are waiting at least until their full retirement age and many are delaying to the maximum age of 70' so they can ultimately claim higher benefit amounts, Gammon said. 'The main area they need help around is with health care coverage until they get to age 65.' That comes back to knowing your numbers. While it's hard to say for sure how much you'll spend on healthcare, you could consider averages, such as Bureau of Labor Statistics data showing the average person ages 55 to 64 spends around $6,700 per year on healthcare. So, factoring that into your spending can help you save enough to retire comfortably at age 60. More From GOBankingRates 5 Types of Vehicles Retirees Should Stay Away From Buying How Far $750K Plus Social Security Goes in Retirement in Every US Region 4 Things You Should Do if You Want To Retire Early 12 SUVs With the Most Reliable Engines Sources National Institute of Retirement Security, 'Retirement Insecurity 2024: Americans' Views of Retirement' Center for Retirement Research at Boston College, 'Will the Average Retirement Age Keep Rising?' Amber Schiffert, Tara Wealth. Chad Gammon, Custom Fit Financial. Bureau of Labor Statistics data, 'Consumer Expenditure Surveys.' This article originally appeared on What If You Had a Plan To Retire Comfortably by Age 60?
