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Yahoo
26-07-2025
- Business
- Yahoo
How To Make Sure You Are in the Financial Top 10% When You Retire
Retiring comfortably is one thing. Retiring in the top 10% of the financial spectrum is another goal, and it's more attainable than many people think. With the right mix of planning, strategy and consistency, you can build long-term wealth that places you well ahead of the curve. Whether you're decades away from retirement or playing catch-up, it's never too late to shift your financial trajectory. Learn More: For You: Here's how to make sure you are in the financial top 10% when you retire. Know the Net Worth Benchmarks for the Top 10% For anyone aiming to retire in the top 10% financially, it's essential to understand what that actually entails. Knowing how much wealth top earners typically have can provide a clear target to work toward. Some estimates suggest that retirees need between $970,900 least $1.9 million to join the top 10% financially by retirement. However, other experts said that the number should be even higher. 'You must have a net worth of about $2.63 million, including real estate, investments and retirement accounts, said Seann Malloy, founder and managing partner at Malloy Law Offices, LLC. Read Next: Start Early or Start Smart Building long-term wealth is easier when you start young, thanks to the power of compound interest. But even late starters can make up ground with focused, strategic financial moves. 'Getting a head start is a big advantage,' said Sean McSweeney, chief advisory officer at Voyant Health. 'If someone starts saving and investing regularly in their 20s or early 30s, they might end up near to or in the top tier by retirement merely by maxing out their retirement accounts with a small growth rate.' Many people don't begin saving seriously until their 40s or 50s. While it's not too late, they'll need a different strategy to catch up. 'That could entail saving a lot more money, cutting back on spending that isn't essential, using catch-up contributions, or even moving to a smaller home or cutting back on other fixed costs to put more money into investments,' McSweeney said. 'It's not about being perfect; it's about being bold and purposeful with the time you have left.' Max Out Tax-Advantaged Accounts One of the most effective ways to build retirement wealth is by taking full advantage of tax-advantaged accounts. These tools can help high earners grow their savings faster while reducing their taxable income. 'Retirees in the top 10% consistently max out retirement accounts, like $23,500 annually in 401(k) [plan]s ($30,500 with catch-up contributions for those over 50 in 2025),' Malloy said. Diversify Your Investments Beyond a 401(k) Plan Relying solely on a 401(k) may not be enough to reach top-tier wealth in retirement. To build real, long-term wealth, many top earners go beyond retirement accounts and diversify their savings into index funds, real estate and business ownership. 'For example, one client in her 40s put $100,000 into a rental property and now earns $15,000 a year in passive income,' Malloy said. 'They use trusts to reduce their taxes, which I have done for clients to the tune of $10,000 a year.' Avoid Common Pitfalls Even high earners can fall short of the top 10% wealth if they make a few key missteps. From delaying serious saving to overspending or going it alone without a plan, these habits can quietly sabotage long-term financial success. 'Without a doubt, the biggest error I see is people putting off getting serious for too long,' McSweeney said. 'They either retain too much cash on hand, put off investing until 'the right time,' or spend more every time they get a raise.' He added, 'Another common problem is trying to do it all by yourself without a proper plan or help from a professional. People that get to the top 10% are frequently those who got focused early on and weren't hesitant to seek help when they needed it.' Regularly Reassess Your Financial Plan Achieving top-tier wealth isn't just about setting a plan; it's about regularly revisiting it. The most successful retirees stay focused on the long game and make consistent adjustments as their life and financial goals evolve. 'One thing that all of them have in common is that they keep their eyes on the long game and look over their plans often instead of letting them sit for ten years,' McSweeney said. More From GOBankingRates 6 Popular SUVs That Aren't Worth the Cost -- and 6 Affordable Alternatives This article originally appeared on How To Make Sure You Are in the Financial Top 10% When You Retire 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
01-07-2025
- Business
- Yahoo
This Little-Known Estate Planning Strategy Can Help Family Members Care For You
If you can't fully care for yourself anymore, you might rely on loved ones to help out. You're certainly not alone in this situation. Nearly two-thirds — 63% — of informal caregivers are family members, but only 9% are paid, according to the One America 2024 Caregiver Study. No doubt, you're grateful for your loved ones' help and want to compensate them for their time. Keep reading to find out how to use an estate planning strategy to pay them back in a manner that works for everyone. Trending Now: For You: 'A caregiving agreement between parent(s) and an adult child or grandchild is something we elder law attorneys do regularly,' said Evan Farr, certified elder law attorney (CELA), certified analytics professional (CAP) and principal attorney at Farr Law Firm, P.C. 'It requires entering into a written contract clearly spelling out the terms of the care.' In most states, he said a geriatric care manager should be involved with the creation of this agreement, to help ensure that Medicaid doesn't consider these Payments gifts in the future. This can also help avoid family fights caused by siblings believing the caregiver is overpaid. Check Out: 'This type of agreement is often used as a way to engage in 'smart spend down' of assets for the elder, who is eventually hoping to qualify financially for Medicaid,' he said. 'In this scenario, the parent of course pays the child on a regular basis for the child's care.' In this situation, the parent is technically supposed to register as an employer and treat the child as an employee — including issuing a W-2 and paying payroll taxes, he said. This might sound intimidating, be he noted there are several online companies that can handle this for you. 'Of course not everyone cares about being tax-compliant and many people deal with the money themselves and don't worry about taxes,' he added. If the parent doesn't currently have the money to pay the child and the child is okay with that, they can enter into an agreement for future payment, Farr said. This would typically occur upon the sale of the parent's home. In this case, the parent and child would agree to a type of loan called a delayed payment agreement, he said. This can either carry interest or not, depending on the terms of the loan. 'This delayed payment agreement is similar to a revolving line of credit promissory note, where the caregiver keeps track of their hours and eventually gets paid the total amount of their hours — plus any interest — when the house is sold,' he said. In a revocable living trust with caregiver compensation provisions, the parent changes their living trust to direct caregivers to be paid out of income from their investment accounts or other trust assets, said Seann Malloy, founder and managing partner at Malloy Law Offices, LLC. This prevents the parent from having to make payments from their checking account. 'This approach is well-suited to elderly individuals who are informally cared for by family members — where the family caregivers experience reduced work or out-of-pocket costs of care,' Malloy said, who practices civil litigation, with a focus on estate planning. 'It is a way of guaranteeing that compensation is fair and at the same time maintaining family unity and transparency.' He said one of the main advantages to this approach is that it doesn't involve cashing in investment accounts or selling property. However, he noted that it does have potential drawbacks, including the need for the agreement to be properly worded to avoid IRS scrutiny. More From GOBankingRates 3 Luxury SUVs That Will Have Massive Price Drops in Summer 2025 Warren Buffett: 10 Things Poor People Waste Money On 9 Downsizing Tips for the Middle Class To Save on Monthly Expenses This article originally appeared on This Little-Known Estate Planning Strategy Can Help Family Members Care For You
Yahoo
07-06-2025
- Business
- Yahoo
I'm an Estate Planner: 6 Things Every Retiree Should Have Prepared in 2025
Retirement is a major milestone, but it doesn't mean the planning stops. In fact, estate planners said 2025 is the perfect time to make sure your legal and financial documents are up-to-date. Read More: Find Out: From wills and power of attorney forms to digital account access and final wishes, these are the six things every retiree should have prepared in 2025. To avoid family disputes and ensure their wishes are honored, retirees should have five essential estate planning documents in place: a last will, a durable power of attorney, an advance healthcare directive, a HIPAA release form, and, if significant assets or property are involved, a revocable living trust. 'These legal documents are designed to minimize family conflict, avoid probate, and give you the power to make medical and financial decisions, should you become incapacitated,' said Seann Malloy, founder and managing partner at Malloy Law Offices. 'The U.S. Constitution protects due process as well as property rights, but your wishes may not be carried out without these documents.' Discover Next: Every retiree should have legal documents in place that authorize someone they trust to make medical and financial decisions if they're ever unable to do so themselves. Having powers of attorney prepared in advance ensures their wishes are respected during an emergency. 'Even if retirees aren't dealing with any medical issues or concerns presently, there is always a chance that something could happen suddenly that leaves them unable to make decisions for themselves,' said Ben Michael, attorney at Michael & Associates. 'Having these documents prepared ensure that in the case that something does happen, the people they want to make decisions for them will have that legal right.' A comprehensive estate plan should include a strategy for long-term care. This may involve purchasing long-term care insurance or establishing an asset protection trust, such as a Living Trust Plus or a Medicaid asset protection trust. 'The best estate plan becomes useless when someone is forced to go broke to pay for nursing home care or other long-term care and winds up with no estate to pass on,' said Evan Farr, principal attorney at Farr Law Firm PC. Farr said retirees can strengthen their estate plan this month by making sure it includes a long-term care strategy. This may involve purchasing long-term care insurance or establishing an asset protection trust, such as a Living Trust Plus. Every retiree should review and update the beneficiaries listed on their retirement accounts, life insurance policies, and bank accounts. These designations take legal precedence over a will, so failing to revise them after major life changes, such as a divorce, death, or new grandchild, can lead to assets being distributed in ways that don't reflect the retiree's true wishes. 'Finally, overlooking contingent (secondary) beneficiaries can leave accounts exposed to probate if the primary beneficiary has already died,' said Steve Lockshin, founder and financial advisor at Vanilla, the modern estate planning platform. As more aspects of our lives move online, experts said using a digital estate planning platform can simplify everything from document storage to updates and access. 'These tools not only help organize all your important documents and assets in one secure place, but they can also send reminders when something needs updating, like a beneficiary or legal form,' said Howard Enders, COO of The Estate Registry, a fintech platform for digital estate and asset management. Enders added, 'Most importantly, they make it easier for your loved ones to access what they need, when they need it, without digging through file cabinets or chasing paperwork.' In 2025, every retiree should have a centralized way to store and protect their digital passwords. A password manager, paired with a secure plan for sharing the master key, can prevent major headaches for the executor and heirs. 'A password manager keeps everything in one secure place, which can make a world of difference later on,' said Jennifer Zegel, an estate planning attorney and chief product officer at Eternal Me. Zegel explained, 'If you want to go one step further, store the master password to your password manager in a secure platform that uses distributed cold storage. This is the most secure way to store this information and ensures your executor and only your executor can access it when it's needed most.' More From GOBankingRates 5 Types of Cars Retirees Should Stay Away From Buying This article originally appeared on I'm an Estate Planner: 6 Things Every Retiree Should Have Prepared in 2025
Yahoo
30-04-2025
- Business
- Yahoo
Millions of Americans Got a Social Security Bump in April: 3 Worst Ways To Use the Extra Funds
Millions of Americans got a Social Security bump thanks to the Social Security Fairness Act, which then-President Joe Biden signed into law in January. Beneficiaries affected by the Windfall Elimination Provision and the Government Pension Offset, which reduced benefits to certain public employees, saw higher monthly benefit amounts and a one-time payment retroactive to January 2024, Fox Business reported. Be Aware: Check Out: While a bigger check offers a welcome financial boost, how you use those extra funds matters. Without a smart plan, it's easy to make mistakes that could hurt your long-term financial security. Here are some of the worst ways to use your extra Social Security funds, according to experts. Also see four promises Elon Musk has made about Social Security. 'A particularly dangerous one is using the extra money for unsecured high-interest debt consolidation when you aren't sure how you will pay it off,' Seann Malloy, founder and managing partner at Malloy Law Offices, wrote in an email. 'While this may appear to be a clever short-term fix, it can be a breach of fiduciary duty under SSA guidelines if the recipient is a representative payee, and can create future hardship if unanticipated medical or housing costs surface.' A representative payee — someone appointed to manage Social Security benefits for a person who can't do so themselves — must use the funds to meet the beneficiary's basic needs first. Using benefits for debt consolidation without covering essentials can violate rules and fiduciary duties, according to the Social Security Administration. Read Next: Malloy also recommended avoiding speculative investments, such as cryptocurrency or high-risk stocks. While the promise of a quick payoff may be tempting, retirees risk losing the extra funds they've received and potentially jeopardizing their financial an even greater risk when a third party is involved. If a representative payee mismanages Social Security benefits, it can lead to legal consequences. 'While the Social Security Administration doesn't make rules concerning how retirees can spend their benefits, legally speaking, the agency will not give another party access to the cake that makes up the basic needs benefits pie; if elder financial abuse is committed, such foolish financial decisions can lead to criminal charges, especially when a third party is involved,' Malloy explained. When you receive your Social Security benefit, no federal taxes are withheld unless you specifically request it, according to the IRS. 'You don't want to [ignore] tax implications,' explained Melissa Murphy Pavone, CFP, founder of Mindful Financial Partners. 'If you're also pulling from retirement accounts, that extra Social Security income could push you into a higher tax bracket — or cause more of your benefits to be taxed. A thoughtful tax strategy matters.' The best way to treat your Social Security is as a guaranteed source of income, Malloy said. 'Legally, this money should be used for 'reasonable and necessary' expenses — housing, health care, food,' he explained. 'Otherwise, talk to a fiduciary financial adviser well-grounded in elder law and the legal boundaries of benefit use.' More From GOBankingRates 5 Types of Vehicles Retirees Should Stay Away From Buying 4 Affordable Car Brands You Won't Regret Buying in 2025 4 Things You Should Do if You Want To Retire Early 7 Tax Loopholes the Rich Use To Pay Less and Build More Wealth Sources Fox Business, 'Social Security checks will be bigger in April for some retirees.' Seann Malloy, Malloy Law Offices Melissa Murphy Pavone, Mindful Financial Partners This article originally appeared on Millions of Americans Got a Social Security Bump in April: 3 Worst Ways To Use the Extra Funds Sign in to access your portfolio
Yahoo
20-04-2025
- Business
- Yahoo
5 Things You Must Do When Your Paycheck Reaches $5K
The average entry-level salary in the U.S. is $39,912 per year, or $19.19 per hour, as of April 2025. For full-time workers, that breaks down to $3,326 per month, or $1,663 per bimonthly paycheck. When you're making this amount, the prospect of making more than double it — $10,000 a month, or $5,000 every other week — could feel like a dream. Find Out: Read Next: Getting to the $5,000 per paycheck mark is a milestone; in many U.S. cities, it means you've graduated to the middle class. It's cause for celebration, but also for financial action. Do the following when your paycheck reaches $5,000, or just increases, period. A higher salary could mean falling into a different tax bracket, meaning your tax liability could go up. 'For example, the 2025 federal income tax brackets increase substantially when single filers pass $48,475 a year, and $96,950 if you're married and filing jointly,' said Erika Kullberg, an attorney, personal finance expert and the founder of 'If you are approaching a higher tax bracket, you can use pretax 401(k) contributions or other methods to stay in a lower bracket.' Learn More: If, like most Americans, you're carrying credit card debt, you need to make paying it off top priority. A boost in income should be seen as a clear opportunity to up the ante in tackling high-interest debt. 'As an employment litigation attorney and a witness to the damage debt and poor financial planning can do to even those with high incomes, my recommendation is: Pay off your credit card debt — in full,' said Seann Malloy, managing partner and founding attorney at Malloy Law Offices, LLC. 'Keeping that balance, especially at a time when interest rates hover around or even over 20%, can devastate your finances quickly.' An increase in pay doesn't make you less vulnerable to unexpected costs. Take this opportunity to build up or replenish your emergency fund. 'You should have enough money saved up to cover at least three months' worth of your current expenses,' said Chris Fohlin, founder and coach at Fohlin Financial Coaching. 'Not having emergency funds puts you at risk of turning to credit cards or pulling from investments or retirement savings in a pinch, which leads to debt, penalties or lost growth opportunities. Calculate your necessary monthly living expenses and build up your emergency savings as quickly as possible so that you're protected from the unexpected.' You may want to enjoy the income boost now, but if you want to be responsible and look out for your future, you should up your retirement contributions. 'When your paycheck increases, I recommend putting higher retirement contributions and savings on autopilot immediately,' Kullberg said. Consider just how big a difference even a modest increase in retirement plan contributions can make. 'If you're investing $500 a month in a Roth IRA with an annual return of 7% from age 30 to 60, you could have over $600,000 tax-free in retirement,' Malloy said. Have you been putting off buying life insurance or disability insurance, or is it time to change your coverage. Now is the time to check your insurance needs. 'If your income is increasing, check your life and disability insurance policies to make sure coverage is still adequate, especially if you have dependents,' Kullberg said. More From GOBankingRates 5 Luxury Cars That Will Have Massive Price Drops in Spring 2025 4 Things You Should Do if You Want To Retire Early 4 Affordable Car Brands You Won't Regret Buying in 2025 5 Types of Vehicles Retirees Should Stay Away From Buying This article originally appeared on 5 Things You Must Do When Your Paycheck Reaches $5K
