Ask MetaFilter questions tagged with finance and retirement

Expat with scattered savings and retirement funds - how do I organise them?

wingless_angel — Thu, 16 Jul 2009 07:36:19 -0800

Expat needing to organise and manage money across two (or more) countries. How best to save in multiple places, and organise superannuation/retirement accounts? I recently moved to the UK, and I am self-employed here. For the first time, I have to take care of insurance, tax, and expenses instead of my employer organising this. I am putting aside money for tax every month. I have savings accounts both in the UK and Australia with various amounts in them. I am not sure how long I will stay in the UK (probably no more than a few years) and will either go home or to another country. I really need to get my money together and work out what to do with it.

I have two Superannuation accounts that refuse to roll together in Australia (both public sector). I have not signed up for a retirement fund in the UK. The most pressing issue right now is whether I let my most recent super account switch from Defined Benefit to Accumulation. I don't necessarily plan to go back to the same sector, so would accumulation be wise?

Should I open a retirement account here in the UK, even if I only plan to stay for a few years (I am paying NI contributions)? Or should I do something else with the money I would have otherwise saved? For example I have an Etrade account for share purchasing that I opened and never used.

Are there any savings accounts that work well for expats in multicurrency? I know about HSBC Premier but I do not have enough money to go with them.

I am concerned that I have pools of money all over the place, and I am not getting the best out of them. I would like to work these things out for myself if I can, if you are an expat how do you manage your money and savings?

What are the baby boomers going to do when they can't afford to retire?

Clambone — Tue, 28 Apr 2009 10:42:36 -0800

What are the baby boomers going to do when they can't afford to retire? I've been doing some research about personal finance recently. I'm very fortunate: I'm relatively young (34), make a salary in the top quintile, and have no children yet. As such, I can afford to save a pretty good amount of money each month. Even so, making relatively conservative assumptions, it seems as though I can save enough to get by comfortably, but not lavishly.

Of course, most people aren't in my position. Most people have lower salaries and higher expenses. In fact, most people approaching retirement do not have a nest egg remotely large enough to comfortably handle retirement. I learned in business school that the baby boom generation had a negative savings rate, and it's going to look even more negative after the real estate bust.

So what are they going to do? I'm starting to get really concerned about the upcoming wave of baby boomer retirees.

Lesser of two tax burdens?

al_fresco — Sat, 13 Dec 2008 15:40:17 -0800

My partner and I need to pay off some debt, and unfortunately we need to dip into our retirement funds. Our tax accountant is on vacation and we can't find the answer to our question. We have two sources–either sell some stock or cash out a couple of short-term IRA CDs. Which is the lesser of two evils? The service charge on either transaction would be about the same (~$50). We understand that the painful part would come in the form of the taxes on the amount we receive. Is there a difference in how the two types of transactions would be taxed? If we took a theoretical amount of $10k from either transaction, which would be taxed at a higher rate? What is the tax rate on either of these. I'm in California, and we'd need to do this before the end of 2008. If it matters, the money would go directly to pay off credit cards, car, student loans.

And it always makes sense to pay off debt before saving for retirement, right? (Higher interest rate on debt than retirement fund, blah blah). Oh, and we're living paycheck to paycheck.

Thanks in advance!

30-year investment portfolio which has to start before the end of the year and wants to be left alone afterwards?

Anonymous — Fri, 05 Dec 2008 08:59:37 -0800

If you had a very strong incentive to invest money before the end of the year with a 30-year outlook, and a further strong incentive to not adjust your investment strategy over that timeframe unless absolutely necessary, what kind of portfolio would you assemble? I live in Germany, which has an effective 0% capital gains tax on long-term capital gains from financial instruments. The government has finally decided to end this peculiar state of affairs and will start to tax long-term capital gains at 25% or more starting in 2009. Investments made before 1/1/2009 and held for more than a year will continue to be (un)taxed under the old system. But, naturally, if you redistribute the portfolio at any point, what was redistributed will come under the new law, so there is a strong incentive to leave it alone if at all possible. I don't see this as a suicide pact, and would make changes that were necessary without sweating the tax too much, but I am trying to design a portfolio to put a little money in now that has decent odds of not requiring rejiggering and having acceptable performance over the long timeframe which is available.

Personality and background: I consider good money management to be an obligation but not a pleasure of life or inherently interesting, so I believe in keeping things as simple as possible, within reason. Past experience has taught me that if the workings of a financial vehicle aren't clear to me after one good and comprehensive explanation, I'd do best to avoid it. I have invested for the (shorter) long-term before and I've had good outcomes, and I've been lucky enough to have received my lessons about active short-term trading and speculation at reasonably low prices. My general financial health is healthy and the investment seed is extra money. I'm able to purchase many (but not all) US and other international securities/ETFs/funds/bonds without too much of a markup, so let's just assume for simplicity's sake that I can purchase any of them. This will be retirement money, but not the only source of retirement money.

I've read the Scott Adams article, lots of Warren Buffett, and several good books on index fund investing, and now this is my AskMe gut-check/brainstorm request before proceeding: what would your 30-year fire-and-forget portfolio look like? I would love to hear your ideas and advice if you wouldn't mind sharing. Thank you!

Picking the right solo 401k provider

gsh — Mon, 17 Nov 2008 16:55:44 -0800

How should I evaluate prospective solo 401k providers? I have recently become an independent contractor and I'm in it for the long haul. I've done the reading about IRAs vs. solo 401k and the latter is for me: it will allow me to contribute much more money for my retirement.

Now, to pick a provider! On what criteria should I compare them?

Why can't I close out and withdraw from my 401k? Any way out?

Anonymous — Mon, 09 Jun 2008 19:02:16 -0800

I want to close out my 401k (and pay the necessary taxes) so I can pay off some debt. My 401k says I'm not allowed. Why not? Can I change anyone's mind? I have relatively minor credit card debt n. I have meager 401k savings n. (I am only 23). I would like to pay off my credit card, and be putting the money I'm currently putting toward monthly credit card payments toward more immediately accessible savings. Additionally, my company has as of last month decided to start matching 401k contributions, so I'd rather be putting matched money in than letting the $n sit there doing not much in the stock market while I continue to accrue credit card interest. However, I can't put money in until I'm not worried about paying off credit cards.

So I called my 401k people (Fidelity) to ask to take the withdrawal. They said I can't. I said, are you seriously telling me I can't have my money? And they said that since I'm still at my current company, I can't do anything with it until I'm fired or leave voluntarily. I've got a while before I'm planning on either of those. What the hell? It's my money, isn't it? We wants it :(

The other option is to take out a loan, but I'm only eligible to take out loan n/2, and paying back loan + interest plus paying off the other half of credit card debt won't really solve my problem. My goal is to wipe out the debt, be able to start contributing small (matched) amounts to retirement, and separately do a better job of keeping an accessible savings account with monthly contributions.

So, question 1: Why can't I take out my money? What's the reason behind this? And is it likely that by arguing in a different way I could get it? I'm fully aware of and willing to pay the necessary taxes if they'll just let me get at the money.

Question 2: Any other options for what I'm trying to do?

(Anonymous because I don't want this connected to the real name I use on here)

A sensible saving plan for an uncertain international future?

Cantdosleepy — Thu, 15 May 2008 07:10:35 -0800

PersonalFinanceFilter: 25 year old looking to start making payments into something pensionesque, but with an international bent. Any suggestions? I think it's time to start a pension (overdue, probably). I am British but have a Significant Other who has ties to three other countries, and feeling not a massive attachment to the UK, there's a reasonable chance that I won't be seeing out my days here.

I earn about 25k a year before taxes. I'm living in London so there's not a massive amount left at the end of the month, but I'd like to start putting a little something by.

So what do people advise? Would a regular British pension with a reputable company (Scottish Widows &c) be a good bet if I plan on disappearing from these shores in the next five, ten, fifteen, thirty years? Or might a regular/fancy savings account that isn't technically a pension but might operate like one (and still be around in ~50 years) be better for my situation?

FinanceMasters, I humbly beg for advice.

Money stories from international types are also greatly welcome.

Thanks!

When do we abandon the stock market (for investing)?

raddevon — Fri, 25 Apr 2008 05:28:02 -0800

So, we're in a recession. At what point should we pull our investments out of the stock market? I know we're hearing from the media, analysts, and the powers that be that there is no problem and we will pull out of this. I've also heard the stories about how the same things were being said at the beginning of the great depression. I've got a Roth IRA that is entirely in the stock market. At what point do I move all that money to a safer investment and wait out the turmoil?

I've heard all the claims that this is the best time to invest because everything is cheaper, but I know that is only worthwhile if there is a rebound at some point. I'm not so sure anymore there will be a rebound.

Roth IRA contributions?

ruwan — Wed, 19 Mar 2008 07:27:02 -0800

Can I contribute to my Roth-IRA from my savings account if I don't earn an income? I am currently a grad student, living solely off student loans. I don't use all the money I get in loans, so I have it stored in a high-interest savings account until I need it. Can I use the extra money in my savings account to contribute to my Roth IRA (less than 2000/yr)?

Since I don't earn an income, am I eligible to contribute to the IRA? (I can't find anything online that states that I am not eligible. References would be great.)

Withdraw Or Not?

cmh0150 — Mon, 03 Dec 2007 19:08:47 -0800

Should I use a hardship withdrawal for my 401K to pay down/off my credit card revolving credit debt? The total debt is over $200K. I am 57. I do not anticipate retirement for another 10 years or so. I have approx $100k in the 401K that I can access. I know that there are IRS penalties for such a withdrawal but my thought was it is better to pay off the debt now and build the 401k back up. So, should I withdraw or not?

Penny foolish and Pound foolish

ian1977 — Tue, 06 Nov 2007 07:24:50 -0800

How to tell inlaws to buck up and be frugal? Recently at dinner my father inlaw told my wife and I that they would like to sit down with us at some point and discuss what might happen in the future re: their retirement, if one of them dies what happens to the other one, etc. He assured us that nothing is out of the ordinary and they just want to be prudent, etc, etc. I thought, well good! I like when people are pragmatic about stuff like that. But then the kicker....he said something about how it would be nice to know that whoever is the widower has support. Then he went on to say that how when he was sick (approx. 8 years ago, he was out of work for 1 year) he wiped out his half of the retirement equation so they really just have hers. So I am guessing that this conversation will be about money, and namely, how much they can count on us for. FYI - they are 55ish, don't make too much but live in a very small town and living expenses are pretty low.

This annoys me for several reasons.
1. He was sick 8 years ago. More or less a full recovery. A guy could save a lot of money in 8 years if they had the gumption. Even $50/month would be ~$5000.
2. They go on like 3-4 mini-vacations every year. Stupid little weekend trips here and there. Nothing extravagant, but still kinda stupid when you supposedly have no money.
3. We've just finally come into a time of relative stability and financial security. We scratched and clawed our way there. I finally finished school and we both have good jobs but we are in no way rich. I am insulted that they all of the sudden want to have this discussion. I feel like they are seeing dollar signs on us.
4. My wife tells me that when she was growing up her parents would be borrowing money from her grandfather for downpayments on houses and stuff like that. That is fine and I think its great that they were able to have that sort of help. Now they are more than likely going to be seeing what they can get out of us. That angers me in a way I can't really understand. Like they are a double drain in the generational chain. They have never helped us and we never asked, except for once. Our child was just born and my wife was on leave and money was tight. A few hundred dollars would have been a lifesaver. They couldn't help. There was just no way. But sure enough, in practically the same breath m-inlaw talked about some upcoming trip to some weekend lame-fest.

I get that it is noble to help your elders. I would certainly hope that our child would help us out of a jam if we really needed it in our golden age. But is it too much to ask that they help themselves first?

So how do we tell them that of course we will help them if need be, but that I need them to do what they can now? IRS allows catch up contributions of up to like $12k or so. THey have 10 years or so to get this sorted out. How do I tell them, stop taking stupid vacations and start saving money fools! - without getting 2 very angry and indignant inlaws.

They are going to have 2 main excuses as to why they can't control this situation at all. One is that FIL was sick as mentioned above. The other is that they don't make much money. So, there is kind of a pity party factor there. And somehow the republicans figure into this, republicans are keeping them down.

I kinda want to be a jerk and say....hey, you had your help, you got downpayments and stuff when you were starting out. Now you want help on the tail end too? Nope. Sorry. We want to be sure that we save money and make reasonable decisions so that we can help our child out the same way that your father helped you.

I guess I don't have a specific practical question other than -
How do I present my viewpoint without it turning into a huge blowout? Am I being a jerkhole for thinking like this? Anyone go through something similar? How did you handle it? How do you ask inlaws about their personal finances and what they are doing about it?

If the dollar collapses, what the hell happens to my retirement account?

Anonymous — Mon, 01 Oct 2007 14:54:38 -0800

Looking for good articles, links, etc. that discuss (rationally, not all panicky-like) strategies for managing one's 401(k) in light of recent shifts in the market and (perhaps more importantly) the declining dollar. So far, everything I've found seems geared toward investors managing their stock portfolios rather than workers managing their retirement accounts. Part II: if anyone would care to comment (I know that You Are Not A [or My] Financial Planner), here's my particular situation (hence why the question is anonymous; it's that weird American neurosis about discussing income rearing its ugly head).

Me: late 30s, unmarried/no kids (but long-term SO and I are discussing both of those factors changing over the next couple of years). I expect to retire in 25-28 years. My employer also offers a pension on top of our retirement plan, in which I am fully vested (but don’t know how much I want to even bank on it, considering the horror stories that sometimes crop up regarding disappearing pension funds). I don't plan on relying on Social Security for anything; I figure if it still exists when I retire, that will be gravy.

Income: $53,000/year, with 4-5% raises annually. I put aside 10% of pretax income into my retirement account, with a company match of 4% of my income. I plan to increase my investment by 1 or 2% annually till I reach my contribution limit. (Other relevant financial facts: I rent my home, own my car outright, and have about $7000 in savings; my only debt is about $3000 in CC debt--at 0% till next summer--which I am on track to pay off once and for all in less than a year.)

Currently have just under $27,000 in account (I didn't really start getting serious about contributing to plan and managing it till a few years ago). My asset allocation is:
- 25% international equity
- 30% U.S. small/mid equity
- 30% U.S. large equity
- 15% "guaranteed income"

None of those funds has significant holdings in real estate, so they haven’t (so far) lost much value in the recent market gyrations at all (in fact, while some of my individual funds are down, my overall return is--for now, at least--still quite good). Beyond that, I understand that the market has its cycles anyway, and has historically always gained in value over the long run. (And since I’m not retiring for at least 25 years, the long run is what I am concerned about.)

BUT! I am very concerned about long-term dollar devaluation. Does it make any sense to shift more money into international funds (which are doing extremely well for me), even though those are normally considered the most risky? That is, if the dollar keeps declining for years to come (which I think it might), doesn't that actually mean that international funds become less risky?

Also, is there anything (besides hysteria) to the rising hubbub in the blogosphere of "Buy gold! Buy gold!"? And what to make of the analysis that I read somewhere (wish I could find it now) that the long-term historical gains in the stock market may begin to reverse once the baby-boomers begin retiring (i.e., once they start removing their funds out of the market in quantities greater than the current workforce will be putting their funds into the market)?

Sorry if some of these questions seem rudimentary. As I said, I only started paying attention to these things in the past few years. Thanks!

Should we save for down payment or pay off our student loans?

esolo — Mon, 11 Jun 2007 12:20:28 -0800

Should we save for down payment or pay off our student loans? and what about retirement? My partner and I want to buy a house soon. He is a young professional and I am a grad student. We are both recent university grads and are working towards paying off our school loans. The interest rate on these is about 8% (it’s a private bank loan). I am confused as to how to divide up the little money we have between paying off the education loans, saving for retirement and saving for the downpayment. What is most logical money-wise? Not to save for either retirement or downpayment until we pay off the loans in full, because we are not likely to make more than 8% in anything else? But then it may take a while to pay them off (approx. $25,000 to go).

I heard that many people save for downpayment in ING savings account (if the purchase is less than 5 years away). ING savings account pays 3.5-4% in Canada, so it doesn’t seem to make much sense to do that, when we are paying 8% on our education loans. Is the better approach just keep paying off as much of education loans as possible, and then just take out the mortgage with zero downpayment? (The rates on the mortgage are low now, so we could get 5.5% rate right now).

One option would be to keep paying off the education loans, until we find the house we like, and then just take out a large mortgage and cover the education loans in one shot. This way, we will only have one large relatively low-interest debt. Has anyone done this? Any advice and suggestions would be appreciated.

401(k) employer matching

blue_wardrobe — Thu, 18 Jan 2007 06:06:05 -0800

When must an employer deposit their matching funds in a 401(k) account? I understand that employee contributions must be deposited "as soon as possible", but what about the employer's matching?

Analyzing mutual fund performance

contessa — Mon, 25 Sep 2006 12:16:33 -0800

How do I best analyze the performance of my mutual funds? I've got 3 sets of mutual funds, all for the purpose of retirement investing.

The first is a defined contribution plan that only my employer can deposit into. It is a well-run state retirement system. I get to choose how the funds are invested. I am in 5 funds, and in the next year (2007) contributions will be ~$420 per quarter ($5k/yr). I like this because, hey, free money.

Next is a deferred compensation plan (457[b]) which only I contribute to - there is no matching. Same sort of deal as above, only with a different mix of 5 funds. I contribute ~$215/paycheck biweekly (~$5600/yr). I like this because it is easy -- I don't really notice the deduction and also it's pre-tax.

Last is a Roth IRA which I hope to max out each year. For 2007 that means $4k. I don't contribute on a set schedule, just sort of whenever I have the $$ and the time is right. I am invested in 2 funds here. I like this because yay, no taxes later (sorta).

With all this lead-in: Given that I don't plan to ditch any of these anytime soon (& I hope to keep investing at this level or higher for the forseeable future), how do I make sense of all this? Do the standard financial ratios apply? Is there a customary way for the individual investor to chart this stuff? What do you do that works for you?

Can I invest my retirement money in my own mortgage?

portabella — Mon, 25 Sep 2006 11:02:08 -0800

Can I invest my retirement money in my own mortgage? Is it possible for me to invest my own retirement funds in my own mortgage? My wife and I have something like $200K in retirement accounts. Our mortgage is $320K or so. Can I somehow invest the money in my own mortgage, pay off the bank, and then undertake to pay myself back (with interest, of course)? Without paying the IRS a huge penalty?

I know that you can borrow up to $50K from retirement accounts, but as you can see from the numbers, that's just not going to do it in this case.

how do I find a great financial advisor?

krautland — Mon, 28 Aug 2006 12:00:59 -0800

my new employer is offering a 401k package via fidelity investments that is, dare I say it, overwhelming to me. I am especially bothered by the fact that the only advise available on said fidelity investment choices is via the nice folks from fidelity investment. so I looked for financial advisors - but how to judge them? how should I know that whoever is passing themselves off as knowledgeable actually is just that? I want to get good advise but I don't know where to look. any ideas what I should do?

oh yeah, if it matters: I am in my late twenties, single and just moved to chicago. I graduated two and a half years ago and already am well in the top 5% income bracket, so I think I can take a couple risks with my 401k. but again, I am clueless and that bothers me...

Any experience with American Funds?

Señor Pantalones — Tue, 25 Jul 2006 13:49:42 -0800

Any experience with American Funds? Could use some opinions about financial planners, too. I recently met with a principal investor for Foothill Securities, Inc. in an effort to get organized and buy a house in the bay area this year. We have two active 401ks , one stagnant (non-rolled-over) 401k and one stagnant 403b from previous employment (sum of these is <$25k). We also have some money in individual stock investments.

The financial planner is interested in taking us on as clients, and wants to move us to American Funds (managed funds where the clients pay a commission and make more overall, versus no-load funds where you don't and make less). She told us to do some research, so we did. I've read as much as I can google about this and found good (Motley Fool community seems to love them) and bad (SEC investigation along with all the other brokerages), but I would love some outside opinions from experienced MeFites.

While we're at it, any opinions about Foothill Securities if anyone here has used them for financial planning and investment? I've been a Motley Fool community and rule breakers reader for two years now and I am completely sick of managing my money this way. I don't have enough of it to justify the opportunity cost and would rather let a professional do it.

Factchecking my financial advisor on mutual funds

ajr — Thu, 30 Dec 2004 09:40:39 -0800

I am presently working with a financial advisor to select mutual funds for my retirement plan. He has explained the differences between Class A, B, and C funds to me, and also suggested that Class A is probably the best option. Is he correct? [more inside] I don't expect to frequently shift fund selections, but the idea of keeping all of the same selections for five years does not seem right.