Minding Your Money 360 - Quick tips to manage your money for success

What happens to my 401(k) when I retire?

Today on the Minute – What Happens to My 401(k) When I Retire?

I got a long email from Barbara S. – a loyal long-time listener and she had a slew of questions about retirement. Over the next few days, I will try to answer Barbara’s questions because they are very good.

Today on the Minute – What Happens to My 401(k) When I Retire?

I got a long email from Barbara S. – a loyal long-time listener and she had a slew of questions about retirement. Over the next few days, I will try to answer Barbara’s questions because they are very good. And, if you have retirement or any other questions be sure to send them in. Because of time restrictions, I can’t go into a lot of detail on the air but if you would like more detailed or private answers you can always go to the website and click on the Private Consult button and sign up for a private call with me. I have a special rate for September so there has never been a better time to call to get answers to your questions.

Now, Barbara writes, “I know I have to take draws from IRA at 70 1/2. What about 401k (or similar accounts)? Do I have to take a bit out of each account? Should I roll it all into 1 account? I don't really like that idea because I prefer the diversity of the management and types of holdings."

You are right, because your money has grown tax-deferred in IRAs and 401(k)s, at age 70 1/2 you must start taking distributions and pay taxes on those distributions as income.

Regarding the status of your 401(k), you can have as many accounts as you like and yes you would have to take some out of each one. However, you have several options regarding what to do with money in your 401(k) and there are pros and cons to each one. First, you can leave it with your employer. The pro is it’s easy. The con is that they often contain funds with very high fees and your employer can change the plan any time – you have no control. Another option is to purchase an annuity where you could have a guaranteed income for life. The downside here is inflation because over time you could have less purchasing power as inflation increased and your payments didn’t. And, one final option is to roll it into an IRA where you have total control and you could choose investment options like low fee mutual funds and ETFs and create a truly diversified account.

So which option should you choose? Well, it depends on the amount of money you have and what sounds appealing to you. In fact, you might choose more than one option. This is where doing your homework can save you a ton of headaches down the road.

And, that’s the minute for today. I love helping people with all aspects of their financial lives. If you have a question, send it to me at [email protected]. 

Thanks for listening and as always remember that minding your money really is the path to a richer life!

Word of the Week: Money Stress

It’s Friday and time for the Word of the Week! Our word this week is the Money Stress.

Stress does horrible things to your body and money stress is no different. In fact it can possibly do more harm because it can affect your relationships in more profound ways.

It’s Friday and time for the Word of the Week! Our word this week is the Money Stress.

Stress does horrible things to your body and money stress is no different. In fact it can possibly do more harm because it can affect your relationships in more profound ways. So what’s the key to dealing with or eliminating money stress? Here are three key strategies:

Identify the sources of the stress. You can’t manage it if you’re not clear on the real sources.

Focus on the moment. Spend time each day thinking about the here and now and not brooding over yesterday or worrying about tomorrow. It is a proven fact that brooding and worrying don’t get you any closer to solutions so STOP IT!

Do the opposite. Whenever people feel negative emotions such as fear or anxiety, they tend to avoid them and withdraw. If you try experiencing the opposite emotions, you can start to feel better. So, for example, if you’re upset about not saving enough, show some compassion and instead of putting yourself down, acknowledge it and create a plan to do better and then follow your plan.

Our word of the week: money stress – money the #1 killer of marriages and if you’re careful it could break you too.

And, that’s the minute for today. Tune in next week as I answer Barbara questions about retirement. I love helping people with all aspects of their financial lives. If you have a question, send it to me at [email protected].

Thanks for listening and as always remember that minding your money really is the path to a richer life!

How will my assets be divided during a divorce?

Today on the Minute – How will my assets be divided in a divorce?

 I got a question from Gina (not her real name) who is contemplating a divorce and she is doing something smart before she takes the plunge she’s asking questions so she can know what to expect.

Today on the Minute – How will my assets be divided in a divorce?

 I got a question from Gina (not her real name) who is contemplating a divorce and she is doing something smart before she takes the plunge she’s asking questions so she can know what to expect. She asked several questions but this is one that I think a lot of people get confused about and that’s how property will be divided in the case of a divorce.

Let me begin by saying that as a couple you together can make a decision to divide your property any way you want – it’s your property to do with as you please. However if you can’t come to an amicable decision then laws or a judge can make the final decision.

For example, if you live in a community property state like Arizona, California, or Texas then property accumulated during the marriage is divided 50/50. However, in equitable states or non-community property states, there is more discretion on the part of the judge to distribute property fairly so that if there is a great disparity in the earning power of the spouses, the lower earning spouse may be granted more than 50/50. So where you live has a great bearing on how your property will be divided.

And, that’s the minute for today. I love helping people with all aspects of their financial lives. If you have a question, send it to me at [email protected].

Thanks for listening and as always remember that minding your money really is the path to a richer life!

Should business owners pay themselves from the start?

Today on the Minute -  Should Business Owners Pay Themselves From the Start?

I got a question from Ben who was starting a business and he wanted to know if it was okay not to pay himself until the business was standing on its own feet. Well, Ben I’m a big fan of always paying yourself.

Today on the Minute -  Should Business Owners Pay Themselves From the Start?

I got a question from Ben who was starting a business and he wanted to know if it was okay not to pay himself until the business was standing on its own feet. Well, Ben I’m a big fan of always paying yourself. However, I do understand that in some cases, that’s not always possible in the beginning, but it should be the exception, not the rule. One of the first things to do before starting your business is to compile budget forecasts that include a salary for you.

You see when you don’t pay yourself, you don’t get an opportunity to test the business and financial models to see if they work because not paying a major employee even if they are the owner is not a normal situation. If your business is not making enough money to pay you even a small token salary don’t just accept this and move on because this could go on for years. Instead, revisit your numbers at least every quarter to see if they are increasing so you can start to pay yourself. Remember, the main reason to go into business is to earn a profit and if you don’t do that for a long enough time – you don’t have a business. What you have is a very expensive hobby.

And, that’s the minute for today. I love helping people with all aspects of their financial lives. If you have a question, send it to me at [email protected].

Thanks for listening and as always remember that minding your money really is the path to a richer life!

What's your biggest money worry?