Your net worth may not be something you think about very often. But if your goal is to retire securely, it's important to work on growing not just your 401(k) or IRA balance, but your net worth. A 2022 Aspen Institute report found that about 13 million Americans, or 10.4% of U.S. households, had a negative net worth. Clearly, these statistics are a bit dated, but they're based on an analysis of Federal Reserve data that only comes out every few years. Where to invest $1,000 right now? Our analyst team jus ...

Core Viewpoint - The focus of retirement planning should shift from net worth to savings, as net worth does not accurately reflect spendable cash for retirement [1][6]. Summary by Sections Understanding Net Worth - Net worth is calculated as total assets minus total debts, which may not represent liquid funds available for retirement [3][6]. - For example, a person with $1 million in assets and $200,000 in mortgage debt has a net worth of $800,000 [3]. Limitations of Net Worth - Not all assets are easily convertible to cash; for instance, home equity cannot be accessed without selling the home or borrowing against it [4]. - Accounts such as IRAs, 401(k)s, and brokerage accounts are more relevant for retirement funding as they can be liquidated or provide income through dividends [5][8]. Importance of Savings - Savings accounts and retirement accounts are crucial for determining retirement readiness, as they represent money that can be used to cover expenses [8]. - The value of a home can fluctuate, impacting net worth; for example, a home valued at $500,000 with a $200,000 mortgage results in a net worth of $800,000, but if the home value drops to $400,000, net worth decreases to $700,000 [9][10].

If you’ve spent decades saving for retirement, your IRA and 401(k) balances probably feel like a financial safety net. Watching those accounts grow can be reassuring. But without careful planning, even healthy retirement savings can morph into a ticking tax bomb. That’s because the Internal Revenue Service (IRS) mandates withdrawals from these retirement accounts once you turn 73 (1). If you have six- or seven-figure balances, these required minimum distributions, or RMDs, can have a noticeable impact on ...

Quick Read Taxable account gains face 15% capital gains tax. IRA withdrawals are taxed at 22% ordinary income rates on the full amount. Spending taxable accounts first shrinks the IRA before RMDs start at 73. This prevents IRMAA surcharges and higher tax brackets. Heirs inherit taxable accounts with stepped-up basis and pay no capital gains tax. IRA beneficiaries pay ordinary income tax on withdrawals. A recent study identified one single habit that doubled Americans’ retirement savings and moved r ...

Key Takeaways Leaving your 401(k) with your former employer keeps funds invested and growing tax deferred, but you can’t make new contributions. Rolling over the funds to an IRA gives you more investment choices, lower fees, and greater control over your savings. Transferring the funds to a new employer’s 401(k) can maximize employer matches and consolidate accounts, but new plans may have limited options or higher fees. When you leave a job, it's important to decide what to do with your 401(k), ...

Core Insights - Many individuals aim to max out their IRA contributions each year, but various life events, such as unexpected medical bills or inflation, can hinder this goal [1][2] Group 1: IRA Contribution Deadlines - Unlike 401(k) plans, which have a contribution deadline of December 31, IRAs allow contributions until the tax-filing deadline of the following year, which is April 15 for 2025 contributions [3] - The maximum IRA contribution for 2025 was $7,000 for individuals under 50, and $8,000 for those aged 50 and older due to a catch-up contribution [4][8] Group 2: Benefits of Maxing Out IRA - Contributing more to the 2025 IRA can enhance long-term investment potential and provide tax benefits, potentially reducing the tax bill for the current year [5][6] - Additional contributions can help offset tax liabilities from gains in taxable accounts or unreported income from side hustles, thereby lowering the overall tax burden [7]

Key Takeaways Median bank balances for Americans under 35 have risen steadily over the past decade, even as many are early in their careers. Comparing yourself to averages can be misleading, so savings guidelines often matter more than hitting a specific dollar number. Earning higher interest can help savings grow faster, whether through today’s best high-yield savings accounts or top CDs. How Much the Average American Under 35 Has in the Bank If you can save, you might wonder how your bank bala ...

Core Insights - The proposed 401(k) housing affordability plan by the Trump administration has not been detailed as expected, particularly during the World Economic Forum in Davos, despite prior announcements [1][4] - The U.S. housing market is facing challenges, with first-time homebuyers at a 44-year low of 21% in 2025, and a significant increase in the median age of first-time buyers to 40 years [1] - The National Association of Realtors (NAR) has highlighted the need for policies that increase housing inventory and affordability rather than relying on the 401(k) plan, which may not effectively assist those needing down payment help [10] Housing Market Challenges - The housing market is currently hindered by high prices and low inventory, leading to a decline in first-time homebuyers [1] - The median down payment for all buyers is reported at 19%, with first-time buyers facing a 36-year high of 10% [1] Proposed Initiatives - Trump has suggested a 10% cap on credit card interest rates for one year to alleviate financial burdens on potential homebuyers [3] - Other initiatives include directing Fannie Mae and Freddie Mac to purchase $200 billion in mortgage bonds to lower fixed-rate loan costs and an executive order to prevent large institutional investors from buying single-family homes [3] Concerns About 401(k) Withdrawals - Experts warn that using 401(k) funds for home purchases could jeopardize long-term financial health, as early withdrawals incur penalties and result in lost compound interest [6][7] - A withdrawal of $10,000 could potentially cost a young person over $80,000 in lost earnings over 30 years, assuming a 7% annual return [7] Criticism of the 401(k) Plan - Financial experts argue that the 401(k) strategy may not target those who truly need assistance with down payments and could inadvertently drive home prices higher [10] - The NAR has called for more effective policies to unlock housing inventory and promote new construction rather than relying on the 401(k) plan [10] Broader Financial Context - Approximately 54% of Americans have some form of retirement savings, indicating that a significant portion of the population may not benefit from the proposed 401(k) housing plan [9] - The potential changes to 401(k) withdrawal rules would require Congressional approval, which may face challenges in a divided Congress [11]

Key Points Regular brokerage accounts don't give you tax breaks like IRAs and 401(k)s do. What they do give you is more flexibility with your money. You can take withdrawals as early as you want without penalty, and you don't have to worry about RMDs. The $23,760 Social Security bonus most retirees completely overlook › I'm a firm believer in taking advantage of any tax break the IRS will give you. And for this reason, I'm a fan of saving for retirement in an IRA or 401(k). With a traditional I ...

Group 1 - The article discusses the importance of making smart financial decisions when receiving a significant amount of money, such as $50,000, emphasizing the need for careful planning and investment strategies [1][2] - It highlights the necessity of ensuring that the funds are not needed for immediate expenses, suggesting a time horizon of 12 to 36 months for investment [2][3] - The article recommends prioritizing safety by making high-return moves before engaging in more volatile investments [3] Group 2 - It suggests utilizing tax-advantaged accounts first, such as IRAs and HSAs, to maximize growth and minimize tax liabilities [4][6] - The article encourages investing for long-term growth, including home purchases, education expenses, and career transitions, indicating a time frame of five to ten years or more [5] - It emphasizes building an emergency fund and paying off high-interest debt as foundational financial strategies [6]