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Pretax, Roth, or After-Tax Contributions: Which Should You Choose?

If your employer-sponsored retirement savings plan allows pretax, after-tax, and/or Roth contributions, which should you choose? Pretax: Tax benefits now With pretax contributions, the money is deducted from your paycheck before taxes, which helps reduce your taxable income and the amount of taxes you pay now. Consider the following example, which is hypothetical and has been simplified for illustrative purposes. Example(s): Mark earns $2,000 every two weeks before taxes. If he contributes nothing to his retirement plan on a…

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Are You Ending 2016 Healthy, Wealthy, and Wise?

Although the year is drawing to a close, you still have time to review your finances. Pausing to reflect on the financial progress you made in 2016 and identifying adjustments for 2017 can help you start the new year stronger than ever. How healthy are your finances? Think of a year-end review as an annual physical for your money. Here are some questions to ask that will help assess your financial fitness. • Do you know how you spent…

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Will vs. Trust: which is Better?

When it comes to planning your estate, you might be wondering whether you should use a will or a trust (or both). Understanding the similarities and the differences between these two important documents may help you decide which strategy is better for you. What is a will? A will is a legal document that lets you direct how your property will be dispersed (among other things) when you die. It becomes effective only after your death. It also allows…

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Index Funds — Passive or Passive Aggressive?

One of the largest misconceptions about index funds is that their only distinguishing feature is their fees. It’s not uncommon to hear, “index funds are just holding the stocks or bonds in the index, so we don’t need to pay attention to them.” This assumption, however, is an oversimplification. Many investors don’t realize that all index funds are not created equally. A key difference between indexes and index funds is that index funds are exactly that – funds. Index…

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What is the most important component of GDP in the United States?

We often hear in the media that consumer spending is crucial to the overall health of the U.S. economy, but exactly how important is it? Representing approximately two-thirds of overall GDP, consumption–the almighty  Consumer–is the largest driver of economic growth in the United States. Of the nearly $18 trillion in U.S. GDP (2015), American shoppers are responsible for a piece of the pie worth about $12 trillion. Consumption is tracked by the Bureau of Economic Analysis, and is reported as Personal Consumption Expenditures (PCE) in its monthly “Personal Income and Outlays”…

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The Importance of Saving for Retirement at a Young Age

If you’re an adult in your 20’s, you are entering an exciting stage of life. Whether you’ve just graduated from college or are starting a new career, you will encounter many opportunities and challenges as you create a life of your own. As busy as you are, it’s no surprise that retirement may seem a long way off, especially if you’re just entering the workforce. What you may not realize, however, is that there are four very important advantages to begin planning and saving for retirement now. 1….

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How to Get a Bigger Social Security Retirement Benefits

Many people decide to begin receiving early Social Security retirement benefits. In fact, according to the Social Security Administration, about 72% of retired workers receive benefits prior to their full retirement age.1  But waiting longer could significantly increase your monthly retirement income, so weigh your options carefully before making a decision. Timing counts Your monthly Social Security retirement benefit is based on your lifetime earnings. Your base benefit–the amount you’ll receive at full retirement age–is calculated using a formula that takes into account your 35 highest earnings years. If you…

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How is GDP calculated in the U.S.?

GDP, or Gross Domestic Product, is a measurement of the total value of all goods and services produced in the United States over a given time period. It is used by economists, government officials, market forecasters and others to gauge the overall health of the U.S. economy. Although there are several ways of calculating GDP, the expenditures approach is the most common. It focuses on final goods and services purchased by four groups: Consumers businesses governments (federal, state, and…

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Q&As on Roth 401(k)

The Roth 401(k) is 10 years old! With 62% of employers now offering this option, it’s more likely than not that you can make Roth contributions to your 401(k) plan.1 Are you taking advantage of this opportunity? What is a Roth 401(k) plan? A Roth 401(k) plan is simply a traditional 401(k) plan that permits contributions to a designated Roth account within the plan. Roth 401(k) contributions are made on an after-tax basis, just like Roth IRA contributions. This…

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How many types of government savings bonds are there, and what’s the difference between them?

While the U.S. government has issued 13 types of savings bonds, there are currently only two series available for purchase through the U.S. Treasury Department: Series EE bonds and Series I bonds. U.S. savings bonds are nonmarketable securities, which means you can’t resell them unless you’re authorized as an issuing or redeeming agent by the U.S. Treasury Department. Savings bonds are guaranteed by the federal government as to the timely payment of principal and interest. You can buy Series…

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