The big decision in retirement: Rent or buy

Register now

The big decision in retirement: Rent or buy
Experts say that giving up a mortgage for a rental appears to be a smart move for many retirees who are experiencing an empty nest or have decided to downsize, according to this article on CNBC. Although owning a home means having a home equity that can be used to create an income stream, the tax benefits of a mortgage, insurance, and property tax deductions may not be valuable, especially if the homeowner has fully paid off the house and faces low mortgage balance.

At back-to-school time, consider a Roth IRA for your child
Parents may want to set up a Roth IRA for their children who made money from a summer job, according to this article from Kiplinger. The children won't pay income tax on the contributions this year if their earned incomes don't exceed $6,300 and unearned incomes are not more than $1,050. Since there is no upfront tax deduction on the contributions, distributions in retirement will be tax-free.

The new reality of old age in America
As Americans live longer without adequate savings, many seniors are forced to work to make money, according to this article from Washington Post. “There is no part of the country where the majority of middle-class older workers have adequate retirement savings to maintain their standard of living in their retirement,” says a labor economist. “People are coming into retirement with a lot more anxiety and a lot less buying power.”

How to avoid some of the more common IRA mistakes
Retirees who reach 70 1/2 should avoid the mistake of not taking their first required minimum distribution, according to this article from USA Today. “Thinking and believing that ‘no one told me about the rules’ is not a valid excuse for missing or messing up the amount you take for your RMD,” says an expert. “The onus is on the taxpayer and just because you have not been audited ‘yet’ does not mean you are in the clear.”

These millennials are saving $16,000/year for retirement
A study by Financial management company Principal has found that some 2,424 people ages 23 to 51 are contributing $16,200 to $18,000 annually to their 401(k) accounts, more than 90% of the maximum contribution amount, according to this article from Forbes. “These ‘super savers’ are incredibly driven,” says a Principal executive. “We see them making sacrifices to achieve their goals, and sometimes that includes delaying milestones until they feel financially secure.”

For reprint and licensing requests for this article, click here.
Retirement readiness Roth IRAs IRAs