Monthly Archives: January 2015

2015 Changes in Retirement Benefits That You Need to Know

changes in retirement benefits

I can’t believe we’re almost a month into 2015…I feel like we were just celebrating New Years.  Lucky for us, 2015 is off to a good start with the US Government sweetening the deal for retirement benefits.  Here are some changes you need to know about:

401(k)s:  The 401(k) contribution limit will increase by $500, meaning you can contribute a maximum of $18,000 pre-tax in 2015.  If you’re 50 or older, the catch-up contribution increases by $500 to $6,000, meaning the maximum you can contribute if you’re 50+ is $24,000.  If you were already contributing the maximum amount in 2014, make sure you update your withholdings for the extra amount this year by contacting your employer’s payroll or HR department.  To put this additional savings in perspective, if you’re under 50 and in the 25% tax bracket, contributing the maximum to your 401(k) in 2014 saved you $4,375 off your tax bill.  In 2015, this will increase to $4,500.  Less money you owe for taxes plus more money in your retirement accounts = a WIN-WIN!

IRAs:  The IRA contribution amounts are unchanged for 2015, with a maximum of $5,500 if you’re under 50, and a catch-up of $1,000 more if you’re 50+.

MyRA:  The Treasury is now offering a new type of retirement account, the MyRA, which is funded with after-tax dollars (similar to a Roth IRA) through a payroll deduction.  Unlike traditional retirement accounts, these funds are guaranteed by the US Government to never lose value.  The MyRA will be available to workers with annual income of less than $129,000 for individuals and $191,000 for married couples.  They can use their account for up to 30 years or until the balance hits $15,000, at which point it will transfer to a private sector retirement account.

Social Security:  Social Security recipients will receive 1.7% bigger payments this year due to a cost of living adjustment.  Most workers will continue to contribute 6.2% of their earnings to the Social Security System, but the taxable income limit will increase from $117,000 to $118,500 this year.

Medicare: The standard Medicare B premium will remain $104.90 monthly in 2015, although high-income beneficiaries pay more, and the deductible is unchanged at $147 a year. The Medicare Part A hospital inpatient deductible will increase from $1,216 in 2014 to $1,260 in 2015. Medicare Part D premiums vary by plan and are expected to increase by 4 percent to an average $38.83 in 2015.

 

Photo Credit: American Advisors Group

How to Reduce Your Energy Bill

save on energy bill

This post is inspired by the pity-party I threw for myself when I walked out to my mailbox last week and looked at my gas and electric bill for the month of December.   I went through a range of emotions from the initial shock of “that can’t be right”, to sadness, to acceptance, and finally to motivation to bring down my bill from the next upcoming months.  So here we are.  And if you found yourself checking your monthly bills and wanting to cry too, read on for ways to make next month less painful:

Master Your Thermostat:  I read that for every 1 degree that you reduce your thermostat temperature you can reduce your bill by about 3%.  The easiest thing to do is to make sure your thermostat is programed so that you have lower temperatures when you’re not at home.  A programmable thermostat costs around $40 and can be programmed differently for weekdays and weekends.  And when you are at home – dress warmer, open window shades during the day to let the sun warm your house, and make sure any drafty window or door is properly insulated to keep cool air out.  Heating and cooling technicians also recommend you make sure all your vents are open and your filters are regularly replaced.

Turn Off Your Devices:  The term “vampire energy” refers to your appliances and electronic devices being left on all day and night, sucking your up electricity.  Even a device in sleep mode is still using energy.  Go through your house and figure out what you can turn off easily when you’re not home or before you go to bed at night.  Flat screen TVs and gaming systems are some of the biggest culprits.  Try using power strips to keep all your devices plugged into one area and turn them off easily with one button.

Turn Down Your Water Heater: The default temperature for most water heaters is 140 degrees, or scalding.  Turning your heater down to something lower, like 120 degrees, will lower your bill and your bubble baths will be none the wiser.

Visit Your Utility Company Website:  Your high bills may vary from my high bills due to where you live.  But your local utility company is here to help you, with tips online about how you can keep costs down specific to your area and maybe even rebates available to use.   They will also explain when they charge higher rates for peak hours so you can try to avoid those if possible (they’re peak hours for a reason I guess).

Photo Credit: Clear Hard Color

 

Get a Load of This: Defining the No Load Mutual Fund

no load mutual fund

I know, I know…it’s been on your mind and keeping you up at night.  What do they mean when they say “no-load mutual fund”?  Today I’ll break down the definition for you and tell you which one is best for you, allowing you to concentrate on more important things like whether the next royal baby will be a boy or a girl?

The “load” in a load mutual fund refers to a type of fee you may pay.  Load funds are funds you purchase from an advisor or broker that charge some type of sales commission for their expertise.  A front-end load means that you’ll pay the commission up front, and a back-end load means you’ll pay it when you sell the fund.  On average, you’ll pay about 3-6% of the value of the fund in fees.

No-load funds, as you might have guessed, have no commission type fees attached to them.  You’re basically cutting out the middle man.  That doesn’t mean they are fee free, so you should still understand what your mutual fund is charging you if it’s no load.  You can find no-load mutual funds from most of the large online mutual fund providers.

So why would someone choose a  load mutual fund?  Maybe they’re hoping they’ll get what they pay for – which is someone’s assistance picking a mutual fund that is right for them.  Many people feel they lack the knowledge or time to choose a mutual fund that is right for them, their financial goals and their existing portfolio.  If this is you, you should still fully understand what kind of load fees you’re paying up front before you commit to a fund or an advisor.

However, studies have shown that those fees you’re paying to the experts in a load fund don’t always help you with the fund’s performance.   According to this particular study, no load funds performed significantly better than load funds from 2000-2002 (a difficult time in the market).  The concern with no-load funds is that without the financial advisor relationship in place, an investor may be more likely to bail on a fund when the market is low.  So when buying a fund, remember that you’re in it for the long haul and do the right research up front so you’re prepared to buy and hold.  Here is Kiplinger’s list of the top 25 no load mutual funds.

 

 

Photo Credit: pilotcarproducts.com