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Getting Personal

Getting Personal

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Tess Vigeland is the host of Marketplace Money, where she takes a deep dive into why we do what we do with our money.
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There is a current trend in financial advice concerning diversification of retirement plans. Reading the future is not only impossible for choosing investments, but also where tax rates and laws will go. Some of the advantages to a ROTH are currently no taxes on gains, no forced withdrawals, and a payout that doesn't affect your Social Security payments. There are no guarantees that these advantages, like Social Security will remain. If you are older, short term tax free growth isn't necessarily worth the 35% tax hit you could take on next years income and the rollover.

Before you pay a bunch of tax to roll over all of your traditional IRA, consider rolling over just half of your traditional IRA balance, and only contributing to ROTH in the near future. This should spread out some of the tax pain, and some of that savings you'd be blowing on taxes this year could go into TIPS or tax free municipal bonds. I'm not sure what your accountant is thinking, but you'd have to be on the line for a top bracket (and ineligible for the IRA write off anyway) to make a one time tax payment with gradual write offs more efficient than gradual post-tax accumulation .

In addition, waiting for the market to trend back down before rolling over would be a wise step since the ~50% rebound has cut some of the advantage of rolling over today. Given the S&P's range between 1300 and 670 over the past year, a bit of careful market timing could place your tax payment on an 880 day rather than a 950 one.

http://finance.yahoo.com/focus-retirement/article/107368/converting-an-i...

As for the other guy, I'm dissappointed that you let him off easy on being short sighted about planning for retirement. While taking the tax write off is reasonable, you could have suggested going into a ultra-conservative IRA CD/money market account next year.

I'm guessing you get a lot of questions about aging student loan payers. It took me forever to get an MFA only to find out there are not enough art departments left to teach in. So after a number of financial reverses, here I am at 58 struggling to pay $360/ month on $48000 debt, most of which is interest. Any light at the end of this tunnel? Is anyone else liable for this debt when I croak.

I'm guessing you get a lot of questions about aging student loan payers. It took me forever to get an MFA only to find out there are not enough art departments left to teach in. So after a number of financial reverses, here I am at 58 struggling to pay $360/ month on $48000 debt, most of which is interest. Any light at the end of this tunnel? Is anyone else liable for this debt when I croak.

Your comments about wills and self-help resources such as on-line forms and books are timely, but your recommendation for partners to make joint wills is DEAD WRONG. Wills are strictly personal documents; joint wills became disfavored in the law by the end of the 19th century. Please correct your misstatement as soon as possible, and don't be timid in telling your listeners about better tools such as the books by Sphinx Legal and Nolo Press that give worksheets, planning instructions and guidance on attorney selection that go way beyond simplistic forms.

Gawd, what a bunch of drivel you choose to take up. My advice to these wannabe financial wizards is to get a life and STOP with the obsession(s) on $$$$$$$$$$!

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