Common Concerns - Understanding the Basics

With the constant stream of information coming at us from TV, the internet, and newspapers, financial concepts can seem overwhelming. Understanding the Basics breaks down important topics into easy-to-understand ideas and actionable steps to help you move forward.
Why your home shouldn’t be your only retirement plan
Why your home shouldn’t be your only retirement plan
When people rely on their homes as their retirement plan, they often end up with less in hand than they would have if they’d put some of their money in other investments as well. There are other options and strategies for retirement savings.
 
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Buy or rent in retirement
Buy or rent in retirement
Is it better to rent or own your home in retirement? It depends on your goals and financial situation.
 
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Earn Lifetime Income Throughout Retirement
Earn Lifetime Income Throughout Retirement
Many women will exceed their average life expectancy and most worry that they’ll outlive their assets. Annuities can provide a regular income stream throughout life, and serve as a valuable component of a diversified retirement portfolio
 
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Retirement Plans
Retirement Plan Basics
Traditional pension plans tell you in advance how much your benefits will be at retirement age. Defined contribution plans, such as 401(k)s, help you save for retirement but don’t guarantee a specific benefit. Self-employed people can choose among a variety of ways to invest tax-deferred for retirement.
 
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Organizing Your Finances
Organizing Your Finances
The more carefully you create an organizing system, the easier it will be to use. You may want to consider hanging files with separate folders for each key topic. Also, think about consolidating your retirement accounts into one rollover account to make it easier to know how you’re doing and to avoid duplicate investments.
 
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Understanding IRAs
Understanding IRAs
IRAs can help you build substantial savings over time, and just about anyone who works can open one. There are two kinds: the traditional IRA (deductible and nondeductible) and the Roth IRA, with very different benefits.
 
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401(k) Rollovers Explained
401(k) Rollovers Explained
There are four ways to handle the money in your 401(k) when you leave a company: cash out, leave the money where it is, roll it over to a 401(k) at your new company, or roll it over to an IRA. With the last two choices, it’s important to follow the rules carefully so you don’t wind up paying taxes earlier than you planned.
 
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Stocks
Stocks
Buying a stock means you become a part owner of a public company. Some companies, such as utilities, often pay dividends; start-ups and technology companies generally don’t. A growth stock is one that investors think will grow at a faster rate than the market; a value stock is one that some investors think is a bargain.
 
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Bonds
Bonds
Bonds can provide income and help diversify your portfolio. They may be taxable or tax-free. Generally, the riskier the bond, the higher its interest rate.
 
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CD Basics
CD Basics
A CD (certificate of deposit) pays you interest for the length of its term and can be held in an Individual Retirement Account (IRA). Most CDs have fixed interest rates, but some have adjustable or variable rates. CDs generally are FDIC insured.
 
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Mutual Funds
Mutual Funds
A mutual fund lets you own a basket of securities, generally stocks or bonds. Some mutual funds are actively managed by a professional who chooses which investments to buy or sell. Others are index funds, which attempt to replicate well-known indexes of stocks or bonds.
 
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The Basics of Annuities
The Basics of Annuities
An annuity lets you invest money for retirement tax deferred and receive regular payments — immediately or sometime in the future — from an insurer for a specific period or for life. You may also decide whether to buy an annuity that invests your money conservatively or aims for higher returns in the stock market.
 
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The Basics on Medicare
The Basics on Medicare
Healthcare can be a substantial expense in retirement, but you can reduce your costs by buying the right coverage. Although Medicare will help you with hospitalization costs and doctors’ visits, you’ll need supplemental coverage. You’ll also need to buy individual coverage if you retire before turning 65.
 
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Taxes and Retirement Planning
Taxes and Retirement Planning
Individual Retirement Accounts (IRAs) and employer-sponsored retirement savings plans, such as 401(k) and 403(b) plans, offer excellent tax advantages. Earnings grow tax-deferred, contributions to retirement plans at work are generally made with pre-tax money, and you may get a tax deduction for investing in an IRA. Withdrawals are typically taxed, but they’re usually tax-free for Roth IRAs.