A. The Internal Revenue Service has issued the new benefit and contribution limits for qualified retirement plans for plan years beginning in 2019.
Below are some of the key limitation amounts for the upcoming year.
Q. What is 2019 retirement plan contribution limit?
A. The Internal Revenue Service has issued the new benefit and contribution limits for qualified retirement plans for plan years beginning in 2019. Below are some of the key limitation amounts for the upcoming year.
0 Comments
Level 0: Complete financial dependence on the kindness of strangers who have no vested interest in your success. Panhandling when unable to work, or companies reliant on raising money from first-time investors who don’t care if you fail. Level 1: Complete financial dependance on people who want you to succeed because they like you and their reputation is attached to your success. Children under age 15 – supported by their parents and generally too young to work – fall into this category. So do companies backed by friends and family who don’t intend on getting their money back. Level 2: Complete financial dependance on people with a vested interest in your financial outcome. Unprofitable-but-promising businesses backed by investors who could earn a meaningful return on their investments, and are thus likely to keep supporting you. Level 3: Ability to partially support yourself by adding value for others while still somewhat reliant on external support. Young people who work but rely on their parents to support what they consider basic lifestyle necessities. Or companies that could realistically be profitable if they changed their cost structure, but continue to raise money from investors to fund growth. Level 4: Ability to fully support yourself by adding value for others, but value that is marginal and easy to replace. This is a common category for both people and businesses. It is grinding and tenuous. It smells like independence, but a boss or customer still owns your day and can dictate your future. Your future relies on their decisions. Level 5: Enough savings to cover run-of-the-mill problems. You can endure hassles that every person or company should expect to experience on a regular basis, without getting wiped out. Level 6: Enough savings to cover large, unforeseen problems. You still rely on your boss or your customers to get by month to month, but if a crisis struck you’d probably be OK for a reasonable period of time. Level 7: Retirement savings, education savings, and avoidance of consumer and auto debt. You still rely on bosses and customers, but you can foresee a time when your current savings will open up a new level of independence for you and your family. This is the most realistic goal for most people. Level 8: The ability to pick a job, or specific customers, that avoids the most egregious examples of bullshit and unnecessary hassle in your life. You still rely on bosses and customers, but have the freedom to say, “No, not you. I’ll find someone else,” when you get too frustrated. Level 9: Becoming comfortable enough with your social status that you don’t feel the need to flash your peacock feathers with expensive consumer goods whose only value is in signaling. The inability to do this is a hidden form of debt and dependance that exists, and it piles up on people who mistakenly think they’re wealthy enough to be independent. Level 10: The ability to say no to banks, whose debt you don’t need, including mortgages. Debt can be cheap capital but it keeps you beholden to others, owning a piece of your future decisions and cash-flow needs. Level 11: Few realistic situations would cause you, your company, or your family to be pushed back below Level 5. You could support yourself for a year or more off your liquid savings. It’s the first true stage of independence. You can now say “No” to almost anyone, with high odds of recovering from the repercussions. Level 12: Interest and dividends cover more than half of your living expenses. Most of this is independence is owed to a slim lifestyle, rather than huge assets. You realize that lifestyle desires compound faster than almost any asset. Level 13: Your assets and their reasonable return expectations will cover basic living expenses for longer than your life expectancy. Congrats. You are no longer reliant on bosses or clients. You can deal with them if you want, and you probably will. But only if you want, when you want, with who you want. Which feels good. Level 14: Your assets cover above-basic living expenses with assets and their reasonable return expectations. You can define “above-basic” however you want. Varies by person. Remember what Chris Rock says: “If Bill Gates woke up with Oprah’s money he’d jump out the window.” Level 15: Independence lets you do and say what you please, unconcerned with other people disagreeing with you, since you don’t rely on the support or opportunities they could offer. Level 16: Meaningful philanthropy is the only reasonable way your assets won’t compound faster than you spend. Q. Which insurance products I don't need?
A. Here is a list of insurance products you should try to avoid - Private Mortgage Insurance: You pay for PMI if, when you’re buying a house, your down payment is less than 5% (sometimes, less than 20%). If you fail to make your payments, the policy pays off -- but it pays the lender, not you or your family. If you now have 20% equity in your home, ask your lender to cancel this insurance, which can easily cost you hundreds of dollars per month. Mortgage Life Insurance: If you die, this policy pays off the remaining mortgage balance. Bad idea, because the money goes to your lender, not your surviving family. And the premiums are high. Replace this policy with a term life policy, and name your spouse or kids as the beneficiary. Flight Insurance: The odds you’ll die in a plane crash are remote, making this policy a waste of money. Think you never buy it? Better check with your credit card company, because some automatically bill you for the coverage when you buy a ticket. Even without this coverage, if you die in an accident, the airline is likely to compensate your family. But that’s not the point. You should have enough life insurance to provide for your family no matter the cause of your death. Accidental Death: Death is death: As noted above, your family does not need more money because you die in an accident instead of an illness. And proving that you died of an accident -- and not a heart attack from stress following the accident -- can be difficult. Cancer Insurance: Ditto to the above. You want life and health insurance that pays, regardless of the diagnosis. Credit Insurance: If you die, this pays off your credit cards. Drop this. It is extremely expensive. Besides, you’re not supposed to carry balances from month to month. Even if you do, cards in your name do not automatically become the obligation of your survivors. And if you fear they are, just get term life insurance, which is less expensive. Children’s Life Insurance: Do not buy a separate policy on each child. Instead, add a child rider to your own life insurance policies. For $25 or so per year, you’ll get enough to cover final expenses. Q. What are the most common reasons people don't buy life insurance?
A. First, let's see some facts about life insurance in U.S. -According to the Life Insurance and Market Research Association (LIMRA): ● Only 44 percent of U.S. households have life insurance. ● One in five households with children under age 18 is uninsured. ● Nearly half (48 percent) of households that do own life insurance have too little coverage — enough to last their heirs only a few years. Lack of awareness isn’t the problem. Of families with no coverage, 73 percent recognize their need for it, and 62 percent say they would be in immediate financial trouble if a primary wage earner died, according to LIMRA. The three most common reasons people cite for not buying life insurance?
None of these excuses is valid, of course. As for cost, sure, it costs money. But so does a big-screen TV. The latter is a luxury and the former a necessity. And policies are surprisingly inexpensive these days. For example, a 40-year-old male nonsmoker in good health can get a $500,000, 20-year term policy for about $390 per year, and that policy even comes with FREE Living Benefits Riders. Female nonsmokers' premium will be even lower. Procrastination? Please. “Here lies Dad. He left us in dire straits because he was too lazy to buy life insurance.” Don’t know how to buy life insurance? Contact us. We’ll show you how to determine the amount of coverage you need to protect your family, and how to buy a policy inexpensively. For archived newsletters, please visit here.
|
AuthorPFwise's goal is to help ordinary people make wise personal finance decisions. Archives
September 2022
Categories
All
|