Financial Fellow

Written by J.P. Wicklein

I read an article in Time last week advocating the death of the 401k. Their rationale was that 401k’s are failing to prove themselves as an effective retirement savings vehicle for the masses. In light of the recent financial meltdown the argument to replace the 401k with another retirement savings vehicle, such as a federally-controlled pension system, has gained attention. Although there may be rationale for providing a government-controlled retirement savings option, beyond Social Security, eliminating the 401k would be a travesty.

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Written by J.P. Wicklein

     Recently I received a couple questions from readers about how I invest my retirement funds. I thought it would be useful to share my answer with everyone. Don’t view my approach as advice on how to invest your retirement money. When investing you need to weigh factors such as your age and level of risk tolerance. As such, what’s best for me, may not work for you. Hopefully, though, reading about my approach will help you to consider some things when determining how to allocate your retirement dollars. Here’s how my retirement asset allocation shakes out:

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   Written by J.P. Wicklein

     Recently, I read an article on Gen X Finance in which the author discussed pension plans.  The article rekindled my distaste for defined benefit pension plans provided to government employees at the expense of the taxpayers. In short, defined benefit pension plans provide retirees with a consistent source of income from retirement to death. How much the retiree receives depends upon their age, salary, and length of service. The problem with defined benefit pension plans is that they are horrendously expensive.

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   Written by J.P. Wicklein

     In 1998, the U.S. Congress created the Roth IRA.  The Roth IRA differs from the Traditional IRA in several ways - the key difference being its tax structure. Whereas contributions to a Traditional IRA are often tax deferred, contributions to a Roth IRA are made with earned income that has already been taxed. Each type of IRA offers its own set of advantages.

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   Written by J.P. Wicklein

     Assuming you meet certain requirements, the federal government will provide you with a tax credit as a result of your retirement savings contributions. Known as the “Retirement Savings Contribution Credit”, this tax credit was designed to assist lower income individuals with saving for retirement. If you qualify, you will be provided you with a tax credit of up to $1,000 for single filers and up to $2,000 for joint filers.

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