Learn how to minimize estate taxes and maximize your legacy with smart gifting strategies. Understand gift tax rules, annual exclusions, and IRS filing tips.

For most things in life, having a plan is one of the best ways to set yourself up for success. It should come as no surprise, then, that having a financial plan for retirement is one of the keys to helping you reach your retirement goals.

We know that too much personal debt can undermine your financial security. What’s less clear is how the national debt can impact your finances. The total national debt of the U.S. reached $28 trillion as of April 1, 2021–and it’s growing. This equates to over $85,000 for every living person in the U.S.

Saving when you’re young can have major benefits for your overall financial plan. As shown in Figure 1 below, starting at age 25, if you save just $381 every month, you’ll reach $1 million by the time you turn 65, assuming a hypothetical 7% compounded rate of return. But the longer you wait to save, the more you need to put away every month to reach that same goal.Figure 1. Monthly Savings to Reach $1 Million by Age 65

It’s easy to assume that financial choices boil down to one’s preferences. While personal preferences, goals and priorities should drive most financial decisions, they often can convert a good intention into a mistake. Conversely, those mistakes may lead you astray: Setting the wrong goals, adopting the wrong strategies, and utilizing the wrong tactics. And unfortunately, when the stakes are high (such as with your retirement), many mistakes may be unfixable.

With the economy in recession, we are sometimes asked whether it makes sense to take an early 401(k) withdrawal. The answer is “no.”Thank you for reading this week’s column.Okay, we’ll elaborate. When it comes to taking an early 401(k) withdrawal, meaning withdrawing funds before the age of 59 ½ and incurring a 10% penalty on top of applicable taxes, there are bad reasons to do it, and worse reasons.

Roth conversions can be a powerful tool to save on taxes in retirement. Yet, even with that goal in mind, many people don’t pay enough attention to the taxes incurred from the Roth conversion itself. How is a Roth IRA conversion taxed? When converting funds from a Traditional IRA to a Roth, that withdrawal is assessed at your marginal income tax rate.

Companies and their employees have already been trending toward relocating from big cities with high rents and other issues. With the current housing and employment market, many have even greater motivation to relocate.

After decades of paying payroll taxes, many people believe that their Social Security benefits are tax-exempt, but this simply isn't the case for a lot of retirees. In fact, the Social Security Administration estimates that 52% of beneficiaries paid income tax on their benefits in 2015 and 56% of all beneficiary families will owe income tax on their benefits from 2015—2050.

When talking about retirement income, we often describe it as coming from three buckets. One bucket is any pensions you may be entitled to. Historically, these have been a critical part of retirement for many workers, but they are becoming less and less common. This means that the other two buckets will become more important over time.