42 articles about investment & retirement
A score of 80+ typically indicates strong readiness based on savings trajectory, income sources, and Monte Carlo success rates. Scores 60–79 suggest moderate gaps to close via higher savings, later...
Read moreUse the Savings Gap tab: increasing contributions by 2–5% of salary can close six‑figure gaps over 15–20 years. Employer match dollars are especially powerful—always capture the full match before o...
Read moreHistorically, 3.5–4% of your starting portfolio, inflation‑adjusted, sustained 30 years in most scenarios. Consider dynamic guardrails and cash buffers to manage sequence‑of‑returns risk and improv...
Read moreDelaying from full retirement age to 70 increases benefits about 8% per year. If longevity is likely and you have sufficient savings, waiting often boosts lifetime income and reduces pressure on po...
Read moreThe best age to claim Social Security depends on your health and financial needs. Claiming at 62 reduces your benefits by 30%, while waiting until Full Retirement Age (66-67) gives you 100%, and de...
Read moreA spouse can receive up to 50% of the higher earner's benefit at Full Retirement Age, even if they never worked. You must be married for at least 1 year. If you claim spousal benefits early (before...
Read moreYes, but there's an earnings test. In 2025, if you're under FRA, Social Security withholds $1 for every $2 you earn above $22,320. In the year you reach FRA, it's $1 for every $3 above $59,520 unti...
Read morePossibly. If your combined income (AGI + nontaxable interest + half of Social Security) exceeds $25,000 (single) or $32,000 (married filing jointly), up to 85% of benefits become taxable. This does...
Read moreBenefits are based on your Average Indexed Monthly Earnings (AIME) from your highest 35 years of earnings. The Social Security Administration applies bend points to your AIME: 90% of the first $1,2...
Read moreYour PIA is your base Social Security benefit at Full Retirement Age (FRA). It's calculated using: Your highest 35 years of earnings (adjusted for inflation), Average Indexed Monthly Earnings (AIME...
Read moreYour FRA depends on birth year: Born 1943-1954: Age 66 | Born 1955: Age 66 + 2 months | Born 1956: Age 66 + 4 months | Born 1957: Age 66 + 6 months | Born 1958: Age 66 + 8 months | Born 1959: Age 6...
Read moreClaiming Early (age 62): Permanent reduction of ~30% (if FRA is 67), more years of benefits but smaller checks, break-even typically around age 78-80. Delaying (to age 70): Permanent increase of ~2...
Read moreAvoid claiming Social Security at 62 without knowing it reduces benefits by 30%. Check your earnings record for errors, consider spousal benefits, and be aware that working while claiming early can...
Read moreDividend Reinvestment Plans (DRIPs) automatically use cash dividends to purchase additional shares of the same stock. Instead of receiving dividend payments as cash, the dividends are reinvested to...
Read moreCompounding occurs when reinvested dividends buy more shares, which generate their own dividends, creating exponential growth. For example, a $10,000 investment with 7% growth and 2% dividend yield...
Read moreIt depends on your goals and life stage. Reinvesting is ideal for long-term wealth building (10+ years) when you don't need the income. If you're retired or need cash flow, taking dividends as inco...
Read moreReinvested dividends are still taxable income in the year received, even though you don't receive cash. Qualified dividends are taxed at 0-20% (preferential rates), while ordinary dividends are tax...
Read moreDRIP offers several advantages: automatic reinvestment (set it and forget it), no trading commissions on most brokers, purchasing fractional shares, dollar-cost averaging into the market, and power...
Read moreDRIP automatically uses your dividend payments to buy more shares of the same stock, including fractional shares. This creates a compounding effect where dividends buy more shares, which pay more d...
Read moreYes, even if you reinvest dividends, you still owe taxes on them in taxable accounts. Qualified dividends are taxed at 0-20% (long-term capital gains rates), while ordinary dividends are taxed at y...
Read moreTake cash dividends when you need income in retirement, want to rebalance your portfolio, believe the stock is overvalued, or want to diversify into other investments. For long-term wealth building...
Read moreDRIP can make a significant difference over decades. For example, a $10,000 investment with 4% dividend yield and 3% dividend growth can be worth $50,000+ more after 30 years with DRIP vs taking ca...
Read moreLook for dividend yields of 2-4% with consistent dividend growth of 3-5% annually. Companies with 25+ years of consecutive dividend increases (Dividend Aristocrats) are ideal for DRIP. Avoid very h...
Read moreThe average employer match is 4.7% of salary, worth $3,525 annually on a $75K income. Over 20 years at 7% returns, that's $145,000+ in lost retirement savings. Freelancers must save this amount on ...
Read moreSEP IRA allows up to 25% of net earnings (max $69K) as employer contributions only—simple setup but limits flexibility. Solo 401(k) allows employee contributions ($23,500) plus employer contributio...
Read moreYes. Freelancers pay both employer and employee portions of FICA: 15.3% (12.4% Social Security + 2.9% Medicare) vs 7.65% for W-2 employees. On $75K income, that's an extra $5,737 annually. However,...
Read moreYes, freelancers should make quarterly estimated tax payments if they expect to owe $1,000 or more in taxes. Contributing to a SEP IRA or Solo 401(k) can lower your taxable income, so consider maki...
Read moreFreelancers should aim to save 20-25% of their gross income for retirement, which means saving $20-25K annually on a $100K income. If needed, start with 10-15% and increase as your income grows, si...
Read moreRecent 10-year data shows the performance gap is minimal (0.1-0.2% annually). The main difference is often just slightly higher expense ratios, not the ESG holdings themselves. Some ESG funds have ...
Read moreThe cost varies by fund type. Low-cost ESG options like ESGV (0.09%) and VOTE (0.05%) are only slightly more expensive than traditional index funds (0.03%). The main cost is the opportunity cost of...
Read moreYes, prioritize low expense ratios (under 0.20%). Vanguard's ESGV and VFTAX are good options. Higher fees can significantly impact long-term returns. The ESG criteria matter less than keeping costs...
Read moreNegative screening excludes controversial industries (minimal performance impact). Positive screening selects best ESG companies within sectors (very small impact). Thematic funds focus on specific...
Read moreSome funds are more marketing than substance. Look for funds with clear ESG criteria, third-party ratings, and transparent holdings. Vanguard's ESG funds and Engine No. 1's VOTE are examples of gen...
Read moreUsing the 4% rule, $1,000,000 supports about $40,000 per year pre‑tax (≈$3,333/month). A 3% rate yields $30,000/year; a dividend-only 3.5% yield gives ≈$35,000/year. Actual sustainable income depen...
Read moreResearch suggests 3.5–4% remains reasonable for 30‑year retirements with diversified portfolios, but flexibility helps. Dynamic guardrails and temporary cuts after large drawdowns can improve succe...
Read moreWithdrawals from tax‑deferred accounts are taxed as ordinary income, while qualified dividends/long‑term gains may be taxed at lower rates. Your effective tax rate (e.g., 12–24%) reduces take‑home ...
Read moreUse the Reverse Calculator to see the portfolio size required for your target at your chosen withdrawal rate. For example, $5,000/month at 4% requires roughly $1.5M; at 3% it requires about $2.0M.
Read moreA stress test simulates how your portfolio might perform during historical crises (e.g., 2008, COVID‑19). It highlights potential drawdowns and recovery times to assess resilience and suitability.
Read moreHistorically, diversified stock portfolios have experienced drawdowns of 30–50% in severe bear markets. Balanced 60/40 portfolios often see smaller drawdowns (~20–35%), depending on the period.
Read moreIncrease diversification (add bonds, international, real assets), use rebalancing bands, and ensure your equity allocation matches your risk tolerance and time horizon.
Read moreAvoid panic selling. Ensure your emergency fund is adequate, rebalance to targets if within your plan, and focus on long‑term goals. Knee‑jerk shifts often lock in losses.
Read moreRecoveries vary. After the Global Financial Crisis, U.S. equities recovered in ~4–6 years depending on the index; COVID‑19 recovered faster. Balanced portfolios typically recover quicker than all‑e...
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