Are You Maximizing Your Retirement Plan?

Last week I shared with you the new retirement tax rules for 2015. If you haven’t read about them, take a moment to review my summary here. You may be feeling as excited as I am about the increased contribution limits, but I’ve also heard feedback from readers who feel completely unaffected because they aren’t contributing close to the maximum to begin with.
I’ve put together the following example for you to see how it’s possible for you to save more, without it hurting as much as you think it will — all with magic of pretax investing. (And just as a reminder, this is not tax advice. Before you take any action concerning your retirement in 2015, consult your tax advisor or meet with a financial advisor.)

How to Save $750 a Month at a Cost of Only $350
I hear your protests, “But, David, I can’t afford to put away more than I do.” Here’s why I know that you can: If you are investing using a retirement plan like a 401(k) or an IRA, then every dollar you invest actually costs you less than 70 cents.
How is that possible? It’s the magic of pretax investing. As we know all too well, every time we earn a dollar, before that dollar ever makes it into our paycheck, the government grabs something like 27 cents in federal income withholding taxes (often more — and before very long, probably a lot more). On top of that, local governments may grab another five cents in city and state withholding (exactly how much depends on where you live). And then there are Social Security taxes, Medicaid and unemployment. But it doesn’t have to be that way. If you are contributing to a pretax retirement account — like a 401(k) plan or an IRA — the money you put in is entirely tax-deductible (up to certain limits). In other words, it comes in off the top, before Uncle Sam takes his bite. You get to keep the whole dollar for you and your future.
What this means is that if you decided to start saving an extra $50 per paycheck in your 401(k) or IRA, you would not see your take-home pay go down by $50. In fact, it would go down only by $35. The $15 that normally would have gone to the taxman goes to your future instead.
And if your employer has a matching program, you may be able to add another $25 to that $50. In other words, a $75 investment is costing you only $35. If you have ever shopped a sale, how can you refuse a bargain like this? The bottom line is that you can save much more than you think, easier than you think.
It’s called ‘Pay Yourself First’
What I’m talking about here, of course, is the tried-and-true concept known as “paying yourself first” — putting some of your hard-earned wages into your retirement account before the taxman takes his cut. I’m going to be blunt here. If you want to be financially secure and ultimately finish rich, you have to do this. There is absolutely no other way to do it if you allow the government to continue muscling in ahead of you. I mean, think about it — how can you possibly expect to get anywhere if you’re willing to give up 30 to 40 cents out of every dollar you make before you ever have a chance to spend — or invest — a penny of it? There’s no getting around it. You must pay yourself first. Not doing it is simply not an option.
If You Are Not in the Game, Get in the Game
By now, I hope you are convinced that there has never been a better time to be saving for your future. Even if you have to start small. So if your employer offers a 401(k) plan and you are not already enrolled, call your benefits office today and find out how to sign up. If your company doesn’t have a 401(k) plan, you will need to set up your own Individual Retirement Account (IRA). You can contact us at Edelman Financial Services and we can help you do just that.
Depend on Your Younger Self Now
No one is going to take care of you or me the way we would like to live when it comes time to retire. There are simply not enough taxable dollars to go around to support the 150 million Americans who will reach retirement age over the next 50 years. You know it and I know it. All we can count on is ourselves.
There’s only one real way to guarantee yourself a comfortable and secure retirement: You need to depend on your younger self now. You will save yourself tomorrow by deciding to save yourself today.
The time to take action is now. Increase the amount you are saving for retirement. Decide to pay yourself first. Review what you are invested in and fix it if it needs fixing. I promise you — your older self will thank you later.
If You Need Help, Get It
If you have retirement planning questions or need help, there’s no reason not to get it. I’m now the Vice Chairman of Edelman Financial Services, where our core belief is that everyone deserves great financial advice. We manage $13.7 billion dollars for more than 26,000 clients1and have been helping people just like you for more than 25 years.
Contact us today for your free, no obligation retirement portfolio review or simply call (855) 215-7171. 

New Retirement Tax Rules for 2015

Have you heard about the new tax retirement rules for 2015 that allow you to save MORE MONEY? Hip hip, hooray! Okay, so maybe I am being a little bit over excited about tax laws and retirement accounts, but hey, I do love this stuff. And candidly, you should too because every dollar you save for retirement is “a dollar saved for retirement.” And every dollar you save in a tax deductible retirement account is a dollar you don’t pay taxes on now.

That’s a dollar you get to keep for as long as you keep it in the retirement account. I know, call me crazy, but I get totally excited about delaying paying taxes for as long as possible.

For years I rallied and complained that the government wasn’t doing enough to make it easy for us to save in tax-favored retirement accounts. I went on Fox’s The O’Reilly Factor and specifically talked with Mr. O’Reilly (who always calls me “Mr. Bach”) about how the IRA tax deductible rules haven’t changed and were stuck at $2,000 a year…FOREVER.

Well, the government listened. Okay, probably not to Mr. O’Reilly and me debate, but they did FINALLY act and began to increase the contribution limits for retirement plans. And millions of Americans took advantage of the changes. Hopefully, you did too.


The IRS just announced the new 2015 Pension Plan Limitations and Rules. Not only have contribution and income limits increased, but a brand new retirement account option is being introduced as well.

Here’s a quick summary for you. Just keep in mind that it’s just a quick summary (not tax advice), so in order to make an informed decision on any action you may want to take concerning your retirement plan in 2015, you’ve got to be thorough in your research, consult your tax advisor or meet with a financial advisor (which I talk more about below.) Sound good? Great, here we go:

- 401(k), 403 (b) and most 457 plans have now increased from $17,500 to $18,000. If you’re 50 or older, the catch-up contribution has also increased by $500, bringing it to $6,000 in 2015.

- IRA income limits have now been increased. Although the limit on annual contributions to an Individual Retirement Arrangement (IRA) remains unchanged at $5,500, the tax deduction for making a traditional IRA contribution is phased out for investors who have a workplace retirement plan and a modified adjusted gross income between $61,000 and $71,000 for individuals (or $98,000 to $118,000 for couples). That’s up $1,000 and $2,000 respectively from 2014. For individuals who don’t have a workplace retirement plan but are married to someone who does, the tax deduction for an IRA contribution is phased out if the couple’s income is between $183,000 and $193,000 in 2015.

- Introducing myRA. President Obama announced this in the beginning of the year and details are supposed to be forthcoming in December. According to the Treasury’s website, beginning in late 2014, the U.S. Department of the Treasury will offer myRA (“My Retirement Account”), which is a Roth IRA account available to anyone who doesn’t have access to an employer sponsored retirement savings plan and is earning less than $129,000 per year (or $191,000 per year for couples). Plans are portable and contributions can be made through direct deposit. Contributions can be withdrawn tax free and earnings can be withdrawn tax free after five years and the saver is age 59½. After 30 years or $15,000 in savings, the saver must transfer the balance to a private sector retirement account. What’s more, myRA accounts are backed by the U.S. Treasury and are guaranteed not to lose value — and there are no fees. To explore this new option in more detail, click here.

Additional changes include increased Roth IRA income cutoffs and a larger saver’s credit threshold. For more detail, check out the new tax deductible rules for 2015 by clicking here.


While I know you can tell by now I’m excited about the new increases to the retirement rules for 2015, I also know by just re-reading what I wrote, that it can easily be confusing. If you have retirement planning questions or need help, remember I now have a team of fee-based financial advisors (the kind I always recommend in my books) available to do financial planning for you and your family. At Edelman Financial Services, we manage $13.7 billion dollars for more than 26,000 clients,1 and have been helping people just like you for more than 25 years.

If you have questions or want to take advantage of a free retirement portfolio review before the year end, you can make an appointment by clicking here or by calling (855) 215-7171. Again, the call is free and the first appointment to review your financial situation and have a portfolio review is also FREE. The end of the year is when I review how my portfolio is doing and make plans for next year, and you should too.

1As of September 30, 2014

How to Stop Fighting With Your Partner About Money

I was interviewed recently by contributor, Kathy Caprino on the subject of couples and money.  

When I researched and wrote Smart Couples Finish Rich®, I found that money was consistently ranked the number one source of marital fighting and unhappiness.

SCFR book cover

Usually it happens because we marry our financial opposite. I often joke in my Smart Couples Finish Rich Seminars that people are born one of two ways.  You’re either “born to spend” or “born to save,” and inevitably you fall in love with your opposite.

Couples always laugh when I say this but that’s because they know it’s true.  The question then becomes, well what do you do about it?  And most importantly, how do you resolve your financial fights without more fights?

Continue reading this post in its entirety, here.



Join Me on National TV

Be on TV with me! Calling all couples in the NY/NJ/CT tri-state area: Are you currently fighting with your spouse over a family financial decision that needs to be made? I’m looking for couples in the tri-state area to come on national television with me to share their story and get coaching to resolve their disagreement. Send me an email today at to be considered for this opportunity.

When Your Values Are Clear to You, Making Financial Decisions Becomes Easier

when your values are clear

Understanding what money really means to you, not only makes it possible to plan your future intelligently, it also makes it easier to stick to your plan. Values are what we believe in, they’re what motivate us and shape us. I invite you to get really clear on your own values. Join us for one of our upcoming Smart Women Finish Rich seminars. Register by clicking here.

Bring a friend and share this post so all the other smart women in your life can benefit as well. Thanks!


Smart Women Finish Rich book update planned for mid 2015

Smart Women Finish Rich 


When I pitched this book in 1997, all the big publishers met with me. But they all also told me that women wouldn’t buy the book. They said to me in meeting after meeting, “Women don’t buy investment books. You will be lucky to sell 10,000 to 15,000 copies.” Well, we proved them wrong — try over ONE MILLION in print.

Funny, right? Women buy 85% of all books and yet the publishers thought women wouldn’t buy one about money? Amazingly 20 years later,the publishers are still telling me “This won’t work.”  Fortunately, my publisher believes in you and I just convinced them to print more copies.

Thank you Random House. Next up — an update for 2015 (mid-year). Stay tuned!