Category Archives: Millennials

What Are The Factors Affecting Your Paycheck?

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2016_0419-TakeHomePayIt’s just a hunch but I’m willing to bet that a lot of you earning a paycheck don’t fully understand all the deductions that are taken from your gross amount. First of all, these deductions are actually called taxes. That’s right, you’re now in that exclusive club that helps run our country as smooth as it can.

Depending on what state you live in determines how much in taxes you pay. The basic taxes we all pay are Federal Income Tax, Social Security and Medicare. Federal is just how it sounds. It pays for what’s needed throughout our country including National Defense. Social Security is there to assist you financial when you reach retirement age. Trust me, you’re going to need that. As you will with Medicare, that’s also for retirement age to assist with basic health care.

All states are not created equal when it comes to taxes. A number of states have a State Tax and could also have a City Tax. There lots of other taxes out there but I think you get the idea. Death and taxes…I’ll take taxes!

Roth IRA for Millennials = Huge Benefits.

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2013_12-TMTest03Attention Millennial Parents and Grandparents – Want to do something special for your millennial-aged young person? As we approach tax time, you are familiar with the benefits of retirement savings for yourself and your spouse. Savings for retirement defers the taxes you will pay, and in some cases, like with a Roth IRA, you can avoid paying any additional taxes on the money you invest as well as all future earnings.

Well, the same works for your millennial children or grandchildren. After all, they have their entire lives ahead of them. A twenty-something individual has at least  40+ years until they are of retirement age. Who is better suited for benefitting from growth over time?

Say for example you have a grandson who is nineteen years old in their second year of college we’ll call him Nathan.

Nathan is in his second year of college, and works part time earning about $8500 a year. Did you know that Nathan is eligible for a Roth IRA up to $5500 for the (2016) year? Well, the odds are that Nathan himself can’t afford to invest in his Roth IRA at all, after all, he’s a college student and he needs all the extra spending money he can earn. But his parents or grandparents can help him by gifting him the funds.

“We starting doing this with our granddaughter Jessica”, said Maggie S. of Fort Lauderdale, FL, “when she was 17 years old, she worked part-time and earned like under $5000 for the year. We sat down and talked with her about the incredible benefits of compounding interest and dividends and we told her we would do this for her as long as she agreed to not touch the money until she is at least 65. We even had her sign a letter agreeing to this. Now for the last three years, we have deposited between two and three thousand a year in a Roth IRA. We have it invested in a low-cost total stock market index fund.”

If you want to create a real legacy with long-term benefits, getting your millennially-aged kids into Roth IRA’s at an early age can be huge.  For example, if for five years, you invest $2000 each year into a Roth IRA, starting when they graduate from high school – here is an example of the potential long-term growth of this very small initial $10,000 investment.

$10,000 investment’s potential growth over 45 years with all dividends and interest reinvested:

Warren Buffet was recently asked, with his vast wealth of investing knowledge, how would he invest for retirement. He stated that he would keep it very simple. Invest 90% in a low-cost S&P 500 Stock Index Fund and 10% keep in cash or short-term government bonds. You can read his comments by CLICKING HERE

So, keeping it simple, with all the market ups and downs, what has been the historical yearly rate of return of the total stock market since 1966? 11.79%

5 Numbers That Spell Fresh Financial Trouble For Millennials

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From Forbes – Ask 5,500 Millennials about the state of their finances and you’ll get 5,500 reasons to feel a little depressed about the financial security of the largest generation in the U.S.

This is what global tax and consulting outfit PricewaterhouseCooper recently discovered when it surveyed 5,500 people between the ages of 23 and 35 about their personal finance knowledge, the state of their savings, the status of their debt, and their overall satisfaction with their financial lives. The results were not pretty.

Given the relatively derelict state of America’s personal finances, this isn’t altogether surprising. But the study makes the argument that Millennials’ small savings and high debt is compounded by their low personal finance IQ — and that this, in turn, could have a domino effect on other generations.

“Millennials owe a lot. They know too little,” says Annamaria Lusardi, the academic director at George Washington University’s Global Financial Literacy Excellence Center, which partnered with PwC to put out the research. What’s more, she says, Gen Y’s ”struggle with debt may eventually become our problem, too.”

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The Pros and Cons of Avoiding Credit Cards

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From the NYTimes –

Millennials are far more likely than older adults to make do without credit cards.

More than 60 percent of millennials — defined as those age 18 to 29 — said they did not have a single major credit card, according to a survey published this week by Bankrate.com. In contrast, 35 percent of adults over 30 said they had no cards. (For the survey, Princeton Survey Research Associates International interviewed 1,161 people by telephone in late July and early August. The margin of sampling error is plus or minus 3 percentage points.)

Click here to continuePile of Credit Cards