Roth 401(k)s used to be fairly rare; now, they're starting to crop up by the bushelful. But while they may be the hot new investment, but the tax implications mean Roth 401(k)s aren't for everyone. To see if you'd benefit, ask yourself the following questions:
People approaching retirement like to think they'll spend less when they hang up their hat, but the reality might be a lot different than that. Here are some reasons why.
People retiring today are part of the first generation of workers who have paid more in Social Security taxes during their careers than they will receive in benefits after they retire. It's a historic shift that will only get worse for future retirees.
The Consumer Price Index, which measures inflation, is only as effective as the assumptions it makes -- in this case, about what you buy. If you spend more on certain things than most people, then the CPI will do a terrible job of reflecting the prices you actually pay. In particular, retirees often don't fit the CPI profile well at all.
Retirees may be past the days of resolving to work out more or buy fewer $4 coffees. Yet when it comes to money in particular, resolutions may be even more important for those living on fixed income. From financial nuts and bolts to more holistic aims, here's a look at seven worthy resolutions for retirees to commit to in 2012.
Social Security recipients, 55 million strong, will get a 3.6% cost of living increase next year. There has not been a cost of living increase from the fund in three years. This one is so small that it may harm consumer spending. It certainly won't help -- another likely drag on GDP.
Even if you've saved enough to live comfortably, the golden years don't buy you a reprieve from money worries. In fact, being retired can make you even more vulnerable to fiscal strife, if you're not prepared. Consider Tom Binns, who retired after a lifetime of savings, only to find that financial responsibilities didn't end with his 9-to-5.
Could you live on less than $30 a day? If you don't have a pension or adequate personal savings, that's what the typical retiree will get in 2036, even setting aside the near-term risks facing Social Security. But don't despair: There are ways to boost your benefits, and ensure that old age doesn't equal penury.
