Comprehensive Planning. Lifelong Solutions.

What you should know about myRA accounts

By Hook Law Center

MyRA accounts are a new type of government-backed starter retirement savings account, designed for people whose employers do not offer retirement accounts. As of now, anyone who has direct deposit for their paycheck can sign up and start saving.

MyRA accounts are free to open and are sponsored by the government. Account holders can contribute directly from their paycheck. To qualify to open an account, an individual’s income must be less than $129,000, while a married couple’s household income must be less than $191,000.

The accounts will be especially beneficial for people who work part-time and those who work at small businesses that do not offer retirement benefits. However, anyone can sign up for a myRA, even those who do have an employer-sponsored retirement plan.

MyRAs are basically the same as Roth IRA accounts, in which after-tax dollars are invested so that earnings can be withdrawn without paying taxes in retirement. MyRAs will be invested in government bonds only, which means that they currently have lower returns than a typical IRA. However, there are no fees, and since the accounts are backed by the government, it is impossible to lose the original investment.

Because myRAs are intended to be a starter retirement savings account, there are some limitations on how they can be used. Account holders can contribute up to $5,500 per year. If the account balance exceeds $15,000, or if 30 years have passed, the account must be rolled over into a Roth IRA in the private sector.

Posted on Thursday, April 16th, 2015. Filed under Estate Planning.

Increasing number of American retirees affected by student loans

By Hook Law Center

A record number of older adults now carry student loan debt, and the phenomenon is still growing: people over 60 are in the fastest growing age group for college debt, according to a report from The New York Times.

A record 2.2 million people age 60 and older now hold student loan debt — three times as many as in 2005. Collectively, older adults owed $43 billion in student debt at the time of the report.

Retirees may have student loan debt from a number of different sources. Some carry debt from their own educations, especially those who went back to school later in life. Others took out student loans to help pay for their children’s or grandchildren’s tuition. Either way, skyrocketing tuition rates make the burden high for those over sixty.

Additionally, a larger portion of older adults who have student loan debt are now having difficulty paying. Nearly 10 percent of older adult borrowers are at least 90 days behind on payments (as compared to about 6 percent in 2005).

Student loan debt can have devastating effects for seniors, as the government has the right to withhold a portion of a person’s Social Security payments to cover student loans. As of September 2014, 119,000 older adults were having their Social Security checks garnished.

Some older adults find themselves working long past their intended retirement age, sometimes on a part-time basis, to manage the educational loans.

Student loans are one of the longest-lasting forms of debt. Most student loans cannot be discharged during bankruptcy, although some lawmakers are pushing for reform.

Posted on Monday, April 13th, 2015. Filed under Estate Planning, Long-Term Care.
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