RE/MAX 440
John F. O'Hara

John F. O'Hara
731 W Skippack Pike  Blue Bell  PA 19422
Phone:  610-277-4060
Office:  215-643-3200
Cell:  267-481-1786
Fax:  267-354-6973

My Blog

What Savers Can Expect from Auto-IRAs

June 17, 2015 1:48 am

If automatic IRAs, or auto-IRAs, were made universal, how significant could their impact be for increasing retirement readiness and reducing the national retirement savings deficit?

According to an evaluation by the Employee Benefit Research Institute (EBRI), the success of auto-IRAs boils down to age, opt-out rates and default contribution rates.

IRAs, authorized by Congress in 1974, were designed to provide a tax-deferred way to save for retirement by people who do not have access to a workplace retirement plan (especially for those at small employers, which tend not to sponsor retirement plans). While IRAs have been shown to produce significant retirement accumulations by those who contribute to them, the vast majority of people who do not have a tax-qualified retirement plan at work also do not take advantage of an IRA.

In response, proponents of auto-IRAs have been pushing for legislation which would require certain employers without retirement plans to automatically invest a designated amount of each employee’s compensation to an IRA, unless the employee changes the amount of the contribution or opts out of the arrangement. Employer contributions are not generally required in these arrangements; rather, an employer’s payroll system would be used to regularly deduct the savings from each paycheck.

In a best-case scenario, EBRI projections estimate the introduction of an auto-IRA for households currently ages 35-39 working for small employers would increase the probability of a successful retirement by 8.4 percent.

Looking at the potential impact on the estimated $4.13 trillion national retirement savings deficit, among households where the family head is ages 35–64, adding auto-IRAs with no opt outs would reduce the savings deficit to $3.86 trillion, a 6.5 percent decrease.

Source: EBRI

Published with permission from RISMedia.


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How Much Should New Homeowners Set Aside for Repairs?

June 17, 2015 1:48 am

Owning a home comes with its fair share of expenses, including mortgage and insurance payments and maintenance costs, but how much can a new homeowner reasonably expect to spend on unexpected repairs?

"My recommendation for homeowners is to take a few simple precautions before moving into their home," says Marianne Cusato, HomeAdvisor.com. "Complete a sewer inspection, check that the insurance policy covers water damage, and set money aside for home emergency projects. Homeowners should plan on spending 1 percent of their home's purchase price on repairs and emergencies each year."

According to HomeAdvisor.com data, more than half of homeowners encountered unexpected home projects within the first year of owning a home. More than half also spent more time on projects than originally anticipated, and less than half spent more money than anticipated.

The most frequently cited emergency projects include blocked toilets and pipes, a clogged drain, a broken heating or cooling system and water leaks. These unexpected repairs can cost homeowners anywhere from $199 to $2,068, according to HomeAdvisor.com.

In the first year of homeownership, most new homeowners tend to focus on improvements that increase curb appeal, such as installing landscaping, a sprinkler system, wood fence or deck. According to HomeAdvisor.com, the average cost of these outdoor projects is $12,850.

Source: HomeAdvisor.com

Published with permission from RISMedia.


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