A shocking exposé by the public-interest media group ProPublica reveals just what can happen to you in America if you get old and you don’t have the right system and paperwork in place to protect yourself.
Source link
All the major players are trying to surf this next wave of AI, including Intel, Nvidia, AMD and Arm Holdings.
Source link
According to the latest figures, Microstrategy’s investment in bitcoin has doubled, showing a 116% increase after the cryptocurrency’s value experienced a significant rise this past week. The company, specializing in business intelligence, has acquired a total of 193,000 bitcoins at an expenditure of $6.122 billion, with the current market value of their holdings soaring to […]
Source link
Amid a significant uptick in ERC20 tokens, especially meme coins, the expense of conducting transactions on Ethereum has notably increased, pushing the average fee to $22.19 for each operation. Further data indicates that executing a swap on a decentralized exchange (dex) platform could incur a cost of $66. Transfers and Dex Swaps Costlier as Ethereum […]
Source link
“Should I pay off the reverse mortgage and risk losing the money if she ends up spending years in a home?”
Source link
If you’ve got more money, you’ve got more retirement options. High-income earners have substantial resources at their disposal, presenting the potential for massive gains and crushing losses. However, practical strategies and careful financial decisions can help you retire as a multi-millionaire. High-income earners often have different retirement needs than others. Here’s how much high-income earners are saving and how to get your savings on track.
If you’re falling behind on your retirement savings goals, a financial advisor can help you create a financial plan.
How Much High-Income Earners Have Saved for Retirement
A high-income earner is an individual or household that earns a substantial amount of money compared to the average income in the country. High-income earners in the United States make over $500,000, putting themselves in the top 1% of the wealthiest households in the country. For a comparison, the median household income in the United States in 2022 was $74,580. As a result, you must make over seven times the typical household income to be a high-income earner.
While saving for retirement has no one-size-fits-all answer, high-income earners usually save more because of their financial abilities. Specifically, high-income earners save $2.68 million by their mid-to-late sixties.
Remember, having a high income doesn’t automatically equate to having a secure retirement fund. Proper financial planning, budgeting and investing are crucial for anyone, regardless of income level, to ensure a comfortable retirement. Additionally, factors like lifestyle choices, debt levels and unexpected expenses can all impact how much an individual or household can save for retirement.
Average Retirement Savings By Age of High-Income Earners
High-income earners start with significant retirement savings and accumulate more throughout the decades.
Let’s take a look at how much each age group has saved for retirement in 2022. Data comes from the Federal Reserve Board and is based on the mean amount for each age group:
Based on the data, retirement savers under age 35 saved almost one-tenth as much as those 75 and older; and almost one-third as much as those between ages 35 and 44. Retirement savers between ages 65 and 74 saved the most — over 12 times more than those under age 35.
Where Your Retirement Savings Stand
Evaluating your current retirement savings is a crucial but challenging task as you work your way to your golden years. A detailed retirement plan incorporates your monthly budget, savings goals and lifestyle, among other factors.
For example, you might decide to save specific amounts when you reach a certain age, such as three times your salary by age 40. On the other hand, you could set one savings goal, such as $3 million by age 65.
Additionally, your savings method is foundational to your plan. You could save 10% of your salary every year or set a stringent monthly budget and dump as much as possible into various assets.
Remember, your investment strategy is as critical as the money you set aside. For instance, choosing low-fee investments, maxing out your accounts (401(k)s and IRAs), and automating savings will help boost your nest egg as you go. Furthermore, minimizing debt means you’ll have more to put towards retirement.
The essence of retirement is setting specific savings goals and following a disciplined approach to achieve them. That being said, financial obstacles (divorce, education for children, etc.) and temptations to spend more in the present can hinder anyone’s retirement savings plan. As a result, consulting a financial expert could help you create and execute your plan.
How to Get Your Savings on Track
High-income earners have unique opportunities and challenges when it comes to retirement planning. Here are four common strategies to help get your retirement savings on track:
-
Maximize contributions to tax-advantaged accounts. Contribute the maximum allowable amount to your tax-advantaged retirement accounts. In 2023, the maximum annual contribution for your 401(k) is $22,500 ($23,000 in 2024); and $6,500 for your IRA ($7,000 in 2024). Additionally, catch-up contributions are available to savers age 50 or older, increasing maximum contributions by $7,500 for 401(k)s and $1,000 for IRAs in both 2023 and 2024.
-
Consider non-qualified deferred compensation plans. Non-Qualified Deferred Compensation (NQDC) plans have no contribution limits and more flexible withdrawal rules. These plans are available only for executive-level roles high-income earners often occupy, and can offer these employees a unique tax advantage by allowing them to set aside significant portions of their income for retirement beyond a 401(k)’s limits.
-
Expand your investment types. Open a brokerage account, buy real estate, or become a stakeholder in a small business. These alternatives could help diversify your portfolio and mitigate risk. Remember, each asset has specific tax implications.
-
Avoid lifestyle inflation. This will involve making intentional financial choices to prevent your expenses from rising with your income. Start by setting clear financial goals, both short- and long-term, to give yourself a clear sense of direction. Create a budget to track your income and expenses, distinguishing between essential needs and discretionary spending. Automate your savings and investments so a portion of your income consistently goes towards your financial goals. Then review and adjust your budget to align it with your evolving financial situation and goals.
Bottom Line
High-income earners can save a lot of money. But, they will need to take effective steps to secure their financial future. Key steps include maximizing contributions to tax-advantaged accounts, considering non-qualified deferred compensation plans and diversifying investments.
Tips for High-Income Earners Saving for Retirement
-
A comfortable retirement isn’t automatic, regardless of your income level. Fortunately, a financial advisor can help you tackle specific challenges for your retirement needs. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
-
Taxes and lifestyle can drain your finances, drying up your savings capacity. Here’s where high earners lose most in these areas and how to counteract them.
Photo credit: ©iStock.com/fizkes, ©iStock.com/szefei, ©iStock.com/brizmaker
The post How Much High-Income Earners Have Saved for Retirement appeared first on SmartReads by SmartAsset.
Tobacco stocks have long been ripe territory for income investors, and after years of consolidation and decline, the industry has been whittled down to three major players: Altria (MO 0.77%) and Philip Morris International (PM 1.28%), which were once part of the same company; and British American Tobacco. BAT deserves consideration from income investors open to tobacco stocks, but here we’ll focus on just Altria and Philip Morris, two companies with similar product portfolios and who have a history of working together.
When the old Philip Morris split in 2008 into Philip Morris International and Altria, which is the parent of Philip Morris USA, PMI took the territory outside the U.S., while Altria retained domestic operations, and the two companies have evolved since. Let’s take a look at how the two stocks stack up in various categories to see which is the better buy today.
Image source: Getty Images.
The state of the business: Altria vs. Philip Morris
Both tobacco stocks are subject to similar industry trends, including declining cigarette consumption. In its fourth-quarter earnings report, Altria reported a 7.6% decline in cigarette shipment volumes to 18.2 billion, and overall revenue, excluding excise taxes, fell 2.4% to $4.35 billion.
Historically, Altria has made up for falling cigarette volumes by raising prices, and it’s also looked to new businesses to deliver growth. However, most of those attempts have fallen flat. In 2018, it spent $12.8 billion to acquire a 35% stake in Juul Labs, though a regulatory crackdown erased nearly all the value of that investment, and what’s left of it now is some heated tobacco intellectual property rights.
An investment in Canadian cannabis grower Cronos Group also led to write-downs and losses, as that industry has underperformed since Canadian legalization.
Now, Altria is pinning its hopes on NJOY, which it acquired a year ago for $2.75 billion in cash. NJOY brings a diverse portfolio of both disposable e-cigarettes, branded Daily, and a vape with reusable pods, Ace. NJOY’s revenue is believed to be a fraction of Altria’s, so its value is in its own growth potential. Altria also sold the commercialization rights in the U.S. for Philip Morris International’s heat-not-burn system IQOS back to PMI, showing that it’s solely focused on NJOY as its next-gen product.
By comparison, Philip Morris seems to have several advantages over Altria. It reported a decline in cigarette volume of just 1.9% to 151.1 billion, as international markets have faced less tobacco regulation as the U.S. has. Philip Morris has also done better at developing its next-gen business as sales of its heated tobacco units (HTUs), largely IQOS, rose 6.1% to 34 billion, which is more cigarettes than Altria sold in total. PMI’s purchase of IQOS rights for the U.S. from Altria for $2.7 billion indicates confidence that it can make that product successful in the U.S.
Because of its success in HTUs, Philip Morris’s overall product shipment volume is nearly flat, and it is on the verge of driving positive growth as HTUs, which were up 6.1% in the latest quarter, replacing cigarettes. More than any other tobacco stock, Philip Morris has found success with next-gen products. That’s led to solid revenue growth as well, with adjusted revenue up 8.3% to $9 billion in the fourth quarter.
Profitability: Altria vs. Philip Morris
While Philip Morris is growing revenue faster than Altria, it’s the more profitable of the two companies based on margins, which is likely a reflection of much of its sales coming from the premium Marlboro brand, and the increased disposable income in the U.S. Altria recorded an adjusted operating income margin of 59.9% last year, compared to 33% for Philip Morris.
Still, Philip Morris managed to grow adjusted operating income by 3.7%, while Altria’s was flat.
Valuation and yield: Altria vs. Philip Morris
Altria currently trades at a price-to-earnings ratio of 8.3 and offers an impressive dividend yield of 9.6%. Philip Morris, on the other hand, offers a P/E of 17.2 and a dividend yield of 5.8%. That gives Altria a clear edge here.
And the winner is…
Altria might be more appealing to dividend investors strictly looking for yield, but Philip Morris is the better choice. The company has a much brighter future as its next-gen business has reached scale and cigarette volumes are declining more slowly, and it doesn’t face the same regulatory restrictions that Altria does.
Altria’s dividend does look safe for now, but it can’t rely on raising cigarette prices forever. While the NJOY acquisition could pay off, it could also take years for it to positively impact the bottom line. Only one of these stocks offers growth, stability, and high yield, and that’s Philip Morris.
Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool recommends British American Tobacco P.l.c. and Philip Morris International and recommends the following options: long January 2026 $40 calls on British American Tobacco and short January 2026 $40 puts on British American Tobacco. The Motley Fool has a disclosure policy.
Sales of Non-fungible tokens (NFTs) have witnessed a notable uptick this past week, climbing 11.62% to hit $442.02 million over the previous seven days. The most significant transaction was the sale of the ‘Alien’ Cryptopunk #3,100, donning a headband, for $16 million, with Bitcoin-based NFTs claiming the lead in sales volume across 22 different blockchains. […]
Source link
Realty Income (O 1.28%) isn’t an exciting company, but it has historically proven to be an attractive and reliable dividend stock. If you are looking to build a passive income stream to support yourself in retirement, it should probably be on your radar. And with the dividend yield near 10-year highs at 5.8%, now is a good time to take a closer look. Realty Income’s continued expansion in a key growth market is one of the big reasons to like it.
What does Realty Income do?
Realty Income is a real estate investment trust (REIT) that owns single-tenant properties. Most of its assets are retail, but it also has exposure to industrial properties and some more unique areas like vineyards and casinos.
The one theme that runs across all of its portfolio, however, is the use of net leases. Net leases require tenants to pay for most property-level operating costs. That keeps expenses low for Realty Income and protects it from rising costs for things like maintenance.
Image source: Getty Images.
Realty Income is not the only net-lease REIT you can buy. However, it is the largest of its most relevant peers, with a market cap of roughly $45 billion. That’s more than twice the size of the next closest competitor. Being so large is both a curse and a blessing. On the negative side of the ledger, it requires more investment to grow a large business. On the positive side, Realty Income has advantaged access to capital and the scale to make sizable moves.
And that brings the story to Europe. This is a relatively new market for Realty Income, but it already makes up around 15% of the REIT’s rent roll. At this point, it owns properties in the United Kingdom, France, Germany, Ireland, Italy, Portugal, and Spain. It just added France, Germany, and Portugal to that list in the fourth quarter of 2023, materially expanding its geographic reach. There are opportunities to grow in each of those countries and plenty of additional countries it could add in the future.
Realty Income is tapping a new market
So Realty Income is doing a good job of pushing into a new geographic region. Great! But there’s another important piece to this puzzle that investors need to understand. To provide some context, the United States has long used the net-lease approach and is, for the most part, a mature market. In Europe, the net-lease approach is fairly new and is only just starting to gain traction.
Some numbers will help. In the United States, the addressable net-lease market is estimated to be about $5.4 trillion in size with 12 public net-lease REITs accounting for about 5% of the total. Europe’s addressable market could be as large as $8.5 trillion with just two public competitors accounting for less than 1% of the total. Simply put, Realty Income has a lot of runway for growth in Europe before the region is anywhere near as developed as the U.S. market.
Realty Income’s size, meanwhile, is an advantage in Europe. It is big enough to take on large portfolios of properties in a single transaction. It has a strong balance sheet and advantaged access to capital, which increases the certainty of deals getting closed quickly and on time. And its size advantages mean that it can be an ongoing partner to asset owners as they look to monetize properties over time. Europe is a huge lever for long-term growth.
Realty Income is doing what it should be doing
Realty Income isn’t diving in with both feet in Europe; it is taking a measured and reasonable approach as it builds out this growth platform. That’s exactly what you would expect from this conservatively run REIT. But don’t take that to mean that Europe isn’t an exciting opportunity, because it is. And Realty Income is tapping into that opportunity in a way that should please long-term income investors.
All in all, Realty Income’s 29-year streak of annual dividend increases looks like it has plenty of room to keep going, helped along by the REIT’s European expansion.
Nearly nine out of 10 seniors 65 and older receive Social Security benefits, and more than a third of them rely upon it for more than half their income. So, you’d think that Americans would be pretty familiar with how the program works. But there are a shocking number of misconceptions out there.
This is a problem because failing to understand the ins and outs of Social Security could cause you to make costly mistakes, like signing up at the wrong time or skipping Social Security altogether because you don’t think you qualify. We’re going to clear up three of the top misconceptions as outlined by a recent Mass Mutual survey right now.
Image source: Getty Images.
1. Only U.S. citizens can claim Social Security
Being a U.S. citizen isn’t a requirement for earning Social Security. Even noncitizens may qualify for a spousal benefit if they’re married to a qualifying worker. Noncitizens can also become eligible by working long enough to earn 40 credits.
A credit is defined as $1,730 in earnings in 2024, and you can earn a maximum of four credits per year. So, most people who have worked and paid Social Security taxes for at least 10 years should qualify.
It’s even possible for those with fewer work credits to qualify if the country they’re a citizen of has an agreement with the United States. In this case, their work credits from their home country could make them eligible for Social Security benefits once they’re old enough.
2. Social Security benefits are taxed just like retirement account withdrawals
The government doesn’t require you to pay income taxes on all of your Social Security benefits as it does with traditional 401(k) and IRA withdrawals. Some seniors don’t owe taxes on their Social Security checks at all, but it’s becoming increasingly common for retirees to give a slice of their benefit back to Uncle Sam.
Whether you’ll owe taxes on your Social Security checks depends on your marital status and provisional income — that’s your adjusted gross income (AGI) plus any nontaxable interest you have and half your annual Social Security benefits. The following table outlines what percentage of your benefits could be taxable:
|
Marital Status |
0% of Social Security Benefits Taxable |
Up to 50% of Social Security Benefits Taxable |
Up to 85% of Social Security Benefits Taxable |
|---|---|---|---|
|
Single |
Provisional incomes under $25,000 |
Provisional incomes between $25,000 and $34,000 |
Provisional incomes greater than $34,000 |
|
Married |
Provisional incomes under $32,000 |
Provisional incomes between $32,000 and $44,000 |
Provisional incomes greater than $44,000 |
Source: Social Security Administration.
To be clear, the above table only reflects what percentage of your benefits could be subject to taxes, not what rate you’ll pay. The IRS will tax the appropriate portion of your Social Security checks at your income tax rate.
You should also keep in mind that some states tax Social Security benefits as well. But each sets its own rules for which seniors owe these taxes.
3. Delaying Social Security grows your checks indefinitely
It’s true that delaying Social Security benefits boosts your checks over time. How much you get depends on your age at the time and your full retirement age (FRA). This is the age when you become eligible for your full benefit based on your work history. For most workers, it’s between 66 and 67.
The following table illustrates how quickly your benefits will grow per month for those with FRAs of 66 and 67.
|
Rate of Increase |
Full Retirement Age of 66 |
Full Retirement Age of 67 |
|---|---|---|
|
5/12 of 1% per month |
From 62 to 63 |
From 62 to 64 |
|
5/9 of 1% per month |
From 63 to 66 |
From 64 to 67 |
|
2/3 of 1% per month |
From 66 to 70 |
From 67 to 70 |
Source: Social Security Administration.
You’ll note that benefits stop increasing at 70 regardless of your FRA. This is when you qualify for your maximum Social Security benefit. There’s no reason to delay checks beyond this age, as you’ll just cost yourself money.
Hopefully, none of the above information surprised you, but if it did, you may want to rethink your Social Security claiming strategy. And if you have any questions about your specific situation, it doesn’t hurt to reach out to the Social Security Administration for clarification.