This book’s full title is What’s Next . . . For You?: The Gussin Guide to Big Changes, Big Decisions, and Big Fun. In this book the Gussins share the experiences of what happened after they retired. They prefer to say they “graduated” into new careers rather than retired. After retiring from their corporate careers they went on to start new careers as writers, publishers, and vineyard owners. This book reads as somewhat of a memoir of their lives after their retirement. It was an interesting read but I was a bit disappointed since the word “guide” in the title led me to believe it would be a how-to type of book. If you just read the book for what it is it can be a nice inspiration for anyone who is looking to start a new career after their traditional retirement.

I am giving away a copy of this book. To enter all you need to do is leave a comment. One entry per person and you must have a U.S. mailing address. The winner will be chosen at random on Wednesday, February 24.

*** The winner of the giveaway is Richard Orlin. Thanks to everyone who entered.

President Obama has proposed changes to the saver’s credit as part of his policies to help the middle class. The saver’s credit would be expanded by matching 50% of the first $1,000 of contributions by families earning up to $65,000 and providing a partial credit to families earning up to $85,000. Also the tax credit would be refundable meaning that even if a taxpayer had no income tax liability they could receive the saver’s credit as a refund.

This credit used to be known as the “Retirement Savings Contribution Credit.” If you qualify you can claim a credit of up to $1000 for eligible contributions to qualified IRA, 401k, and certain other retirement plans. Since this credit is not refundable it can’t be larger than the tax amount the taxpayer would have had to pay without the credit.

Currently single filers can get a 50% credit of their eligible contributions if their AGI is up to $16,500; a 20% credit if their income is up $18,000: and a 10% credit if their income is up to $27,750. If the single filer’s AGI is over $27,750 they are not eligible for the credit.

A credit equal to 50% of eligible retirement contributions sounds nice but most people making $16,500 and less are probably not contributing or not contributing much to a retirement plan. My guess is that most people who take the credit are those who are eligible for the 10% rate. Although this credit is a nice perk for some I doubt it is actually enticing people to contribute to their retirement plans.

If your income is under $27,500 though be sure to check if you are eligible for this credit. The Saver’s Credit is probably one of the most overlooked credits.

If you owe a small amount in taxes it might be worthwhile to make an eligible retirement contribution just to take advantage of this credit considering you would get 10-50% of your money back.

As part of Obama’s middle-class plan he includes a proposal for an automatic IRA. This has been proposed before but it has never been implemented. Here are a few details of this plan.

Under the plan certain companies that do not currently offer a retirement plan would be required to enroll their employees in an IRA. An automatic deduction of 3% would come out of the employee’s paychecks and be deposited into the account. The employee could opt to lower or raise the deduction or opt out altogether. It is not yet determined what would be the default investment for the IRA.

The positive benefit of an Automatic IRA would be that more workers would be covered by a retirement plan. Currently about half of the workforce lack employer-based retirement plans. Many workers delay contributing to a retirement plan and an Automatic IRA would greatly increase employee savings rates.

The negative aspect of an Automatic IRA is that it would be an added administrative expense for small businesses. Although those proposing the Automatic IRA state that the expense would be low it remains to be seen if that is actually the case.

There has been a lot of speculation about how long Social Security will be around and in what form it will be in the future. Figures vary but it is reported that the trust fund will start running at a deficit in 2018 and will be unable to pay full benefits by 2040. I have 22 years until I can file for Social Security so I decided to do some research on Social Security.

I was surprised to find out that you can file at 62 and still get your full benefit amount at age 70. With the uncertainties surrounding Social Security I would prefer to start getting my benefits as soon as possible. In order to get benefits at 62 and still get full benefits at 70 does require some work. The Social Security Administration allows you to “withdraw your application” for benefits at 69, reapply at 70, and get the same larger monthly check as someone who delayed taking Social Security until that age. The catch is that you have to pay back all benefits you have received. You won’t have to pay interest on the money though and you can get either a tax credit or tax deduction on any income taxes you paid on the Social Security.

This works if you are able to save and invest your Social Security benefits. Doing this gives you will roughly $20,000 in earnings if the benefits are saved at 5%. In addition to the extra $20,000 you will also have a significant increase in the amount of Social Security benefits. For those born after 1960 like myself there is a 77% increase in benefits from age 62 to 70. This option may not be around by the time I’m ready to file for benefits but for those retiring soon it is something to consider. For a more detailed look at the math involved visit the Retire Early Home Page.

*This post was previously published at TightFistedMiser.com

With a new year comes a new limit for contributions, however 2010 will have the same contribution limits as 2009.

For 2010, the contribution limit for Roth IRAs will be $5,000 for Age 49 and Below; $6,000 for Age 50 and Above (to reflect the “catch-up” amount).

If you are getting a jump on 2010 contributions, remember to mark your contributions as 2010 Roth IRA contributions or your brokerage may be confused. If you don’t write anything, your brokerage will likely mark the contributions for 2010 but it’s better to be safe than sorry.

Currently if you earn over $100,000 you are not eligible to convert your Traditional IRA to a Roth IRA. The Tax Increase Prevention and Reconciliation Act of 2005 abolished the income limit and the change will take effect as of Jan. 1,2010. The government has also included a one-time option to spread your tax payment over two years. If you convert in 2010 you could pay 50% of the tax owed in 2011 and 50% in 2012. You will need to plan ahead to decide whether it is better for you to pay the total tax bill in one year or two.

Whether you should choose to convert or not is another question. This depends on whether you would come out ahead paying the taxes at the time of conversion or when you retire.

Also as noted in a previous 2010 Traditional IRA conversion post the removal of the income limits for conversion creates a loophole that effectively removes the income limits for contributing to a Roth IRA.

Every once and a while, someone emails me to ask how I find a good stock broker for my retirement assets. What do I look at when I compare stock brokers? My answer, almost always, is “it depends.”

Ahhh I bet you hate that answer too. Well, unfortunately, it’s the truth. Who you decide to use as your stock broker will depend on what you want it for. If you want to invest primarily in mutual funds, I recommend you go with a mutual fund company. If you like Fidelity funds, then open a Fidelity account. If you like Vanguard funds, go to Vanguard Group for your retirement account. For mutual funds, going with the broker that runs them makes the most sense because you don’t have to pay a transaction fee to buy and sell shares. With a Vanguard account, you can buy or sell at will.

If you want to trade in stocks, it comes down to cost. I want a broker that has a good reputation and affordable fees. If I want to trade a lot of options, then I want one that gives me good prices on options trades. If I want to trade straight equities, I want one with cheap commissions on stock trades. After that, I want to look at the account minimums and any other fees, such as an account maintenance or inactivity fee. In all truthfulness, I never pay an account maintenance or inactivity fee. There are far too many brokers for you have to stand dealing with a broker that nickels and dimes you for those fees.

While no one welcomed the news of no cost of living adjustment (COLA) in 2010 for Social Security recipients, I didn’t hear anyone complain about an “artificially high” 5.8% increase this year (2009). Artificially high is the term used in a NY Times article discussing the $250 Social Security bonus payment President Obama has discussed recently.

I thought that was an interesting idea lost in the discussion of Social Security COLA.

When it was revealed that there would be no cost of living adjustment for Social Security in 2010, people were livid. Just reading the comments on my blog revealed that people were furious there was no adjustment next year, so you can imagine how the broader public felt about it.

It turns out the outrage has yielded results because yesterday, President Obama called on Congress to approve $250 payments to the more than 50 million senior citizens on Social Security. This would make up for the lack of a COLA for next year. Incidentally, since automatic adjustments were implemented for Social Security in 1975, 2010 would’ve been the first year there was no adjustment.

The total cost of the move is estimated at $13 billion.

In addition to the Social Security bonus payment, there was also moves to prevent a reduction in contribution limits for retirement funds like IRAs and 401(k)s.

Obama calls for $250 payments to seniors [Associated Press]