Women who haven't Saved - Can you help?

[aja8888]

I went back and read the OP and a few posts after that and nowhere do I see anything where these people have asked for help in improving their financial situation.

So why are we going on and on about this issue?

Because we have too much time on our hands and wish to add our personal ideas. If you read ALL the posts, the OP already chimed in and added additional information.

 

[MC Rider]

Be a deadbeat. Borrow money and never pay it back. Die first, you win!

 

[TheWizard]

Because we have too much time on our hands and wish to add our personal ideas. If you read ALL the posts, the OP already chimed in and added additional information.

I did not read all of the posts in this thread..

 

[MarieIG]

Nowadays, we have ETFs that you can buy for any amount ($50?) when using market orders.
(Limit orders require whole shares, at Vanguard anyway...)

You can now buy $1 of a Vanguard ETFs at Vanguard.

(You can also add to pre-existing Vanguard funds with buy orders of $1, and submit pre-scheduled buys of Vanguard ETFs (i.e. on a monthly basis) for $1 or more.)

IIRC, Fidelity also allow $1 orders of some of their ETFs, and no minimum to open an account.

 

[TheWizard]

You can now buy $1 of a Vanguard ETFs at Vanguard.

(You can also add to pre-existing Vanguard funds with buy orders of $1, and submit pre-scheduled buys of Vanguard ETFs (i.e. on a monthly basis) for $1 or more.)

IIRC, Fidelity also allow $1 orders of some of their ETFs, and no minimum to open an account.

Ok, fine.
But this still does not address the issue of this thread.
Are these women struggling to buy investments or are the just trying to slide through the final ten years of their lives without any big problems?

 

[MarieIG]

Ok, fine.
But this still does not address the issue of this thread.
Are these women struggling to buy investments or are the just trying to slide through the final ten years of their lives without any big problems?

I responded to OP earlier in the thread.

 

[Koolau]

I went back and read the OP and a few posts after that and nowhere do I see anything where these people have asked for help in improving their financial situation.

So why are we going on and on about this issue?

I intuited the call for help (second hand.).

 

[Artiscara]

One thing that both should check into is the Retirement Savers Tax Credit. It is akin to an employer match on a 401k but by the US government for lower income taxpayers who save for retirement.

It's a non-refundable tax credit. For DS we move money from his brokerage account to his Roth calibrated so he gets all of his withholdings refunded to him.

It's basically free money courtesy of the US government.

https://www.nerdwallet.com/article/taxes/can-you-take-the-savers-credit

Thank you, I sent it to them

 

[Artiscara]

I'm going to throw a rock in the pond here. OP said that these women do not have saving and have income levels that make it difficult to save. Nowhere did he say that they were stupid or lacked a firm grasp of the obvious. IMO many of the posts here verge on being insulting.

Our financial situations are often due to conditions beyond our control. Good or bad luck is probably the biggest thing. Medical debt is the biggest factor nationally IIRC. SAHM and a divorce might be a factor, as might a past need to leave a job to provide care for a spouse or parent. A job layoff due to a plant closing, .. and so on.

Give 'em a break folks. Don't assume that they are stupid or do not have a firm grasp of the obvious.

Thank you. They are both very intelligent but as you suggest life's situations have caused these women to be living too close to their income. i'm just trying to help them and yes they have asked for help, so if you have any ideas I am really appreciating hearing them and will research them.

 

[OldShooter]

Thank you. They are both very intelligent but as you suggest life's situations have caused these women to be living too close to their income. i'm just trying to help them and yes they have asked for help, so if you have any ideas I am really appreciating hearing them and will research them.

My best suggestion was in Post #7, to find and use the state-level resources that are there for them. I think every state has a state board or other organization that funnels local and federal money to support seniors. Meals on Wheels and congregate dining are typical of these. There is also help with transportation and housing plus a wide range of referral opportunities to other agencies and organizations.

 

[pb4uski]

Thank you, I sent it to them

I figured I'd add a little color since I just went through this for someone's return and there is a progression of steps to optimize the credit... that is, get as much credit as possible for as little retirement contributions as possible and get the optimal mix of traditional and Roth IRA contributions.

First, look at your Form 8880 before any contributions. The most that they will provide credit on is $2,000 of contributions. The first tier is 50c on the dollar and the second tier is 20c on the dollar.

Traditional IRA contributions reduce your income and move you towards the 50c tier. So first, I look at the 8880 to see if it might be possible to reduce income to get to the 50c tier. If so, do tIRA contributions to get into the 50c tier. It might be prudent to add $100 in case of an overlooked 1099 or something to make sure you don't later get thrown into the 20c tier.

Then, add Roth contributions as needed to adjust the credit so that either the credit is maximized or all federal income taxes withheld are refunded. The mazimum credit is $1,000 so if you are in the 50c tier or can make tIRA contributions to put you in the 50c tier, the maximum total retirement account contributions would be $2,000. Anything more than that doesn't benefit you.

Also, there isn't any point to making more contributions than needed to simply get all FWT refunded since any additional credit isn't refundable.

The return that I just completed, the taxpayer was in the 20c tier but just a little over the income level for the 50c tier. So first, I included tIRA contributions for the excess of their income over the income limit for the 50c tier plus $100 safety margin. After that tIRA contribution they still had net tax of $350, so I added $700 of Roth contributions which increased the credit by $350 at 50c on the dollar, so their net tax was $0 and their refund was for ALL federal income taxes withheld.

This person is in their 30s, so the small tIRA contribution is effectively locked up until they turn 59-1/2 unless they are willing to pay the 10% penalty, but the Roth contribution can be withdrawn at any time without penalty and can serve as a secondary emergency fund.

However, keep in mind that any tIRA or Roth withdrawals are counted as negative contributions for the purpose of the credit so to while one could contribute to a Roth, claim the credit and immediately withdraw the Roth contribution and have the money for spending, it would mess up your qualification for the credit in subsequent years (not just the next year because withdrawals for more than a single year are factored into the credit calculation).

While it is complicated and requires a little playing with the numbers, what is neat is that you can calibrate the tax-deductible and after-tax contributions to optimize the credit and end up with $0 tax.