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Podcast: Prepaid Cell Phones & Tax Preparation

February 25, 2015 Podcast

Jim shares the latest on his decision to drop AT&T cell phone plan to go with a Virgin prepaid account. What salary does it take to buy a home in America’s largest cities? Why has Jim Paris gone 100% to cash and sold his stock investments? And IRS audit rates are at a 10 year low, how should this affect your tax preparation this year?

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Podcast: Social Media Stocks

November 5 Podcast

On this episode – Are for-profit college degrees worth it? Is investing in social media stocks a good idea? How scammers are using technology to deceive people and does it make sense to pay your bills in advance to create a financial cushion?

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Podcast: Binge Saving For Retirement

September 25 Podcast

On this episode – binge saving for retirement, standing up to financial bullies, what people will give up to accumulate $1 million dollars, and an update on Facebook stock.

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Podcast: Protect Yourself From Bank Hacking

August 28 Podcast

On this episode – Russian hackers access thousands of U.S. bank accounts, what can you do to protect yourself? What companies and industries offer the best 401k plans? New digital currency platform provides easy way to set up multiple currency portfolio. What high corporate tax rates mean to you, a case study of Burger King’s plans of moving its corporate operations to Canada.

Podcast: New Options For Low Interest Rate Loans

August 13 Podcast

On this episode – the return of the subprime mortgage. New options for loan interest rate loans to pay off credit cards, how one couple underpaid their mortgage by just 70 cents and ended up in a financial nightmare, and the importance of properly designating IRA beneficiaries.

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Podcast: The Good And Bad Of Setting Goals And Resolutions For The New Year

An update on the growing popularity of digital currencies and an interesting take a ‘Nostradamus’ prophecy guy has on it, the good and bad of setting goals and resolutions for the new year, a new ‘risky’ investment becomes available in 2014, and how one family paid off more than $118,000 in debt.

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Podcast: The Capital Value Of Passive Income

The capital value of passive income, saving money by going vegetarian, can you sell your home without a real estate agent? and Does the 0% capital gains rate apply to you?

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Podcast: Is Ripple The New Bitcoin?

Is Ripple the new Bitcoin?  The tax implications of profits in virtual currency.  Holiday scams and the pitfalls of investing in collectibles.

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Podcast: Financial Documents Your Family Needs To Know About

Financial documents your family needs to know about.  Bitcoin up above $200 again. Buying stock in dollar stores.  What is a ‘safe’ withdrawal percentage from retirements plans these days?

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Podcast: The Role Of Psychology In Investment Success

The role of psychology in investment success. How to fire your financial adviser. How to avoid affinity scams. Is your credit score affecting your love life?

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Putting Your Retirement Savings Into Overdrive When You Turn 50

It’s a generalization to say that the kids are out of the house, the dog has died, and it’s just you and the wife (or husband) by the time you reach age 50, but the reality is that many people do find themselves with more limited obligations…and, therefore, fewer expenses…when they reach the “big 5-0.” So, what are you going to do with all that extra money now? Take more vacations? Enjoy some more dinners out? Buy that boat you’ve long been eyeing?

There’s certainly nothing wrong with having some fun should you find yourself with a little more cash these days, but do not forget that you can also apply some of that money to improving the balances in your retirement plans. Until you reach the age of 50, you may deposit up to $5,500 per year into an IRA (note, however, that’s also a total of $5,500 to all of your IRAs, in case you have more than one). However, once you turn 50, you can add $1,000 to that yearly contribution limit, which means you have the ability to make an even bigger difference in the size of your retirement account at that time.

Let’s illustrate the impact of this extra, or “catch-up,” contribution you can make by turning 50. Let’s say, for the sake of discussion, that you have contributed nothing prior to turning 50 (which, hopefully, is not the case). If you contributed the $5,500 per year on the basis of 12, equal, monthly contributions of $458.33 per month, you’d have about $232,000 by the time you turned 70, if we assumed an annual rate of interest of 7%. Now, by adding the $1,000 to your contributions (again, spread over the course of 12 monthly contributions), your balance at age 70, assuming the 7%, becomes almost $275,000. This means that your extra $20,000 in contributions over the course of those 20 years adds $43,000 to the total of what you will have accumulated by age 70.

If you participate in a 401(k) plan at work, the contribution benefits associated with turning 50 are even more substantial; annual contribution limits for folks under age 50 are presently at $17,500 per year, but when you turn 50, you can add another $5,500 per year to your total 401(k) contributions. Assuming, then, that you’re already maxing the maximum contributions by the time you reach age 50, you can realize another $232,000 (again, assuming the 7% annual rate of return) by the time you’re 70 just on the basis of having made your annual “catch-up” contributions. Note that these limits often change, so depending on when you’re reading this, they may be different at that time (they are regularly adjusted upward to account for inflation).

The power of the time value of money is great…but it’s even greater when you actually have some, or more, to sock away. With average life expectancies for Americans sitting somewhere around 78 to 80 years of age, it’s prudent to take whatever “spare change” you can find and apply it to your wealth-building programs, and with the higher contribution limits afforded to you once you hit 50, your opportunities to reach your goals are better than ever.

Robert G. Yetman, Jr.
ChristianMoneyPlus Co-Founder