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Should you expect a 10% annual return? No, but you don't need to

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Should you expect a 10% annual return? No, but you don't need to
Contrary to what an expert says, investors don't need a 10% annual return to end up with a million dollars in savings by the time they retire, according to this article on CNBC. For example, clients could still amass more than a million dollars if they contribute $5,500 to a tax-advantaged Roth IRA for 40 years and get an annual return of 6.5%, says an analyst. "That's nothing to sneeze at. If you take small steps over time, you can easily have $1 million in your retirement."

College Savings 101: Arguments against 529 plans and alternatives that might work better
Parents are advised to put their financial health ahead of savings for their child's college education, writes an expert for Kiplinger. Before saving in a 529 or a retirement plan, parents should build an emergency fund, buy the right amount of life and disability insurance and pay off debt with high interest rates, writes the expert. When contributing to a 529 college savings plan, parents should be mindful of the annual gifting limits, as they will need to file a gift tax return if their contributions exceed the limits. They will also owe federal taxes on non-qualified withdrawals.

Don’t have kids? 7 ways to prepare for old age
Seniors who do not have any children are advised to engage in serious planning for an older life, as their options will not be the same as those who have children, writes an expert on MarketWatch. They should consider buying long-term care insurance, living in retirement community, updating their will and seeking professional advice to develop a sound retirement plan, writes the expert. "With no adult children around to serve as a safety net, the sensible path for us is to make some decisions while our bodies are still functioning adequately and our brains are still sharp."

What to do with your 401(k) plan? Consider moving it to an IRA
From a tax perspective, cashing out an old 401(k) plan can be a wrong move, as this option will trigger income taxes plus penalty, according to this article on USA Today. While they have the option to keep the assets with the old plan or move the funds to a new one, transferring the money to a new IRA is recommended. They can cash the assets and reinvest the money with a new custodian or opt for trustee-to-trustee transfer to avoid any tax pitfalls.

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