What the experts say
A post-retirement tax nightmare
For some higher earners, saving for retirement in a tax-deferred account is a ticking tax time bomb, said David McClellan in Kiplinger’s. Saving “everything you can in tax-deferred accounts” to benefit from tax-sheltered growth is still good advice for most savers. But eventually all retirees must take required minimum distributions (RMDs) starting at age 72. For those with extensive pretax savings, that “represents a growing tax liability.” A couple who have $500,000 in savings at age 40—and max out their contributions every year—will end up with $7.3 million in their 401(k) and face RMDs exceeding $435,000 by retirement and reaching $739,000 by age 80. Those are taxed as ordinary income. How to defuse the tax bomb? Consider transferring money from an existing tax-deferred account to a tax-free Roth IRA. This is a better strategy in lowincome years, as “the transfer amount is usually fully taxable.”
The fine print in your home policy
You may be less prepared for climate-related disasters than you think, said Tara Siegel Bernard in The New York Times. The first thing you should do is “assess your home’s risk to earthly hazards.” One online tool, Risk Factor, “outlines flood, fire, and extreme-heat risks,” estimating the odds of catastrophic weather events and “how much repairs might cost.” From there, you should know your insurance coverage—and “always choose ‘replacement value’ coverage when you can.” When Hurricane Ida peeled back the roof of Jeanne Gouaux’s home in Louisiana, she didn’t learn until later that her wind and hail policy “only provided the depreciated value” of the destroyed property, giving her half the money she needed.
A hidden bounty of forgotten gifts
If you’re like most people, you’re probably sitting on an unused gift card worth a considerable sum, said Lorie Konish in CNBC .com. A new survey by CreditCards.com found that 47 percent of people “currently have at least one unused gift card, voucher, or store credit” lying around. And the credit is nothing to sneeze at. “The average unused amount is $175 per person, up from $116 last year.” Amid 40-year-high inflation, those sums—a total of $21 billion—“may provide a welcome boost to consumers’ wallets.” Some companies, like CardCash, Raise, or ClipKard, will even buy unused gift cards if there’s nothing you want to purchase for yourself.