Personal Finance News Friday 3/15

Phil's Personal Finance Tip of the Day:

'Help! I'm in my late 40s, with no retirement savings'

By Walter Updegrave | Money 

I'm in my late 40s, single and have no idea of how to prepare for retirement. My employer offers health insurance, but no retirement plan. I don't want to have to rely just on Social Security. Please help. -- Maria, Ohio

The fact that you're getting a late start makes retirement planning more of a challenge. The lack of a 401(k) or similar plan at your job doesn't help either.

But let's look on the bright side. You know that you've got to start doing something and you seem ready to begin. You also have a good 20 or so years to build a nest egg.

So if you get started now -- and I mean pronto -- you can still dramatically improve your retirement prospects and avoid ending up dependent on Social Security alone after your retire.

Your first move: Open an IRA at a mutual fund company and fund it for the 2012 tax year.

That's right, if you contribute to an IRA before the tax filing deadline of April 15th, you can stipulate that the money count toward the 2012 tax year. The maximum contribution for 2012 is $5,000. (People 50 and older can make an additional $1,000 catch-up contribution). If you can't sock away the max, do as much as you can.

Unless you think you'll face a higher tax rate in retirement than you do now -- doubtful in your case given that you're getting a late start with saving -- you're probably better off doing a traditional IRA and taking the tax deduction rather than doing a Roth IRA and foregoing the deduction in return for tax-free distributions down the road.

But don't get hung up on this issue. What's most important is that you fund some type of IRA account before April 15th. Besides, you always have the option of converting all or a portion of a traditional IRA to a Roth IRA later on.

Similarly, don't obsess about how to invest your IRA funds. If you don't already have a plan for how to build a diversified portfolio, I suggest you just invest in a target-date retirement fund offered by one of the fund companies on our MONEY 70 list of recommended funds. That will give you a fully diversified portfolio of stocks and bonds that will become more conservative as you age.

To read the entire article from Walter Updegrave | Money:
http://finance.yahoo.com/news/help-im-40s-no-retirement-101900581.html

Inspirational Quotes@Inspire_Us from Twitter:
Always and never are two words you should always remember never to use. - Wendell Johnson

Hi my name is Philip J. Miano and I am the founder of PJM Personal Finance and Productivity Coaching specializing in Budgeting, Debt Reduction, Bank Reconciliations, Goal Setting, Time Management, and Organizational skills. Please visit my website: http://pjmcoaching.com.