For Moriello, she previously explained why it’s fairly easy for existing clients — including forward mortgage borrowers — already served by the company to be flagged as potential reverse mortgage customers once they reach the age of eligibility. For the HECM program, a company professional could look into their customer relationship management (CRM) software and see when a client could potentially qualify for a reverse mortgage.
“Any loan officer can run a report in their own database to calculate when someone’s date of birth hits that prime age [for a reverse mortgage],” Moriello said.
While some may think that certain technology tools are either forward-specific or reverse-specific, Moriello says that the tools at her company are often interchangeable by forward and reverse professionals.
Still, there are advantages to being a lender that is active in both forward and reverse, she explained.
“I feel like, as a loan officer that can look at all products and decide to show the client what different products — like a home equity line, a forward mortgage or a reverse mortgage — can do for them, it gives me the unique opportunity to present all products to them at the same time,” she explained. “[It helps me] give them an understanding about how each product would serve them.”
2024 HECM limit
On Jan. 1, the limit for HECM loans was increased to $1,149,825 by the Federal Housing Administration (FHA). Loan originators who have spoken with RMD on the topic generally find the increase welcome, but they do not feel that the higher limit is a “game-changer” when it comes to new business this year.
Moriello thinks it could be potentially beneficial overall.
“It’s absolutely a consideration,” she said. “I’m in the Northeast, so the higher the dollar amount, the better. I had a conversation [with a borrower] where we were talking through the benefits of taking out a HECM line of credit [for] future planning, [including] the growth rate tied to the HECM line credit.”
Still, despite the potential utility of a higher HECM limit, there are still some product gaps that the proprietary market could serve for people with higher-value homes, she said.
“When I sat down with this borrower, I realized I’ve got to run both the HECM and the proprietary for this client due to the value of the home,” she said. “I wish that we had a proprietary product that had more of a growth-rate line-of-credit option more similar to the HECM.”
Receptivity of referral partners, clients
When asked about openness to reverse mortgages from business referral partners and borrowers, Moriello explained that getting a curt “no thanks” is still common. But for those who might find a benefit in a reverse mortgage, they’re more open of late to explore the possibility.
“More often than not, these high-level professionals are looking for options for their clients,” she said, “whether those options are to help them buy a new home, to live a better life with more assets in retirement, or to help them get a non-taxable stream of cash flow to help them in retirement. They’re looking at opportunities.”
Certain longstanding issues have not gone away, including a perception by some financial planners that makes them feel reverse mortgages are not an option that can even be explored, let alone discussed. But modern classes of financial planners generally seem to be more open to conversations, based on Moriello’s conversations.
“These financial planners are much higher caliber and quality than I’ve ever seen before, but yet the understanding of the compliance behind it causes them to have to take a step back,” she said. “And sometimes they feel they can’t even talk about a reverse mortgage. It’s not as often as it used to be, which is a good thing.”
Spending speed
As for what’s fueling these greater levels of openness, Moriello said it could come from a lot of places, but the speed with which clients are burning through money today is a clear possibility.
“I know from what I can see, it is absolutely tied to how fast people are going through money,” she said. “I can absolutely see that these professionals are worried that their folks are going to run out of money.
“We were just talking here in the office about our own electric bills, which have effectively doubled in our area. That’s one thing when you’re still working, but what happens when you’re on a fixed income?”
That puts far more pressure on fixed-income retirees, which could lead to conversations about tapping into home equity, she said.
“What that means is folks need to take more money out of retirement than they ever have before, and the financial professionals are looking at understanding that. So, they’re looking at options to help them extend the life of their assets so that they can continue to live well in retirement.”
In the heart of California, Sacramento is a city that effortlessly blends rich history with modern charm. From the bustling streets of Midtown to the serene beauty of the American River Parkway, Sacramento offers a diverse and vibrant lifestyle for its residents. With historic roots in the gold rush, too many parks to choose from, and a close proximity to wine country, Sacramento is a city that truly has something for everyone.
Whether you’re searching for apartments in Sacramento, homes for sale, or just learning more about what Sacramento is known for, this article is the comprehensive guide you’ve been looking for.
1. The California State Capitol
Sacramento is known for being the capital of California and is home to the impressive California State Capitol. The Capitol is a stunning example of neoclassical architecture and is surrounded by beautiful gardens, making it a must-see for visitors and a point of pride for locals.
2. Gold
The Gold Rush of the mid-19th century was a pivotal event for Sacramento, rapidly transforming it from a modest settlement into a thriving commercial and supply hub for gold miners. This influx of population and wealth laid the groundwork for Sacramento’s development, establishing its significance within California’s political and economic landscapes.
3. Old Sacramento Historic District
Old Sacramento Historic District is a charming area that showcases the city’s history. Visitors can explore the cobblestone streets, historic brick buildings, and museums that offer a glimpse into Sacramento’s past as a bustling Gold Rush town. This is a great opportunity to explore the areas past and see the lasting effects it has on the city today.
4. Tower Bridge
The iconic Tower Bridge is a symbol of Sacramento and is known for its distinctive Art Deco design. Spanning the Sacramento River, the bridge offers stunning views of the city and is a popular spot for locals and tourists to kick back and soak up the beauty surrounding them.
5. Crocker Art Museum
Sacramento is home to the impressive Crocker Art Museum, which houses a massive collection of art spanning from classical to contemporary. The museum’s many exhibits and educational programs make it a hub in the city for everyone from young families to aspiring artists to retirees and everyone in between.
6. American River Parkway
The American River Parkway provides a natural escape within the city, offering opportunities for hiking, biking, and more. The scenic beauty of the parkway is a beloved feature of Sacramento’s landscape and one of the many unique perks about calling Sacramento home.
7. Craft beer scene
Sacramento’s craft beer scene is growing, reflecting the city’s passion for locally brewed, innovative beers. With a focus on quality and creativity, the area boasts a ton of breweries that contribute to Sacramento’s reputation as a destination for beer lovers of all persuasions. Two of the most beloved local breweries are Track 7 Brewing Co., known for its diverse range of styles and community-focused approach, and Bike Dog Brewing Company, which combines a love for cycling with the art of beer making.
8. Sutter’s Fort
Sutter’s Fort is a historic landmark that played a significant role in the early development of Sacramento. The fort offers guided tours and living history demonstrations, allowing visitors to step back in time and experience California’s pioneer era in its purest form.
9. City of Trees
Sacramento is the City of Trees thanks to its wide variety of foliage, from native oaks to exotic species planted over the decades, provides not only aesthetic beauty but also significant environmental benefits, like improved air quality, reduced urban heat island effect, and enhanced outdoor spaces. The city’s tree-lined streets, parks, and green spaces contribute to its identity and quality of life, making it a welcome green getaway in the heart of California.
10. Sacramento Kings
As the local NBA team, you’re likely to see some Kings gear around town as you get to know the city. Since relocating to Sacramento in 1985, the Sacramento Kings have become a central part of the city’s identity, fostering a strong sense of community and pride among residents. Their presence has significantly impacted the local economy by way of new jobs and downtown revitalization, particularly with the construction of the Golden 1 Center.
Lawyers are highly educated and command high salaries to match. How much a lawyer earns a year depends on what type of law they practice, what school they attended, as well as their competence and experience.
According to the U.S. Bureau of Labor Statistics (BLS), the average salary for a lawyer in May 2022 (the latest data available) was $135,740 per year, or $65.26 per hour.
Corporate lawyers who work in the private sector tend to earn more than those in the public sector (such as district attorneys or public defenders), and sole practitioners typically earn less money than lawyers at large firms.
Read on to learn more about how much a lawyer makes, where you can find top-paying jobs for lawyers, and the benefits and drawbacks of becoming a lawyer.
What Does a Lawyer Do?
Lawyers advise and represent clients on legal proceedings or transactions. They typically conduct in-depth research into law, regulations, and past rulings. They also prepare legal documents, including lawsuits, wills, and contracts.
Not an ideal job for people with social anxiety, lawyers will often appear in court in support of their clients and present evidence in hearings and trials, including arbitration and plea bargaining. Lawyers also counsel their clients in legal matters and suggest courses of action.
A lawyer’s exact duties will vary depending on the type of law they practice. For example, criminal defense attorneys advocate on behalf of those accused of criminal activity; family lawyers handle family-related legal issues like divorce, adoption, and child welfare; and corporate lawyers handle legal matters for businesses. Some lawyers work for the government or in the public’s interest, and are known as public interest lawyers. Public defense attorneys, for example, represent criminal defendants who cannot afford to hire a private attorney. Public interest lawyers also work for nonprofit organizations to support civil rights and social justice causes.
Other types of lawyers include:
• Environmental lawyers
• Bankruptcy lawyers
• Immigration lawyers
• Intellectual property lawyers
• Entertainment lawyers
• Tax lawyers
• Personal injury lawyers
• Estate planning lawyers 💡 Quick Tip: When you have questions about what you can and can’t afford, a spending tracker app can show you the answer. With no guilt trip or hourly fee.
Check your score with SoFi
Track your credit score for free. Sign up and get $10.*
How Much Do Starting Lawyers Make a Year?
Lawyers tend to be well paid even at the entry level because they are highly educated. And, the more experience a lawyer gains, generally the more they will earn. According to ZipRecruiter, entry-level lawyers make $100,626 a year, on average, with a range from $47,000 to $138,000.
Those who choose to invest the time, money, and work into becoming a lawyer can feel relatively confident about being able to get a job when they graduate: The BLS projects an increase of 62,400 attorney jobs between 2022 and 2032, representing an 8% growth (which is faster than the average for other occupations).
Recommended: What Trade Job Makes the Most Money?
How Much Money Does a Lawyer Make a Year on Average?
According to the BLS’s most recent data, the average salary for a lawyer in 2022 was $135,740. The best-paid 25% made $208,980 that year, while the lowest-paid 25% made $94,440.
A lawyer working for a law firm or as in-house counsel will typically be paid with an annual salary versus an hourly wage, but the average hourly pay for a lawyer works out to be $65.26 an hour.
How much a lawyer makes, however, can vary widely depending on their experience, specialty, and location.
The highest paying legal specialties include:
• Patent attorney
• Intellectual property attorney
• Trial lawyer
• Tax attorney
• Corporate lawyer
The cities that pay the highest lawyer salaries are:
• San Jose, California ($267,840)
• San Francisco, California ($239,330)
• Washington, District of Columbia ($211,850)
• Bridgeport, Connecticut ($209,770)
• Oxnard, California ($207,970)
Recommended: 11 Work-From-Home Jobs Great for Retirees
How Much Money Does a Lawyer Make by State?
As mentioned above, how much money a lawyer makes can vary by location. What follows is a breakdown of how much a lawyer makes per year, on average, by state.
State
Average Annual Lawyer Salary
Alabama
$138,250
Alaska
$120,590
Arizona
$144,890
Arkansas
$116,730
California
$201,530
Colorado
$168,680
Connecticut
$174,520
Delaware
N/A
District of Columbia
$226,510
Florida
$135,840
Georgia
$165,560
Hawaii
$106,520
Idaho
$96,810
Illinois
$158,030
Indiana
$143,060
Iowa
$117,500
Kansas
$115,860
Kentucky
$99,840
Louisiana
$127,150
Maine
$102,060
Maryland
$158,150
Massachusetts
$196,230
Michigan
$127,030
Minnesota
$163,480
Mississippi
$101,240
Missouri
$138,680
Montana
$98,170
Nebraska
$119,310
New Hampshire
$130,130
New Jersey
$163,690
New Mexico
$110,970
New York
$188,900
North Carolina
$146,890
North Dakota
$120,780
Ohio
$130,320
Oklahoma
$114,470
Oregon
$144,610
Pennsylvania
$144,570
Rhode Island
$156,300
South Carolina
$115,230
South Dakota
$109,190
Tennessee
$149,050
Texas
$166,620
Utah
$133,920
Vermont
$101,610
Virginia
$162,640
Washington
$162,200
West Virginia
$122,070
Wisconsin
$147,530
Wyoming
$88,570
Source: U.S. Bureau of Labor Statistics
Lawyer Job Considerations for Pay & Benefits
To get a job as a lawyer, you must complete a four-year undergraduate degree and then attend law school to earn a juris Doctor degree, or J.D. This can mean four years pursuing a bachelor’s degree, followed by three years of law school (or four years if you go to law school part time).
After graduating from law school, you’ll need to pass the multi-day bar exam for the state in which you want to practice. In addition, most states also require lawyers to keep up to date with law and take training courses throughout their career.
The hard work and financial investment can pay off, however. In addition to competitive pay, lawyers who work full time for a specific company or organization typically get a wide variety of benefits, including health insurance, retirement plans, paid time off, flexible scheduling, and more. They may also get bonuses for cases won, costs of bar association fees covered, and training and development opportunities. 💡 Quick Tip: Income, expenses, and life circumstances can change. Consider reviewing your budget a few times a year and making any adjustments if needed.
Pros and Cons of a Lawyer’s Salary
Becoming a lawyer can be a clear path to making more than $100,000 but, as with any profession, working as a lawyer comes with both benefits and drawbacks. Understanding the pros and cons of this role will help you determine if you’re well-suited for this career path.
Pros of Becoming a Lawyer
• Multiple job opportunities: As a lawyer, you have a variety of career paths, giving you the opportunity to work in an area you feel passionate about, whether that is corporate law, family law, real estate law, criminal law, or immigration law.
• Option to start your own practice: With a law degree and significant experience, you may be able to start your own business and determine the types of clients you want to represent and how many cases you want to take on at any one given time.
• Earn a high salary: Lawyers have the potential to earn well over six figures a year. Though you may not earn this salary right out of the gate, there is ample opportunity for career advancement and salary increases over time.
• Stimulating and challenging work: As a lawyer, your daily duties will likely be intellectually challenging. Lawyers typically need to understand complex legal theories, form a hypothesis and create a legal strategy to benefit their clients, and argue and debate in a courtroom.
Cons of Becoming a Lawyer
• Work can be stressful: Lawyers must meet deadlines as well as the demands of their clients. You may also come across stressful and emotionally difficult cases, which can take a psychological toll.
• Long hours: This professional is notorious for its long hours, particular for those who are just starting out in a prestigious law practice. It’s not unusual for an associate lawyer to put in 60 to 90 hours a week each week, depending on the demands of the case they’re working on.
• High level of student debt: In addition to a bachelor’s degree, lawyers need to pay for law school, which often comes with a high price tag. Generally, the more prestigious the school, the higher the price. Even with a high salary, new lawyers may not be able to pay off their debt for many years.
• Today’s clients have more options: The opportunity to get clients has gotten more competitive with the rise of self-help legal websites, legal document technicians, and virtual law offices. If a client seeks legal advice or counsel, they don’t always have to go to a lawyer for help.
The Takeaway
A law degree is a valuable credential that takes around seven years of study to achieve (including a bachelor’s degree). Lawyers can choose where they want to work and what type of law they would like to specialize in, whether it be criminal law, corporate law, environmental law, or immigration law.
The amount a lawyer makes will vary depending on the school they attended, experience, type of law they practice, and where in the country they practice. According to the BLS, the highest paid lawyers earn over $230,000, and the lowest paid lawyers earn around $66,500.
Whatever type of job you pursue, you’ll want to make sure your earnings can cover your everyday living expenses. To help ensure your monthly outflows don’t exceed your monthly inflows, you may want to set up a basic budget and check out financial tools that can help track your income and spending.
With SoFi, you can keep tabs on how your money comes and goes.
FAQ
Can you make $100k a year as a lawyer?
Yes. Most lawyers earn over $100k a year. The average salary for a lawyer, according to the U.S. Bureau of Labor Statistics, is $135,740 per year. The best-paid lawyers, however, can earn more than $200,000 a year.
Do people like being a lawyer?
Being a lawyer can be a great career choice if you enjoy working in a fast-paced and challenging environment and have an interest in upholding laws and defending an individual’s rights. According to a recent survey by Law360 Pulse, 83% of surveyed attorneys report they are stressed at least some of the time, nonetheless 68% percent say they are satisfied or very satisfied with their overall job.
Is it hard to get hired as a lawyer?
It’s generally not hard to find a job as a lawyer after you pass the bar exam, especially if you attended a top-rated law school, graduated in the top third of your class, and/or had strong internships and clerkships. Jobs for lawyers are expected to grow 8% between 2022 and 2032, which is faster than the average for other occupations (3%).
Photo credit: iStock/shapecharge
SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.
*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
After I wrote a simple primer on Roth conversions a couple weeks ago, several readers reached out asking for more details. A few specific snippets of those questions include:
I see many articles like this about lowering your tax bracket when doing Roth conversions. But, what about the amount of money that can be made by not doing Roth conversions and letting the taxable [sic: qualified, or not taxable] money grow in an account like an IRA or 401K? Is that math too hard to explain?
Sure your RMDs will be higher and you will be taxed more, but how much more money will you make by letting that tax deferred money grow? You could assume a rate of return at 6% for the illustration.
Kelly M., Question 1
A wise man once said “never pay a tax before you have to.” Back around 2015 I had the owner of an income tax service try to convince me to convert all my traditional IRA money to Roth. He said tax rates were going to go up and he was converting all of his own personal traditional IRAs. Fast forward to 2017 and Congress actually ended up lowering tax rates. I wonder what he thought about his conversions after that.
Anonymous, Question 2
Even with my spouse still working, I don’t think we’ll hit the IRMAA limits while I do Roth conversions before I take Medicare. But, could Roth conversions now help me avoid the IRMAA thresholds when I’m taking RMDs in the future? Or, is it worth doing Roth conversions to avoid the IRMAA thresholds? I’d be interested in an article like that.
Anonymous, Question 3
To summarize those three questions:
Does the math of Roth conversions really work?
But since we don’t know future tax rates, how can we confidently convert assets today?
What about IRMAA (the income-related monthly adjustment amount), which is an additional Medicare surcharge on high-earners?
Let’s address these questions one at a time.
Does the Math of Roth Conversions Really Work?
Roth conversions involve many moving pieces, as you’ll see in this simple Roth conversion spreadsheet.
Reminder: you can make a copy of the spreadsheet via File >> Make a Copy
There are terrific financial planning software packages that take care of this math. I wanted to present 95% of the good stuff in a free format that you all can look at. Hence, Google Sheets.
Nuanced Tax Interactions
Especially important is the interaction between normal income (via Traditional account withdrawals), capital gains, and Social Security. These taxes interplay in nuanced ways. A simple example:
Let’s say a Single retiree’s annual income is:
$5000 in interest income
$5000 in long-term capital gains
$30,000 in Social Security benefits.
If you plug that into a 1040 tax return, you’ll find that:
None of that Social Security income is taxable.
All of the interest and capital gains are enveloped by the Standard deduction
Resulting in zero taxable income and a $0.00 Federal tax bill.
But if we copied Scenario A and added in $30,000 in Traditional IRA distributions, what happens? I think we all expect that the $30,000 distribution itself must have a taxable component, but you might not know that:
The IRA distribution affects Social Security taxability. Now, $22,350 of the Social Security income becomes taxable. That’s right. Simply by distributing IRA assets, you’ve now increased how much Social Security you pay taxes on.
The Standard deduction still helps, but there’s now a remainder of $48,500 in Federal taxable income.
Resulting in a $5584 Federal tax bill.
It’s not the end of the world. Taxes happen. They pay for our public shared interests.
But part of tax planning is understanding ahead of time what your future tax bills will look like. It’s important to understand how taxes interact. And this is just a simple example!
Measuring Roth Conversion Benefits
Going back to this spreadsheet, you’ll three tabs full of retirement withdrawal math. The Assumptions tab contains important information on our hypothetical retiree’s starting point (e.g. $2.9M in investable assets), their annual spending ($100K), their future assumed growth (5% per year, after adjusting for inflation), and other important numbers.
Note – this math takes place in “the convenient world” where inflation is removed from the math.
Then three tabs are presented with different Roth conversion scenarios, described below:
“Baseline Calculations“
This tab shows a retiree not focused on any conversions
They want to leave to their children both Roth assets (if possible) and taxable assets (on a stepped-up cost basis).
Therefore, they attempt to fund as much of their retirement using Traditional assets as possible
“No Trad Withdrawals”
This tab shows a “worst case” scenario, to help bookend the analysis. This retiree is not pulling any funds from their Traditional accounts (unless necessary). Thus, we’d expect them to have large RMDs and large RMD-related tax bills.
“Reasonable Conversions”
This tab shows a “reasonable” Roth conversion timeline, electing to convert $1.7 million throughout their retirement, while funding their lifestyle using a mix of Traditional, Roth, and taxable assets along the way.
By no means is this “optimized.” But it’s reasonable, and better than the first two scenarios, as we’ll see below.
Pros, Cons, and Results
The three scenarios end up similar in multiple ways.
Our retiree never has an issue funding their annual lifestyle. This is of utmost importance.
Our retiree reaches age 90 (“death”) with roughly $5M in each scenario.
But there are important differences (as we’d suspect).
The Baseline scenario ends with $5.00M. Of that, 27% is Traditional, 35% is Roth, and 34% is Taxable. They’ve paid an effective Federal tax rate of 20.7% throughout retirement.
The No Traditional Withdrawal scenario ends with $5.20M. Of that, 63% is Tradtional, 0% is Roth, 37% is Taxable. They’ve paid an effective Federal tax rate of 18.8% throughout retirement.
The Reasonable Conversions scenario ends with $5.17M. 18% is Traditional, 68% is Roth, and 14% is Taxable. They’ve paid an effective Federal tax rate of 13.9% throughout retirement.
The Same, But Different
These three scenarios share many similarities. All three result in successful retirements. But there are important differences.
Our Roth converter paid far fewer taxes and, ultimately, left a majority of their tax dollars to their heirs via Roth vehicles, and thus tax-free.
The No Trad Withdrawal retiree paid 28% effective tax rates in their final years (only going further up in the future) and left 63% of their assets in Traditional accounts with a large asterisk on them.***
***TAXES DUE IN THE FUTURE*** …unless you’re leaving the Traditional IRA assets to, for example, a non-profit charity. But if you’re leaving the Traditional IRA to your kids, they’ll owe taxes when they withdraw the funds.
Long story short: Roth conversions work to your benefit when executed intelligently.
Should You Worry About Leaving Behind Traditional Assets?!
I don’t want to freak you out. Your heirs will appreciate you leaving behind a 401(k) or Traditional IRA for them.
But it’s worth understanding that they’ll owe taxes on that money (usually). Let’s dive into an example with simple math: a $1 million Traditional IRA left to one person (e.g. your child).
That person will most likely set up an Inherited Traditional IRAand (via new-ish rules in the SECURE Act) will have to empty that account by the end of the 10th year after your death. The withdrawals can be raised and lowered during those 10 years. Much like with Roth conversions, it makes sense to take larger withdrawals during otherwise low-income years and vice versa.
But if the beneficiary is in the middle of their career, a series of 10 equal withdrawals makes sense. Some rough math suggests ~$135,000 per year is a reasonable withdrawal amount (based on account growth over the 10 years).
That withdrawal is taxed as income for the beneficiary. If they’re already earning $100,000 per year of normal income, then taxes will consume ~$41,000 of their annual $135,000 withdrawal. State taxes might take another bite.
Again – I don’t want anyone to cry over the prospect of inheriting $94,000 annually for 10 years. Where can I sign up?! But it’s also worth understanding that 30% of this inheritance is going to Federal taxes.
“Never Pay a Tax Before You Have To”
What about Question #2 from the beginning of the article? A reader wrote in and suggested one should “never pay a tax before you have to.”
While pithy, it’s false.
If you can reasonably front-load low tax rates to prevent later high tax rates, the math supports you. What we’ve covered so far today is clear evidence of that.
Now, in the reader’s defense: I’d rather delay taxes if thedollar amounts are exactly the same. That’s one argument behind the tax-loss harvesting craze: I’d rather pay $100 in taxes in the future than $100 in taxes today.
But Roth conversions work differently. Done well, Roth conversions allow you to pay a 22% tax on $50,000 today to prevent a 37% tax on $100,000 in the future. It’s apples-and-oranges compared to the tax-loss example.
And perhaps the bigger lesson: there are few universal rules in personal finance. The pithy rule that works in one scenario (“never pay a tax before you have to”) might fail miserably in another scenario. Let the math guide you.
What About IRMAA?
Irma used to only be a name you’d give to the great-grandmother character in your 11th-grade B-minus fiction story.
No longer! Today, IRMAA has been given new life (which, I bet, was covered by Medicare!)
IRMAA (Income-Related Monthly Adjustment Amount) is a Medicare premium surcharge imposed on higher-income beneficiaries in addition to their standard Medicare Part B and Part D premiums. The amount of IRMAA is determined based on an individual’s modified adjusted gross income (MAGI) and can result in higher healthcare costs for those with higher incomes.
In plain English: high-earners pay more for Medicare.
Question #3 today asked if Roth conversions can be used to avoid IRMAA premiums. The answer is: yes.
But first, how painful are these IRMAA surcharges in the first place?!
Important note: you’ll see below that the 2023 IRMAA brackets are based on 2021 modified adjusted gross income (MAGI). That same 2-year delay holds for future years. Your 2024 Roth conversions (or lack thereof) will be important in determining IRMAA in 2026
If a married couple’s MAGI in 2021 was $225,000, they’d end up paying $231 per month (or, more accurately, $462 per month for the couple) as opposed to $330 for the couple if they earned less than $194,000. That’s a difference of $132 per month or $1584 for the year.
I’m of two minds here. Because:
Yes, I believe in frugality. A penny saved is a penny earned. Why pay $1584 extra if you don’t have to?
But if you’re earning $200,000in retirement, do you also need to stress over a $1500 annual line item?
Personally, I’ll be stoked if my retirement MAGI is $200,000. It’ll be a sign that my financial life turned out unbelievably well. I won’t mind the IRMAA.
The people most likely to suffer IRMAA are also best positioned to deal with it.
Will IRMAA Get You?
The 2-year delay in IRMAA math means you might get IRMAA’d early on in retirement.
Imagine retiring at the end of 2023. The peak of your career! You and your spouse earned a combined $300,000 and now you’re settling down to mind your knitting. Like all U.S. citizens, you sign up for Medicare just before you turn 65.
Come 2025, Uncle Sam and Aunt IRMAA are going to look back at your 2023 income and surcharge you.
But the good news, most likely, is that your 2024 income is quite low in comparison and IRMAA will drop off in 2026.
Can Roth Conversions Help?
Remember: RMDs are forced and count as income, and that has the potential of “forcing” IRMAA on retirees as they age.
So to answer our terrific reader question: yes, Roth conversions can help here. You can use Roth conversions to shift the realization of income from high years to low years, preventing or mitigating IRMAA in the process.
But once more, make sure the juice is worth the squeeze.
If a 75-year-old has a $200,000 RMD that kills them on IRMAA, ask yourself: where does a $200,000 RMD come from? Answer: it’s coming from an IRA of over $5 million. Should someone with $5 million be losing sleep over IRMAA? I don’t think so.
That’s A Lot of Numbers…
A long and math-heavy article. I hope this helped you out! We covered:
Roth conversions can be objectively helpful, decreasing taxes in retirement and shifting large portions of portfolios from Traditional accounts (with potential taxes for heirs) into Roth accounts (no taxes for heirs)
Taxes in retirement are nuanced and interconnected. In today’s example, realizing extra income (via IRA distributions) also triggered extra Social Security taxes.
It’s not bad to leave behind Traditional assets to heirs. They’re getting a wonderful gift from you. But there will be taxes, which should be planned for.
There are many scenarios where it makes sense to pay taxes before you “have” to.
IRMAA is a negative reality for many retirees, but the people most likely to suffer IRMAA are also best positioned to deal with it.
Roth conversions can be used to mitigate IRMAA over the long run.
As always, thanks for reading!
Thank you for reading! If you enjoyed this article, join 8000+ subscribers who read my 2-minute weekly email, where I send you links to the smartest financial content I find online every week.
-Jesse
Want to learn more about The Best Interest’s back story? Read here.
Looking for a great personal finance book, podcast, or other recommendation? Check out my favorites.
Was this post worth sharing? Click the buttons below to share!
Earning returns can be exhilarating. But it’s important to remember that they don’t necessarily represent the money that goes in the bank. Commissions, taxes, and other fees impact the returns any investor makes on their investment.
Just how big a bite these investment expenses take out of an investor’s assets isn’t always instantly clear. But by understanding the fees they pay, and the taxes they’re likely to owe, investors can better plan for the money they’ll actually receive from their investments. And they can also take concrete steps to minimize the effects of fees and taxes.
Investment Expenses 101
There are a few different types of investment expenses an investor may come across as they buy and sell assets. Here are the most common ones.
Fund Fees
Mutual funds are a very popular way for investors to get into the market. They’re the vehicles that most 401(k), 403(b), and IRAs offer investors to save for retirement. But these funds charge fees, starting with a management fee, which pays the fund’s staff to buy and trade investments.
Investors pay this fee as a portion of their assets, whether the investments go up or down. (With employer-sponsored retirement accounts, the employer may cover the fees as long as the account holder is employed by the company.) Management fees vary widely, with some index funds charging as little as .10% of an investor’s assets. But other mutual funds may charge more than 2%.
In addition to the management fee, the fund may also charge for advertising and promotion expenses, known as the 12b-1 fee. Plus, mutual fund investors may have to pay sales charges, especially if they buy funds through a financial planner, or an investment advisor. While the maximum legal sales charge for a mutual fund is 8.5%, the common range is between 3% and 6%.
One way to understand how much of a bite these mutual fund fees take out of an investment on an annual basis is to look at the expense ratio. 💡 Quick Tip: Look for an online brokerage with low trading commissions as well as no account minimum. Higher fees can cut into investment returns over time.
Advisor Fees
Investors may also face fees when they hire a professional to help manage their money. Some advisors charge a percentage of invested assets per year. More recently, some advisors have simplified the cost by simply charging an hourly fee.
Broker Fees and Commissions
Even investors who want to manage their own portfolios typically pay a broker for their services in the form of fees and commissions. These fees and commissions may be based on a percentage of the transaction’s value, or they may be rolled into a flat fee. Another factor that may influence the fee: whether an investor uses a full-service broker or a discount broker.
How to Minimize the Cost of Investing
No matter how an investor approaches the market, they can expect to pay some fees. It’s up to each individual to decide whether or not those fees are worth it. For some, paying a professional for hands-on advice is worth the extra annual 1% fee (or more) of their invested assets. For others, minimizing costs may be a priority. Among many options, there are a few investing opportunities that stand out as relatively low-cost.
Index Funds
When investing in mutual funds, one type of fund has established itself as the least expensive in terms of fees: Index funds. That’s because these funds track an index instead of paying analysts and managers to research and trade securities. When it comes to index funds vs. managed funds, proponents typically cite the lower fees.
Automated Investing Platforms
People seeking investing advice or guidance who don’t want to pay typical fees might want to explore automated investing platforms, also known as “robo-advisors.” Some of these platforms charge annual advisory fees as low as .25%. That said, these platforms often use mutual funds, which charge their own fees on top of the platform fees.
Discount Brokerage
Investors who manage their own portfolio may opt for a discount or online brokerage. These brokers tend to charge flat fees per trade as low as $5, with account maintenance fees also often as low as $0 to $50 per account.
How Taxes Eat into Investing Profits
There are typically two kinds of taxes that investors have to worry about. The first is income tax, and the second is capital gains tax. In general, income taxes apply to investment earnings in the form of interest payments, dividends, or bond yields. Capital gains, on the other hand, apply to the returns an investor realizes when they sell a stock, bond, or other investment. (The exception: The IRS taxes short-term investments, which an investor has held for less than a year, at that investor’s marginal income tax rate.)
By and large, capital gains tax rates are lower than income tax rates. Income tax rates for high-earners can be as high as 37%, plus a 3.8% net investment income tax (NIIT). That means the taxes on those quick gains can be as high as 40.8%—and that’s not including any state or local taxes.
The taxes on long-term capital gains are lower across the board. For tax year 2023, for investors who are married filing jointly and earning less than $89,250, the capital gains tax rate is 0%. It goes up depending on income, with couples making between $89,250 and $553,850 paying 15%, and those with income above that level paying 20%.
For tax year 2024, those who are married and filing jointly with taxable income up to $94,050 have a capital gains tax rate of 0%. Couples making between $94,050 and $583,750 have a rate of 15%, and those with income above that have a tax rate of 20%. 💡 Quick Tip: Automated investing can be a smart choice for those who want to invest but may not have the knowledge or time to do so. An automated investing platform can offer portfolio options that may suit your risk tolerance and goals (but investors have little or no say over the individual securities in the portfolio).
Strategies to Minimize Taxes
There are a few ways an investor can minimize the impact of taxes on their investments. One popular way to take advantage of the tax code is by investing through a retirement plan, such as a 401(k), 403(b), or IRA. All of these plans encourage people to save for retirement by offering attractive tax breaks.
For tax-deferred accounts like a 401(k) or traditional IRA, the tax break comes on the front end. Retirees will have to pay income taxes on their withdrawals in retirement. On the other hand, retirement accounts like a Roth 401(k) or Roth IRA are funded with after-tax dollars, and money is not taxed upon withdrawal in retirement.
Another approach some investors may want to consider is tax-loss harvesting. This strategy allows investors to take advantage of investments that lost money by selling them and taking a capital loss (as opposed to a capital gain). That capital loss can help investors reduce their annual tax bill. It may be used to offset as much as $3,000 in non-investment income.
The Takeaway
Fees and taxes typically do have an impact on an investor’s returns on investments. How much they eat into profit varies, and is largely dependent on what the investments are, how they are being managed, and how long an investor has had them. Other factors include the investor’s income level, and whether they’ve also lost money on other investments.
Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).
Invest with as little as $5 with a SoFi Active Investing account.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
SoFi Invest® INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below:
Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit SoFi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform.
Investment Risk: Diversification can help reduce some investment risk. It cannot guarantee profit, or fully protect in a down market.
Exchange Traded Funds (ETFs): Investors should carefully consider the information contained in the prospectus, which contains the Fund’s investment objectives, risks, charges, expenses, and other relevant information. You may obtain a prospectus from the Fund company’s website or by email customer service at [email protected]. Please read the prospectus carefully prior to investing.
Shares of ETFs must be bought and sold at market price, which can vary significantly from the Fund’s net asset value (NAV). Investment returns are subject to market volatility and shares may be worth more or less their original value when redeemed. The diversification of an ETF will not protect against loss. An ETF may not achieve its stated investment objective. Rebalancing and other activities within the fund may be subject to tax consequences.
Fund Fees If you invest in Exchange Traded Funds (ETFs) through SoFi Invest (either by buying them yourself or via investing in SoFi Invest’s automated investments, formerly SoFi Wealth), these funds will have their own management fees. These fees are not paid directly by you, but rather by the fund itself. these fees do reduce the fund’s returns. Check out each fund’s prospectus for details. SoFi Invest does not receive sales commissions, 12b-1 fees, or other fees from ETFs for investing such funds on behalf of advisory clients, though if SoFi Invest creates its own funds, it could earn management fees there.
SoFi Invest may waive all, or part of any of these fees, permanently or for a period of time, at its sole discretion for any reason. Fees are subject to change at any time. The current fee schedule will always be available in your Account Documents section of SoFi Invest.
One of the most attractive features of equity investments for many investors is the prospect of dividends. These regular payments serve as a consistent source of income, supplementing any capital gains.
But have you ever wondered, how do dividends work? From the basics to the finer details, this guide will cover everything you need to know about dividends, enhancing your investment knowledge.
What are dividends?
At its core, a dividend is a portion of a company’s earnings that is distributed to its shareholders. Companies pay dividends as a way to share their financial success, effectively rewarding those who have invested in the business. More often than not, established companies pay them to their shareholders from their earnings or reserves.
The dividend payments are usually disbursed in cash—known as cash dividends. However, dividends can also be paid in the form of additional shares of stock, termed as stock dividends, or even other forms of property. It’s important to understand the different types of dividends and how they work, as each comes with its own set of advantages and tax implications.
Diving Into Dividend Types
Cash Dividends
Cash dividends are the most common type of dividends that companies distribute. When a company’s board of directors decides to issue a dividend, they set a specific amount of money to pay shareholders for each share they own.
This cash dividend is a direct share of the company’s profits, often paid quarterly. However, some companies prefer to pay monthly dividends or an annual dividend, depending on their financial structure and investor preference.
Stock Dividends
In lieu of cash, some companies may choose to distribute dividends in the form of additional shares of stock. Stock dividends are usually a percentage of the shares an investor already owns.
For instance, if a company declares a 5% stock dividend, you’ll receive an additional share for every 20 shares you own. This can be a way for companies to reward their shareholders without reducing their cash reserves.
Special Dividends
A special dividend is a non-recurring distribution a company might decide to issue under certain circumstances. Typically, it signals that a company has had an exceptionally profitable period. These special dividends can be in the form of cash, stock, or property.
The Decision to Pay Dividends
The decision to distribute dividends ultimately rests on the company’s board of directors. When a company has a profitable period, its board of directors must decide whether to reinvest those profits back into the company, aiming for long-term growth, or distribute them as dividends to shareholders.
Various factors can influence this decision, such as the company’s current financial health, its growth trajectory, the industry norms, and the company’s dividend history. For instance, a company with high growth potential might prefer to reinvest its earnings to fuel that growth, while a well-established company with stable earnings might choose to reward its shareholders with regular dividends.
Dividend Dates: An Overview
Understanding the timeline of dividends is essential for any investor. Here are the key dates you need to keep in mind:
Declaration Date
This is when the company’s board of directors officially announces that they will pay a dividend. The declaration statement includes vital details such as the size of the dividend, the record date, and the payment date.
Ex-Dividend Date
This is the date by which you need to own shares of the stock to receive the declared dividend. If you buy the dividend stock on or after its ex-dividend date, you won’t receive the upcoming dividend payment. Conversely, if you sell your shares on or before the ex-dividend date, you’ll still receive the dividend.
Record Date
This is when the company reviews its records to identify the shareholders eligible for the dividend payment. An investor must be listed as a shareholder on the record date to receive the declared dividend.
Payment Date
The payment date is the day when the dividend payments are actually distributed to the shareholders. It’s the day when the dividend income officially lands in the investors’ accounts.
The Role of Dividend Yield
A key metric for income investors is the dividend yield. The dividend yield is a financial ratio that shows how much a shareholder is expected to receive in dividends relative to the price of the stock. It’s calculated by taking the annual dividends per share and dividing it by the current market price of the stock, with the result expressed as a percentage.
While a high dividend yield can be attractive, it’s crucial to understand that it might not always be a positive sign. A high yield could indicate a company in distress or a falling stock price. Therefore, when assessing potential dividend stocks, investors should consider other factors and not base an investment decision solely on the dividend yield.
Dividends and Total Returns
Dividends play a vital role in an investor’s total returns, which include both capital appreciation (the increase in the stock’s price over time) and the dividends received. Investors have the choice to either take their dividends as cash, providing regular income, or opt for dividend reinvestment.
Dividend reinvestment programs, or DRIPs, allow investors to use their dividend income to purchase more shares of the stock. This approach exploits the power of compounding, potentially leading to greater long-term returns. However, whether to opt for cash dividends or dividend reinvestment depends on an investor’s financial goals and cash flow needs.
Tax Considerations for Dividends
Dividends can be classified as either qualified or non-qualified for tax purposes. Qualified dividends are taxed at a lower rate than regular income, making them more desirable for investors.
However, to qualify, dividends must meet certain criteria, including being paid by a U.S. company, and the shares must be held for a specific period of time. Non-qualified dividends, on the other hand, are taxed as ordinary income.
Investors should also be aware that dividends received in tax-advantaged accounts, like an IRA, may not be subject to immediate taxation. However, withdrawal rules and potential taxes should be taken into consideration.
How to Identify Dividend-Paying Stocks
Investors looking to generate regular income through dividends need to know how to identify potential dividend-paying stocks. Typically, companies that pay dividends are mature and established with a track record of stable earnings.
Investors can use financial websites and tools to find information about a company’s dividend yield, its dividend payout ratio (the percentage of earnings paid out as dividends), and its dividend growth rate. Companies with a history of consistently paying and increasing their dividends—known as Dividend Aristocrats or Dividend Kings—can be particularly attractive.
It’s essential to remember that while dividend stocks can provide a regular income stream, they are not without risks. The company’s board of directors can decide to reduce or even eliminate dividend payments if the company’s financial condition deteriorates.
Risks Involved in Dividend Investing
While the allure of dividends is strong, investing in dividend stocks is not without risks. Companies can cut or eliminate their dividends at any time, especially when faced with financial difficulties. This could lead to a decline in the stock’s price, which could cause a capital loss for the investor.
Moreover, an overemphasis on dividends can lead to an imbalanced portfolio. A diversified portfolio should consist of a mix of assets to spread risk, and not be overly dependent on the performance of dividend-paying stocks.
Additionally, the past performance of a company’s dividends is no guarantee of its future payouts. Investors need to regularly monitor the performance of the companies they invest in and the overall market conditions.
Dividends and Mutual Funds
Dividends are not exclusive to individual stocks. Mutual funds, which consist of a pool of different securities, can also pay dividends to their investors. These dividends can be derived from the income generated by the fund’s underlying portfolio of stocks.
The process of declaration, ex-dividend date, record date, and payment date applies to mutual funds as well. Income from mutual funds can be an efficient way for investors to receive dividends while maintaining a diversified portfolio.
Exchange-Traded Funds and Dividends
Similar to mutual funds, exchange-traded funds (ETFs) can also pay dividends. ETFs are marketable securities that track an index, sector, commodity, or a basket of different assets.
When the underlying stocks in an ETF issue dividends, these are collected by the fund and typically passed on to investors as ETF dividends. This can be a viable way of gaining exposure to a diversified set of dividend-paying companies without having to invest in each individually.
Dividend Reinvestment Plans (DRIPs)
Many companies and brokerage services offer Dividend Reinvestment Plans (DRIPs), allowing investors to reinvest their dividend payouts back into additional shares or fractional shares of the underlying stock. DRIPs can be an efficient way to increase one’s stake in a company, and over time, the power of compounding can result in substantial growth of the investment.
Dividend Payout Ratio: A Crucial Metric
The dividend payout ratio is a financial metric that income investors should consider. It indicates what portion of the company’s earnings is being paid out in the form of dividends.
A low payout ratio might suggest that the company has room to increase its dividends in the future. In contrast, a high payout ratio could signal that the company is paying out more than it earns, which might be unsustainable in the long run.
Bottom Line
Dividends can be a powerful component in an investor’s portfolio, providing regular income and potential for compounding returns. However, understanding how dividends work is key. From knowing the important dates to understanding the tax implications, an informed investor is a prepared investor.
Remember, investing involves risks, and while dividends can provide a steady stream of income, they are not guaranteed. Companies can and do cut their dividends, and stock prices can fall. Therefore, a balanced investment strategy should consider both capital appreciation and dividend income.
Before making any investment decisions, it’s always advisable to do your research and consider your financial goals and risk tolerance. You might also want to seek advice from professional advisory or brokerage services if you have specific questions or concerns.
Investing in the equity markets requires knowledge, patience, and an understanding of your financial goals. Whether you’re investing in individual stocks, mutual funds, or ETFs, understanding how dividends work is an integral part of the investment process. So, take the time to educate yourself, make informed decisions, and happy investing!
Frequently Asked Questions
Why do people invest in dividend stocks?
Investors buy dividend stocks for several reasons. First, dividends provide a steady stream of income, which can be especially beneficial for retirees or those seeking a regular income from their investments.
Second, dividends can be reinvested to buy more shares, accelerating portfolio growth through compounding. Lastly, dividend-paying companies are often established and financially stable, potentially reducing investment risk compared to non-dividend paying stocks.
Why do companies pay dividends?
Companies pay dividends to distribute a portion of their earnings back to their shareholders. This can make the company’s stock more attractive to investors, potentially driving up the stock price. Additionally, dividends signal financial health and profitability, as companies with uncertain futures or tight cash flow often cannot afford to pay them.
When are dividends paid out?
Dividends are paid out on the payment date, which is set by the board of directors when they declare a dividend. The frequency of dividend payments can vary by company.
Most commonly, U.S. companies pay dividends quarterly, but some companies might pay them monthly, semi-annually, or annually.
How do dividends get paid out?
Dividends are typically paid out in cash directly to the shareholder’s brokerage account. The process begins with the board of directors declaring a dividend, at which point they establish a record date. Shareholders who own the stock on the record date will receive the dividend, which is usually deposited into their brokerage accounts on the specified payment date.
How do dividends affect a stock’s share price?
Dividends impact a stock’s share price in a few ways. On the ex-dividend date, the stock price typically drops by about the amount of the dividend payment, as new buyers of the stock will not receive the upcoming dividend.
Over the long term, a history of stable or increasing dividends can attract investors, potentially driving up the stock price. However, if a company reduces or eliminates its dividend, the stock price may fall as investors reassess the company’s financial health.
Should you automatically reinvest dividends?
Whether to automatically reinvest dividends depends on an individual’s investment goals and financial needs. Reinvesting dividends can take advantage of compounding, potentially leading to significant portfolio growth over time. However, investors who need a regular income from their investments may prefer to take their dividends in cash.
How much does it take to make $1000 a month in dividends?
The amount of money needed to generate $1000 a month in dividends depends on the average dividend yield of the investments. For example, if the average yield of your investments is 4%, you would need a portfolio of $300,000 to generate $12,000 a year, or $1,000 a month, in dividends.
How long do you have to hold a stock to get a dividend?
To receive a dividend, you must own the stock before the ex-dividend date, which is usually one business day before the record date. If you purchase the stock on or after the ex-dividend date, you will not receive the upcoming dividend.
The length of time you need to hold on to the stock can vary, but generally, if you own the stock by the end of the day before the ex-dividend date, you should be eligible for the dividend.
Can you live off of dividends?
In theory, it’s possible to live off dividends if you have a large enough investment portfolio and the dividends it generates can cover your living expenses. However, this requires substantial upfront investment and a portfolio of reliable dividend stocks.
It’s important to remember that dividends are not guaranteed and can be cut or eliminated if a company’s financial situation changes. Therefore, while living off dividends is possible, it requires careful planning and consideration of the potential risks.
Orlando is home to the “most magical place on Earth” — Walt Disney World Resort — which makes it a popular destination for tourists. With so many people visiting the local theme parks, attractions and restaurants, the airport can get very crowded.
Enter Orlando’s airport lounges, which can provide a sanctuary from the throngs of travelers while you enjoy complimentary beverages, snacks and other benefits.
Learn more about which Orlando airport lounges are available, where they’re located and how you can get in.
About the lounges at Orlando airport
Currently, there are seven airport lounges spread across all three terminals at Orlando International Airport. Other than the USO Lounge, each lounge is located inside airport security, which means that you must have a valid ticket to visit them.
Admission to these lounges varies based on ticket type, elite status or which credit card you hold. In some cases, you may even be able to purchase a day pass to enjoy lounge benefits.
Terminal A
Orlando’s Terminal A has limited airport lounge options, though may be the most versatile. Its Priority Pass lounge is ideal for travelers because access isn’t limited to a specific airline. Plus, Terminal A has the USO lounge, which offers exclusive access to active duty military.
The Club at MCO Lounge
Location: Terminal A, adjacent to XpresSpa near Gates 1-29.
Opening hours: Daily from 5 a.m. to 10 p.m.
Lounge amenities
The Club at MCO Lounge Orlando Airport offers complimentary snacks, beverages and Wi-Fi. It does not have premium food or spa services, but guests can take advantage of its complimentary showers.
How to enter the lounge
Since there are two The Club at MCO lounges at Orlando’s airport, access is restricted based on which gate you’re flying out of. This The Club lounge is available to travelers departing from Terminal A Gates 1-29 and Terminal B Gates 30-59. All others must visit the other location.
Visitors can access the lounge beginning three hours before departure. To enter, purchase a day pass for $50 from The Club website or use your Priority Pass benefits.
USO Welcome Center Lounge
Location: Terminal A, outside of security on Level 1.
Opening hours: Daily from 8 a.m. to 8 p.m.
Lounge amenities
The USO Welcome Center Lounge offers complimentary non-alcoholic beverages, coffee, tea and snacks. Visitors can access free Wi-Fi and enjoy DVDs and multiple video game systems. It includes a children’s play area, sleeping quarters and quiet areas, plus a library.
How to enter the lounge
USO lounges are available to active duty members of the U.S. Armed Forces, Reserves and Guard, plus their immediate families. Admission is not available to military retirees, disabled veterans and others who have previously served in the military.
Terminal B
Terminal B is where you’ll find the lounges for the major domestic airlines. Travelers must have elite status, a qualifying ticket, a lounge membership or a day pass to enter. If you don’t qualify, the Priority Pass lounge is another option.
American Airlines Admirals Club
Location: Terminal B, near Gate 55
Opening hours: Daily from 4 a.m. to 8 p.m.
Lounge amenities
Inside this Orlando airport lounge, travelers can enjoy complimentary snacks and drinks, including a full-service bar. This location does not offer conference rooms for visitors. Guests can also use the complimentary Wi-Fi to access the internet to check email, stream shows or browse the internet.
How to enter the lounge
Complimentary entrance to the Admirals Club in Orlando is available to club members when flying on American Airlines or one of its partners.
Additionally, you receive free entrance if you have a ticket for a first or business class international, transcontinental or other domestic flight by American Airlines or a Oneworld airline.
Elite status members of a Oneworld airline with Emerald or Sapphire status can also enter the lounge for free with any ticket for American or a Oneworld partner.
Citi® / AAdvantage® Executive World Elite Mastercard® provides complimentary access to Admirals Club lounges when flying on any American or Oneworld flight. This card also provides complimentary access to immediate family members or up to two guests who are also flying on American or a Oneworld partner.
Day passes are capacity-limited, but available for purchase online or on-site for $79 (or 7,900 AAdvantage miles) when flying on American or a Oneworld partner flight.
U.S. military personnel traveling in uniform are offered free admission to Admirals Club lounges when flying American; these guests may also bring their immediate family or up to two guests.
Delta Sky Club
Location: Terminal B, near Gate 71.
Opening hours:
Open 4:30 a.m to 9:45 p.m. on Monday, Tuesday, Thursday and Friday.
Open 4:30 a.m to 10:45 p.m. on Wednesday, Saturday and Sunday
Lounge amenities
The Sky Club in Orlando offers complimentary snacks, beer, wine, spirits and liquor. Guests can also enjoy free Wi-Fi during their stay. It does not have showers, premium food or conference rooms.
How to enter the lounge
Delta Sky Club members can access the lounge when flying Delta or one of its partners, unless they purchased a basic economy ticket.
Purchasing a domestic or international Delta One ticket provides complimentary entrance to the Sky Club. Additionally, if you’re flying on an international first or business class partner flight, you receive free entry.
Delta Medallion elite status provides free access based on the type of ticket purchased. Diamond, Platinum or Gold members can enter the lounge for free when flying Delta Premium Select internationally or on any Delta One flight. One guest can accompany the member if they have the same class of ticket.
SkyTeam Elite Plus members can access Sky Club lounges for free on a SkyTeam international flight or on a domestic flight connecting to a same-day international flight.
Those traveling on partner flights not operated or marketed by Delta can access the lounge for $50 per person. Reserve cardholders can bring immediate family members or up to two guests into the lounge for $50 per person.
The Platinum Card® from American Express, The Business Platinum Card® from American Express and Centurion cardholders receive complimentary entrance to Sky Club lounges when traveling on a Delta-operated or Delta-marketed flight operated by WestJet. They can bring up to two guests or immediate family members at a rate of $50 per person. Terms apply.
Delta no longer offers day passes for sale.
The Club at MCO Lounge
Location: Terminal B, near Gate 91.
Opening hours: Daily from 5 a.m. to 9 p.m.
Lounge amenities
In addition to complimentary snacks, spirits, beer and wine, this lounge also offers a children’s area. Guests can use the complimentary shower before departing on their flight. It also includes complimentary Wi-Fi for streaming, browsing the internet and checking email.
The children’s area provides an opportunity for children to burn off energy before the flight while the parents enjoy the lounge’s benefits.
How to enter the lounge
Of the two Orlando airport lounges from The Club at MCO, this one serves passengers departing from Terminal A Gates 100-129 and Terminal B Gates 70-99. Passengers departing from other gates within Terminal A and B should visit the other The Club at MCO Lounge location.
United Club
Location: Terminal B, near Gate 43
Opening hours: Daily from 5 a.m. to 8 p.m.
Lounge amenities
The United Club lounge offers a full-service bar, light snacks and Wi-Fi for free to its guests. The lounge also has a children’s area for young guests and their parents. A conference room is available for an additional fee for travelers needing to conduct business.
How to enter the lounge
There are many ways travelers can gain access to this United Club lounge. Passengers on United Polaris or business class international or transcontinental flights receive complimentary admission, as can those flying first or business class on a Star Alliance member airline.
Star Alliance Gold members also have access to United Club lounges when traveling on an international flight by any Star Alliance airline.
Travelers can also purchase a United Club membership using cash or by redeeming miles. The price starts at $550 or 75,000 miles per year and varies based on your elite status level.
United Club℠ Infinite Card includes a complimentary United Club membership. With this membership, you and your eligible travel companions can enter these lounges for free whenever you fly on United or a partner airline.
United also offers free admission to active U.S. military personnel traveling on United. This includes those dressed in uniform, on leave orders or traveling on rest and recuperation papers.
Terminal C
The only airport lounge in Terminal C is the Plaza Premium Lounge. Travelers can access this lounge with qualifying credit cards regardless of which airline they’re flying.
Plaza Premium Lounge
Location: Terminal C, on the second floor overlooking Palm Court.
Opening hours: Daily from 7 a.m. to 9 p.m.
Lounge amenities
The Plaza Premium Lounge at Orlando International offers complimentary draft beer, food and Wi-Fi. Guests can also use its “luxury washrooms with spa-like shower facilities” to freshen up when they arrive or before their flight departs.
This lounge also offers an entertainment space for families, including a turtle drop game and a curated Orlando Storytelling Wall.
How to enter the lounge
Plaza Premium lounges partner with many major banks to offer complimentary access for travelers. However, it is not included with Priority Pass membership.
Eligible cards for this airport lounge in Orlando include:
Travelers can also book a day pass online through the Plaza Premium website. Price may vary based on when you’re traveling, how many are with you and how long you stay. A three-hour visit in April 2024 is available for $69.18 per person.
🤓Nerdy Tip
If you’re buying a day pass, you can save money by purchasing a multi-visit pass ranging from two, five or ten days.
The bottom line
Whether it’s your final destination or you’re on a layover before your next flight, Orlando airport lounges offer an escape from the noise inside the terminal.
How to maximize your rewards
You want a travel credit card that prioritizes what’s important to you. Here are our picks for the best travel credit cards of 2024, including those best for:
We often think of homebuyers as younger, but retirees and senior citizens have plenty of reasons to make a purchase, too. Although the current housing market isn’t the best for buyers, waiting for it to change isn’t an option for some older house hunters. Here’s what to know about getting a mortgage as a senior.
Key statistics on seniors and mortgages
Roughly two-thirds of adults who own a home have a mortgage, according to 2022 data from the U.S. Federal Reserve.
The median mortgage in 2022 was $1,400 per month, based on data from the U.S. Federal Reserve
Baby boomers carry an average of $190,441 in mortgage debt — the second-lowest balance, behind the Silent Generation, according to 2023 data from Experian.
At 52 percent, baby boomers account for the largest generation of home sellers, according to the National Association of Realtors. They also account for the biggest cohort of homebuyers, at 39 percent.
More than forty percent of people report that paying for housing negatively impacts their mental health, according to a Bankrate survey.
Iowa is the No. 1 best state to retire to in 2023, according to a Bankrate study. Delaware, West Virginia, Missouri and Mississippi also rank highly. The worst states to retire include Alaska, California and New York.
Can you get a mortgage as a senior?
Yes, lenders offer mortgages for seniors. When it comes to getting a home loan, mortgage lenders look at many factors to decide whether a borrower is qualified — but age isn’t one of them. It’s one of the protected categories specified by the Equal Credit Opportunity Act, which makes it unlawful to discriminate against a credit applicant because of age (along with race, religion, national origin, sex and marital status).
Still, lenders can ask your age on mortgage applications, but only for the purpose of gathering demographic data, as specified by the Home Mortgage Disclosure Act (HMDA). The information is supposed to be confidential and not used as a criterion to approve or deny the applicant.
“The same underwriting guidelines apply to retirees and seniors as does to everyone else,” says Michael Becker, branch manager and loan originator at Sierra Pacific Mortgage in Lutherville, Maryland. “They must have the capacity to repay the loan — that is, have the income and assets to qualify.
“I once did a 30-year mortgage for a 97-year-old woman,” says Becker. “She was lucid, understood what she was doing and just wanted to help out a family member [by taking] some cash out of her home, and had the income to qualify and the equity in the home — she owned it free and clear. So she was approved.”
Is qualifying for a mortgage harder for seniors?
Despite laws prohibiting lending discrimination on the basis of age, it can still be challenging for seniors to qualify for home financing. In fact, a 2023 working paper out of the Federal Reserve Bank of Philadelphia found a link between the rejection rate on mortgage applications and the age of the borrower.
This could be for a number of reasons, including qualifying factors like assets and debt. If you’re managing a lot of debt already, you might not be able to take on a mortgage (or another mortgage), especially if you now have less income in retirement. No matter your age, you’ll still need to meet the lender’s criteria for approval.
How to qualify for a mortgage in retirement
When seniors apply for a mortgage, lenders look at the same financial criteria as they do for any other borrower, including credit history and score, debt-to-income (DTI) ratio, income and other assets.
Credit score
Here are the minimum credit scores needed based on loan type:
Loan type
Minimum credit score
Conventional loans
620
FHA loans
580 with 3.5% down payment, 500 with 10% down payment
VA loans
No minimum requirement, but generally 620
USDA loans
No minimum requirement, but generally 640
Bear in mind that minimum scores can allow you to qualify for a loan in general, but you won’t get the best interest rates the lender has to offer. For a conventional loan, for example, you’d need a score of 740 or higher to nab a more competitive rate.
You can check your credit score for free each week by visiting AnnualCreditReport.com.
DTI ratio
Calculate your DTI ratio using this formula:
Mortgage Calculator
DTI = Monthly debt payments (including mortgage or rent) / monthly gross income x 100
Some lenders allow a DTI ratio as high as 50 percent, but most prefer to see you spend less than 45 percent of your monthly income on debt payments, including your mortgage.
Income verification
Besides what’s required to prove your identity, you’ll need to supply documentation about your income. If you’re still working — and many are, according to a recent Bankrate survey — that includes paystubs, W-2s and tax returns. If you’re retired, it might include:
Income source
Documents
Social Security
Copies of benefit verification, proof of income or proof of award letter, statements and/or tax returns
Pension
Copies of retirement award or benefit letter statements and/or tax returns
401(k), IRA and Keogh distributions
Copies of statements and/or tax returns
Interest and dividends income
Copies of statements, 1099s and/or tax returns
Annuities
Copies of statements and/or tax returns
Rental property income
Copies of tax returns and/or current lease agreement
Disability
Copies of disability policy and/or benefits statement
“Generally, two months’ of bank statements are needed to show those payments being deposited into the retiree’s account,” says Becker. “Since there is no paycheck, the bank statements serve the same purpose. The deposits have to match what the forms show.”
Investment income — capital gains, dividends, distributions and interest — is reported on your tax return. For the income to be used to qualify you for the loan, you’ll need to provide two years’ worth of returns.
“If the retiree has retirement income that is nontaxable, like Social Security income or tax-exempt interest, that income can be ‘grossed up,’ or increased 15 to 25 percent, depending on the loan product, to help qualify for the loan,” says Becker.
Should you get a mortgage in retirement?
In general, it’s best to avoid taking on more debt in retirement, when your income might not be as predictable as it once was. Using your retirement savings to pay down your mortgage can make it difficult to enjoy a comfortable retirement lifestyle and cover costs like medical bills.
“Even if one owns a property with no further mortgage payments due, property taxes and upkeep will be a consideration,” says Mark Hamrick, senior economic analyst and Washington bureau chief for Bankrate. “As with people of all ages, having a budget, limiting expenses and accurately accounting for income expectations are key.”
Then again, working hard to pay off your mortgage debt prior to retirement might not be the best strategy either. It could leave you financially vulnerable and unable to pay for emergencies.
However, taking out a senior mortgage can be a smart play for retirees who can afford to make a substantial down payment on a home. Along with a smaller loan, consider a shorter loan — say, a 15-year mortgage instead of the benchmark 30-year. Yes, your monthly payments will be higher, but your interest rate will be lower. You can also ask your lender about senior citizen mortgage assistance programs that are available in your state.
Be sure to consider your spouse or partner when deciding to get a mortgage. What would happen if one of you were to die, and how would that affect the survivor’s ability to repay the loan? If your surviving spouse or partner would not be able to take over the loan, getting a mortgage during retirement may not be a smart financial decision.
7 mortgage options for seniors
There are plenty of home loan options available to retirees or seniors — mostly the same as for anyone, with one exception. Here are seven to consider:
Conventional loan: You can find conventional mortgages from virtually every type of lender, in terms ranging from eight to 30 years. If you’re not making a down payment or don’t have an equity level of at least 20 percent, you’ll need to pay private mortgage insurance (PMI) premiums.
FHA, VA or USDA loan: These government-insured loans might be easier to qualify for than a conventional mortgage. You can only get a VA loan if you or your spouse has served in the military, however, or a USDA loan only if you’re buying in a USDA-approved area.
Cash-out refinance: With a cash-out refi, you’ll get a brand-new mortgage and cash out some of your home’s equity in a lump sum.
Home equity loan: A home equity loan is a lump-sum loan, usually with a fixed rate, fixed monthly payments and a term between five and 30 years. You’ll typically need at least 20 percent equity to qualify.
Home equity line of credit (HELOC): – A HELOC is a variable-rate product that works similarly to a credit card — you’re given a line of credit to draw on as needed. You’ll have a certain number of years to draw the money, and then a certain amount of time to repay the loan.
Reverse mortgage: A reverse mortgage is a loan taken out against your current home, in which a lender pays you monthly installments; these must be repaid, or the home surrendered to the lender, when you die or move out. To qualify, you must be at least 62 years old, own your home outright (or close to it) and live in the home as your primary residence. You’ll also have to pay for the property taxes, homeowners insurance, HOA fees (if applicable) and other upkeep on the home.
No-document mortgage: A no-doc mortgage doesn’t require income verification. It’s an uncommon product, but it can be an option for borrowers who have irregular income.
Bottom line
Seniors with good credit, sufficient retirement income and assets and not a lot of debt can get a mortgage or home loan. The keys are knowing your long-term plans, exploring loan options and providing documentation to support your application. It’s also worth speaking to a financial advisor or retirement planner to prepare your finances for the new loan. If you’re acquiring or unloading property, you’ll want to revisit your estate plan, as well.
Frequently asked questions
Lenders consider employment wages, Social Security payments, freelance income, part-time income, tips, pension and retirement income as income for loan qualification. They also count alimony and child support payments, unemployment benefits, investment income and disability leave.
It’s possible to get a mortgage with Social Security as your only income, depending on how high your payments are. But like any borrower with a low income, you might not qualify for a large mortgage, and you may have to put down a sizable down payment to get approved. If you’re looking for mortgages for seniors on Social Security, ask lenders about their specific eligibility requirements before applying.
I grew up east of Rochester, in Upstate New York’s apple country. New York produces ~30 million bushels of apples per year, second among the 50 states (behind Washington).
But apples start to rot 5-7 days after they’re picked. So how does New York harvest 30 million bushels of apples in September and October without eating 30 million bushels over the following week?
The answer is cold storage.
Apples can be stored near 35°F for 6-12 months without decay. We gain an entire year of “freshness!” But first, we must put forth an effort of time, resources, and money to build that cold storage infrastructure.
Today’s effort allows us to keep more of our harvest in the long run. We get to choose our consumption schedule, not Mother Nature.
Roth Conversions
It might seem like an odd transition, but the same concept applies to Roth conversions. Today’s planning can allow us to keep more of our “harvest” in the long run. We gain control over our tax schedule rather than leaving it entirely up to the IRS.
Roth conversions are among many tools in a good “tax planning toolbelt.” Done correctly, Roth conversions allow an investor to turn high tax rates in the future into lower tax rates today. This article was inspired by Catherine (a listener of The Best Interest Podcast), who wrote me the following email:
Can you please explain the connection between RMDs and Roth conversions? Is this something I should look into? I’m 57, single, and have ~$2.3M in my 401k right now.
An Example: Required Minimum Distributions
Most retirees have heard of required minimum distributions, or RMDs, which are mandatory withdrawals that individuals with tax-deferred retirement accounts, like Traditional IRAs and 401(k)s, must make once they reach a specific age.
RMDs are forced. You must withdraw money from your 401k. Thus, the income tax associated with RMDs is forced. That’s not ideal.
Let’s use Catherine as an example. She’ll start taking RMDs at age 73 (although Congress might change that minimum age, as they’ve done before). That’s 16 years from her current age 57.
We don’t know the rest of Catherine’s scenario. Her Roth assets, taxable assets, Social Security, etc. are a mystery to us. So is her monthly spending need. All that info is essential to proper planning!
But I want to be extreme, so we’ll say Catherine’s lifestyle is wholly supported by her Social Security, taxable assets, and Roth assets. She doesn’t withdraw a single dollar from her 401k. Thus, it will grow from $2.3M today to $6M by the time she’s 73 (the assumption: 16 years at 6% per year).
Now in 2040, it’s time for her first RMD.
To calculate that RMD, we’ll look at Catherine’s year-end account value from the prior year ($6.0M) and divide it by her age-based Life Expectancy Factor. For age 73, that factor is presently 26.5. Here’s the full table of Life Expectancy Factors.
Catherine’s RMD is $6M / 26.5 = $226,415
That entire RMD is taxable as income, so her marginal Federal tax bracket is 32% based on the current tax code.
I’d bet Catherine’s account continues to grow past 2040, despite the RMD withdrawals. Her first 10 RMDs are all in the 4-5% range, and we’d expect her investment growth to outpace that. Her RMDs will grow in size. And that means she’ll be paying higher and higher marginal taxes in the 32% bracket, the 35% bracket, and potentially even the 37% bracket.
How Can Roth Conversions Help?
Paying high tax rates on RMDs is like letting your apples rot during the glut of harvest season. We need a “cold storage” to gain control over our tax rates and spread those taxes over time.
So let’s return to 2024, while Catherine is still 57 and her 401(k) is still at $2.3M. How do Roth conversions work?
First, we need to ensure Catherine’s 401(k) – which is still active – allows “in-service Roth conversions.” If it doesn’t, Catherine will have to wait until she retires and rolls over the 401(k) into an IRA.
Some simple paperwork with Catherine’s custodian will allow her to convert a number (of her choosing) of Traditional dollars into Roth dollars. Since the Traditional dollars have never been taxed, this conversion is taxable, triggering income tax.
Those converted Roth dollars will never be taxed again! That’s fantastic. But did Catherine save money? Was this a smart move?
We’d want to know all of Catherine’s personal financial details to run an accurate analysis, but we certainly need to understand what Catherine’s tax rate is today.
Her 2024 regular taxable income is $100,000, so she’s paying Federal taxes in the marginal 24% bracket. And she has another $90,000 available in that 24% bracket this year.
We can fill that ~$90,000 space in her 24% bracket with Roth conversions. Catherine would pay 24% Federal tax on those dollars today to prevent 32% (or higher) marginal tax rates once her RMDs hit. That’s the essence of Roth conversions.
Not Too Much Roth Conversion
Catherine needs to be careful not to overdo it. And so should you.
If you’re in your high-earning years and paying high marginal taxes, the odds are Roth conversions don’t make sense for you right now. There’s no reason to move extra income into your current high tax years.
But! You might have a few low-income years as soon as you retire. Your W2 income will disappear. Your financial plan might dictate you delay Social Security for a while.
Your only income might be dividends and income from your Taxable accounts and small withdrawals from your Traditional accounts. If so, fill up those low tax brackets with Roth conversions! This is a very common strategy for new retirees.
What If…?
But even as I write this article, “What if…” questions are bombarding my head.
Retirement planning withdrawal strategies are far from one-dimensional, and what I’m describing today is a one-dimensional view. I’m only focusing on a few details to provide an example of Roth conversions. Other nuanced planning questions include:
Roth conversions and (more generally) tax planning are essential aspects of retirement planning. But just two of many aspects.
A cold-stored apple a day keeps the IRS away.
Thank you for reading! If you enjoyed this article, join 7500+ subscribers who read my 2-minute weekly email, where I send you links to the smartest financial content I find online every week.
-Jesse
Want to learn more about The Best Interest’s back story? Read here.
Looking for a great personal finance book, podcast, or other recommendation? Check out my favorites.
Was this post worth sharing? Click the buttons below to share!
The Westwood neighborhood in Los Angeles has so much to offer its residents. From great schooling to delicious restaurants, there’s something for everyone in Westwood. This article will tell you all you need to know about this desirable Los Angeles neighborhood.
Where is Westwood?
Settled on Wilshire Blvd., Westwood is nestled amongst some of L.A.’s wealthiest neighborhoods. To the north, you’ll find Bel Air and to the south, there’s Century City. On the west lies Brentwood and on the east, there’s Beverly Hills.
In addition, the popular neighborhoods of Santa Monica and Hollywood are just a few miles away.
Source: Rent.
What’s it like to live in Westwood, Los Angeles?
Like all L.A. neighborhoods, Westwood is truly unique. It’s located close to the famous UCLA campus, which can make the surrounding area feel like a small college town. However, that doesn’t mean there isn’t more to this diverse neighborhood.
The average resident of Westwood is 50 years old. While the average resident skews a little older in age, it’s also a great space for young families and singles alike. There are many different elements that make living in this area great. Let’s dive into a few of those elements.
Community
Westwood’s population is roughly 2,000 people, composed of retirees, young adults and students. Although the area mainly draws in students attending UCLA or other surrounding colleges, it has become more popular in recent years due to the building of new high rise apartment buildings.
The area is also home to many retirees who enjoy the more suburban side of Westwood, near The Los Angeles Country Club. This area hosts spacious homes that draw in people looking for a quieter side of this urban neighborhood.
Westwood is also a great option for families as the area offers several amenities suited for families, such as spacious parks and interactive play areas. In this community, you’ll really find a broad mix of people across all ages and walks of life.
Safety
If you’re looking for a safe neighborhood in Los Angeles, you can’t go wrong with Westwood. Compared to other neighborhoods of Los Angeles, Westwood is a very safe place to live. According to the L.A. Times, Westwood averages one violent crime and 12 property crimes per week, with an average of 2.5 crimes per 10,000 people.
While we all want to live in a crime-free neighborhood, this rate per person is incredibly low compared to other areas in the city, state and even country. Safety matters when it comes to choosing a place to live and Westwood is a pretty safe area to settle down and call home.
Transportation
Los Angeles is not known as a walking city and most people living in Westwood drive to work with an average commute time of 27 minutes. Parking in Westwood Village can be tricky and sometimes non-existent. While public transportation is available, it isn’t always the most reliable.
That being said, Westwood is one of the more walkable neighborhoods in Los Angeles. There are other forms of transportation to get around this cozy neighborhood, such as rideshare apps, bikes and scooters.
Education
There are many great schools within the Westwood neighborhood. For families with children, the area offers many options for school, from private to charter to public schools. For high school, Westwood has many college prep schools for those looking for a more specific education for their children.
The most notable schools in the area are UCLA and Mount Saint Mary’s, which draws college students from all over the world. Whether your kids are just starting their education or ready to write their college essays and take the SATs, Westwood is a great neighborhood that caters to education and continued learning.
Entertainment
Westwood, Los Angeles has an abundance of entertainment, everything from fancy, fine dining to cozy coffee shops. Some of the favorites restaurants include Mary and Robbs Westwood Café, Diddy Riese and Espresso Profeta.
If you’re looking for a cultural day activity, you’re in luck because Westwood is home to some of L.A.’s best art museums — one of them being The Hammer — where you’ll find everything from Monet to modern art.
There’s also plenty to do at night. Try The Geffen and Fox theater as they’re staples in Westwood and are well known for putting on plays and hosting movie premieres. On the weekend, support local shops at the Farmers Market. Keep in mind the neighborhood is also located within driving distance to many other neighborhoods and attractions, such as the beaches of Santa Monica and the famous Rodeo Drive in Beverly Hills.
Finding an apartment in Westwood
Westwood is one of the most sought after neighborhoods in Los Angeles. With its new high-rise apartment buildings, diverse restaurants and entertainment, this area is quickly increasing in popularity. The average rent in Westwood is around $5,000 for a three-bedroom apartment.
Whether you’re a student, recent grad, young family or retiree, Westwood has something for you. It’s the perfect Los Angeles neighborhood to settle down in. Check out these apartments and find your perfect home in Westwood, Los Angeles.
Ashley Singleton is a writer who loves following and writing about current lifestyle, DIY and home improvement trends. You can read some of her other work on the Lady Spike Media website. In her spare time, she performs stand-up comedy in Los Angeles.