Here’s How The Saver’s Credit Can Lower Your Tax Bill by $2,000

You might be eligible for 50%, 20% or 10% of the maximum contribution amount.
On the scale of great tax breaks, tax credits are the best. While deductions merely lower your taxable income, a tax credit reduces your actual tax bill dollar-for-dollar.
To be eligible for the Saver’s Credit, you must:
Seriously. Check this out.

What Is the Saver’s Credit?

Next, make your deposit.
Let’s say you do your taxes and discover you owe ,000. If you paid ,000 out of your paycheck to your retirement accounts over the course of the year and received a 0 Saver’s Credit, your tax bill would shrink to 0.
If you’re a low- or middle-income worker, you can claim the Saver’s Credit — also known as the retirement savings contributions credit — by adding money to a 401(k) or individual retirement account (IRA).
The Internal Revenue Service sets maximum adjusted gross income caps for the retirement savings contribution credit each year.
The IRS actually gives taxpayers until April 15, 2022, to make contributions to individual retirement accounts and include those investments on their 2021 taxes. Pretty cool, huh?
Not only do a lot of people forget about this credit, many low-income workers miss out on the sweet tax benefits of saving for retirement because they worry doing so will strain their tight budgets.

How Do You Qualify for the Saver’s Credit?

First, you’ll need to open a retirement account if you don’t have one already. You can open one with any brokerage firm or robo-advisor. Or, you can start contributing money to your workplace 401(k).
Your income determines the percentage of your retirement savings that will be credited to your tax bill.

  • Be 18 years or older and file a tax return.
  • Not claimed as a dependent on someone else’s tax return.
  • Not be a full-time student. (However, you’re still eligible for the Saver’s Credit if you’re enrolled in an online-only school or participating in on-the-job training).
  • Save some money in a retirement account, like an employer-sponsored 401(k).

It’s important to note that this government tax benefit is not a deduction, but a credit.
Here’s what eligible taxpayers need to do to take advantage of the Saver’s Credit.
How much the Saver’s Credit is worth depends on how much you contribute to your retirement account, your filing status and your AGI.

  • $66,000 for married filing jointly.
  • $49,500 for head of household.
  • $33,000 for a single filer or any other filing status.
Pro Tip
The maximum amount of the Saver’s Credit cannot exceed ,000 for single filers or ,000 for joint filers in 2022.

How Much Is the Saver’s Tax Credit Worth?

It’s called the Saver’s Credit, and it’s one of the most valuable tax credits available. But it’s also one of the most overlooked.

Pro Tip
Lastly, you need to file Form 8880: Credit for Qualified Retirement Savings Contributions with the IRS. If you’re using online tax software, like TurboTax, then it’s even easier to file this form with your tax return.

Finally, you must contribute new money to a retirement plan: Rollover contributions from an existing account — like a 401(k) rollover into an IRA — don’t count.
For example, a single filer earning ,000 who invests ,000 in a Roth IRA would receive a maximum credit for 50% of their contribution, or ,000.
One drawback about the Saver’s Credit is it’s nonrefundable. That means the tax credit can be used to offset income-tax liability but not as a refund. In other words if you owe no taxes but qualify for the Saver’s Credit, Uncle Sam won’t cut you a check. Bummer.

Keep reading to learn who is eligible for the Saver’s Credit and how it works.

Filing status 50% of contribution 20% of contribution 10% of contribution
Single Filers, Married Filing Separately, or Qualifying Widow(er) AGI of $19,750 or below AGI of $19,751 – $21,500 AGI of $21,501 – $33,000
Married Filing Jointly AGI of $39,500 or below AGI of $39,501 – $43,000 AGI of $43,001 – $66,000
Head of Household AGI of $29,625 or below AGI of $29,626 – $32,250 AGI of $32,251 – $49,500

When you file your 2022 taxes for the 2021 tax year, your adjusted gross income (AGI) must fall below the following thresholds to qualify for the Saver’s Credit:
If you earn too much to qualify for the Saver’s Credit, you can still receive a tax deduction by contributing to a traditional IRA.
It’s worth checking to see if you qualify for the Saver’s Credit, especially if you or your spouse were unemployed or experienced a reduction of income in 2021.

How Do I Claim the Saver’s Credit?

As you can see, people with the lowest income benefit most from the Saver’s Tax Credit.
Rachel Christian is a Certified Educator in Personal Finance and a senior writer for The Penny Hoarder.
But a single filer earning ,000 who contributed ,000 to a Roth IRA would receive a credit of just 10% of the amount they invested, or 0.

  • Traditional or Roth IRA
  • Traditional or Roth 401(k)
  • ABLE account (if you’re the designated beneficiary)
  • 403(b) plan
  • 457(b) plan
  • A federal Thrift Savings Plan

Ready to stop worrying about money?
First, you’ll need to meet some basic requirements.

Other Information About the Saver’s Tax Credit

The Saver’s Credit is worth up to ,000 for single filers, or ,000 for married couples filing jointly.
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It’s also worth noting that the Saver’s Credit can be claimed in addition to any tax deduction you receive by making qualified retirement savings contributions.
Keep in mind that the percentage of your retirement contribution you can receive as a credit decreases as your income increases.
The Saver’s Credit is a way to put money back in your pocket when you save for retirement.
Saver’s Credit Rate for 2022
So if you contribute to a traditional IRA or traditional 401(k), you could receive double tax savings: A reduction in your taxable income equal to the amount you kicked into your retirement account plus the Saver’s Credit (if you qualify). Believe it or not, the government will pay you to save. <!–


Depending on your adjusted gross income and tax filing status, you can claim the credit for 50%, 20% or 10% of the first ,000 you contribute to a retirement account within a tax year.

Are Robo-Advisors Worth It? Are They Safe?

When robo-advisors first appeared on the financial scene nearly 15 years ago, they were a novelty. Now these automated portfolios have become a staple offered by numerous financial companies, providing many people with a reliable, cost-efficient way to invest for retirement and other goals — while helping to manage certain market and behavioral risks.

Because robo-advisors typically rely on sophisticated computer algorithms to help investors set up and manage a diversified portfolio, some have questioned whether technology alone can address the range of needs that investors may have over time.

Others note that the lower fees and lower minimum balance requirements typical of most robo-advisors, in addition to the automated features, may provide a much-needed option for new investors. Could a robo-advisor be the right choice for you? It helps to understand how they work in order to weigh the pros and cons.

Is a Robo-Advisor Right for You?

Robo-advisors typically use artificial intelligence to create retirement and financial planning solutions that are tailored to people’s individual needs. Here are some questions to ask yourself, when deciding whether a robo-advisor is right for you.

How Does a Robo-Advisor Pick Investments?

While the term robo-advisor can mean different things depending on the company that offers the service, investors usually fill out an online questionnaire about their financial goals, risk tolerance, and investment time frames. On the back end, a computer algorithm then recommends a portfolio of different securities based on those parameters.

For example one person may be investing for retirement, another saving for the purchase of a home. Depending on each person’s preferences, the robo-advisor generates an asset allocation that aligns with their goals, or suggests portfolio options they can choose from. A portfolio for someone nearing retirement age would typically have a different allocation versus a portfolio for someone in their 20s, for example. Depending on these details, the service might automatically rebalance the portfolio over time, execute trades, and may even conduct tax-loss harvesting.

Can I Choose my Own Investments?

To a limited degree, yes. A robo advisor typically has a range of investments they offer investors. Usually these are low-cost index ETFs, but the offerings can vary from company to company. In most cases, though, your investment options are confined to those available through the robo-advisor.

As the industry grows and becomes increasingly sophisticated, more companies are finding ways to offer investors new options like themed ETFs, stocks from different market sectors, socially responsible investing options, and more.

Who Manages the Portfolio?

Part of the appeal for some investors is that these portfolios are automated and require less hands-on involvement. This may be useful for people who are new to the process of setting up and managing a diversified portfolio, or who don’t feel comfortable doing so on their own. In some cases, a robo-advisor service may also offer a consultation with a live human advisor.

That said, in most cases robo-advisor services are somewhat flexible. Even though you’ve set up an automated plan, it’s still possible to change your asset allocation if your preferences change.

Are There Risks Involved in Using a Robo-Advisor?

Investment always involves some exposure to market risks. But robo-advisors may help manage behavioral risk. Many studies have shown that investors can be impulsive or emotional when making investment choices — often with less than optimal results. By reducing the potential for human error through the use of automation, a robo-advisor may help reduce potential losses.

What do Robo-Advisors Cost?

While there are some robo-advisor services that have higher minimum balance requirements or investment fees, the majority of these services are quite cost efficient. In some cases there are very low or no minimums required to set up a portfolio. And the management fees are typically much lower than what you’d pay for a human advisor. With SoFi’s automated investing feature, for example, you can get started with as little as $1 and you don’t pay any SoFi management fees (although there are typically fees or expense ratios associated with the investments in the portfolio).

Pros and Cons of Robo-Advisors

Hopefully, the questions above have clarified the way a robo-advisor works and shed some light on whether a robo service would be right for you. In addition, there are some pros and cons to keep in mind.

Pros of Robo-Advisors

Saving for Retirement

It’s true that you can use a robo-advisor for almost any short- or long-term goal — you could use a robo-advisor to save for an emergency or another savings goal, for example. But in many ways these services are well-suited to a long-term goal like retirement. Indeed, most robo services offer traditional retirement accounts like regular IRAs, Roth IRAs, SEP IRAs.

The reason a robo-advisor service can be useful for retirement is that the costs might be lower than some other investment options, which can help you keep more of your returns over time. And the automated features, like rebalancing and tax optimization, can offer additional benefits over the years.

Typically, many robo portfolios require you to set up automated deposits. This can also help your portfolio grow over time — and the effect of dollar cost averaging may offer long-term benefits as well.


Achieving a well-diversified portfolio can be challenging for some people, research has shown, particularly those who are new to investing. Robo-advisors take the mystery and hassle out of the picture because the algorithm is designed to create a diversified portfolio from the outset; you don’t have to do anything. In addition, the automatic rebalancing feature helps to maintain that diversification over time — which can be an important tool to help minimize risks. (That said, diversification itself is no guarantee that you can avoid potential risks completely.)

Automatic Rebalancing

Similarly, many investors (even those who are experienced) may find the task of rebalancing their portfolio somewhat challenging — or tedious. The automatic rebalancing feature of most robo-advisors takes that chore off your plate as well, so that your portfolio adheres to your desired allocation until you choose to change it.

Tax Optimization

Some robo-advisors offer tax-loss harvesting, where investment losses are applied to gains in order to minimize taxes. This is another investment task that can be difficult for even experienced investors, so having it taken care of can be highly useful — especially when considering the potential cost of taxes over time.

Want to start investing?

Our robo-advisors can build a portfolio to fit your
needs and risk – with no fees!

Cons of Robo-Advisors

Limited Investment Options

Most automated portfolios are similar to a prix fixe menu at a restaurant: With option A, you can get X, Y, Z investment choices. With option B, you can get a different selection, and so on. Typically, the securities available are low-cost, index ETFs. It’s difficult to customize a robo account; even when there are other investments available through the financial company that offers the robo service, you wouldn’t have access to those.

In some cases, investors with higher balances may have access to a greater range of securities and are able to make their portfolios more personalized.

Little or no Personal Advice

The term “robo-advisor” can be misleading, as many have noted: These services don’t involve advice-giving robots. And while some services may allow you to speak to a live professional, they aren’t there to help you make a detailed financial plan, or to answer complex personal questions or dilemmas.

Again, for investors with higher balances, more options may be available.


Robo-advisors have become commonplace, and they are considered reliable methods of investing, but that doesn’t mean they guarantee higher returns — or any returns. We discuss robo advisor performance in the section below.

Robo-Advisor Industry

Robo-advisors have grown quickly since the first companies launched in 2008-09, during and after the financial crisis. Prior to that, financial advisors and investment firms made use of similar technology to generate investment options for private clients, but robo advisers made these automated portfolios widely available to retail investors. The idea was to democratize the wealth-management industry, by creating a cost-efficient investing alternative to the accounts and products offered by traditional firms.

Today, the robo adviser market is worth about $1 trillion (estimates vary), and there are dozens of robo-advisors available — from independent companies like SoFi Invest®, Betterment, blooom, and Ally, as well as established brokerages like Charles Schwab, Vanguard, T. Rowe Price, and many more.

While these figures are still miniscule compared to the $100 trillion in the global asset-management industry, robo-advisors are seen as potential game-changers that could revolutionize the world of financial advice.

Because they are direct-to-consumer and digital only, robo-advisors are available around the clock, making them more accessible. Their online presence has meant that the clientele of robo-advisors has tended to skew younger.

Also, traditional asset management often have large minimum balance requirements. At the high end, private wealth managers could require minimums of $5 million or more.

The cost of having a human financial advisor can also drive up fees north of 1% annually, versus the 0.25% of assets that robo-advisors typically charge.

How Have Robo-Advisors Performed in the Past?

Like any other type of investment — whether a mutual fund, ETF, stock, or bond — the performance of robo-advisors varies over time, and past performance is no guarantee of future returns.

Research from BackEnd Benchmarking, which publishes the Robo Report, a quarterly report on the robo-advisor industry, analyzed the performance of 30 U.S.-based robo-advisors. As of Sept. 30, 2021, the 4-year total portfolio returns, annualized and based on a 60-40 allocation, ranged from 6.51% to 10.98%. (Data not available for all 30 firms.)

The Takeaway

Despite being relative newcomers in finance, robo-advisors have become an established part of the asset management industry. These automated investment portfolios offer a reliable, cost-efficient investment option for investors who may not have access to accounts with traditional firms.

Robo advisors don’t take the place of human financial advisors, but they can automate certain tasks that are challenging for ordinary or newbie investors: selecting a diversified group of investments that align with an individual’s goals; automatically rebalancing the portfolio over time; using tax-optimization strategies that may help reduce portfolio costs.

Curious to explore whether a robo-advisor is right for you? When you open an account with SoFi Invest®, it’s easy to use the automated investing feature. Even better, SoFi members have complimentary access to financial professionals who can answer any questions you might have.

Check out automated or active investing with SoFi Invest today.

SoFi Invest®
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . SoFi Invest refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC Registered Investment Advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).

2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.

3) Cryptocurrency is offered by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.

For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, please visit
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. Information related to lending products contained herein should not be construed as an offer or pre-qualification for any loan product offered by SoFi Lending Corp and/or its affiliates.
Investment Risk: Diversification can help reduce some investment risk. It cannot guarantee profit, or fully protect in a down market.
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.
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.


7 Steps to Quickly Eliminate Your Holiday Debt

Man stressed about holiday debt
Zivica Kerkez /

Christmas may now be past, but holiday credit card bills can haunt you well into the new year.

Maybe you spent more than you planned on a last-minute gift or sprang for dinner for unexpected holiday guests. Decembers tend to bust the best of budgets.

But a new year offers the chance to wipe the slate clean. Try these post-holiday hacks to pay down debt and replenish savings.

1. Tackle balances wisely

Traditionally, financial advisers have told consumers to pay off their highest-interest debts first, as their cost adds up the fastest.

But studies have found advantages to the snowball approach, which involves paying off the smallest debt first. Then, the money that had been going to pay off that debt is added to the payment for the next debt in line, and so on, continuing to incorporate payments as debts are retired.

To determine which approach is better for you, check out “The Best Way to Kill Off Credit Card Debt.”

2. Transfer a balance

Shifting your balance to a credit card that offers zero percent interest on balance transfers might buy you some breathing room.

For help finding the right no-interest card for you, check out the credit card search tool in Money Talks News’ Solutions Center. For example, select “0% APR” or “Balance Transfer” from the menus on the left to view various cards with those features.

3. Turn gift cards into cash

Online marketplaces such as enable you to sell unwanted gift cards to someone else for a little less than their face value.

4. Return gifts

You won’t be alone if you return a gift that doesn’t thrill you.

If you have the receipt or a gift receipt, bring it back to the store for cash. Even if you don’t have a receipt, try to return it. You might get store credit.

If possible, make sure the item is in its original packaging, and keep tags on clothing and shoes. For more pointers, check out “12 Tips for Gracefully Returning Holiday Gifts.”

You also can post unwanted gifts for sale online, such as on eBay, Craigslist or neighborhood Facebook groups.

5. Shop your pantry

Got holiday leftovers? Get creative with what you’ve got on hand. Only shop for what you need fresh, like milk and produce.

Avoid last-minute fast-food outings, take lunch to work and do without a cappuccino.

6. Track your money

Use the free tools provided by Money Talks News partner Personal Capital or a similar app that allows you to view all of your accounts — including checking, savings and retirement accounts — in one place.

Such apps generally let you track your spending and even your net worth.

Knowing exactly where all your money is going each month can help you find more funds to put toward paying off your debt. And tracking your net worth can help you build your savings.

7. Pay yourself first

Once you’ve paid off your debt, prioritize building an emergency fund. Having money set aside for unexpected expenses is key to avoiding the need to take on debt in the future.

Perhaps the best way to build up any type of savings is to pay yourself first, such as through payroll deduction. With this approach, you have money automatically taken from your paycheck and transferred to a savings or retirement account.

Your employer may even allow you to directly deposit paychecks into multiple accounts.

Also, send any additional income from raises, bonuses, cash awards or other windfalls straight to savings.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.


How to Know When You Can Retire

See if you can relate to this … You have contributed to a 401(k) or other employer-sponsored account at work, maybe you’re paying extra on the mortgage or have already paid it off, you keep cash on hand for those unexpected expenses or upcoming big-ticket purchases and you often wish there was a way to pay less in taxes.

You have worked for 30 or 40 years and are at or approaching Social Security eligibility and are now looking at when to take Social Security to maximize your benefits.

Sound familiar?  Now, here’s what often comes next … You look at the account statements and begin to wonder whether the investments you have are the right ones to own for where you are in life. You begin weighing your options for making withdrawals from your retirement accounts. You aren’t sure exactly how this is done, and you’re nervous about the risk of a stock market pullback and the possibility of running out of money. 
And then it happens, you begin searching the internet for answers.  (That may even be how you ended up here!)  After a lot of searching and reading you realize that there are just too many opinions to choose from, and you resort to simply eliminating options that you’re not as familiar with or have heard negative things about.  Then you take what’s left and try to put together a coherent strategy while continuing a search to find information that supports what you have contrived.

This is an all-too-common situation.  Maybe this is exactly where you are or perhaps it describes something similar, but either way, you wouldn’t be reading this far into the article without some truth to what I am describing.

Regardless of the details, what you do next is critical to your long-term success. The decisions you make will determine the trajectory of your financial future, and it’s imperative to have a good plan to follow.

What to Do and How to Know When You Can Retire

There is a lot to this if done correctly, and at some point you’re probably going to want some professional help, but there are a few things you can do to get moving in the right direction.

Calculate Your Income Need

Before you jump in and begin picking from the assorted list of investments that you found on the internet or that a broker recommended, you should understand that this is the very last step in the process.  You would be well advised to set all of that aside for now and begin with your income needs. You cannot sidestep this, because you have to know this figure before you can do anything else.

To do this right, sort through and total up all your bank payments, then your insurance payments, then your tax payments, then your monthly living expenses, and don’t forget the irregular expenses throughout the year, like gifts and travel.  You want to know how much money you spend over the course of a year. 

Another point to make here, realize that this spending amount will be for when you are retired – not while you’re working.  Things are going to look different for you in retirement, so be sure to think about how you will be spending your time in retirement.  You’ll have a lot of time to fill!

Calculate Your Income Gap

Once you have this figure, subtract from it your Social Security or pension benefits. Any fixed income you have coming is already solved for, so we have to figure out what your “income gap” is between what you need and what income you already have coming in.

Identify the Return You Will Need from Your Investments

So, the amount you have determined as your income gap needs to be annualized and divided by the amount of retirement assets you have designated for retirement. This calculation will tell you what yield you need from your investments. This figure shouldn’t be more than between 4%-5% at the most. If it is higher, then you may not be ready for retirement just yet.

For example, say you have an income gap of $70,000 per year and retirement savings of $2 million. Divide $70,000 by $2 million, and you find that you will need an investment return of 3.5% to support your living expenses. That’s well within an acceptable range.

Remember that you stretch your resources too far right out of the gate, you’re just setting yourself up for failure. This is no time to be overly optimistic with your calculations and will want to lean on the side of caution.

Hedge For Inflation

Unfortunately, there is inflation in your future that you will need to account for on top of market volatility. The income gap amount you came up with a moment ago will need to be hedged due to the future effects of inflation.  The amount of money you need today will be greater in the future simply due to the price of goods and services increasing over time. 

By using a historical figure for inflation of 3.5%, we can estimate that in 15 years your income need will increase by 68%!  So, you have to consider this headwind in your calculations and realize that you need two pools of retirement assets, one to generate the income you need now and another designated for income in the future.  One portfolio would be allocated using income producing assets while the other allocated for long term growth.

Find Income-Producing Assets

When you’re looking to fill your income gap, the obvious solution is to generate more income to fill it. How this is done can vary from person to person, but the primary outcome you’re looking for is income regardless of how you go about it.

If you’re wanting to remain active, you can consider taking on a part-time job, start or buy a business, acquire some rental properties or work another full-time job that you enjoy.

If you prefer not to work and want passive income, then you’re going to have to rely on income-oriented investments.  This would be through specific types of income annuities or select alternative investments that are designed specifically for income.

When doing this, be sure you are working with a qualified professional who is properly licensed and who can education you on your options. You can read this article and learn what to look for before working with an adviser. 

Get A Checklist

It is always a good idea to work off of a checklist, and regardless of where you are in this process, there are likely a few tweaks that can help increase your probability for a successful retirement. I encourage you to formulate a plan that articulates where you are, where you’re going and what needs to be done to start receiving the income you need. 

You can download the Successful Retirement Checklist™ for free here and use it as a guide as you prepare for your retirement.  In addition, taking a retirement readiness quiz can be a good idea, too. A quiz is a useful tool to measure your level of understanding about a topic or your readiness for progressing toward something. Here is a retirement readiness quiz you can take for free that can help you figure out how ready you are for retirement.

Securities offered through Kalos Capital, Inc., Member FINRA/SIPC/MSRB and investment advisory services offered through Kalos Management, Inc., an SEC registered Investment Advisor, both located at11525 Park Wood Circle, Alpharetta, GA 30005. Kalos Capital, Inc. and Kalos Management, Inc. do not provide tax or legal advice. Skrobonja Financial Group, LLC and Skrobonja Insurance Services, LLC are not an affiliate or subsidiary of Kalos Capital, Inc. or Kalos Management, Inc.

Founder & President, Skrobonja Financial Group LLC

Brian Skrobonja is an author, blogger, podcaster and speaker. He is the founder of St. Louis Mo.-based wealth management firm Skrobonja Financial Group LLC. His goal is to help his audience discover the root of their beliefs about money and challenge them to think differently. Brian is the author of three books, and his Common Sense podcast was named one of the Top 10 by Forbes. In 2017, 2019 and 2020 Brian was awarded Best Wealth Manager and the Future 50 in 2018 from St. Louis Small Business.


5 Beginner Investing Tips for a Healthy Headspace

When you’re just starting out on your investing journey, sure, it helps to be pointed toward great stocks or funds to build a portfolio. But the most valuable investing tips – those that you’ll use for decades – are those that focus on the most important aspect of investing:

Your mind.

Hokey as that might sound, it’s true. But it doesn’t mean that investing is only for people who “have a head for numbers,” while those who aren’t as mathematically inclined are destined to be poor money managers. In fact, buying into those labels can be disastrous, leading some people to overconfidence and dissuading others from ever investing in the first place.

Forget the labels, says Sallie Krawcheck, CEO of Ellevest, a digital financial advisor for women. Just be you. If you do that, and adapt a healthy mindset, you too can be an effective investor.

But how, exactly, do you get into a healthy mental space for investing? That’s what we’ll explore today. Read on as several financial experts provide some of the best investing tips to get any beginner – and any seasoned pro, for that matter – in a better state of mind to build their wealth.

1 of 5

1. Use Visualization to Make Long-Term Investing Goals Feel Immediate

A young white woman makes a vision board out of Post-It NotesA young white woman makes a vision board out of Post-It Notes

One of investing’s biggest mental challenges is that it’s a long-term endeavor. (Or at least, for most, it should be.) You won’t become a millionaire overnight, but if you keep at it for the next few decades, you just might be.

The problem? The human brain really doesn’t like to wait for a treat.

“Our brains are wired to make decisions that move us towards pleasure or away from pain in the present,” says Michael Savino, chief of staff at robo-advisory M1 Finance. “We’re more inclined to buy concert tickets or replace an uncomfortable desk chair than think about our investments or retirement accounts.”

So one of the best investing tips for beginners is to rewire your brain to focus on long-term goals – which Savino suggests doing through visualization.

“Imagining the first bite of food on your trip to Spain, or how the sand will feel on your feet outside of your dream beach house can help make the goals feel real,” he says. “This allows us to prioritize our long-term goals and make decisions that we’ll thank ourselves for down the road.”

For some, this might be as simple as creating a mental image of your big vacation or your children going to college. Others might want to create a vision board for a more tangible reminder.

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2. Make Financial Well-Being Part of Your Overall Well-Being

An older black man smiles while practicing yogaAn older black man smiles while practicing yoga

Savino also suggests prioritizing your financial well-being by thinking of it as an integral part of your overall well-being. Savino thinks of financial well-being using a model similar to Maslow’s Hierarchy of Needs.

“This pyramid of financial well-being ranges from your financial survival to financial freedom,” he says. “It spans from barely providing yourself with basic needs to having all the resources to do what you want in life.”

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Investing is the best way to climb this pyramid.

Before you start investing, think about what financial freedom means to you. “This could range from the ability to absorb an unexpected cost, like a home or car repair, to taking a spontaneous vacation with your family,” Savino says. “Think of your investments not just as a safety net, but as a way to provide comfort and happiness.”

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3. Create a Financial Roadmap

Concept art of a white businesswoman standing on a road that is actually a roadmap.Concept art of a white businesswoman standing on a road that is actually a roadmap.

Some compare investing to a road trip. It’s a journey from where you are today to where you want to be in the future, be that five, 10 or 50 years from now.

But before you set out on any journey, you typically get directions. One of the best investing tips for beginners, then, is that investing should be no different.

A financial roadmap can help you determine how you should invest to reach your destination, says Aditi Gokhale, president of Investment Products and Services at Northwestern Mutual.

Start by plotting out each of your financial goals. Do you want to buy a car in a year? Do you want to take a European vacation in five years? When do you plan on retiring? For every goal, you should have a timeline of when you want to reach the goal, and a rough estimate of how much the goal will cost.

Next, consider your risk tolerance. This is how much volatility (the market’s upswings and downswings) you can stomach. Think of your risk tolerance as your speed limits on the road trip. How fast are you willing to drive, and at what risk of getting a flat tire or pulled over? The more aggressively you invest, the higher your chance of long-term gain … but also the higher your chance of a near-term bump in the road.

This is why those who near their financial goals often invest more conservatively; you have plenty of time to adjust if you blow a tire early on in the trip, but hurdles near the end are more likely to throw your plans into disarray.

In general, invest conservatively for goals that are five or fewer years away. However, feel empowered to invest more aggressively for objectives that are much farther down the road.

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4. Prepare Yourself to Do Less

An adorable bulldog looks super bored at a computer deskAn adorable bulldog looks super bored at a computer desk

Once you’re on the road, enjoy the scenery a little bit.

Some investors pick up a misconception that they need to check their investments every day and routinely get involved. But believe it or not, a high level of activity can work against many investors.

Krawcheck compares investing to a soufflé: “If you keep opening the oven, it’s going to fall.”

If you keep an overly watchful eye over your portfolio, you’ll be more likely to trade when you’re better off leaving things alone. The 2020 COVID pandemic, for instance, scared some investors into panic-selling – only to see the market recover all of its losses in just a few months and keep climbing from there. But unless those same sellers also aggressively bought back in, they missed out on the recovery.

Krawcheck says the worst time to make an investing decision is when you’re feeling strong emotions.

“Prepare yourself to be emotionless about your investments,” she says. “If you’re feeling excited, you might be making a mistake. If you’re feeling unbelievably nervous, you might be making a mistake.”

This also holds true when the broader market seems captured by emotions. Remember: This is your trip. People might be whizzing by you in the passing lane – but those same people might be forced to slam on the brakes when an obstacle catches them by surprise, while you can calmly navigate your way through.

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5. Remember That Nothing Is Certain

several open doorsseveral open doors

Lastly, let go of any sense of certainty you might have about the future.

When you invest, you have no idea exactly what the future holds.

This might be one of the most difficult investing tips to digest. That’s because we have a tendency to view past events as obvious, Krawcheck says. Market participants who were around during the dot-com bubble or the subprime-mortgage crisis remember those times and all of the glaring warning signs. But those signs weren’t nearly as clear at the time – which is why so many investors were blindsided by the respective market drops.

Because no one knows what tomorrow might bring, diversify your investments. Diversification means owning a variety of assets that respond to different economic, political and financial stimuli.

For instance, stocks typically do well during periods of economic expansion. But bonds perform better during times of uncertainty, when people are looking for a guaranteed buck. U.S. stocks have long outperformed international equities, but it might pay to have a little position in developed or emerging-market shares in the event the U.S. goes through bouts of underperformance.


What Is a Money Purchase Pension Plan (MPPP)? How Is It Different From a 401k?

A money purchase pension plan or MPPP is an employer-sponsored retirement plan that requires employers to contribute money on behalf of employees each year. The plan itself defines the amount the employer must contribute. Employees may also have the option to make contributions from their pay.

Money purchase pension plans have some similarities to more commonly used retirement plans such as 401(k)s, pension plans, and corporate profit sharing plans. If you have access to a MPPP plan at work, it’s important to understand how it works and where it might fit into your overall retirement strategy.

What Is a Money Purchase Pension Plan?

Money purchase pension plans are a type of defined contribution plan. That means they don’t guarantee a set benefit amount at retirement. Instead, these retirement plans allow employers and/or employees to contribute money up to annual contribution limits.

Like other retirement accounts, participants can make withdrawals when they reach their retirement age. In the meantime, the account value can increase or decrease based on investment gains or losses.

Money purchase pension plans require the employer to make predetermined fixed contributions to the plan on behalf of all eligible employees. The company must make these contributions on an annual basis as long as the plan is maintained.

Contributions to a money purchase plan grow on a tax-deferred basis. Employees do not have to make contributions to the plan, but it may allow them to do so. The IRS does allow for loans from money purchase plans but it does not permit in-service withdrawals.

What Are the Money Purchase Pension Plan Contribution Limits?

Each money purchase plan determines its own contribution limits are, though they can’t exceed maximum limits set by the IRS. For example, an employer’s plan may specify that they must contribute 5% or 10% of each employee’s pay into that employee’s MPPP plan account.

Annual money purchase plan contribution limits are similar to SEP IRA contribution limits. For 2022, the maximum contribution allowed is the lesser of:

•   25% of the employee’s compensation, OR

•   $61,000

The IRS routinely adjusts the contribution limits for money purchase pension plans and other qualified retirement accounts based on inflation. The amount of money an employee will have in their money purchase plan upon retirement depends on the amount that their employer contributed on their behalf, the amount the employee contributed, and how their investments performed during their working years. Your account balance may be one factor in determining when you’re able to retire.

Rules for money purchase plan distributions are the same as other qualified plans, in that you can begin withdrawing money penalty-free starting at age 59 ½. If you take out money before that, you may owe an early withdrawal penalty of 10.

Like a pension plan, money purchase pension plans must offer the option to receive distributions as a lifetime annuity. Money purchase plans can also offer other distribution options, including a lump sum. Participants do not pay taxes on their accounts until they begin making withdrawals.

The Pros and Cons of Money Purchase Pension Plans

Money purchase pension plans have some benefits, but there are also some drawbacks that participants should keep in mind.

Pros of Money Purchase Plans

Here are some of the advantages for employees and employers who have a money purchase plan.

•   Tax benefits. For employers, contributions made on behalf of their workers are tax deductible. Contributions grow tax-free for employees, allowing them to put off taxes on investment growth until they begin withdrawing the money.

•   Loan access. Employees may be able to take loans against their account balances if the plan permits it.

•   Potential for large balances. Given the relatively high contribution limits, employees may be able to accumulate account balances higher than they would with a 401(k) retirement plan, depending on their pay and the percentage their employer contributes on their behalf.

•   Reliable income in retirement. When employees retire and begin drawing down their account, the regular monthly payments through a lifetime annuity can help with budgeting and planning.

Disadvantages of Money Purchase Pension Plan

Most of the disadvantages associated with money purchase pension plans impact employers rather than employees.

•   Expensive to maintain. The administrative and overhead costs of maintaining a money purchase plan can be higher than those associated with other types of defined contribution plans.

•   Heavy financial burden. Since contributions in a money purchase plan are required (unlike the optional employer contributions to a 401(k)) a company could run into issues in years when cash flow is lower.

•   Employees may not be able to contribute. Depending on the terms of a plan, employees may not be able to make contributions to the plan. However, if the employer offers both a money purchase plan and a 401(k), they could still defer part of their salary for retirement.

Money Purchase Pension Plan vs 401(k)

The main differences between a pension vs. 401(k) have to do with their funding and the way the distributions work. In a money purchase plan, the employer provides the funding with optional employee contribution.

With a 401(k), employees fund accounts with elective salary deferrals and option employer contributions. For both types of plans, the employer may implement a vesting schedule that determines when the employee can keep all of the employer’s contributions if they leave the company. Employee contributions always vest immediately.

The total annual contribution limits (including both employer and employee contributions) for these defined contribution plans are the same, at $61,000 for 2022. But 401(k) plans allow for catch-up contributions made by employees aged 50 or older. For 2022, the total employee contribution limit is $20,500 with an extra catch-up contribution of $6,500.

Both plans may or may not allow for loans, and it’s possible to roll amounts held in a money purchase pension plan or a 401(k) over into a new qualified plan or an Individual Retirement Account (IRA) if you change jobs or retire.

Recommended: IRA vs 401(k)–What’s the Difference?

Employees may also be able to take hardship withdrawals from a 401(k) if they meet certain conditions, but the IRS does not allow hardship withdrawals from a money purchase pension plan.

MPPP Plan 401(k) Plan
Funded by Employer contributions, with employee contributions optional Employee salary deferrals, with employer matching contributions optional
Tax status Contributions are tax-deductible for employers, growth is tax-deferred for employees Contributions are tax-deductible for employers and employees, growth is tax-deferred for employees
Contribution limits (2022) Lesser of 25% of employee’s pay or $61,000 $61,000, with catch-up contributions of $6,500 for employees 50 or older
Catch-up contributions allowed No Yes, for employers 50 and older
Loans permitted Yes, if the plan allows Yes, if the plan allows
Hardship withdrawals No Yes, if the plan allows
Vesting Determined by the employer Determined by the employer

The Takeaway

Money purchase pension plans are a valuable tool for employees to reach their retirement goals. They’re similar to 401(k)s, but there are some important differences.

Whether you save for retirement in a money purchase pension plan, a 401(k) or another type of account the most important thing is to get started. If you don’t have access to a money purchase pension plan or similar plan at work there are other options you can pursue, such as opening an IRA online through the SoFi Invest brokerage platform. The sooner you begin saving for retirement, the more time your money will have to grow through the power of compounding interest.


Here are answers to some additional questions you may have about money pension purchase plans.

What is a pension money purchase scheme?

A money purchase pension plan or money purchase plan is a defined contribution plan that allows employers to save money on behalf of their employees. These plans are similar to profit-sharing plans and companies may offer them alongside a 401(k) plan as part of an employee’s retirement benefits package.

Can I cash in my money purchase pension?

You can cash in a money purchase pension at retirement in place of receiving lifetime annuity payments. Otherwise, you can start taking Early withdrawals from a money purchase pension plan are typically not permitted and if you do take money early, taxes and penalties may apply.

Is final salary pension for life?

A final salary pension is a defined benefit plan. Unlike a defined contribution plan, defined benefit plans do pay out a set amount of money at retirement, typically based on your earnings and number of years of service. Final salary pensions can be paid as a lump sum or as a lifetime annuity, meaning you get paid for the remainder of your life.

Photo credit: iStock/ferrantraite

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Early Retirement: How To Protect Your Hidden Retirement Asset

Early retirement has become a hot topic for a lot of workers. Some look at the high balances in their retirement accounts and think, “Maybe I have enough money to retire now.” Others plan to join the FIRE movement (short for “financial independence, retire early”) by leaving their industry before age 50. And yet others are being swept up by the COVID-caused Great Resignation and think it’s time to call it quits.

However, as you’re waltzing out the door of your workplace for the last time, take care not to slam it. Things change, and maybe one day you’ll want to return to the workforce. Maybe you’ll need to return to the workforce. Either way, before retiring it makes sense to take steps to protect your most important, and sometimes hidden, asset: your human capital.

The ability to generate wealth through employment is our human capital. If you are retiring early, you may have significant human capital left; you just have to decide whether you choose to deploy it by going back to work, redirect it by using it for volunteer work, or let it fade away.

There are a number of ways to protect your future income-earning ability without having to actually return to work. Here are some key strategies:

Make an Effort to Stay Current

If you enjoyed the field you worked in, you’ll benefit by keeping up to date even after you leave.

  • Stay current on the issues in your field. Keep your contacts, and don’t let those subscriptions to trade magazines expire just yet.
  • Maintain your centers of influence network. Don’t ignore your LinkedIn account, and be sure to continue attending association functions.
  • Avoid fading into obscurity. Retirement shouldn’t go from “Who’s Who” to “Who’s He?” Keep your name out there.

If you have simply burned out and can afford to retire, fine. But sometime in the future your batteries may recharge, and your retirement might turn out to be more of a sabbatical than a permanent exit. Hedge your bets by staying up to date.   

Maintain Your Licenses

After a time away from your career you may realize you like to work. Don’t let a piece of paper keep you from getting back in the game. There may be expense in maintaining a license, and continuing education requirements can be a nuisance, but keeping your licensing current — at least for a while — is good insurance.

Avoid Non-Compete Agreements

Many an accountant has aged out of their firm, only to realize they can’t get back into the field unless they move away or wait a few years. Non-compete agreements typically restrict an individual’s ability to work within a geographic area or for a period of time. This can particularly happen to employees leaving positions in the tech sector, professions such as accounting, and any job where employers are protective of their trade secrets. However, non-compete agreements are under attack — indeed they are illegal in some states — so you may be able to negotiate better terms for your agreement before you leave.

Your firm’s exit agreement isn’t just paperwork. It may determine your future.

Be Tech Savvy

Many newly minted retirees are dismayed when the reality sets in that there’s no longer a tech-support department to call when having a computer issue. Since you will have spare time as a retiree, it behooves you to stay current on tech issues. Whether you use the Geek Squad or become a DIY techie, you’ll want to avoid being an IT dinosaur. 

You’ll find that you’ll need to stay computer literate so that you can take on the occasional self-employment gig. In fact, working for yourself often requires computer skills you may not have needed when you were an employee. You might even consider looking for a tech-support person to have on-call for the occasional computer hiccup.

Stay Healthy

It’s more than just a platitude to emphasize the importance of good health in retirement. For some retirees, they see that taking care of themselves — being healthy — is their new job. They replace their work routine with activities such as going to the gym, being disciplined about their diet, and building social interaction into their schedules.

Besides making for a happier retirement, staying healthy is the best insurance policy for maintaining your human capital.

Protect Your Options

Sometimes early retirements don’t stick. Either finances or boredom demand that you return to the working world. So don’t just protect your 401(k) and Social Security — protect your human capital. Retirement can last a long time, and so can your earning ability.  

Co-Director, Retirement Income Center, The American College of Financial Services

Steve Parrish, JD, RICP®, CLU®, ChFC®, RHU®, AEP®, is an Adjunct Professor of Advanced Planning and Co-Director of the Retirement Income Center at The American College of Financial Services. His career includes years spent as a financial adviser, attorney and financial service company executive. He focuses on law, estate planning, taxes and financial strategies that can help enable a successful retirement.