While taking RMDs from tax-deferred retirement accounts is mandatory at age 70½, you may not need to spend this money. You have options of reinvesting it in a taxable account or donating it to charity. Read more...
At age 70½, you will need to start taking an RMD from your tax-deferred retirement accounts.
The money can be invested in a taxable, nonretirement account.
You can contribute to a 529 college savings plan.
You can transfer your RMD to a charity using a qualified charitable distribution (QCD).
You may be able to contribute to a Roth IRA if you have earned income and meet the income limits.
For most parents, it makes sense to consider how much financial aid your family might receive when developing a savings strategy for a college education. Read more...
Trying to save for the full sticker price of your child’s four-year college education can be daunting.
The key is to be realistic. Rules of thumb around saving for college might be useful, but they could also be inappropriate for your situation. Remember that most schools don’t meet 100% of a family’s financial need and that loans are often part of the financial aid package.
Whatever you do, don’t let the quest for financial aid eligibility deter you from saving. You don’t often hear about people who are unhappy that they saved too much.
Estate planning can be less intimidating when you’re armed with practical strategies that can provide peace of mind when you think about the afterlife of your money.
In this podcast, Lynnette Khalfani-Cox, who’s also known as The Money Coach®, is joined by guests Jeffrey Condon, author of “Beyond the Grave: The Right Way and the Wrong Way of Leaving Money to Your Children (and Others),” and Roger Young, a CERTIFIED FINANCIAL PLANNER™ at T. Rowe Price, to tackle the subject.
The panel will address questions, including: What are the various components of an estate plan? Is it expensive to develop an estate plan? What happens if you don’t have an estate plan?
In a segment called “This or That?,” the experts discuss the pros and cons of two choices: liquidation of assets versus distribution of items. Tune in to hear their advice.
When faced with conflicting financial priorities, how do you decide where to put your next dollar? Our experts share their perspectives on which savings and spending choices to consider. Read more...
In this podcast, Lynnette Khalfani-Cox, who’s also known as The Money Coach®, is joined by guests Kimberly Palmer, author of “Smart Mom, Rich Mom,” and Judith Ward, a CERTIFIED FINANCIAL PLANNER™ at T. Rowe Price, to answer some tough questions on prioritization.
The panel will address questions, including: What are three things to consider when choosing where to put your next dollar? How does proximity to retirement play a role in where to put your next dollar? Are there any tricks or questions to ask yourself when deciding between two financial priorities?
In a segment called “This or That?,” the experts weigh the pros and cons of a common financial conflict: Should you save for emergencies or pay off a credit card? Tune in to hear their advice.
It's challenging to focus on something that seems so far away. With our experts’ help, you can develop a more comprehensive understanding of how to build a solid retirement plan. Read more...
In this podcast, Lynnette Khalfani-Cox, who’s also known as The Money Coach®, is joined by guests Christine Benz, director of personal finance and senior columnist for Morningstar.com, and Judith Ward, a CERTIFIED FINANCIAL PLANNER™ at T. Rowe Price.
The panel will address questions, including: At what age should you begin to focus on your retirement plan? How do you know how much you will need to save for retirement? What are the different ways to save for retirement?
In a segment called “This or That?,” the panel discusses the pros and cons of saving for retirement versus paying down debt. Tune in to hear their advice.
If your retirement is right around the corner, new questions are likely surfacing. Our experts will help answer some of the ones most commonly asked. Read more...
In this podcast, Lynnette Khalfani-Cox, who’s also known as The Money Coach®, is joined by guests Kerry Hannon, AARP’s Jobs Expert and Great Jobs columnist, and Roger Young, a CERTIFIED FINANCIAL PLANNER™ at T. Rowe Price.
The panel will address questions, including: How do you know if you have enough saved for retirement? If you haven’t saved enough for retirement, what are your options to catch up? When should you consolidate your retirement assets?
In a segment called “Keeping You Up at Night,” the experts address a common concern: Will I have enough money to live comfortably in retirement? Tune in to hear their advice.
When you start collecting Social Security, it can have a big impact on your retirement income. Our experts will discuss tips to help determine the right Social Security strategy for you. Read more...
In this podcast, Lynnette Khalfani-Cox, who’s also known as The Money Coach®, is joined by guests Philip Moeller, author of “Get What's Yours: The Secrets to Maxing Out Your Social Security,” and Judith Ward, a CERTIFIED FINANCIAL PLANNER™ at T. Rowe Price.
The panel will address questions, including: When will you be eligible for Social Security? What is full retirement age? How much can you expect to receive from Social Security? Why is there a deficiency in Social Security?
In a segment called “This or That?,” the panel discusses the pros and cons of claiming at different ages. Should you claim at age 62, claim at full retirement age, or claim at age 70 for the maximum benefit? Tune in to hear their advice.
A personal finance podcast series that inspires long-term success through informed decisions on savings and investing. Read more...
The Confident Wallet™ by T. Rowe Price and The Washington Post BrandStudio is a personal finance podcast series designed to inspire long-term success by helping listeners make informed decisions on saving and investing.
Hosted by a different industry expert each season, this series provides listeners with actionable strategies on a range of topics like investing 101, understanding IRAs, financial tips for the self-employed, couples and money, and more. Roundtable guests answer tough questions about each topic with expertise and thoughtfulness.
Listeners can expect helpful insights, clear and concise definitions, and the resources and wisdom to be more confident in their financial decisions.
Meet the challenge of saving for college with less stress and more confidence. Our experts explore the ins and outs of college saving strategies.
In this podcast, Lynnette Khalfani-Cox, who’s also known as The Money Coach®, is joined by Robert Farrington, founder of The College Investor, and Roger Young, a CERTIFIED FINANCIAL PLANNER™ at T. Rowe Price.
The panel will address questions, including: How do you estimate future college costs? What’s the difference between a 529 savings plan and Uniform Gifts to Minors Act/Uniform Transfers to Minors Act accounts?
In a segment called “The Big Picture,” the panel takes a step back and discusses what listeners need to consider to make paying for college a reality. Tune in to hear their tips.
Deciding whether to convert assets to Roth involves consideration around the amount of taxes you will pay on the conversion amount and whether the money will ultimately be passed on to your heirs. Read more...
Converting assets to Roth enables potentially tax-free distributions later, as well as more flexibility and a hedge against higher tax rates.
Because you will pay ordinary income tax right away on the amount you convert, the strategy isn’t for everyone.
It may make sense to do a Roth conversion in a low-income year for someone with irregular income.
Converting assets to Roth early in retirement before facing required minimum distributions may benefit affluent households, particularly if you plan to leave an estate.
Once investors turn age 70½, they will need to take required minimum distributions (RMDs) from their retirement accounts, whether they need the money or not. Read more...
For IRAs, you must take your first RMD by April 1 of the year after the year you turn age 70½—regardless of whether or not you are retired. For each following year, you must take an RMD by December 31.
If you have multiple IRAs, you must calculate the appropriate RMD for each one. The total distribution amount can be taken from one or more IRAs to satisfy the withdrawal—as long as the total RMD amount is withdrawn.
If you have multiple prior employer retirement accounts (401(k)s, etc.) you will have to contact your prior employer to calculate the RMD and send you a distribution.
Once the RMD is distributed, you don’t have to spend it, but it cannot remain in the tax-deferred account.
Our experts share money management tips geared specifically towards the self-employed. Read more...
On this episode of The Confident Wallet™, a personal finance podcast series from T. Rowe Price and The Washington Post BrandStudio, host Kevin McCormally is joined by a panel of experts who share money management tips for self-employed workers.
McCormally, the former chief content officer at Kiplinger’s Personal Finance Magazine, calls on guests Roger Young, a CERTIFIED FINANCIAL PLANNER™ at T. Rowe Price, and Kathy Kristof, editor of SideHustl.com, to answer questions for this growing population.
Panelists answer questions like “How should someone who isn’t having taxes removed from their paycheck prepare to save their money each month to pay taxes later?” and “When does or doesn’t it make sense to set up a separate bank account and credit card for your business?”
From rolling over 401(k)s and consolidating IRAs to investing in target-date funds, learn about a few ways you can simplify your accounts. Read more...
On this episode of The Confident Wallet™, a personal finance podcast series from T. Rowe Price and The Washington Post BrandStudio, host Kevin McCormally is joined by a panel of experts to discuss how to make retirement savings less complicated.
McCormally, the former chief content officer at Kiplinger’s Personal Finance Magazine, calls on guests Stuart Ritter, a CERTIFIED FINANCIAL PLANNER™ at T. Rowe Price, and Diane Harris, editorial director at Considerable.com, to tackle this topic for listeners.
The panel discusses ways to help you simplify your investment accounts–from rolling over 401(k)s and consolidating IRAs to utilizing target-date funds–so you can focus on what’s really important. They’ll answer questions like “What types of accounts can't be consolidated?” and “What are target-date funds and what are the pros and cons to investing in them?”
Investing 101: Learn how to build and manage your portfolio and reach your investment goals. Read more...
On this episode of The Confident Wallet™, a personal finance podcast series from T. Rowe Price and The Washington Post BrandStudio, host Kevin McCormally is joined by a panel of experts to discuss how beginners can get started with investing.
McCormally, the former chief content officer at Kiplinger’s Personal Finance Magazine, calls on guests Stuart Ritter, a CERTIFIED FINANCIAL PLANNER™ at T. Rowe Price, and Arielle O’Shea, a personal finance writer at NerdWallet, to walk would be investors through the elements of saving.
The panel discusses the difference between bonds and stocks and addresses how to set up and build a portfolio and how to respond to market fluctuations. They’ll answer questions like “What are some typical investing goals?” and “How might a person’s strategy change with age?”
In a segment called “If you remember one thing...” McCormally asks his guests to sum up one big takeaway from the episode. Here, O’Shea explains why it’s never too early or too late to get started, while Ritter emphasizes that investors shouldn’t worry about being “perfect.” Tune in to hear their advice.
There are several types of IRAs—so how do you choose which one may be right for you? This episode describes and compares IRAs to help you decide. Read more...
On this episode of The Confident Wallet™, a personal finance podcast series from T. Rowe Price and The Washington Post BrandStudio, host Kevin McCormally is joined by a panel of experts to discuss the differences between types of Individual Retirement Accounts also known as IRAs.
McCormally, the former chief content officer at Kiplinger’s Personal Finance Magazine, calls on guests Roger Young, a CERTIFIED FINANCIAL PLANNER™ at T. Rowe Price, and Emily Brandon, senior editor for retirement at U.S. News & World Report, to walk listeners through IRA options.
Each IRA has different requirements and consequences, depending on your personal circumstances and retirement goals. This episode will cover the basics of IRAs, how to open one, and a comparison of benefits so you can determine which type may be right for you. They’ll answer questions like “Do IRAs invest automatically, or do we need to be actively engaged?” and “Are there benefits to rolling over a 401(k) to an IRA?”
This episode examines matters women should consider when planning for their financial future. Read more...
On this episode of The Confident Wallet™, a personal finance podcast series from T. Rowe Price and The Washington Post BrandStudio, host Kevin McCormally is joined by a panel of experts to discuss unique financial challenges that women face.
McCormally, the former chief content officer at Kiplinger’s Personal Finance Magazine, calls on guests Judith Ward, a CERTIFIED FINANCIAL PLANNER™ at T. Rowe Price, and Laura Adams, author of "Money Girl’s Smart Moves to Grow Rich", to dive into this topic.
From fewer years in the workplace and lower earnings to a longer life expectancy, this episode examines these, and other matters women should consider when planning for their financial future. Panelists answer questions like “Do women approach managing money differently than men do?” and “What is the difference between a pay gap and a wealth gap?”
In sickness and in health—and in joint bank accounts. This episode provides tips for couples about to say I do prepare for their financial future together. Read more...
On this episode of The Confident Wallet™, a personal finance podcast series from T. Rowe Price and The Washington Post BrandStudio, host Kevin McCormally is joined by a panel of experts to discuss how couples entering into marriage could prepare for their financial future together.
McCormally, the former chief content officer at Kiplinger’s Personal Finance Magazine, calls on guests Judith Ward, a CERTIFIED FINANCIAL PLANNER™ with T. Rowe Price, and Janet Bodnar, editor-at-large of Kiplinger’s Personal Finance Magazine, to help couples through an exciting but sometimes tricky time.
The panelists cover topics, including taxes, merging assets, debt, and savings. They’ll answer questions like “What topics should you discuss before you get married to make sure you are on the same page as your soon-to-be spouse?” and “How can couples divide financial responsibilities but keep each other in the loop on the full picture?”
Learn more about capital gains from mutual funds and potential tax consequences. Read more...
Mutual funds must distribute any dividends and net realized capital gains earned on their holdings over the prior 12 months, and these distributions are taxable income even if the money is reinvested in shares in the fund.
Investors concerned about tax exposure might want to consider investing in tax-efficient equity funds. Such funds typically are managed with an eye toward limiting capital gain distributions, when possible, by keeping holdings turnover low and harvesting losses to offset realized gains.
While tax considerations may play an important role in investment decisions, T. Rowe Price financial planners strongly encourage investors to focus primarily on their long-term financial goals. Making investment decisions based solely on tax considerations could result in expensive mistakes that reduce overall returns.
The trade war between the U.S. and China is likely to persist, which will create challenges for key Chinese industries. However, it may create opportunities to invest in countries that attract supply chains relocated from China. Read more...
Property prices, which were slowing anyway, could be hit further by weakened buyer sentiment if the trade dispute continues, as could auto sales.
Chinese manufacturers may struggle to procure suitable technology if investment restrictions prevent them from purchasing from U.S. vendors.
A recession may not be as imminent as many believe. Read more...
Credit spreads have widened recently as fears over a U.S. recession have spooked investors. But while a recession in the short term cannot be completely ruled out, the evidence available from the yield curve, credit spreads, and T. Rowe Price’s own recession probability models suggests that one is not imminent—and, as such, credit is probably a safer investment than many people believe.
Based on this, we increased our credit exposure in global multi-sector and diversified income strategies—primarily through liquid and shorter-dated instruments—in the back half of December 2018. Our credit risk exposure is now the longest it has been in over 12 months and approximately at the midpoint of our historical exposure range.
We do not want to be too long credit as the market is not cheap and risks remain. We will continue to evaluate the data as it emerges.
This strategy could reduce your taxes over the long term. Read more...
A Roth conversion—moving assets from a Traditional IRA to a Roth IRA—is most compelling when you pay tax on the converted amount at a relatively low rate.
Converting assets early in retirement before you face required minimum distributions (RMDs) can reduce those RMDs (and the risk that they will increase your tax rate).
Since a Roth conversion increases taxable income in the conversion year, drawbacks can include: a higher tax bracket, more taxes on Social Security benefits, higher Medicare premiums, and lower college financial aid.
Social Security is not a simple benefit system. It is worth learning about the rules of the program and understanding how benefits are calculated so you can make informed decisions on your claiming strategy.
Because Social Security is a significant, inflation-adjusted source of steady income, it should be an important part of your holistic income strategy in retirement.
Social Security claiming is not one size fits all. There are specific considerations for you to think through if you are single, married, divorced, or widowed.
When planning to leave money to heirs, it’s important to weigh the tax burden of the account holder and the recipients. Read more...
If you're considering passing along taxable assets to your heirs, take into account the investments’ cost basis, your tax rate on capital gains, your life expectancy, and the growth potential of your different investments.
If your heirs will have a lower future tax rate, it may make sense to leave them tax-deferred assets.
Leaving taxable assets to heirs allows them to benefit from the step-up in cost basis, making the gains during the original owner’s lifetime tax-free for the heirs.
Cybersecurity is becoming more important every day because cybercriminals are becoming increasingly innovative.
Instead of reacting to internet crimes, it is important to look for ways to prevent them from happening in the first place.
The key steps to avoid cyberthreats discussed in the webcast are: protect key personal information, manage email and internet activities safely, interact with financial institutions securely, and take action if something is amiss.
Separating estimates for annual premiums and out-of-pocket costs makes planning easier. Read more...
Given that health care costs are incurred over time, it makes more sense to view them as an ongoing regular budget item instead of a lump sum needed at the start of retirement.
Health insurance premiums account for nearly 75% of retirees’ annual health care expenses and, for the most part, are predictable and can be paid from monthly income. However, out-of-pocket expenses can vary and should be paid from savings.
Traditional financial planning principles and basic budgeting can help address many of the financial unknowns about health care costs in retirement.
February 26, 2019
Sudipto Banerjee, Ph.D., Senior Manager, Thought Leadership
Separating premiums and out-of-pocket costs makes it easier to plan for expenses. Read more...
We believe viewing retirement health care costs as an annual expense, instead of as a lump sum, makes it easier for retirees to plan for and pay for them.
Health insurance premiums are usually fixed and can be budgeted for and funded from monthly income. On the other hand, out-of-pocket expenses can vary from month to month and could be paid from savings or a fund earmarked for those purposes.
Retirement health care costs can vary widely, depending on the type of insurance a retiree chooses, and no type of coverage is “typical.” So we believe it is useful to provide these estimates based on the type of insurance coverage.
March 12, 2019
Sudipto Banerjee, Ph.D., Senior Manager, Thought Leadership
Credit research and trading strategies can impact performance. Read more...
With over 50,000 bonds in the municipal bond index, true passive investing is an inexact science at best in the municipal market.
While still a small part of the municipal market, passively managed muni portfolios—including exchange‑traded funds—that have attempted to replicate the characteristics of the municipal benchmark grew rapidly in 2018.
We believe investors are better served with actively managed portfolios that take full advantage of credit research and efficient trading across the broader market.
Rigor and conviction have created opportunities for clients. Read more...
A T. Rowe Price performance study of 16 of our actively managed non-U.S. equity funds compared with competing passive investment vehicles found that the value added by our strategic investing process was significantly positive for a majority of the funds included in the study.1
Over the rolling three-year periods we studied, 94% of the T. Rowe Price funds (15 of 16) posted positive active success rates after fees and costs. The average excess return over those periods was 1.38%.
We attribute our success to our practice of going beyond the numbers, by traveling to meet companies we invest in and debating and sharing investment insights to understand the complex dynamics of investment opportunities.
In the current investing environment, discover how our Asset Allocation Committee is positioning their portfolios. Read more...
We moderated our position in small-cap stocks in the U.S. given recent strength and favorable liquidity in the face of moderating domestic growth.
We continued to reduce our exposure to developed market value stocks outside the U.S. in favor of growth as value-oriented sectors within those regions, such as financials, may be challenged by moderating economic growth.
We added to hedged international bonds as they offer an attractive hedged yield for U.S. dollar investors.
Scott Berg shares why he thinks the technology sector is going from strength to strength. Read more...
The secular forces powering the technology sector are robust and here to stay. The pace of innovation remains breathless, as we found out during our annual trip to Silicon Valley.
As large-scale investors, we were able to meet many of the leading figures within the industry. The expansion of media platforms, the rise of artificial intelligence (AI) and the potential of the cloud remain powerful forces at many different levels.
Investors should approach technology less as a standalone sector, but in a more diverse way. Technological change is impacting business models across every sector of the global market.
May 24, 2019
R. Scott Berg, Portfolio Manager, Global Growth Equity Strategy
In the current investing environment, discover how our Asset Allocation Committee is positioning its portfolios. Read more...
We remain modestly underweight equities in favor of cash and bonds as valuations are extended against a backdrop of rising risks.
We favor high yield bonds as yield levels remain attractive and fundamentals healthy. Relative to equities, high yield bonds currently offer similar return expectations with a lower volatility profile.
We are overweight emerging market equities as they should benefit from the trade truce, dovish central banks, and a weaker U.S. dollar.
Key signals indicate aging expansion rather than imminent downturn. Read more...
The risk of a recession in the near term has not increased markedly despite the flattening of the U.S. Treasury yield curve.
While in the past a rise in the short rate typically caused the flattening of the curve, on this occasion, policy has not been tightened to the same degree. Second, cyclical indicators do not point toward the buildup of economic vulnerabilities.
Finally, the very low term premia currently in evidence mean that yield curve flattening or inversion was more likely to occur recently than at any other point in U.S. history.
In a more volatile world, high‑conviction, quality‑focused investing is key. Read more...
The Asia ex‑Japan region offers investors a rich, highly diverse opportunity set. Particularly interesting are those often overlooked companies that have continued to deliver modest earnings growth, consistently, year after year.
U.S.‑China trade tensions have clouded the near‑term outlook in the Asia ex‑Japan region. However, China’s domestic A shares market has continued to represent a rich, longer‑term opportunity set.
In May 2019, the T. Rowe Price Asia Opportunities Fund celebrated its five‑year anniversary, recording positive excess returns every year since inception.
July 30, 2019
Eric C. Moffett, Portfolio Manager, Asia Opportunities Equity Strategy
ESG factor analysis is key to assessing business quality and value. Read more...
Emerging markets (EM) have made great progress in relation to environmental, social, and governance (ESG) considerations in recent years, with many companies today displaying ESG standards in line with global best practices.
Yet there remains a general perception among investors that EM continue to suffer from an “ESG shortfall.”
This presents opportunities for active investors to find mispriced companies where strong or improving ESG standards are underappreciated, thereby offering long‑term price improvement potential.
October 29, 2019
Ernest C. Yeung, Portfolio Manager, Emerging Markets Discovery Equity Strategy