Four Money Skills That Are Making Baby Boomers Poor

Are you a baby boomer that feels like they are never getting ahead?  If your stuck in a rut, and can’t figure out why you can’t get a hold of your financial situation, it’s time for a change.  To get on financial track could mean to implement a variety of things.   Today, we are just going to focus on four.  Here are four things that you can change today.

1. Too Much In Your Checking Account

It’s definitely very wise to save and have a good chunk in savings. You should keep at least 8 months worth of emergency funds (12 months if your income is unpredictable) in a high-yield savings account such as HSBC Direct or WTDirect Savings Account.

But over and above that, you’re missing out on the potential to earn more. Consider doing a CD Ladder or an Intermediate Term Bond Fund.  Both of these example will put your money at little to no risk, and you’ll earn more interest than your local bank.

2. Hands off the 401k

Have you been wanting to remodel your kitchen for quite some time?  Maybe it’s new carpet.  Whatever it is, you’ve got the itch to do something, but you are not sure where to get the money.

Then it dawns on you – your 401k! Stop right there before the thought goes any further. Your 401k is not your savings account. Most likely your 401k has taken a big enough hit this year without you touching it. Taking it now to fit the bill for some unnecessary expense could put your retirement future in shambles. Don’t do it!

3. Go The Tax Free Route

If you’re single and earn less than $116,000 a year, or are married, filing jointly and earning less than $169,000 a year, then congratulations! You are now allowed to participate in one of the greatest retirement tools of all time.

I’m talking about the Roth IRA. Investing in a Roth IRA means you set aside money now, watch it grow for decades and then cash out without paying a dime in taxes.

A recent study found that only 15% of American households have a Roth IRA. Are you part of the 85%? Don’t be.

4. 2010 Will be Here Before You Know It

In 2010, everyone will be allowed to convert old retirement plans and Traditional IRA’s to a Roth IRA. For a baby boomer that has several working years ahead of you, this could be extremely advantageous.

The amount you convert will be taxed, but you can spread the bill over three years. You might want to start saving for the tax bill now, because this will be an opportunity you will want to capitalize on.  The 2010 Roth IRA Conversion may end up being the best money move you’ve ever made!

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