You won’t be able to withdraw an unlimited amount of money in retirement. So a retirement budget is a necessity. Some retirees forego one, only to regret it later.

Run the numbers before you retire. Often people need about 70-80% of their end salaries in retirement, but this can vary. So years before you leave work, sit down for an hour or so (perhaps with the financial professional you know and trust) and take a look at your probable monthly expenses. Online calculators can help.

The closer you get to your retirement date, the more exact you will need to be about your income needs. You first want to look for changing expenses: housing costs that might decrease or increase, health care costs, certain taxes, travel expenses and so on. Next, look at your probable income sources: Social Security (the longer you wait, the more income you can potentially receive), your assorted IRAs and 401(k)s, your portfolio, possibly a reverse mortgage or even a pension or buyout package.

While selling your home might leave you with more money for retirement, there are less dramatic ways to increase your retirement funds. You could realize a little more money through tax savings and tax-efficient withdrawals from retirement savings accounts, through reducing your investment fees, and getting your phone, internet and TV services from one provider.

If you have just retired or are about to, you will enter 2012 with some financial breaks. Social Security benefits will increase by 3.6% next year, Medicare Part B premiums will only rise $3.50 instead of the $10 that Medicare projected, and the Part B deductible will be $22 cheaper in 2012 ($140).

Budget-wreckers to avoid. There are a few factors that can cause you to stray from a retirement budget. You can’t do much about some of them (sudden health crises, for example), but you can try to mitigate others.

• Supporting your kids, grandkids or relatives with gifts or loans.
• Withdrawing more than your portfolio can easily return.
• Dragging big debts into retirement that will nibble at your savings.

Budget well & live wisely. These are times of low interest rates and modest Wall Street gains. Given those factors, creating a retirement budget makes a lot of sense. A budget – and the discipline to stick with it – may make a financial difference.

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. Marketing Library.Net Inc. is not affiliated with any broker or brokerage firm that may be providing this information to you. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is not a solicitation or a recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Almost everyone is looking forward to retirement. After working almost all of your life, you would finally get the freedom from all the tedious and stressful work you have been keeping all these years. As your officemates throw you a fabulous farewell party, you could start sitting back and planning for much deserved vacations and trips around the globe.

Retirement could be synonymous to freedom for most people. You would not have to be tied up to any job anymore. As mentioned, the moment you spend your last day working, you could be thinking about traveling. You may also consider many other fun and leisure activities, which could be quite costly.

By this time, you could be raving because you have a huge amount of savings in your bank account. You may also start claiming from your retirement plans. Do not forget that what you have now is all you have. There is a need to make it last your lifetime, which could be 10 years, 20 years, or even 30 years more. While it is just ideal to enjoy planned vacations and shopping sprees, you still need to observe several restrictions especially when it comes to your personal finances.

Spending trend on the first few years of retirement

After the day of retirement, people normally spend more on trips and shopping sprees. You may want to take advantage of not being tied to any job anymore. Thus, travel would have to be on top of your ‘what-to-do’ list. Going to places across the country or abroad could be expensive, needless to say. Just enjoy your time and go to just about anywhere you have been dreaming to go to.

Usually, after a year or two, your desire to travel would wane. That is the time you would want to spend more time at the comfort of your home. And while you are at it, you surely would want to remodel or redecorate, if not buy a new home. This new project could logically be costly especially if there are so many things you want to do to make your home all the more homey. Your home remodeling project may get a little more than your budget.

Investing and spending money

After spending some of your savings traveling and remodeling your home, you have to focus more on wisely spending your money. You may be retired but you could still invest your money to make it earn for you. Try to make diverse investments so that your money would be spread out strategically. This would protect you from possibly losing too much in case any market or industry performs weakly.

Your retirement is also not an excuse not to be frugal. Always make your spending in check. It would be wise to stick to a modest and practical budget so you could be sure you would have money to spend the moment you need it the most. Enjoy your retirement but stay wise in your spending.

This guest post was written by Andrew Black. Andrew has been working in the debt consolidation industry for the last 3 years, specialising in debt relief solutions.   Want to write a guest post?  Email us at info at jayperoni dot com.

On September 8, President Obama announced a new plan to improve the economy – the $447 billion American Jobs Act, a sequel of sorts to his past economic stimulus proposals. His announced goal: job creation without new taxation.

While the President took some sharp jabs at Republicans in his speech to Congress (“I know that some of you have sworn oaths to never raise any taxes on anyone for as long as you live”), early indications are that the bill will have noticeable bipartisan support.

What’s in this bill?

The AJA would try to boost the economy through seven different tactics – extensions and expansions of tax breaks, and infusions of federal dollars.

1. The current payroll tax holiday would be extended through the end of 2012.
2. The payroll tax would fall to 3.1% – not only for workers, but also for businesses with payrolls of $5 million or less.
3. Companies could get a tax credit as large as $4,000 for hiring the long-term unemployed (people who have been out of work for at least 6 months).
4. Long-term jobless benefits would again be extended.
5. $80 billion of federal money would be assigned to new infrastructure projects (highways, bridges and schools).
6. Businesses could expense 100% of their investments in 2012, just as they have been able to do in 2011.
7. Additional federal money would be given to struggling state and local governments to help them avoid layoffs of first responders and teachers.

How could this all be funded without new taxes? President Obama claims the effort can be paid for as a byproduct of his plan to reduce the federal deficit (a plan he will discuss in greater detail in a September 19 speech).

The bill isn’t set in stone yet. The AJA goes to the House for a vote this week, and though the House Republican leadership likes the essence of the plan, it may seek major alterations.

In a jointly authored statement issued on September 9, House Speaker John Boehner (R-OH), House Majority Leader Eric Cantor (R-VA), Majority Whip Kevin McCarthy (R-CA) and Conference Chairman Jeb Hensarling (R-TX) said the plan “merits consideration”, but they also hoped that the President’s ideas were not offered “as an all-or-nothing proposition, but rather in anticipation that the Congress may also have equally as effective proposals to offer for consideration.”

Indeed, Republicans have had an alternative plan in the works for a while – the so-called Plan for America’s Job Creators – which centers on tax reduction, decreased non-defense discretionary spending and less costly industry regulations to stimulate private-sector job growth. There isn’t much support for it among Democrats.

What do economists think the AJA could accomplish?

Some think the economy would get some short-term relief if it became law. Others see an upcoming object lesson in failed Keynesian economics.

• Moody’s Analytics chief economist Mark Zandi is big on the bill – he believes it could add 2% to GDP, cut 1% off the jobless rate, and create 1.9 million jobs in an economy “on the edge of recession”.
• University of Pennsylvania Wharton School of Business professor Susan Wachter thinks the payroll tax reductions alone could generate 1 million jobs and expand the economy by 1%.
• At Pimco, Mohamed El-Erian calls it a “credible program that is focused on the right structural areas.”
• Unicredit’s Harm Bandholz thinks the AJA could “add up to 2 percentage points to growth in the coming year.”
• “Bottom line: not a lot of bang for the buck here,” states Tom Porcelli of RBC Capital Markets, who feels that the economic impact of the infrastructure investments will likely be “fairly modest … the red tape and politics involved in allocating these funds makes the implementation a long and drawn-out process.”
• The Heritage Foundation’s J.D. Foster sees “a bunch of retread policy ideas that two years after they were first tried managed to create an arithmetic novelty – exactly zero job growth in August. In total, the President is calling for more new spending on proven policies that are proven failures.”

As the economy is in such a low gear, you may see Democrats and Republicans support the bill with newfound unity or at least tolerance. While America can’t reach across the Atlantic and fix the Eurozone crisis hampering world stocks, this envisioned stimulus could help our economy make some small strides.

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty.

Help! Where do we go from here?

There is definitely a lot of bad news coming down the pike.  From the United States’ massive fiscal problemsto potential defaults in Europe to the massive inflation and economic slowdown in red hot China.  If you also consider the Japanese global supply restraints and the Middle East oil crisis, there really is a perfect financial storm brewing.  Will it be a tropical storm or a category 5 hurricane?  That is the question.

Bad times don’t have to beat you down.  We serve a mighty God who can steer us through the storms. This doesn’t mean we will be bulletproof, but it does mean we can place our trust in Him rather than monetary instruments.  This shouldn’t be an excuse for complacency and “sticking the mighty head in the sand”.  Instead, it is a time to put our faith into action.  We should seek to do all we can to proactively protect the wealth entrusted to us and leave it to God for the results.

Plan ahead

He wants us to plan ahead for good times and bad.  In our desire to multiply all the Lord has provided, this means we should be taking the extra steps to be wiser stewards in how we:

* Earn income

* Give generously

* Spend money

* Invest a surplus

By bringing our faith to the front and center, seeking wise counsel, and taking action, we have a better shot at producing positive results even while the world is falling apart.  Have you noticed that there are two economies?  The world’s and God’s?  Where do you place your trust?

Most of us will be quick to respond “of course we choose God!” Yet, is this the way we live? If it is, why do so many Christ followers worry and fight so much about money?  Why do most Believers not handle their money any differently than non-believers?

It all starts with your attitude

Many Christians are still stuck in the rut that money is the root of all evil.  They look negatively at wealth and cite passages like:

Again I tell you, it is easier for a camel to go through the eye of a needle than for a rich man to enter the kingdom of God. – Matthew 19:24

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Debt ceilings, credit downgrades, and a collapsing market oh my!  Feels a bit lately like the U.S. is having a bad dream.  Like we woke up in Oz and the Wicked Witch took over.  Wake me up from this nightmare!

Many politicians probably wish they could click their heels and make it all go away.  The truth remains that our fiscal problems are here for the long haul unless urgent changes are made.  When you borrow from Peter to pay Paul, as it is in life, choices have consequences. The U.S. is now facing some tough times ahead because of poor choices…

Let us quickly get up to speed on where we are:

1. First we battled over raising the debt ceiling.

The August 2nd debt ceiling deadline came and went as the Treasury reassured  the world financial markets that U.S. would not default on her debts. This was too close for comfort!  When all the dust finally  settled, it  was determined by the non-partisan Congressional Budget Office that the federal deficit will be reduced by at least $2.1 trillion. Yet it is still uncertain where the majority of these cuts will be made.

We will definitely see defense and non-defense programs reduced by $741 billion over a 10-year period, which includes a $350 billion cutback in defense spending at the Pentagon. There will be an additional $156 billion in savings from lower interest costs on servicing our existing National Debts.  Another $20 billion will be cut from education loan initiatives and through efforts to identify fraud and abuse in other mandatory federal programs. (Student loan funding will be reduced to $22 billion by 2021, but Pell Grant funding will increase by $5 billion by 2015.) A bipartisan committee of 12 will have to recommend between $1.2 trillion and $1.5 trillion in additional federal budget cuts by November 23rd.

This bi-partisan committee will be responsible for looking at Social Security,Medicare and Medicaid and any other line items that can add some bang for the buck. The committee consists of :

• House Minority Leader Nancy Pelosi (D-CA) & Senate Majority Leader Harry Reid (D-NV)  who will each get to select three Democrats.
• House Speaker John Boehner (R-OH) and Senate Minority Leader Mitch McConnell (R-KY) who will each get to pick three Republicans.

READ MORE

Here are 7 common financial mistakes due to a lack of a plan:

1. Procrastination. This does not help you save for retirement, and it will not help you reduce your taxes or transfer money to your heirs. Delaying necessary financial planning can be perilous. Some avoid planning out of fear – they simply don‘t know where to begin. Don‘t let this stop you. Decide today to do something about your financial future.

2. Putting all your eggs in one basket. Too many people invest everything in just one place. Try spreading your assets across multiple investments, and you‘ll help to insulate them against the effects of economic ups and downs.

3. Buying more home than you can afford. Interest-only loans, option adjustable-rate mortgages (option ARMs) and lease purchases still tantalize couples and families with small nest eggs, modest salaries and credit blemishes into taking on much more liability than they can bear. The result is often foreclosure.  This has proved costly to millions of Americans. By speaking to a qualified professional they can make sure the amount of home you purchase makes sense for you.

4. Making impulsive or emotional money decisions. A decision that feels good (or exciting) may not be appropriate for you financially. Avoid spur-of-the-moment financial choices, and the influences that may trigger them. The next time you‘re about to make a snap decision, stop and think. Will you lose the opportunity if you take a while to consider your next move? Consider and compare whenever possible. Also make sure your spouse is on the same page as you. Money problems are still one of the top reasons for divorce!

5. Living above your means. In the acclaimed book The Millionaire Next Door, authors Thomas Stanley and William Danko found that most millionaires drive used American cars and shun a champagne-and-caviar lifestyle. It is the middle class that is generally seduced by big-debt, big-ticket luxury items … sometimes all the way into bankruptcy. Make wise decisions about money, take the time to consider big purchases, and be mindful of what effect they‘ll have on finances down the road.

6. Avoiding all risk. Caution is good, but being extremely risk-averse (for example, refraining from investment and just putting your money in an FDIC-insured bank account) may cost you in terms of the growth of your retirement savings and assets. If you‘re holding back because you‘re unsure, speak with a financial advisor.

7 Taking on too much risk. Whether it’s self insuring through not heaving health insurance, having too little or no disability or life insurance, or investing too aggressively, many who lack a financial plan take on far too much risk…

Want to see if you plan is on track? Give us a call at Faith-Based Investor at 866-594-9919 and we can spend 30 minutes to see if you’re heading in the right direction or need a few adjustments.

What will it take for the housing market and employment to really improve? It really boils down to the two greatest economic factors of all: supply and demand.

What needs to happen in the labor market? Ideally, a swift rise in consumer demand for goods and services in 2011 spurs businesses to hire, with no need for another costly federal stimulus. About 125,000 people enter the U.S. labor force every month, so job creation needs to hit that level just to tread water in terms of employment–to-population ratio. Data from the Brookings Institution shows that 280,000 new positions emerged monthly at the peak of job creation in the 2000s. Back in 1994, the economy was creating an average of 321,000 new jobs a month.

Economy still in trouble

As 2010 drew to a close, our economy wasn’t anywhere near that. According to the Labor Department, 71,000 new non-farm jobs were created in November and 103,000 new non-farm jobs in December. Last month, the government said that private payrolls grew by 113,000 (297,000 according to payroll services provider ADP). Yet the December report also indicated a 1.3 million month-over-month rise in the population of discouraged workers who had simply stopped seeking jobs.

On December 7, Federal Reserve chairman Ben Bernanke told the Senate Budget Committee that while we were seeing a “self-sustaining” economic recovery, the jobless rate would likely remain elevated through 2015 or 2016.

Perhaps 2011 could be better than we expect. A Manpower Inc. survey of employers in December found that 73% foresaw no change in the pace of hiring at their firms for the first quarter of 2011. However, the survey did find that seasonally adjusted (read: net) hiring was projected to rise from 5% in the past quarter to 9% in 1Q 2011.4 That represents a significant jump in net hiring and suggests either the perception or reality of rising demand in some industries.

The Bureau of Economic Analysis recently reported a 3.4% year-over-year rise in disposable personal incomes for 3Q 2010, which would seem to promote a consumer spending increase. Federal Reserve data showed consumer credit card debt ticking back up by 0.6% in September and 1.7% in October after months of decreases; this is another potential sign of a rebound in consumer spending and consumer confidence.

What about real estate?

What needs to happen in real estate? Well, two key factors do seem to be in place to encourage a rebound. Interest rates on 30-year conventional home loans are still below 5%; compare that with 9.4% as recently as the early part of 1989. The Standard & Poor’s/Case-Shiller Home Price Index tells us that existing home prices dropped 29.6% between July 2006 and October 2010, and some analysts see them falling further.

But two cold, hard facts remain in the way of a recovery:

1. You can’t buy a home if you don’t have a job. Unemployment and its cousin underemployment represent the biggest drag on the real estate market – thwarting purchases, reducing demand, and hastening delinquencies and foreclosures.

2. You can’t readily sell your home if it is “underwater”. The latest CoreLogic Inc. data shows that 22.5% of U.S. homeowners owe more than their residences are worth.

So what’s next?

During 2009-2010, any sense of momentum or recovery seemed a product of government intervention. The homebuyer tax credit led to a spike in sales, then a reversal. Turning from the month-to-month “weather” of the real estate market to year-over-year numbers, you would think things couldn’t get any worse: according to the latest figures (November), existing home sales were down 27.9% year-over-year and new home sales down 21.2% from 12 months before.

However, some of the “weather” bears studying; things did get sunnier during 2010 in some respects. Mortgage rates didn’t rocket north when the Fed ended its campaign to buy mortgage-backed securities last March. (The European debt crisis had an effect.) Existing home sales rose by 5.6% in November, and the rate of new home purchases also improved by 5.5%. Pending home sales, as tracked by the National Association of Realtors, were up a record 10.4% in October and up another 3.5% for November.

Ideally, 2011 brings some kind of sweet spot for the residential real estate sector where job creation ramps up while mortgage rates remain historically low for a few months. That could contribute nicely toward a recovery in the sector in 2012.

Yes, you can make 2011 the year you alter your financial life for a better financial future. Let’s look at some steps you might think of taking with the goal of financial freedom in mind.

No, we’re not talking about those ridiculously obvious steps the usual articles recommend, like “write your goals down” and “set a budget”. Let’s go past the clichés and get into the real issues.

Look at your income source, your expenses and your debt.

How do you earn income? If you earn it from one source, is there effectively a ceiling on it, or is there real potential for your income to rise in the next few years? Now look at your core living expenses, the ones you can’t avoid (such as a mortgage payment, car payment, etc.). Can any core expenses be reduced? Investing aside, you position yourself to gain ground financially when income rises, debt diminishes and expenses stay (relatively) the same.

Maybe you should pay your debt first, maybe not. If you are a business owner or a professional, for example, you’ll likely always have some debt. Your ultimate goal should be to build wealth – and you can plan to build wealth and minimize debt at the same time.

Some debt is “good” debt. A debt is “good” if it brings you income. If you buy a rental property, you’re paying a mortgage, but that’s considered a “good” debt because you’re getting passive income from the rent payments. Credit cards are “bad” debts.

If you’ll be carrying a debt for a while, put it to a test. Weigh the interest rate on that specific debt against your potential income growth rate and your potential investment returns over the term of the debt. If the interest rate on that debt looks like it will outpace your income growth and investment returns, then you should really think about paying that debt down fast, because you can’t afford that interest rate.

Of course, paying off your debts, paying down balances and restricting new debts all works toward improving your FICO score, another tool you can use in pursuit of financial freedom (we’re talking “good” debts).

Implement or refine an investment strategy.

You can’t refrain from investing, even when the bears are out. You’re not going to retire on the relatively small elective deferrals from your paycheck; you’re going retire on the interest that those accumulated assets earn over time, plus the power of compounding. Investing can also potentially bring you passive income. Consistent investing, this year and in years to come, has the potential to help you improve your financial life.

Manage the money you make on your way to financial freedom.

It’s amusing: all these Internet gurus tell you they have a method to make you “financially free” or “debt free”, but few tell you how to manage the money you make. Their not-so-subtle message seems to be “succeed and live lavishly” – if you make it financially, you’ve earned the freedom to blow it all on cars, boats and luxuries.

This is a classic nouveau riche mistake. If you simply accumulate unmanaged assets, you have money just sitting there open to risk – inflation risk, market risk, even legal risks. Don’t forget taxes – while not technically a “risk”, they are a threat to your money. The greater your wealth, the more long-range potential you have to accomplish some profound things – provided your wealth is directed.

If you want to build more wealth this year or in the near future, don’t neglect the risk management strategy that could be instrumental in helping you retain it. Your after-tax return matters even more than your investment return, so risk management should be part of your overall financial picture.

Request professional guidance for the wealth you are growing.

A good financial advisor will really help to educate you about the principles of wealth building. You can draw on that professional knowledge and guidance this year – and for years to come.

Want strategies and action plan for 2011?  Join our VIP Program. Get coaching, training, and resources to take your finances to the next level!

Why do we cling to the myth that women don’t understand money as well as men?

If you look at the personal finance books out right now, some of the titles might convince you that women need “special help” when it comes to figuring out saving, investing and budgeting. The current self-help tomes include:

Prince Charming Isn’t Coming …

SHOO, Jimmy Choo!

The Modern Girl’s Guide to Spending Less and Saving More …

Does This Make My Assets Look Fat? …

Girl, Get Your Money Straight …

A Purse of Your Own: An Easy Guide to Financial Security.

Judging by these titles, you would think contemporary American women are naive shopaholics or squanderers. But is that really the case?

Data suggests women and men don’t spend that differently. The Bureau of Labor Statistics, which tracks consumer spending patterns per gender, finds that personal spending between the genders evens out. For example, while women have historically spent more on their apparel than men do on theirs, recent findings show that men are spending more on eating out, audio and visual equipment and transportation.

Do women run wild at the mall?

Data seems to say otherwise. While the most recent BLS data indicates that 76% of women have at least some credit card debt compared with 67% of men, it also reveals that credit card balances are higher for males.

Empathica, a firm providing consumer insights to retailers, polled more than 7,200 U.S. consumers in 2009 and found that 72% of women had reduced their retail spending in the recession compared to only 62% of men.

Two surveys suggest women might be more prudent investors. In 2001, a study conducted by two University of California, Davis professors titled Boys Will Be Boys: Gender, Overconfidence, and Common Stock Investment appeared in MIT’s Quarterly Journal of Economics. Looking at patterns across 35,000 households, Brad Barber and Terrance Odean determined that male investors traded stocks about 50% more often than women investors, with their market timing efforts resulting in poorer returns and more frequent fees and charges.

In March 2009, University of Oregon professor Ellen Peters conducted a nationwide survey which revealed that just one in every 40 women had “made riskier investments looking for long-term growth” in the past week, while one in eight men had taken such a risk.

Other surveys find women prioritizing savings and debt reduction. TD Ameritrade has a new poll out in which 68% of women say they intend to save more of their money in 2011, compared to 62% of men. In a 2010 Citigroup survey, 48% of women aged 18 to 39 said that they were saving more money than they had in the past. Overall, 72% of women in the Citi survey responded that they would use extra cash to pay down debt, compared to 65% of their male counterparts.

The real issue is unequal income.

On average, women live longer than men and therefore need more money across a lifetime. Yet on average, they don’t earn as much as men. According to the Labor Department, women working full-time after age 24 still earn just 80% of what men working full-time do.

However, the National Center for Women and Retirement Research estimates that 75% of women will be widowed – at an average age of 56 – and that 90% of women will be solely responsible for their financial situation at some point in their lives.

There is no need for condescension; there is a need for comprehension. Women do need to realize the financial challenges that come with potentially longer life spans and potential absences from the workforce, and plan accordingly. But, it’s time to shed the old stereotypes and myths.

The end of the year is a good time to review your personal finances. What are your financial, business or life priorities for 2011? Try to specify the goals you want to accomplish. Think about the consistent investing, saving or budgeting methods you could use to realize them. Also, consider these year-end moves.

1. Think about adjusting or timing your income and tax deductions. If you earn a lot of money and have the option of postponing a portion of the taxable income you will make in 2010 until 2011, this decision may bring you some tax savings. You might also consider accelerating payment of deductible expenses if you are close to the line on itemized deductions – another way to potentially save some bucks.

2. Think about putting more in your 401(k) or 403(b). You can contribute up to $16,500 to these accounts in 2010, with a $5,500 catch-up contribution also allowed if you are age 50 or older. Has your 2010 contribution approached the annual limit? There is still time to put more into your employer-sponsored retirement plan.1

3. Can you max out your IRA contribution at the start of 2011? If you can do it, do it early – the sooner you make your contribution, the more interest those assets will earn. And if you haven’t made your 2010 IRA contribution yet, you can still do so through April 15, 2011.

The 2011 contribution limits on traditional and Roth IRAs are unchanged from 2010. You can contribute $5,000 to your IRA next year if you are age 49 and below, $6,000 if you are age 50 and above.

4. Consider a Roth IRA conversion before 2010 ends. Now anyone may convert a traditional IRA to a Roth IRA; there are no longer any income limits in the way. If you pull off a Roth conversion before 2010 ends, you can choose to divide the taxes on the conversion between your 2011 and 2012 federal returns. This nice opportunity won’t be available if you make a Roth conversion in 2011.1

There are still MAGI phase-out limits for contributing to Roth IRAs. For 2010, those limits kick in at $167,000 for joint filers and $105,000 for single filers. If your MAGI will exceed those limits, you still have a chance to contribute to a traditional IRA in 2010 and immediately roll it over to a Roth.

5. Consult a tax or financial professional before you make any IRA moves. You will want see how it may affect your overall financial picture. The tax consequences of a Roth conversion can get sticky if you own multiple traditional IRAs.

6. If you are retired and older than 70½, don’t forget the 2010 RMD. As your IRA custodian has undoubtedly reminded you, the one-year suspension of Required Minimum Distributions has been lifted. Retirees over age 70½ must take RMDs from traditional IRAs – and 401(k)s – by December 31. Remember that the IRS penalty for failing to take an RMD equals 50% of the RMD amount.

If you have turned or will turn 70½ at some point in 2010, you can choose to postpone your first IRA RMD until April 1, 2011. The downside of that is that you have to take two IRA RMDs next year – you have to make your 2010 tax year withdrawal by April 1, and your 2011 tax year withdrawal by December 31.

7. Keep an eye on what happens with income, capital gains & estate taxes. We’re all watching and waiting here to see what Congress will do.

If Congress doesn’t extend the current law, the tax rates on long-term capital gains will go from 0% to 10% next year for those in the 10% and 15% tax brackets. Taxpayers in higher brackets will see their capital gains tax rates rise 5% in 2011 to 20%. In addition, dividends are scheduled to be taxed at marginal income rates of 39.6%. As it stands now, time is running out to take advantage of the current capital gains tax break.5

Income taxes are poised to return to pre-EGTRRA levels in 2011, with the lowest bracket set at 15% and the highest bracket set at 39.6%. (The so-called “marriage penalty” would also come back.) No one in Congress wants this on their legacy, so some kind of extension of the Bush-era tax cuts will almost certainly be worked out. We will have to wait and see if Congress extends the cuts for all or simply for the middle class.

Estate taxes will undoubtedly return in 2011. Hopefully, Congress will prevent them from returning at the 2001 levels (a puny $1 million exemption and a 55% top tax rate).

8. You may wish to make a charitable gift before New Year’s Day. If you make a charitable contribution this year, you can claim the deduction on your 2010 return.

9. You could make December the “13th month”. Can you make a January mortgage payment in December, or make a lump sum payment on your mortgage balance? If you have a fixed-rate mortgage, a lump sum payment can reduce the home loan amount and the total interest paid on the loan by that much more. In a sense, paying down a debt is almost like getting a risk-free return.

10. Are you marrying next year, or do you know someone who is? The top of 2011 is a good time to review (and possibly change) beneficiaries to your 401(k) or 403(b) account, your IRA, your insurance policy and other assets. You may want to change beneficiaries in your will. It is also wise to take a look at your insurance coverage. If your last name is changing, you will need a new Social Security card. Lastly, assess your debts and the merits of your existing financial plans.

11. Are you returning from active duty? If so, go ahead and check the status of your credit, and the state of any tax and legal proceedings that might have been preempted by your orders. Review the status of your employee health insurance, and revoke any power of attorney you may have granted to another person.

12. Don’t delay – get it done. Talk with a qualified financial or tax professional today, so you can focus on being healthy and wealthy in the New Year.