Monday’s need-to-know money news

Zemanta Related Posts ThumbnailToday’s top story: NerdWallet’s best credit card tips for December. Also in the news: How to tell if a Roth 401(k) is for you, why postdating checks is a waste of time, and how many credit cards you should have.

NerdWallet’s Best Credit Card Tips for December 2016
Just in time for holiday spending.

How to Tell If a Roth 401(k) Is for You
Choosing the right retirement savings.

Postdating Checks Is a Waste of Time — Here’s Why
Not worth the risk.

How many credit cards should you have?
What’s the magic number?

Monday’s need-to-know money news

401k-planToday’s top story: Why long-term care insurance is worth the expense. Also in the news: The differences between a 401(k) and a Roth 401(k), how to make yourself a better retirement saver, and keeping an eye out for electricity surge pricing.

Long-Term Care Insurance Is Worth the Expense
Paying now can save a lot later.

You Know About the 401(k) — But What About the Roth 401(k)?
Know the differences.

5 Ways to Make Yourself a Better Retirement Saver
Taking the long view.

Beware of Surge Pricing on Your Electric Bill
Running your air conditioner just got a bit pricier.

Q&A: Regular 401(k) vs Roth 401(k)

Dear Liz: I just turned 50. My company has an option to contribute pretax money to a regular 401(k) or after-tax money into a Roth 401(k). Should I put the maximum contribution ($17,500) plus the catch-up ($5,500) into the Roth? Or should I split my contributions?

Answer: Given that you’re close to retirement, putting most of your contributions into the traditional 401(k) is probably the way to go.

Most people’s tax brackets drop once they retire. That means you can benefit from a bigger tax break now and qualify for a lower rate on your future withdrawals.

If you had a few decades until retirement, the math might be different. Younger people with good prospects may well be in a lower tax bracket currently than they’ll eventually be in retirement. In their case, it can make sense to gamble on making after-tax contributions to a Roth 401(k), betting that their tax-free withdrawals in retirement will be worth much more.

You may want to put some money into the Roth 401(k) so you’ll have flexibility with your tax bill in retirement. Being able to choose between taxable and nontaxable options gives you what financial planners call tax diversification. But the bulk of your contributions should still go to the traditional 401(k).