We’ve talked before about IRAs and needing the right amount of money saved for retirement. However, there are other reasons to have an IRA, but especially a Roth IRA. Why a Roth IRA? Here are a few reasons: 

Compound interest- like other IRAs, Roths allow your money to grow with compound interest. This is important because there are…

No age limits- you can open a Roth IRA whether you’re 16 or 36; you just need earned income. The younger you open an account and start saving, the longer your balance grows with compound interest, which is a good thing for you.

TAX-FREE contribution withdrawals- this gives you flexibility for emergencies when you may need extra cash on hand. The catch here is that you can only withdraw contributions tax-free, not earnings. And while we don’t advocate spending money meant for retirement, it does work as a financial backstop.

Generally tax-free withdrawals in retirement- traditional IRAs tax retirement withdrawals in your top tax bracket, whereas Roth IRA withdrawals are mostly tax-free. Assuming tax rates will continue to rise in the future, it’s better to pay your taxes now than later.

It can help you buy a home- an added perk of Roth IRAs: once the account has been open for 5 years you can withdraw all contributions plus up to $10,000 in earnings penalty and tax-free to purchase your first home. Again, Lincoln Savings Bank isn’t big on dipping into retirement savings, but it’s nice to know that option is available.

Better contribution for flexibility- procrastinators rejoice! With Roth IRAs, you get a 16-month time period to contribute to the account. So, if you started funding a Roth IRA back in May of this year, you have up until Tax Day in April of 2014 to reach your $5,000 contribution limit for 2013, while 401(k)s and other retirement accounts end on Dec. 31.

More investment choices- most Roth IRA options have more investment options than a 401(k). This means you can create a more diversified portfolio for safer investing.

There’s no limit on your account growth- 401(k)s and traditional IRAs require you to begin minimum distributions at age 70 ½; with Roth IRAs you’re never forced to withdraw your money. If you don’t need your money, continue to let it grow until you do.

Roth IRAs can be passed on- account funds can be passed on to heirs after you die, which they receive annually or in a lump sum tax free. Traditional IRAs and 401(k)s can also be passed on, but their funds will be taxed.

While Roth IRAs tend to be better suited for younger workers, a Lincoln Savings Bank financial planner can help you decide which retirement option is best for you. Just give your nearest LSB branch a call to get started today!

America is a lot of things, but statistics show that being “financially literate” is not a strength of our society. Despite being a world super power and having the world’s largest GDP by a good amount, we also have the highest debt of basically all forms in the world. Why? Because we don’t know how to manage money. 

Financial literacy is not a great subject for Americans. Are
better or worse off than the average American?

Perhaps the saddest part of our illiteracy is that we know it: 41 percent of U.S. adults, about 92 million people, gave themselves a grade of C, D or F on their personal finance knowledge according to a 2009 study by the National Foundation for Credit Counseling. Yet we still charge purchases to credit cards, miss payments, buy things we don’t need and put off saving for the future.

So, here’s a quiz for you to take to see if you’re in good shape or need to start hitting the books. Answers are at the bottom, but no cheating! The questions cover all aspects of finances that teens, young adults, and even middle-age and older folks need to know.

1. True or False: If you don’t owe taxes, you won’t be penalized for filing your federal tax return after April 15^th.
2. How large should your emergency savings fund be?
   A) As much as your current debt 
   B) 6 months of living expenses 
   C) Double your monthly rent or mortgage payment
3. Are contributions to a traditional 401(k) deducted from your salary before or after taxes?
4. How many times a year can you get your credit score from the three credit companies?
   A) Once  
   B) Twice
   C) Unlimited
   D) Never
5. What’s the minimum your FICO credit score could be to qualify for the best interest rates?
   A) 650
   B) 700
   C) 750
   D) 800
6. True or False: You can only invest in one 529 college savings plan per child.
7. True or False: All income from mutual funds is subject to state income tax.
8. If you want to improve your credit score what’s the best thing to do?
   A) Close credit card accounts you don’t use  
   B) Pay down your debt on each card to about 25 percent of the limit  
   C) Consolidate your debt on one balance-transfer credit card
9. Out of these three people, who needs life insurance the most?
   A) A retired widow  
   B) A single mother with two children  
   C) A two-income couple with no children
10. Who will have the larger sum in their account come retirement?
    A) Dave, who saved $1,000 a year from age 25 to 35 and then let the money sit  
    B) Cindy, who saved $1,000 a year from age 35 to 65

If you found you need a little help, Lincoln Savings Bank’s financial professionals can help you get on the right track. We also offer financial guidance through the LSB Plus program, so contact us if you’re interested in learning more.

Answers: 1. True, 2. B, 3. Before taxes, 4. A, 5. C, 6. False, 7. False, 8. B, 9. B, 10. A

Lincoln Savings Bank, Member FDIC

Ever get the feeling you’re falling behind the 8-ball when it comes to your financial life? Have you ever said the following phrase: “Wait, I should’ve been saving more/investing more/paying off my credit card SOONER”?

Financial planning should be a lifelong process, not something
you start once you're already behind.

Financial matters are a great source of stress for Americans of all ages, so we at Lincoln Savings Bank want to help. We offer you the Lifetime Financial Cheat Sheet! It offers a quick reference for some important financial milestones through various stages of your life.

Your 20s

• Get a source of income- get a good job and continue to improve your skills
• Build an emergency fund- it should  be 3-6 months of expenses stashed away in a savings or money market account
• Make a plan to repay your debt- it doesn’t have to be all at once, but shoot for having it paid off before your 30^th birthday
• Start a 401(k) or IRA- yes, you need to start saving for retirement. For example, putting $150 a month into an IRA that earns 8 percent starting at age 25, you’ll have over $500,000 by age 65. Waiting until you’re 30 will net you over $180,000 less.

Your 30s

• Increase your 401(k) contributions- by this point hopefully you’ve worked up the ladder a bit, so you have more money to save
• Save outside of work, too- maxing out your 401(k) contributions? Nice! Now look into opening an IRA outside of work to save more
• Invest- don’t put all your eggs in one basket; invest wisely by diversifying
• Be liquid- yes, you need a certain amount of investments, but by now you may have a family and kids. Accidents and emergencies happen, so you need readily available funds

Your 40s

• Continue to max out savings- make sure your taking maximum advantage of your 401(k) and outside IRA. If you have kids, this is the time you may have to begin thinking about their education or other expenses, so having enough saved up goes a long way
• Get some advice- talk to a financial planner or trusted investment manager about your investments. It may be wise to reduce the percentage of assets in stocks and put them into bonds

Your 50s

• Play catch up- catch up contributions for your 401(k) allow you to save $5,500 more once you turn 50; this could be more if you can get a company match too!
• Consolidate 401(k)s- one manageable IRA is easier to oversee then multiple 401(k)s with varying amounts of money in them
• Look into long-term care insurance- daily care in a nursing home can burn through retirement savings quickly, so it’s better to be prepared
• Think about Social Security- you can apply for Social Security benefits starting at 62, but your monthly check will be smaller for the rest of your life
• Reassess retirement costs- we all think we can live on less, but most people badly underestimate health costs and other expenses

The rest of your life- take advantage of being smart with money your whole life!

Everyone’s case is different, but these are great general topics to help get you thinking about retirement no matter your age. For help in planning out your financial life, Lincoln Savings Bank’s Personal Financial Advisors will help you make sense and take advantage of the things you need.

IRAs are great tools for preparing for retirement.

Individual retirement accounts (IRAs) are a great way to save for your future so you can live comfortably after you retire. With tax season ending soon, we wanted to share a few IRA tips and inform you of a change in contribution limits for your IRA.

It’s not too late to make a contribution to your IRA and have it count for the 2012 tax year!  This kind of contribution, called a carryback contribution, allows you to add money to the balance of your IRA during the first part of 2013 and designate it as a contribution from 2012. The deadline to make a carryback contribution to your traditional or Roth IRA is April 15, 2013. This allows you to make extra tax-deductible contributions if you have a traditional IRA that you can claim for 2012.

Other big news for your IRA(s) is that the maximum contributions have changed. For 2013, the maximum amount you can contribute to all of your traditional or Roth IRAs is the smaller of $5,500 ($6,500 if you’re age 50 or over) or your taxable compensation for the year. The 2012 limits were $5,000, and $6,000 if age 50 or over.

We would also like to remind you to check your beneficiary designation for your IRA. Significant life changes such as marriages, divorces or death of family members may change who you want to benefit from your IRA.

Finally, we encourage you to simplify your finances when it comes to your old employer retirement plans by consolidating them with Lincoln Savings Bank. This will give you one centralized location for your IRA funds, making it much easier to manage. We employ IRA Specialists that can help you make the right decision for your financial future.

Call or stop in today to see how you we can help you successfully plan so that you can live the lifestyle you want without outliving your money in retirement. 

Examining your tax strategy could mean more money in your pocket.

Filing your tax return is a once-a-year event, and by using all the best filing practices and claiming every deduction you have earned, you can effectively reduce your tax bill. But managing what you pay in taxes throughout the year may help you have an even smaller tax burden. 

Here are a few strategies from Lincoln Savings Bank to help you see a smaller tax bill come April 15.  Consult your tax professional to determine if these strategies might benefit you!

Get a Raise…From Yourself- a big tax refund is nice, but it may also mean that you’re having too much of your hard earned money taken out of every paycheck you get. Recalculate your withholding and fill out a new W-4 with your employer to get more of your money when you earn it.

Start an IRA- if you haven’t already. For the upcoming year you can contribute $5,500 to your IRA ($6,500 if you are 50 or over), so why not take advantage of it? Contributions can be made up to April 15^th.

Give Your Retirement Savings a Boost- you can reduce your tax bill by reducing your taxable income. Stash some of your money into your 401(k) or similar retirement savings plan because it is not included in your taxable income. For 2013, you can contribute up to $17,500 to your 401(k).

Switch to a Roth 401(k)- while you don’t get the tax break for contributions made to a Roth 401(k) like you do for a traditional 401(k), any money taken out of the Roth is tax-free. Taking money out of a regular 401(k) is taxed in your top bracket.

Go for a health tax break- if your employer offers a flex plan, use it. It allows you to put away part of your paycheck for future medical expenses. However, it also allows you to avoid income and Social Security tax on that money, saving you 20-35 percent when compared to spending after tax money.

Pay child care bills with pre-tax money- use a child care reimbursement account if your work offers one. It allows you to pay child care bills with pre-tax dollars, saving you up to one-third the cost because you avoid Social Security and income tax.

These are just a few ways to help lower your tax bill over the year.  Consult your tax professional to find out if these strategies will have a benefit to you.  The financial professionals at LincolnSavings Bank are also available to answer your financial questions, whether you are just out of college, starting a family or working toward retirement. Call or come by any of our branch locations to see how we can help you today!

Your finances can be a scary thing to face without guidance. What kind of checking and savings accounts should your money be in? What should you do with your old 401(k)s or IRAs? What’s the most secure bet for the future: investing in the stock market or putting your money into a certificate of deposit (CD)? These are all critical questions you must face when looking to make your future as financially secure as possible, and the LSB+ program from Lincoln Savings Bank can help you find the right answers.

LSB+ is an engaging and comprehensive system in which our trained LSB+ Coordinators connect with you to gather financial information, consult, set goals and periodically review your progress. Instead of reacting to your financial issues, you can be proactive about them. Here’s how our system works:

• Assessment- you schedule an appointment and meet with an LSB+ coordinator for a short financial evaluation. You can complete this in one visit or over time.
• Document review- our coordinators then review your current financial situation, along with any wills or other important documents to get a sense of where you are financially.
• Goal definition- using what they have found in your assessment and document review, your coordinator will then help you define what your needs are, any obstacles you will face and your financial goals.
• Contact- your LSB+ Coordinator will then contact the correct professionals within Lincoln Savings Bank to assist you with your plan.
• Review- you can have your progress periodically reviewed to make sure you are staying on track with your needs and goals.

The LSB+ program allows us to constantly fulfill our core mission of being an engaged, life-long partner that helps our customers achieve their financial goals. For more information about the LSB+ program or to get started, contact the nearest Lincoln Savings Bank branch today.

With tax season upon us and New Years resolutions still fresh in our minds, it’s a good time to think about our IRA accounts. Here are some things that may be important for your 2010/2011 tax and retirement savings planning:

Max out your contributions! Traditional and Roth IRA contribution limits are the same for 2011 as they were for 2010:

• Those under age 50 can contribute up to $5,000 in 2011
• Those age 50 and over can contribute up to $6,000 in 2011

One of the provisions of the new tax bill is the extension of the Qualified Charitable Distributions. Here are some of the guidelines for Qualified Charitable Distributions:

• Distributions from Traditional IRAs
• Must be age 70 1/2
• Distributions up to $100,000 can be made tax free to a charitable donation:
• $100,000 for 2010
• $100,000 for 2011
• If done before February 1, 2011, it can be applied to the 2010 tax year.
• Checks must be written directly to the charity
• Required minimum distributions for 2011 can be sent to the charity

Contact your local IRA specialist for more information. LSB's Personal Financial Advisors can help with your retirement questions.

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This information is being provided by Lincoln Savings Bank (LSB) / LSB Financial, an Iowa-based institution devoted to providing complete financial services since 1902. http://www.mylsb.com