How to save for retirement when you don’t make a lot of money?

Ever since I read the book Shortchanged: Why Women Have Less Wealth and What Can Be Done About It by Mariko Chang, I have been more cognizant of how difficult it is for low-wage earners to save money for retirement. When I heard about the Tax Savers Credit at a seminar this week I took notice.

What is the Tax Savers Credit?
The tax savers credit was designed to help low and moderate income workers save for retirement. Unlike a tax deduction, a tax credit reduces the tax you owe dollar for dollar. This credit is available to anyone who meets the income limitations and made contributions to qualified retirement plans including 401K, traditional or Roth IRAs, 457s, 501c, SEP and SIMPLE. The credit can be taken even if you don't make a contribution for the previous year until April 15 of the current year.

The tax savers credit provides a credit of between 10% and 50% of the amount contributed to an eligible plan up to $2,000. For someone filing as a single taxpayer who meets the income requirements would receive a maximum credit of $1,000 on contributions of $2,000. Taxpayers filing jointly would receive a maximum credit of $2,000 on contributions of $4,000.

The credit does not affect your eligibility to exclude your savings from your income, and does not impact your earned income credit or your child care tax credit.

The credit is non-refundable. It will reduce the taxes you owe, but will not help you generate a tax refund. For example, if you are eligible for a $1,000 credit, but owe taxes of $800 the tax savers credit will reduce your tax liability to zero, but will not provide you with a $200 refund.

The adjusted gross income limits to claim the savers credit in 2012 are as follows:

• For Married couples filing jointly : Maximum adjusted gross income (AGI) –$57,500
• For Heads of Household : Maximum adjusted gross income (AGI) – $43,125
• For Married individuals filing separately and $28,750 in 2012.

If you would like to see a table that provides the percentage of credit allowed by income for 2011, please see this article. I can't locate a similar table for 2012.

Adjusted gross income is your taxable income after you have subtracted personal exemptions and itemized deductions.

Other rules that apply to the saver’s credit:

• Taxpayers must be at least 18 years of age.
• Anyone claimed as a dependent on someone else’s return cannot take the credit.
• A student cannot take the credit. A person enrolled as a full-time student during any part of 5 calendar months during the year is considered a student

In the Los Angeles Times article Retirement Saver's credit could significantly reduce tax bill Kathy M. Kristof wrote:

"Hardly any of the people who qualify for the credit are aware of it," said Catherine Collinson, president of the Transamerica Center for Retirement Research. Collinson's organization surveyed thousands of individuals and found that only 12% of the respondents who earned less than $50,000 — those most likely to qualify for the credit — had heard of it. And just 17% of those who were aware of the credit had claimed it.

I am a CPA (working in industry not tax) and only became aware of this credit, which has been around since 2002, last week. If I hadn't heard of the credit, how are those who are not as financially savvy supposed to be aware of it. Let’s get the word out:

Have you checked to see if you are eligible for the TAX SAVERS CREDIT?

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Worker embarrassed to attend retirement party after being fired

Jennifer writes:
I was recently fired from my janitorial job after 20-years of service.  I am 75 years old.  My manager and co-workers had asked me numerous times over the past three years when I planned on retiring.  I always responded with, “never.”  I loved my job, enjoyed the people I worked with and needed the money.  Having been a stay-at-home mom before divorcing my husband at age 55, I still have a mortgage, almost no money saved and a mere pittance of a social security check.  Three weeks before my birthday my manager called me in for a meeting, she had written me up for working too slow stating others had complained they had to complete my work.  I strongly disagreed with her statement and spent the next three weeks keeping to myself and working hard.

Around my birthday, my co-worker gave me an empty swag bag he had found in the ladies restroom (the company I worked for hosts numerous on-site conferences) and asked me if I wanted it.  I took it (despite knowing the rules – we are to turn in any left behind items to lost and found).  A week later I was called in to HR.  This very same employee had turned me in to his manager for stealing the swag bag.  I told them he had found the bag and had given it to me, though, I did admit to taking it.  He denied giving me the bag instead saying he had witnessed me stealing it.  I was fired.  

One more fact to note, my-coworker and manager are husband and wife.
Yesterday I received a phone call from one of my other co-workers; the company wants to throw me a retirement party.  The party will be held at my former place of work and supposedly everyone will be there.  I am embarrassed to show my face after what happened.  Am I obligated to attend?

Jennifer,

I sincerely believe you were not fired for stealing an empty $2 swag bag; you were forced to retire because you are 75 years-old.  Companies can’t tell you that though or they risk being sued for discrimination.  They now feel guilty and want to give you a proper send-off and thank you for emptying their trash cans and scrubbing the company urinals for the past 20-years I highly doubt your former manager and her lying back-stabbing husband will show their faces.   Go.  You deserve a proper send-off.

Also, I believe in Karma. Setting you up like this was truly shameful. I predict your company will eventually outsource their janitorial services and your former manager and back-stabbing co-worker will be the first ones to be let go.

Enjoy your retirement. You deserve it.

Love for Grown-Ups

Motivation for reading:
TLC Book Tours recommended I review the book Love for Grown-ups: The Garter Brides' Guide to Marrying for Life When You've Already Got a Life by Ann Jacobs, Patricia Lampi and Tish Rabe for this blog. Since I write about personal finance, finance for women, relationships, and also do book reviews, I decided to accept a review copy.

What is the book about?
The book offers advice for dating and getting married later in life and includes thoughts about combining finances with prospective partners, enjoying dating, blending families, and more.


Why do the authors call themselves Garter Belt Brides?
Because all three of them got married after the age of thirty-five and each bride wore the same lucky garter at their wedding.

My thoughts:
First off I was pleased the book was better than the fluffy gimmicky “How to find a man in 30 Days” books my old roommate used to read and leave lying all over our apartment.

This book, though, not as in depth as I would have liked did touch on important points and offer good advice.  For example: pay attention to how he treats his mother, be careful of over sharing (too soon), and introduce him to your friends at a large gathering (you can arrive and leave spontaneously). I especially agreed with the advice to read each other’s divorce agreements and to make out new wills before getting married.

I also realized since I married at thirty-five, I too was a garter bride and have to agree with what they say about grown up dating:

Grown up dating is different from dating in your twenties – in a good way! First, you’re a lot wiser about what you want in a relationship. Second, there’s only one rule: It should be fun. Both of you are looking for a new start, so give yourselves one!  (Pg.1)

In addition to advice from the authors, the book also includes anecdotes and experiences from other grown up brides.  I thought this was especially helpful in the chapters pertaining to couples with children; how to meet the kids and blend the families.

The book offered an entertaining look at dating as a grown up. I came away with the following suggestions for a successful relationship: both parties need to have an open mind, talk about their needs, be honest, willing to compromise and willing to change. Overall though I think the book makes "love for grownups" sound easier than it actually is.

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Will I be pretty?

I discovered this video of poetry slammer Katie Makkai reciting her poem “Pretty” over on Bella of One Sister's Rant's website. Watch it – I guarantee you’re definition of the word “pretty” will never be the same:

In Bella's post Who's ready to stop the insanity?, Bella encourages us to join forces and together redefine what comprises beauty. She writes:

Let us laugh, giggle, and support each other in our grief, pain, and triumphs.

Let us go back to the time when being best friends meant sharing secrets, helping one another, and splitting a stick of gum.

Let us encourage each other so that we can all come to believe we are beautiful; that we are worthy.

The only way we can stop the insanity is by coming together to say, enough.

Let us demonstrate that the sisterhood still exists and it’s on a mission; a mission to stop the insanity.

What say you, ladies?
Are you in?

I was the first one to respond I was in.  Stopping the insanity has long been one of the goals of this blog and my Making Women Count project. One of my biggest life regrets is spending too much time and mental energy in my teens and twenties trying to attain society’s ideal of “pretty.”  

For all of you, who are joining forces with Bella and me, be advised we have our work cut out for us.  My 10-year old niece is a gifted athlete, but receives many more messages from family, her peers and the media that she should work on being more “girlie” rather than on her soccer game or pitching arm.  At a recent Father-Daughter dance at her school, some of her fourth grade classmates showed up in makeup and with their hair professionally styled.  These are nine and ten year olds.

Then there is the latest addition to our family.  A baby girl born on Valentine’s Day:

Just days old and there have already been comments about her appearance.  Here is a picture of the baby's parents and brothers:

Have you spotted the baby's flaw?

You got it.

The baby's hair is not blonde.

It is not the baby's mother who is concerned about this (she knows her baby is perfect), but another family member.  A bleached blonde who gasped when I pointed out that the natural hair color of all the adult members of our family is actually brown.

I spend many family get-togethers kicking this particular family member under the table or jabbing her with my elbow while she is talking to the ten-year old.   I don't want today's girls growing up believing the message society continues to force upon girls:  we need to be "pretty."  Instead why can't we instill the message from my favorite line of Kattie Makkai's poem:

“You will be pretty intelligent, pretty creative, pretty amazing. But you, will never be merely 'pretty'.” 

What can we do to stop the insanity? How can we change the conversation?
Lisa Bloom in How to talk to little girls provides an excellent example of how to talk to little girls.  Instead of telling a little girl she had met how gorgeous she was and asking her to model her pretty dress, she asked her about her favorite book.  What a novel idea; asking her about her mind. Bloom goes on to say:

Try this the next time you meet a little girl. She may be surprised and unsure at first, because few ask her about her mind, but be patient and stick with it. Ask her what she's reading. What does she like and dislike, and why? There are no wrong answers. You're just generating an intelligent conversation that respects her brain. For older girls, ask her about current events issues: pollution, wars, school budgets slashed. What bothers her out there in the world? How would she fix it if she had a magic wand? You may get some intriguing answers. Tell her about your ideas and accomplishments and your favorite books. Model for her what a thinking woman says and does.

Be cognizant of opportunities to change the conversation:
Recently ahead of me in the checkout-line at the grocery store, an eleven-year old girl and her mother were admiring the models on magazine covers. The girl was pointing at them talking about how pretty and skinny they were. I butted in on their conversation and said, "They don't really look like that you know. Those photos are photo shopped." Her mother took my cue and agreed with me.  She began telling her daughter how perfect she was and that she didn't need to wear makeup.

Are you ready to change the conversation and to stop the insanity? If so head over to Bella's blog and let her know you too are in.

Here are links from a few fellow bloggers who've committed to changing the conversation:
Virginia Sole Smith's Brave Books for Girls (not Princesses) provides a list of her favorite books from childhood featuring brave (non-princess-y) girls as the main characters and none of them never so much as mentions their weight.

Elizabeth at Yo Mama praises Ashley Judd for slapping media in the face for speculation over her 'puffy' face appearance in  Making Ashley Judd's Moment Last.

Lori at The Ole Master Plan writes about weight and her own experience with prednisone in Worth Doesn't Equal a Size 4.

If you have written a blog post or know of one that belongs on the above list, let me know I will be happy to add it. Let's work together and say enough.