AARP examines how the "sequester" will impact Social Security and Medicare.

The average account balance grew 12 percent last year, according to Fidelity Investments. The nation's largest 401(k) administrator said Thursday that the year-end average was $77,300, up from $69,100 a year earlier. In the fourth quarter, the average balance rose 2 percent. 

Good news...The average balance among the 12 million 401(k) accounts that Fidelity administers is at the highest level since it began tracking the data in 2000.

Interest rates are at a record lows and many investors may be looking for a new home.  Many people will tap their IRA accounts.  Generally you'll get a 10% penalty if you withdraw from your IRA prior to 59 1/2-there are a couple of exceptions including the first-time homebuyer distribution.  "First-time" is a little bit misleading as it includes any buyer of a principal residence if "such individual (and if married, such individual's spouse) had no present ownership in a principal residence during the two-year period ending on the date of acquisition of the principal residence" for which the exclusion is being currently claimed.  

The expenses that qualify for the first-time homebuyer expenses — up to a maximum of $10,000 — include the costs of acquiring, constructing or reconstructing the home. Included in the acquisition costs are normal closing costs and financing costs. This would include the down payment. 

The distribution is taxable...can't avoid the the IRS and you'll use IRS form 5329 to claim the exclusion from the penalty tax.

IRS Form 5329

USNews highlights some changes to your Social Security.

Payroll tax cut ends. The temporary payroll tax cut was allowed to expire at the end of 2012. Workers who paid 4.2 percent of their income into the Social Security system in 2011 and 2012 will now resume contributing 6.2 percent of their earnings in 2013, up to the payroll tax cap of $113,700.

Paper checks will end. On March 1, 2013, the Treasury department will stop mailing paper checks to Social Security recipients. Retirees will be required to choose to have their Social Security payments either directly deposited into a bank or credit union account or loaded onto a prepaid Direct Express Debit MasterCard. 

Bigger payments. Social Security beneficiaries began receiving payments that were 1.7 percent larger in January 2013. The average monthly Social Security benefit in January increased from $1,240 to $1,261 as a result of the cost-of-living adjustment.

 The IRS begins accepting all 2012 tax returns, whether filed in paper form or electronically, on January 30.

During the dark, cold days of January you may be sitting at your computer or parked in front of your TV watching the games...it's a perfect time to take 5 minutes and set up a Roth IRA!  It's simple- just head over to one of the brokerage houses, Schwab, Vanguard, TD Ameritrade or Fidelity (sure you can use use your advisor, bank or credit union) and establish a new IRA if you don't have one. You'll type in your personal information and add your bank routing and account info...fund it with a few bucks.

 The contribution limit for IRA accounts in 2013 is $5,500.00. You don't have to contribute that much and you're not required to fund it each year.

It's a perfect retirement account and can be use for emergencies..your contributions can come out at any time.  Remember it's a after- tax IRA (unlike your pre-tax 401k)...all of your withdrawals will be tax free!

Courtesy of Sightingsat60.blogspot.com

Baby Step 1

$1000 To Start An Emergency Fund

An emergency fund is for those unexpected events in life that you can’t plan for: the loss of a job, an unexpected pregnancy, a faulty car transmission, and the list goes on and on. It’s not a matter of if these events will happen; it’s simply a matter of when they will happen.

Read Dave Ramsey's "The Seven Baby Steps."

 Above age 70 1/2?  Your 401k or IRA MRD can go to your favorite charity.  Contact the custodian of your plan and have the check sent directly to the charity.

As part of the "fiscal cliff" deal, Congress has resurrected a popular tax-law provision, known as the "IRA charitable rollover," that had expired at the end of 2011.

The rule allows many investors 70½ or older to transfer as much as $100,000 a year from an individual retirement account directly to a qualified charity without having to count any of that transfer as taxable income.

The transfer, if done properly, counts toward the taxpayer's required minimum distribution for that year.

And there still is time for some people this month to take advantage of the rule for 2012. "Charitable rollovers can be made in January 2013 for 2012, and individuals who took mandatory distributions in December 2012 can donate that money to a public charity and not have the distribution subject to tax," according to Independent Sector (independentsector.org), a Washington-based nonprofit, nonpartisan coalition of charities, foundations and corporate philanthropy programs.

Courtesy Of Wall Street Journal

I'm sure many of you are thinking about diet, nutrition or exercise resolutions in 2013.   It makes sense...most of us want to be healthier.  Weight loss and a exercise regimen will will help us with aging and retirement!  Here are 16 tips to help us lose weight from Health.com.

Skip the salty aisle

"I reached my goal weight after I stopped routinely buying snacks at the grocery store. If I wanted a bag of chips or a candy bar, I had to walk to the store to get it. That inconvenience usually made me ignore my cravings."

Make sure to read this Wall Street Journal article if you're close to retirement in 2013.  Many people who will retire this year have worked for years...it may be time to leave your job....  how about a part time job or a different career?  Keep a paycheck coming in!  It may be the best retirement move you can make.

1.  Is it really time to retire?

Maybe it feels like it's simply, probably time to retire. But, "do you really have to retire?" asks Christine Fahlund, a senior financial planner at T. Rowe Price Associates in Baltimore. "You might want to think about adding a year or two before you retire."

If it's a viable option, that extra time at a full-time job has a multiplying effect. It allows more time to build up savings and less time drawing down on the nest egg. In addition, any mortgages and other debts can be paid down.