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Here are three of the week's top pieces of financial advice, gathered from around the web:
Winning at frequent-flier miles
Airlines are getting stingier with frequent-flier miles, but "that doesn't mean you have to give up on your dream of a free ticket entirely," said Martha C. White at Time. In August, American Airlines will join United and Delta in awarding miles based not on how far passengers have flown, but on how much they've spent on tickets. Budget-minded travelers will inevitably earn fewer reward flights, but they can still make the most of what they do earn by "thinking of miles as currency." Use points to snag seats on only the most expensive routes and only for flights, not upgrades. Or get strategic. Points earned with carriers that still use the old system, like Alaska Airlines, can often be applied to partner airlines that don't.
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Tips for special needs children
"Increasing life spans make retirement planning more of a challenge for everyone — but especially for parents of disabled children," said Elizabeth O'Brien at The Wall Street Journal. Individuals with Down syndrome, for example, now have a life expectancy of 60 years, compared with 25 in 1983. Government benefits offer some help, but there's a catch. To be eligible for Supplemental Security Income and Medicaid, disabled individuals generally must not have more than $2,000 in assets. Experts advise parents to establish a special needs trust early on; the assets of such trusts don't affect the beneficiary's eligibility for government assistance. Another tool is the newly created 529 ABLE account, which works like a 529 college-savings plan. Parents can contribute $14,000 annually, with the money used to pay for qualified expenses like housing, employment training, and assistive technology.
Avoid the retirement tax trap
"At age 70½, the bill comes due on all those tax-deferred savings accounts we've been building," said Suzanne Woolley at Bloomberg. The biggest worry is that required minimum distributions from IRAs and 401(k)s — determined by an IRS formula based on life-expectancy — will push a retiree into a higher income bracket. "To minimize the tax bite," a favorite strategy of financial planners is to strategically convert money from a traditional IRA into a Roth IRA. That happens after individuals turn 59½ and are able to tap tax-deferred accounts without penalty, but before they're required to do so. The point is to pay taxes on that money when retirees are in a lower tax bracket, before they begin drawing Social Security benefits or a pension.
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