How High-Income Earners Can Protect Themselves From Rising Taxes

We recently received a question from a woman who was looking for more tax advantaged ways to invest since she is already maxing out her 401(k) and earns too much to contribute to a Roth IRA. With the Bush tax cuts currently scheduled to expire at the end of the year, more and more people are searching for ways to shield their investments from the prospect of higher taxes. This is especially true for households making more than $250k a year since the President’s new proposal doesn’t extend the Bush tax cuts on income above that amount. That’s also where the new 3.8% Medicare tax on net investment income starts kicking in next year for married couples filing jointly ($200,000 for single and head of household filers).  While you may not have control over tax policy, there are some steps you can take to reduce your future income taxes:

See if your employer offers a Roth 401k option
Like a Roth IRA, these accounts provide you with the ability to make after-tax contributions that can grow to be tax-free after age 59 1/2. Since they became available in 2006, an increasing number of employers have been offering them but they haven’t caught on as fast with employees. Fidelity, Schwab, and Vanguard found that only 6%, 15%, and 9% of their respective plan participants with a Roth option chose to take advantage of it.

 

There are a few reasons why a Roth might make sense for you though. First, if you’re saving a lot for retirement, you may actually find yourself in a higher tax bracket when you retire, especially if you’re currently benefiting from tax breaks you may no longer have in retirement like ones for dependent children and mortgage interest. Second, even if your taxable income doesn’t go up, tax rates might (someone has to pay for all that debt we’re accumulating). Finally, all things being equal, a Roth account will give you more bang for your buck if you’re able to max out your contributions. That’s because for a pre-tax account to give you the same after-tax income in retirement, you would need to invest your current tax savings somewhere else and that somewhere else is likely to be taxable.

For example, let’s say two people both contribute the maximum $17k per year to their retirement accounts and earn 6% over 25 years. The first person contributes to a Roth account and has $988,660 of tax-free money in retirement. The second person contributes to a pre-tax account and has the same amount but after a 25% tax rate it would only be worth$741,495. If the second person also invested their $4,250 of annual tax savings from making pre-tax contributions, that would grow to an additional $247,165 for a total of $988,660, the same as the first person. But when you subtract the taxes on that second pot of money, they would be behind.

Make a backdoor contribution to a Roth IRA
Another way to shield your investments from future taxes is to contribute to a Roth IRA. If your employer doesn’t offer a Roth option, it might be your only choice. The problem is that your ability to contribute begins to phase out once your AGI exceeds $110k as an individual or $173 filing jointly.

However, there is a way around this because there is no longer an income limit to convert a traditional IRA to a Roth IRA. That means you can make a nondeductible contribution to an IRA and then immediately convert it into a Roth. There is one little snafu though. If you have an existing traditional IRA, whatever percentage of all your IRAs is taxable is the percentage of your conversion that will be taxable. The good news is that there may be a way for you to get around this too.

For example, if you have $95k in a pre-tax IRA and you make a $5k contribution to a nondeductible IRA. Since 95% of your total traditional IRA balances is taxable, you’ll have to pay taxes on 95% of anything you convert. If you’d rather pay the taxes now anyway, this isn’t an issue. (If you change your mind on a Roth conversion, you’ll have until Oct 15th of next year to undo it.) Otherwise, you can avoid this tax by rolling any taxable IRAs into your employer’s retirement plan (if they allow it) since employer retirement plans aren’t counted in determining how much of your conversion is taxable.

Consider cash value life insurance
With a cash value life insurance policy, part of your premium goes into a cash account that can earn interest or be invested. You can accelerate the growth of this cash value by making paid-up additions and lowering the death benefit to reduce the cost of the insurance. This cash value can then be borrowed tax-free anytime and for any purpose, including as a supplement to your retirement income. Since there’s generally no required prepayment structure, the loan could be held until your death and then subtracted from the death benefit.

So what’s not to like? Cash value life insurance has generally been vilified by financial gurus and the media for their high costs and low returns compared to traditional investments. For example, the entire first year’s cash value can be eaten away by commissions used to compensate the agent that sells it to you.

Returns in the cash accounts are also generally lower than what you would have earned by investing the money in a balanced portfolio of mutual funds. A study by Mass Mutual showed actual historical growth over 28 years ranging from 4.49% to 6.52% depending on the scenario, compared to 8-10% you could have earned in the stock market. James Hunt, an actuary with the Consumer Federation of America, estimated that 20-year returns on whole life insurance policies from the best insurers to be about 4.5% after accounting for the value of the insurance and assuming dividend rates don’t continue to decrease.

However, they also come with less risk. Many insurers offer a minimum rate of 3-4%, which is higher than you can earn in almost any other guaranteed account and more than what bond funds are generally paying without the risk of falling bond values. While a lot depends on the insurer staying in business, insurance companies are typically known for their ultraconservative investment policies and many have been around for quite a long time. For these reasons, cash value life insurance might be a good fit as part of the conservative portion of your overall portfolio.

So could this make sense for you? First, max out your retirement plan contributions since those accounts tend to have lower fees and higher average returns over time. Second, you’ll want to make sure that the tax savings outweigh the higher insurance costs. This can work best for a young, healthy person in a high tax bracket who also has a need for life insurance. Good examples would be a high income, young professional with children. Finally, make sure you can afford to keep making the payments. Otherwise, the policy will eventually lapse and your earnings in the cash account will be taxable.

The bottom line
The bad news for many high income earners is that higher tax rates are likely on their way. The good news is that there are perfectly legal ways to protect your investments from them. You don’t need to flee the country and renounce your citizenship like Facebook‘s co-founder, at least not yet.
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Are you looking for an unbiased answer to your own financial question? Once a week, we’ll be responding on this blog to questions from our Financial Helpline or posted on our Twitter or Facebook site.
Erik Carter, JD, CFP® is a resident financial planner at Financial Finesse, the leading provider of unbiased financial education for employers nationwide, delivered by on-staff CERTIFIED FINANCIAL PLANNER™ professionals. For additional financial tips and insights, follow Financial Finesse on Twitter and become a fan on Facebook.

The 401(k) Option That You've Probably Never Heard Of

Erik Carter, Contributor

 

Last week, I wrote about some ways that high income earners can protect themselves from rising taxes.  However, I left out one method that many people don’t even know exists and that is to make after-tax contributions to a retirement plan like a 401(k). No, I’m not referring to the new Roth 401(k) plans. I mean being able to put additional money into your 401(k) above the $17k per year cap (or $22k if you’ll be age 50 or above this year) after-tax. (The IRS limit for the total of all annual contributions is the lesser of $50k or 100% of your compensation.) If you check with your retirement plan provider, you may be surprised to discover that this option is available. Here are some factors to help you decide if it’s an option worth considering.

Are you maxing out your pre-tax and/or Roth contributions? 
You’ll probably want to make sure that you’re maxing out your pre-tax or Roth contributions first. Roth contributions are also after-tax but the earnings are tax-free after age 59 1/2 as long as the account has been open for at least 5 years. In contrast, earnings on after-tax contributions are still taxable when you withdraw them. That makes Roth contributions clearly superior.

As for pre-tax contributions, the only way that after-tax contributions can come out ahead is for your tax rate to be significantly higher when you make withdrawals. In that scenario, you might be better off paying the tax on the contributions now rather than later. But you have to ask yourself how likely that is, considering that people typically have less income in retirement and a lot of your 401(k) withdrawals may be taxed at lower brackets. In addition, that benefit is at least partially offset by the fact that you can afford to save more pre-tax since those contributions have a smaller effect on your paycheck than after-tax contributions, which reduce your paycheck dollar-for-dollar.

Would you end up paying more taxes and penalties in the after-tax account?
Even if you’re maxing out your pre-tax or Roth contributions, you still might be better off putting money in a taxable account for a couple of reasons. First, under current tax law, you’ll end up paying a lower tax rate on long term capital gains (except maybe on collectibles) in a taxable account since earnings from the after-tax account are taxed at higher ordinary income tax rates when they’re withdrawn. This is less of an issue if you invest the after-tax account in bonds since the interest is taxed at ordinary income rates anyway. The same would also be true of stock dividends if the lower tax on qualified dividends expires next year as scheduled.
Second, a taxable account provides more flexibility as you can withdraw your money anytime and for any reason without worrying about early-withdrawal penalties. On the other hand, even if your retirement plan allows you to withdraw from the after-tax account, a pro rata percentage of your withdrawals would be considered earnings and possibly subject to a 10% penalty if you’re under age 59 1/2. This is an important factor if you might need the money before then.

Would you like to contribute more to a Roth?
There is one really good tax reason to contribute to an after-tax account though. That’s the ability to contribute additional dollars into your retirement plan that can later be rolled into a Roth account. (Don’t forget that you’ll still need to pay taxes on the after-tax earnings when you do so.) If your employer offers you a Roth option, you might even be able to convert it to a Roth while you’re still working there. Otherwise, you can roll the after-tax money into a Roth IRA after you leave your job. This can be a particularly good move if you’re still early in your career since you’re likely to change jobs at some point and will still have plenty of years to benefit from tax-free growth.

Does your 401(k) offer superior investment options?
Taxes aren’t everything. You might want to contribute more to your 401(k) rather than a taxable account because it offers a unique investment opportunity that you want to take advantage of or mutual funds for a lower cost than you can purchase outside. These are valid arguments for an after-tax account too.
After-tax contributions are obscure for a reason. Most people don’t really need them and many retirement plans don’t even offer them. But if you’re maxing out your pre-tax and/or Roth contributions, have additional dollars to invest, don’t need the funds before age 59 1/2, and would like to invest the money in bonds, choose investments unique to your 401(k), or eventually roll it into a Roth account, you might want to consider making after-tax contributions. Just don’t be surprised when no one else knows what you’re talking about.

Erik Carter, JD, CFP® is a resident financial planner at Financial Finesse, the leading provider of unbiased financial education for employers nationwide, delivered by on-staff CERTIFIED FINANCIAL PLANNER™ professionals. For additional financial tips and insights, follow Financial Finesse on Twitter and become a fan on Facebook.

8 Opportunities in Your Paycheck You May Be Missing

When it comes to our paycheck, we tend to focus on the bottom line and think about how we’ll spend or save that money. But some of the most important decisions for our financial future are among the myriad of deductions above that line. Unfortunately, they’re often hastily determined in a flurry of paperwork when we first start a new job and are never revisited.

With summer coming to an end and open enrollment coming up for many employers, this is as good a time as any to take a closer look at your paycheck. In fact, the American Payroll Association decided to designate this week as National Payroll Week, which is a campaign to help American employees better understand their paychecks and their payroll-driven benefits. Let’s take a look at some of those deductions and how they can affect your financial well-being:

Tax Withholding

Estimated Payments: Having tax withheld from your paycheck allows you avoid penalties on not paying enough taxes throughout the year.

Pitfalls to Avoid: Having too much tax withheld means providing a no-interest loan to Uncle Sam. You can use the IRS’s withholding calculator, which will be available starting in mid-September, to estimate how many allowances to declare.

[More On Forbes: 10 Common Money Management Mistakes That You’re Probably Making]

Retirement Plans

Employer Match: If you’re fortunate enough to have an employer that matches part of your contributions, you’ll want to try to contribute at least enough to max the match. Otherwise you’re leaving free money on the table.

Tax Deferral: Pre-tax contributions allow you to defer the taxes until you withdraw the money from your plan. This has a couple of advantages. First of all, lowering your taxable income could make you eligible for additional credits and deductions. Second, you might be in a lower tax bracket in retirement if you’ll need less income than you make now. But even if you’re in the same tax bracket, you could still end up paying an overall lower rate in retirement since some of your income will be taxed at lower brackets. Finally, even if you pay the same tax rate, you’ll have the additional earnings on the money that would have gone to taxes each year.

Tax Free Growth: Some plans also allow Roth contributions, which can grow tax-free after 5 years and age 59 1/2. These can be particularly beneficial if you max out your contributions or expect to be paying a higher tax rate in retirement.

[More On Forbes: How To Teach Kids About Money: 10 Dos And Don’ts]

Retirement Income: For the reasons above, this is usually the biggest voluntary deduction for most people but it’s still not big enough. According to our latest research, 92% of American employees are contributing to their employer’s retirement plan but only 18% know they are on track for retirement. So how much is enough? The National Graduate Institute for Policy Studies calculated that if you work for 30 years, invest in a 60/40 split between stocks and bonds, and then retire for 30 years on Social Security and a 4% initial withdrawal from your portfolio adjusted annually for inflation, you’d have to save 12-15% of your income each year to retire with an income of half of your final year’s income. Of course, your situation may be different so you’re better off running your own numbers.

Automatic Contribution Rate Escalator: If you need to save more but can’t afford to dramatically increase your contribution rate, see if your employer offers this feature, which allows you to automatically and slowly increase your contributions until you’ve hit your target rate. For example, if you’re putting in 6% to your 401(k), you can have that go up 1% per year until it reaches 15%. In his book The Automatic Millionaire, David Bach shares real stories of how ordinary people built up extraordinary wealth by slowly increasing their saving like this over time.

Investment Options and Advice: Your retirement plan may offer unique investment options like stable value funds and low cost institutional shares as well as investment education or advice services at no additional cost to you.

Pitfalls to Avoid: Since there are restrictions and possible penalties on withdrawing your money early, it’s a good idea to have some savings outside your retirement plan to cover emergencies and other short-term savings.

Flexible Spending Accounts (FSAs)

Tax Benefits: FSAs combine the best of pre-tax and Roth contributions since both the contributions and withdrawals are tax-free if used for qualified medical and dependent care expenses. That means if you’re in the 25% tax bracket, it’s like having a 25% discount on these areas of your budget.

Pitfalls to Avoid: Medications without a prescription are no longer eligible (except insulin). Whatever you don’t use by the end of the year, you lose so don’t contribute more than you’re pretty sure you’ll spend. If you do end up with some extra money at the end of the year, you can use it to stock up on things like prescription drugs and contact lenses.

Health Savings Accounts (HSAs)

Tax Benefits: Like FSAs, HSAs are tax-free on both contributions and withdrawals for qualified medical expenses. (They’re also free of FICA tax if part of a cafeteria plan but not if you make a post-payroll deposit into an HSA.) Unlike FSAs, you can roll over any unused amounts to future years and they can eventually be withdrawn for any purpose penalty-free after age 65. This can make them a hybrid health/retirement savings account and given the high probability of health expenses in retirement, you may even want to invest the money and let it grow tax-free for that purpose.

Pitfalls to Avoid: The penalty for non-qualified withdrawals has recently been increased to 20%, which is higher than the 10% early withdrawal penalty from retirement accounts, so this should be among the last money you touch for non-health related expenses.

[More On Forbes: 10 Common Myths That Could Be Hurting Your Retirement Planning]

Employee Stock Purchase Plans (ESPP)

Discounts: Your employer may provide the opportunity to purchase company stock at a discount of as much as 15% from typically the lower of the stock price at the beginning and at the end of a given offering period. This blog post illustrates just how good of a deal this can be and argues that you should purchase the maximum number of shares allowed as long as you can sell them right after the purchase period.

Pitfalls to Avoid: Be careful of having too much of your portfolio in any one stock, especially if it’s your employer. No matter how safe your company may seem, you never know what can happen and the last thing you want is to lose a significant portion of your assets at the same time as you lose your job. There are also some tax pitfalls. If it’s a non-qualified plan, you’ll have to pay ordinary income tax on the discount when you purchase the shares. If it’s qualified, you won’t pay the tax when you purchase the shares but you’ll have to hold them an extra year to qualify for the lower capital gains rate on the growth.

Group Insurance Premiums

Group Rates: You can get group rates with no or limited underwriting on certain types of policies such as life, disability, and long term care for you and possibly family members as well.

Pitfalls to Avoid: Be sure to comparison shop since you may be better off with an individual policy, especially if you’re in decent health. Your policy may also not be as customized as you’d like and may not be portable, which means you would have to get a new policy after you leave your employer based on your health at that time. If your health deteriorates, that could leave you uninsurable or having to pay much higher rates.

Savings Bond Payroll Deduction Plans

Competitive Risk-Free Rates: Through this program, you can purchase US Government Series I Savings Bonds, which are fully-backed by the federal government, do not fluctuate in value, adjust with inflation, and are currently paying a 2.2% tax-deferred. The interest may also be tax-free for qualified education expenses.

Pitfalls to Avoid: You can’t cash out the bonds within the first 6 months and you lose 3 months of interest if you cash them out in the first 5 years.

529 Payroll Deduction Plans

Tax Benefits: The earnings grow tax-free if used for qualified education expenses.

Pitfalls to Avoid: You may have to pay a  tax plus a 10% penalty if you withdraw the money for something else. In addition, you’ll want to make sure your retirement and other important goals are on track before saving for education since financial aid is available.

Of course, one benefit all of these deductions share is the convenience of being on auto-pilot. But since they tend to be out of sight and hence out of mind, this can also easily be a source of missed opportunity. The good news is that this inertia can be made to work in your favor. By taking just a little bit of time upfront to make sure you’re making the most use of them, you can reduce your taxes, build your wealth, and insure against catastrophe before you even have a chance to waste your paycheck on something else.

10 Common Misconceptions About Money

Money. The myths surrounding money are numerous and widely held, especially among the young. It’s a shame, because pursuing myths will lead you astray, waste your time and, taken to extremes, ruin your life.
Here are 10 popular misconceptions about money that experience has taught me are more often fiction than fact…

1. The more money I have, the happier I’ll be.
Let’s ask Howard Hughes, Anna Nicole Smith, John Belushi, Chris Farley, Marilyn Monroe, Michael Jackson, Amy Winehouse, Jimi Hendrix, Janis Joplin, Kurt Cobain, and Elvis about this one. OK, guys, show of hands… did fame and fortune make you happy?

Happiness comes from liking yourself, something completely unrelated to money. Riches buys recognition, too often confused with validation. But respect, especially self-respect, isn’t for sale.

When you’re on your death-bed, will you be thinking about money? If so, your contribution to the gene pool was negligible. Rather than obsessing about money, think about what really makes you happy. Then make only enough money to take part in those activities. Making more is a waste of the only non-renewable resource you have: your time on the planet.

2. A big income will keep me out of debt.
What’s the difference between someone who makes $50,000 a year with a $100,000 mortgage and someone who makes $500,000 a year with a $1 million mortgage? Answer: nothing. Unless they have money set aside for emergencies, they’re both a paycheck away from disaster.

Debt often rises with income. What keeps you out of debt isn’t a high income or net worth. It’s not borrowing money.

3. Millionaires drive fancy cars, wear fancy clothes, and live in fancy houses.
Not according to the folks who did a bunch of research and wrote The Millionaire Next Door. According to their studies, the average American millionaire drives an unexciting American car, lives in the same nondescript house they’ve owned for years, and avoids designer labels. That’s how they became millionaires.

So who’s buying all the designer clothes and Porches? Many times it’s people who will never become wealthy because they’re swapping tomorrow’s financial freedom for today’s appearance. As I’m fond of saying, life affords you the opportunity to either look rich or be rich, but few live long enough to accomplish both. The younger you decide, the better.

4. The more money I have, the less worries I’ll have.
Balderdash. Money doesn’t end anxiety. It gives you something else to be anxious about: losing your money. Granted, those without enough money to eat or keep a roof over their heads have lots to worry about. But once you have enough money for all your needs and a reasonable number of your desires, the excess will add to your concerns, not alleviate them.

5. Money will help me find love.
In my experience with women, they’re not attracted to money. They are, however, attracted to ambition and intelligence, especially when it presents as humor. Everyone’s attracted to people who are self-confident, non-needy, and able to laugh at themselves.

Like a peacock, wealthy people can easily attract attention. But attention isn’t the same as admiration or affection. And even if it works, do you really want to spend your life with someone so shallow and insecure they were attracted to your money?

6. I’ll have more fun if I have more money.
When I was young, I didn’t have two nickels to rub together, but I had a ton of fun. Today I have lots of nickels – and am happy to report, still having a riot.

There’s no doubt that money can furnish the elements of a good time. But if you need money to have fun, you’re boring. And should you become a billionaire, you’ll still be boring.

7. Money means security.
When you boil it down, a primary purpose of money is to make life more predictable. It allows you to control your environment by being prepared for the unexpected.

While that’s partly true, there’s not enough money in the world to completely control everything. I could have a heart attack and die before I finish writing this, and you could have one before you finish reading it. Accept that we’re all bobbing on a sea of uncertainty, no matter how much money we have.

8. Money will enable me to meet interesting people.

In my experience, you can’t swing a dead cat without hitting interesting people. But if I want to maximize my odds of meeting someone worth knowing, I won’t be heading to the nearest country club.

I’ve met plenty of fun and interesting rich people – but I’ve also met rich people who were vain, myopic, pretentious, and judgmental. They weren’t that way because they were rich. They were that way because they were born rich and as a result never had to overcome adversity.

Overcoming adversity is what makes people interesting, not how much money they have. People without at least a few skeletons in the closet are often shallow as a puddle.

9. I need money to travel, and travel is important.
The world is an interesting place, and being well-traveled makes you interesting. But travel comes in many forms, including the budget variety. If you want to see faraway places, you’ll find a way.

In my book Life or Debt, I conclude by describing the first book I ever read about something I love: sailing. The book was about a couple who built their own sailboat and traveled around the world, working when they needed to and never accumulating more than a few thousand dollars at a time. Their boat had no air conditioning, no refrigerator – not even a radio.

What most people do in the same situation is wait until they have enough money to buy what amounts to a floating condo: a boat that’s luxurious, seaworthy, and far too expensive to ever actually buy. The result is they spend their lives on the dock. What a waste.

10. Money will buy friends.
This is not only untrue, it’s the opposite of what money actually does. I’ve got a super-rich friend or two, and what I’ve observed is that money attracts plenty of hangers-on – but almost no friends.

People with vast wealth or fame can’t trust the motives of those surrounding them (see No. 5 above). That’s why the people they count as true friends are normally either people they knew before they were rich and famous, or people who are equally rich and famous.

There’s the advantage of being judged on your personality versus your net worth: The friends that result actually like you, not what you can do for them.

The Best Job Opportunities of the Future

With an unemployment rate still stuck above 8% and much talk about a mismatch between worker skills and the jobs available, many people are trying to scope out the fields that will have many job openings in the future. Many college graduates are struggling to find work and are saddled with student loan debt, prompting many colleges to shift resources to fields that are expected to be in high-demand in the future. Many who are currently unemployed or underemployed are seeking training in different fields where the jobs are considered “hot.”

To find the jobs that will be in highest demand, 24/7 Wall St. has compiled a list of the occupations that will have the most job openings in this decade. The professions on this list are very diverse, consisting of both white-collar and blue-collar jobs. They also require a wide range of educational achievement. For instance, a glazier needs just a high-school diploma to break into the field, but a statistician requires a postgraduate college education. Similarly, the pay spectrum for jobs on this list is quite wide. The median pay for a pest control worker was just $30,340 in 2010. Meanwhile, the median pay for a natural science manager was $116,020.

[More from 24/7 Wall St.: America's worst companies to work for]

24/7 Wall St. was primarily interested in looking at openings for occupations where people usually work full-time and without frequent turnover. Therefore, we decided to exclude occupations where the median pay in 2010 was less than $30,000, thus discounting many occupations that will see many job openings. Without this salary floor, most of the occupations on this list would be low-skilled, low-wage jobs, such as home health aides, personal care aides and food concession workers. In fact, only two jobs on this current list would have made the list if we didn’t impose the $30,000 minimum pay.

For some professions, considerable job growth between 2010 and 2020 is the main driver behind the job openings. While there were only 41,900 glaziers as of 2010, 17,700 positions will be added by 2020, accounting for more than half of the job openings during that time. In other professions, most of the job openings are simply the result of normal turnover cycle. While there will be 18,700 job openings for statisticians, only 3,500 jobs will be added to the 25,100 people already working in the profession, with the remaining openings meant to replace existing workers.

24/7 Wall St. looked at data from the Bureau of Labor Statistics on more than 1,000 different occupations. In addition to excluding jobs with median pay below $30,000, we also chose to exclude jobs employing fewer than 20,000 people as of 2010 in order to represent jobs that will clearly provide opportunity for many individuals in the future. From there, we ranked the professions based on the number of job openings projected between 2010 and 2020 as a percentage of the 2010 headcount in that specific field. We also calculated the number and percentage of those openings due to added positions as well as replacing current employees. Finally, we considered factors such as industry, median salary and credentials of these professionals to provide context on the types of jobs likely to see many openings.

[More from 24/7 Wall St.: America's disappearing jobs]

These are the 10 best job opportunities of the future.

1. Actuaries

 
Future job openings as a pct. of 2010 employment: 87.1%
> New openings, 2010 to 2020: 18,900
> Median annual wage: $87,650

An actuary analyzes the financial costs of risk for individuals and organizations, using a combination of statistics and financial theory to make projections. While there were only 21,700 actuaries in the U.S. as of 2010, there will be 18,900 new job openings in this field by the end of the decade. However, only 5,800 of those new openings, or slightly less than 31%, will be derived from job growth. The other 13,100 actuary openings will be available to replace those leaving the field, meaning more than six of 10 actuaries won’t remain in the field during the decade. Once a person graduates from college and finishes actuarial exams, he or she can expect to make a decent income. The median annual pay of $87,650 is better than accountants and auditors, whose median income is $61,690, and budget analysts, whose median income is $68,200.

2. Glaziers

> Future job openings as a pct. of 2010 employment: 79.7%
> New openings, 2010 to 2020: 33,400
> Median annual wage: $36,640

Glaziers, the BLS explains, “install glass in windows, skylights, storefronts, and display cases to create distinctive designs or reduce the need for artificial lighting.” The number of job openings for glaziers between 2010 and 2020 is projected to reach 33,400, or 80% of the total number of glaziers employed in 2010. Of these openings, roughly 17,700 can be attributed to job growth as glass is increasingly used in construction and glass windows become more energy efficient. However, another 15,700 job openings will be needed simply to replace former glaziers, as the occupation remains exceptionally physically demanding and has a particularly high rate of injury due to cuts from glass and tools as well as from falls.

3. Statisticians

 
Future job openings as a pct. of 2010 employment: 74.5%
> New openings, 2010 to 2020: 18,700
> Median annual wage: $72,830

Statisticians work in virtually every field that requires the collection, aggregation and analysis of large amounts of data. In 2010, there were roughly 25,100 statisticians employed in the U.S. By 2020, the number of statisticians is projected to increase by roughly 3,500, as statistical analysis becomes a more commonly used tool in decision-making. However, between 2010 and 2020, 15,200 positions will be filled just to meet replacement needs — a figure that is equal to roughly 75% of 2010 employment. The issue of high turnover is probably unrelated to salary, however, as the median annual wage for statisticians is $72,830.

4. Pest Control Workers

> Future job openings as a pct. of 2010 employment: 70.9%
> New openings, 2010 to 2020: 48,500
> Median annual wage: $30,340

Pest control workers use traps, fumigants and various other methods to remove rats, roaches, bedbugs and other unwanted creatures from buildings. Between 2010 and 2020, the BLS estimates that the number of pest control workers will increase by 26.1%, as “population growth, particularly in the South, where pests are more common, should result in more buildings that will require additional pest management.” However, while there are projected to be 48,500 openings between 2010 and 2020, 30,600 of these will address replacements needs as workers leave the industry. Among possible reasons for such high turnover: work schedules that often include weekend and evening hours and an increased likelihood of injury and illness due to exposure to pest control chemicals.

5. Interpreters and Translators

 
Future job openings as a pct. of 2010 employment: 69%
> New openings, 2010 to 2020: 40,300
> Median annual wage: $43,300

Becoming an interpreter or translator is not easy, usually requiring a bachelor’s degree, and above all else, fluency in English and at least one other language. Additionally, work experience is critical as many employers will only hire interpreters and translators with past work history. Some 40,300 openings for interpreters and translators are expected to become available between 2010 and 2020 as the U.S. population becomes increasingly diverse and international trade expands. Though roughly 24,600 of these openings will come from new growth, the remaining 15,700 positions, roughly equal to 27% of the 2010 workforce, will be needed to replace previous workers. Many established interpreters and translators also have the option of working for themselves, as 22.9% were self-employed in 2010.

[More from 24/7 Wall St.: Cities losing the most jobs]

6. Optometrists

> Future job openings as a pct. of 2010 employment: 68.4%
> New openings, 2010 to 2020: 23,400
> Median annual wage: $94,990

The number of optometry jobs is expected to grow from the 34,200 jobs in 2010 to 45,500 jobs in 2020, an increase of 33.1%. The BLS projects 23,400 job openings will have to be filled, with 11,300, or just under half, to job growth. The other 12,100 openings, representing 35.4% of the current headcount, will arise due to replacement needs. But you better like school if you want one of these optometry jobs. In addition to holding a bachelor’s degree, optometrists must earn a doctorate in optometry, which takes an additional four years. The median pay of $94,990 is the 36th highest of all professions, but it is far smaller than the pay of physicians. The median pay for doctors in primary care was $202,392, while the pay for those in medical specialties was $356,885.

7. Natural Science Managers

 
Future job openings as a pct. of 2010 employment: 68%
> New openings, 2010 to 2020: 33,500
> Median annual wage: $116,020

Natural science managers direct and supervise research projects for biologists, physicists and chemists. Most are former scientists who have taken on management roles, and many conduct their own research as well as supervise others. The BLS projects 33,500 openings for natural science managers will have to be filled by 2020. Just 3,800 of those are projected to come from the growth of new jobs, as research and development operations are outsourced to specialized firms. The remaining 29,700 are expected to address replacement needs. Finding replacements may be difficult, as the prerequisites include at least five years work experience and a bachelor’s degree.

8. Market Research Analysts and Marketing Specialists

> Future job openings as a pct. of 2010 employment: 67.8%
> New openings, 2010 to 2020: 191,800
> Median annual wage: $60,570

Market research analysts study market conditions, as well as sales and pricing trends of products and services. Between 2010 and 2020, a projected 191,800 analyst positions will have to be filled. Of these openings, 116,600 are expected come from job growth, as demand for market data and research increases.The remaining 75,200 of openings are expected to address job turnover and attrition. Most positions for market research analysts typically require at least a bachelor’s degree, though many analyst positions require a master’s degree.

9. Insulation Workers


 
Future job openings as a pct. of 2010 employment: 67.5%
> New openings, 2010 to 2020: 34,700
> Median annual wage: $35,110

Insulation workers handle, install and dispose of fiberglass and foam insulation in buildings. Where asbestos is present, workers trained in removing hazardous material are used to remove the asbestos before insulators may install new insulation. Between 2010 to 2020, the BLS projects 34,700 more insulator jobs to become available. Of these projected openings, 20,300 are expected to address replacement needs as workers leave the profession due to the physical irritation caused by insulation as well as difficult working conditions. Demand for new positions is expected to come from increases in home-building as well as the need to make existing buildings more energy-efficient.

10. Environmental Science and Protection Technicians, Including Health

> Future job openings as a pct. of 2010 employment: 65.9%
> New openings, 2010 to 2020: 19,500
> Median annual wage: $41,380

According to the BLS, environmental science and protection technicians “monitor the environment and investigate sources of pollution and contamination, including those affecting health.” Between 2010 and 2020, about 19,500 positions are projected to become available. The majority of these openings, roughly 12,500, are expected to address replacement needs as technicians retire or otherwise leave the profession. Other openings will be due to job growth, as the public becomes increasingly conscious of protecting the environment. Those looking for a job as a technician usually need an associate’s degree.

The 10 Best States to Be Young in America

Between crushing student debt and and a staggering 13.9 percent unemployment rate, there's no denying the recession has been unkind to America's young adults.

Even so, we may be putting too much focus on the big picture when it comes to gauging how badly young people are faring, says MoneyRates.com financial analyst Richard Barrington.

"There are so many stories about how difficult conditions are for young adults ... but one thing that we know is that conditions vary greatly from state to state," Barrington told Business Insider. "Probably the clearest example of that is the unemployment rate. While it's steadily remained around 9 percent nationally, in some states it's under 5 percent."

In a new study that hones in on where 20-24 year olds have the best shot at thriving in today's economy, Barrington analyzed 9 key lifestyle factors in all 50 states––including youth unemployment, education costs, car insurance, housing, nightlife, and overall healthfulness.

1. North Dakota



"While North Dakota may not be the first place you think of when it comes to youth culture, given how tough things are for young people these days, it might be wise to look somewhere off the beaten path," Barrington suggests.

"North Dakota's booming economy gave it very high marks across the board in economic categories, and it did just well enough in the lifestyle categories to grab the top spot."

Stats:
Youth unemployment rate: 5.3% (The lowest of all 50 states)
Percentage of population aged 20-24: 12.05%
Average car insurance rate: $1,400
Average cost of higher education: $10,774
Median rental cost:  $564

2. South Dakota



South Dakota wins the runner-up slot with dirt cheap apartments for the young residents that fill its borders. It also has a relatively low unemployment rate.

The only sector where it's lacking? "Youth-oriented retailing," Barrington says.

Stats:
Youth unemployment rate: 8.4%
Percentage of population aged 20-24: 10.01%
Average car insurance rate:  $1,338
Average cost of higher education: $14,900
Median rental cost: $562

3. Iowa



Drivers will dig Iowa for its insurance premiums, which are the lowest in the nation, according to Insure.com. It beats out just about every other state on this list in rental rates, too.

Stats:
Youth unemployment rate: 11.3%
Percentage of population aged 20-24: 10.04%
Average car insurance rate: $1,220
Average cost of higher education: $17,057
Median rental cost:  $611

4. Montana



Montana ranks high for low rental costs and a relatively cheap college tuition.

Bonus: "It has a surprisingly high number of health clubs and top-rated bars for its population size," Barrington says.

Stats:
Youth unemployment rate: 14.7%
Percentage of population aged 20-24: 9.56%
Average car insurance rate: $1,634
Average cost of higher education: $14,431
Median rental cost:  $627

5. Nebraska



Nebraska isn't just a bargain for retirees. Young people can find rental rates more than $150 below the national average and have a far greater chance at scoring a job than in most other states.

Stats:
Youth unemployment rate: 7.9%
Percentage of population aged 20-24: 9.99%
Average car insurance rate: $1,646
Average cost of higher education: $13,574
Median rental cost:  $644

6. Delaware



On top of low tuition rates, "There are a surprising amount of top-rated bars and youth-oriented stores for such a small state," Barrington notes.

"Just try to live in a city where you can use public transportation, though, since Insure.com reports that Delaware has the nation's highest auto insurance premiums in the 20-24 age group."

Stats:
Youth unemployment rate: 11.4%
Percentage of population aged 20-24: 10.12%
Average car insurance rate: $3,006
Average cost of higher education: $12,192
Median rental cost:  $949

7. Vermont



Clear across the country from youthful Alaska, Vermont is also high on the young worker scene.

"They're into fitness too," Barrington says. "Based on [International Health, Racquet & Sportsclub Association] figures, Vermont has more fitness clubs per capita than any other state. But you might want to put off moving there until after college, since average four-year tuition costs are among the highest in the nation."

Stats:
Youth unemployment rate: 12.8%
Percentage of population aged 20-24: 10.37%
Average car insurance rate: $1,566
Average cost of higher education: $23,361
Median rental cost:  $829

8. Alaska



"Since it is one of the most youthful states in the country, perhaps it should be no surprise that Alaska offers some attractive stats in most of the lifestyle categories," says Barrington.

"The tough part is finding a place to live: According to the Census Bureau, Alaska has the nation's lowest rental vacancy rate."

Stats:
Youth unemployment rate: 12.80%
Percentage of population aged 20-24: 10.54%
Average car insurance rate: $1,925
Average cost of higher education: $15,431
Median rental cost: $1,007

9. Utah





With nearly more than 11 percent of its residents in the 20-24 year age bracket, Utah has far more going for it than stunning scenery.

"While not great on most lifestyle factors, Utah has very low unemployment among young adults, and the lowest average cost of four-year colleges," Barrington says.

Stats:
Youth unemployment rate: 8.5%
Percentage of population aged 20-24: 11.51%
Average car insurance rate: $1,733
Average cost of higher education: $5,745
Median rental cost:  $793

10. New Hampshire



You'll pay more to attend a four-year university in New Hampshire, but cash-strapped college grads can take comfort in its decent employment rate for young workers.

"Despite scoring high on the availability of bars, fitness clubs and youth-oriented stores, New Hampshire's population is relatively low on young adults," Barrington says. "That's a pity, because unemployment for that demographic is relatively low there."

Stats:
Youth unemployment rate: 8.7%
Percentage of population aged 20-24: 9.3%
Average car insurance rate: $1,631
Average cost of higher education: $26,234
Median rental cost:  $918

Wall Street Week Ahead: A nice rally while it lasted

NEW YORK (Reuters) - At the start of the historically weakest month for equities there are plenty of reasons to believe stocks may be just about reaching a top - at least in the short term.

The S&P 500 has surged 14 percent this year and is at its highest level in more than 4 years. Not counting 2009 when equities rebounded from their crisis lows, this could be the best year for stocks since 2003 - nearly a decade.

A report showing hiring in the United States in August was again much slower than expected and warnings of a slowdown at Intel and FedEx this week, which will likely foreshadow a very weak earnings season, have not been enough to deter investors buoyed by aggressive central bank action.

After the European Central Bank's pledge to buy the debt of troubled eurozone countries this week the Fed is widely expected to introduce new stimulus measure in the form of more bond buying when it closes its two-day meeting on Thursday.

"Good news in good news and bad news is good news, largely because of the Bernanke put," said Eric Kuby, chief investment officer, North Star Investment Management in Chicago.

The S&P 500 is now trading at 13.3 time its forward earnings estimates, meaning investors are willing to pay just over $13 for a dollar of expected earnings from S&P 500 companies.

Although that is below a median forward price-to-earnings ratio of 13.7 since 1976 - according to Morgan Stanley - it is close to the upper end of the range in the low-growth post crisis era of the last 5 years. During that time there has been a median price-to-earnings ratio of 12.9, according to Thomson Reuters data.

In fact, the recent price-to-earnings high was 13.5 in February 2011, just above current levels. If you are of the view that little has changed since then, there is no reason for the ratio to go much higher. That combined with a slowing earnings picture inevitably means lower prices.

"Our view is that the next double digit move in the market is down not up," said Morgan Stanley in a research note.

The analysts, led by equity strategist Adam Parker, believe the S&P 500 will finish the year at 1,214, 15 percent below where it is now.

At current levels the risk-reward skew is starting to look less attractive then it did. That is especially true given the uncertainty the November presidential elections are likely to generate, as well as the potential for more slip-ups in Europe.

"We put a 1,450 target on the S&P for year and so I'm encouraged," said Jack Ablin, chief investment officer at Harris Private Bank in Chicago. "But I will say, if this trend continues, I'm inclined to declare victory and move to the sidelines (and) start taking profits."

The average analyst estimate for the S&P 500 this year is 1,383 according to a Reuters poll from the middle of the year. That shows Ablin is not alone. The S&P's performance has already outstripped most expectations.

Another negative factor is the rapidly declining earnings outlook for the remainder of the year, as well as for 2013. Analysts are now expecting a 2.1 percent drop in third quarter earnings year-on-year. About a year ago they were looking for growth of nearly 15 percent.

This week Jonathan Golub, UBS's chief U.S. equity strategist, cut his S&P 500 earnings outlook due to a weaker U.S. economic outlook, conversion distortions from a stronger dollar, as well as weaker oil prices.
For 2012 Golub cut his S&P earnings forecast to $102.50 from $103.50 and to $107.00 from $110 for next year.

Golub believes third quarter earnings will be just $25.10, 2 percent below the same period last year. On an annualized basis that would translate into an S&P 500 level of just over 1,300 given a price-to-earnings ratio of 13.

Signs are that those forecasts are already starting to come true.

On Tuesday, FedEx Corp (FDX), the world's second-largest package delivery company, cut its profit outlook for the current quarter, saying weakness in the global economy was hurting demand for overnight international shipments.

Three days later, Intel Corp (INTC) cut its third-quarter revenue estimate due to a decline in demand for its chips, as customers reduce inventories and businesses buy fewer personal computers. A revision of Intel targets had been expected by some analysts after PC makers Hewlett Packard Co (HPQ) and Dell Inc (DELL) warned of slow demand last month.

Golub is now talking about an earnings "drought" and even an earnings "recession."

"While investors are focused on monetary policy, we believe these weak earnings results will contain a market advance," he said in a research note.

Golub has a year end S&P target level of 1,375, 4.3 percent below Friday's closing level.

The latest leg of the rally was a 2 percent surge on Thursday that pushed the S&P 500 to its highest in more than four years and the Nasdaq to its highest in 12 years.

The move was courtesy of the European Central Bank and its pledge to act as an unlimited lender of last resort to troubled European nations. But it is not a done deal.

The German constitutional court will rule on Wednesday whether the European Union's new ESM rescue fund should come into being. If it vetoes it, the ECB's plans could be left in tatters since its intervention requires a country to seek help from the rescue fund first.

Dutch elections on the same day look to have been robbed of some of their potential drama, with the hard-left socialists now slipping in the polls. Instead, the fiscally conservative Liberals are set to win most seats with the center-left Labour party also polling strongly.

But there are no guarantees and Germany could yet be robbed of one of its staunchest pro-austerity allies in the debt crisis debate.

"While we got some monetary solutions we still need more answers (on) the underlying European economy," said Ablin. "I don't think bond buying solves the euro crisis."

Europe is not the only concern for investors. A slew of Chinese data on Sunday will provide an insight into how the world's second economy is faring amid concerns of a slowdown. The data includes inflation, retail sales and industrial production.

The Baltic Exchange's main sea freight index (.BADI), which tracks rates for ships carrying dry commodities, fell for the eighth straight session on Friday. Some of the weakness is blamed on collapsing iron ore demand from China.

Shipments of iron ore account for about a third of sea-borne volumes. Spot iron ore prices just hit their weakest in nearly three years, extending a market rout that began in July, while Poor demand drove Shanghai steel futures to a record low this past week.

But even with the less than stellar fundamental picture, the old saying 'don't fight the Fed' has proven to be true once again.

The chances of the Federal Reserve embarking on another round of bond purchases next week have jumped after the disappointing August U.S. employment numbers on Friday, according to a Reuters poll of economists.

The median of forecasts from 59 economists gave a 60 percent chance the Fed will announce another round of quantitative easing, or QE3, on Thursday.

For the last 40 years the MSCI world index (.MSCIWO) has lost 0.9 percent on average in September, making it the worst performing month for the stock market, according to data from Thomson Reuters. So far the index, a broad measure of global equities, is up 2.6 percent this month.

This year may well buck the trend.