Aug
28
How Do You Estimate Your Normal Retirement Requirements?
Filed Under Retirement Money | Comments Off
Emlyn Scott asked:
Standard retirement plans are quite simple and apply to the middle class and to a lesser extent the financially independent. The following process would apply almost entirely to the middle class pension savings only (the financially independent would have extra personal holdings of assets such as bonds, stocks, mutual funds and rental properties):
1. Work out when you want to retire, say age 65, which is 35 years from now (if you’re 30 years old).
2. Work out how long you’re likely to live after retirement, say 20 years, until age 85. As a guide the approximate life expectancy today for a male is about 75 years and 80 years for a female.
3. Add some room for error, say an extra 10 years. Thus, the total amount of years that money is needed for your retirement is 30 years (20 +10).
4. Work out how much you need to retire in today’s money and adjust for inflation. For example, if you think you need $35,000 per year in today’s money to retire and you intend to retire 35 years from now, assuming 3% inflation, you’d need an income of $98,485 per year in future money (i.e., $35,000*(1+0.03)^35).
5. Work out what lump sum would produce $98,485 per annum for 30years and add to this a lump sum what you’d like to leave your heirs. Let’s say you’d like to give your heirs at least $150,000 in today’s money, which is the equivalent of $1,02,512 in 65 years’ time (35 years until retirement plus 30 years of retirement). (Normally, you’d also increase your retirement income by the inflation rate, say 3% per year, to maintain the real value of your income, but for this example we’ll ignore this complication.) You also need to adjust for the interest you’d earn on your retirement lump sum after retirement, say a conservative 5%. In this example, the lump sum you’d need at age 65 works out to be $1,764,512. This will give you an income of $98,485 for 30 years and at least $150,000 in today’s money ($1,024,512 in future money) to leave your children when you die.
6. Calculate the amount you’d need to save each month to generate $1,764,512 with 35 years of saving. Assuming, say, a 7% return on your savings per year, you would need to save about $974.03 per month ($225 per week) for 420 months (i.e. 12*35 years).
So, to earn a mediocre $35,000 in today’s money in retirement 35 years from now and leave at least $150,000 in today’s money to your heirs, you’d need to save at least $974.03 per month for 35 years. This is no easy task, and the result wouldn’t guarantee you a wealthy retirement. Hopefully, you’re starting to see why just saving for retirement is difficult and won’t ensure that you have a particularly comfortable retirement.
However, it is crucially important that you create a middle class retirement plan because it will give the warning you need that without planning your retirement is bound to be very poor. If you speak to a financial advisor they should be able to walk you through the whole process.
MARR
Standard retirement plans are quite simple and apply to the middle class and to a lesser extent the financially independent. The following process would apply almost entirely to the middle class pension savings only (the financially independent would have extra personal holdings of assets such as bonds, stocks, mutual funds and rental properties):
1. Work out when you want to retire, say age 65, which is 35 years from now (if you’re 30 years old).
2. Work out how long you’re likely to live after retirement, say 20 years, until age 85. As a guide the approximate life expectancy today for a male is about 75 years and 80 years for a female.
3. Add some room for error, say an extra 10 years. Thus, the total amount of years that money is needed for your retirement is 30 years (20 +10).
4. Work out how much you need to retire in today’s money and adjust for inflation. For example, if you think you need $35,000 per year in today’s money to retire and you intend to retire 35 years from now, assuming 3% inflation, you’d need an income of $98,485 per year in future money (i.e., $35,000*(1+0.03)^35).
5. Work out what lump sum would produce $98,485 per annum for 30years and add to this a lump sum what you’d like to leave your heirs. Let’s say you’d like to give your heirs at least $150,000 in today’s money, which is the equivalent of $1,02,512 in 65 years’ time (35 years until retirement plus 30 years of retirement). (Normally, you’d also increase your retirement income by the inflation rate, say 3% per year, to maintain the real value of your income, but for this example we’ll ignore this complication.) You also need to adjust for the interest you’d earn on your retirement lump sum after retirement, say a conservative 5%. In this example, the lump sum you’d need at age 65 works out to be $1,764,512. This will give you an income of $98,485 for 30 years and at least $150,000 in today’s money ($1,024,512 in future money) to leave your children when you die.
6. Calculate the amount you’d need to save each month to generate $1,764,512 with 35 years of saving. Assuming, say, a 7% return on your savings per year, you would need to save about $974.03 per month ($225 per week) for 420 months (i.e. 12*35 years).
So, to earn a mediocre $35,000 in today’s money in retirement 35 years from now and leave at least $150,000 in today’s money to your heirs, you’d need to save at least $974.03 per month for 35 years. This is no easy task, and the result wouldn’t guarantee you a wealthy retirement. Hopefully, you’re starting to see why just saving for retirement is difficult and won’t ensure that you have a particularly comfortable retirement.
However, it is crucially important that you create a middle class retirement plan because it will give the warning you need that without planning your retirement is bound to be very poor. If you speak to a financial advisor they should be able to walk you through the whole process.
MARR
Aug
28
Retirement Can be More Rewarding if you Plan Ahead
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George White asked:
There are few times in life worth looking forward to that are better than retirement, unless it is retiring knowing you will have financial security for you and your family. Most people will spend years working, knowing retirement is going to sneak up on them and for most people proper planning will enable them to enjoy their years doing things with their spouse and family that they did not have time to do while working.
The first few months may be difficult when entering into retirement as bad as many see the habit of working it was something they did every day for many years. They woke up, got ready and left for work and came home in the evening, based on the shift they were working, usually five or six days a week. The first few days may feel like a break, similar to being on vacation and it may take some time before it sinks in that the time for retirement has arrived and there will be no going back to the job.
Retirement is not an acceptable alternative to going to work every day for some people. If they retired after reaching the age for full retirement, there is no problem with finding another job. However, if they took an early retirement at age 62, and began receiving Social Security benefits, they will be penalized for earning the extra money until they reach full retirement age. In most cases, for every two dollars they earn, they will lose one dollar in benefits.
Retiree’s Time Used For Getting Re-acquainted
If couples plan to travel they usually begin almost immediately after their retirement party, and have already set a goal of where they want to go and how long they want to be gone, but most retain their home as a roosting point for the times between travel. Whether it is to go on a second honeymoon or a celebration cruise, they will want time for themselves to celebrate the fact that they will not have to share their time with a job.
For others retirement is a time to participate in hobbies they enjoy but lacked the time due to a hectic work schedule. Outdoor activities are now possible on days other than the weekend when crowds were a problem and prices were higher. Typically, amusement parks have significantly more traffic on weekends and many golf courses have reduced rates on weekdays. Hitting the hot spots with the spouse is a great way to get to know each other after being separated for about a third of the day, everyday.
Retirement also gives people the time to offer their time and talents for charity work or for mentoring others entering the field from which they recently retired. For those who took an early retirement they may be willing to offer their services on a voluntary basis to keep their minds sharp and to offer their experience in various industries to keep busy without risking the loss of their retirement income.
For the most part, retirement is to be the time when people can leave the hassle of work and spend time doing the things they have always wanted to do, but lacked the time. However, if they failed to plan their finances, they find they have the time, but not the money and will go back to work to help pay for extras that they cannot afford on their retirement income.
When it comes time to retire, whether it is early, late or right on time most view retirement with a feeling of relief mixed with anxiety, as they may not be sure of what they will do with themselves. However, whatever they decide to do once they retire, they will likely have the time to do it.
ROLAND
There are few times in life worth looking forward to that are better than retirement, unless it is retiring knowing you will have financial security for you and your family. Most people will spend years working, knowing retirement is going to sneak up on them and for most people proper planning will enable them to enjoy their years doing things with their spouse and family that they did not have time to do while working.
The first few months may be difficult when entering into retirement as bad as many see the habit of working it was something they did every day for many years. They woke up, got ready and left for work and came home in the evening, based on the shift they were working, usually five or six days a week. The first few days may feel like a break, similar to being on vacation and it may take some time before it sinks in that the time for retirement has arrived and there will be no going back to the job.
Retirement is not an acceptable alternative to going to work every day for some people. If they retired after reaching the age for full retirement, there is no problem with finding another job. However, if they took an early retirement at age 62, and began receiving Social Security benefits, they will be penalized for earning the extra money until they reach full retirement age. In most cases, for every two dollars they earn, they will lose one dollar in benefits.
Retiree’s Time Used For Getting Re-acquainted
If couples plan to travel they usually begin almost immediately after their retirement party, and have already set a goal of where they want to go and how long they want to be gone, but most retain their home as a roosting point for the times between travel. Whether it is to go on a second honeymoon or a celebration cruise, they will want time for themselves to celebrate the fact that they will not have to share their time with a job.
For others retirement is a time to participate in hobbies they enjoy but lacked the time due to a hectic work schedule. Outdoor activities are now possible on days other than the weekend when crowds were a problem and prices were higher. Typically, amusement parks have significantly more traffic on weekends and many golf courses have reduced rates on weekdays. Hitting the hot spots with the spouse is a great way to get to know each other after being separated for about a third of the day, everyday.
Retirement also gives people the time to offer their time and talents for charity work or for mentoring others entering the field from which they recently retired. For those who took an early retirement they may be willing to offer their services on a voluntary basis to keep their minds sharp and to offer their experience in various industries to keep busy without risking the loss of their retirement income.
For the most part, retirement is to be the time when people can leave the hassle of work and spend time doing the things they have always wanted to do, but lacked the time. However, if they failed to plan their finances, they find they have the time, but not the money and will go back to work to help pay for extras that they cannot afford on their retirement income.
When it comes time to retire, whether it is early, late or right on time most view retirement with a feeling of relief mixed with anxiety, as they may not be sure of what they will do with themselves. However, whatever they decide to do once they retire, they will likely have the time to do it.
ROLAND
Aug
25
Beatnik – a message from Patty Duke about Social Security
Filed Under Retirement | Comments Off
SocialSecurityOnline asked:
Academy Award, Golden Globe and Emmy winning actress, today unveiled Social Securitys new online retirement application and launched the agencys Retire Online campaign. Featuring cousins Patty and Cathy Lane from the hit 1960s sitcom, The Patty Duke Show, the campaign will let Americans know that its now easier than ever to retire online at www.socialsecurity.gov. Social Securitys new online retirement application can be completed in as little as 15 minutes from the comfort of your home …
JOHNSON
Aug
25
How To Get More Money For Retirement
Filed Under Retirement Money | Comments Off
Brian Armstrong asked:
If you’re a senior 62 years or older with equity in your home, you can supplement your retirement with a reverse mortgage.
This is basically where the lender pays the borrower instead of the borrower paying the mortgage to the lender.
You may be wondering how this works. Basically the lender will pay you either a lump sum or monthly payments determined by the value of the home and how old you are. The more valuable your home and the older you are, the more money you’ll be able to get.
The reverse mortgage comes due at the end of the permanent occupancy of the senior in the home. When you move out of the home permanently, the reverse mortgage comes due.
One of two things may happen at that point in time. The home may be refinanced with a regular mortgage. This works well if the heirs or seniors decide they want the home to “stay in the family” or be able to have a say in who gets the home.
If the seniors or heirs decide to “walk away” at that point in time without arranging for refinancing with a regular mortgage, the lender or bank will take ownership of the home.
The reverse mortgage is a “non-recourse” loan which means that the amount due will not exceed the appraised value of the home.
Reverse mortgages require counseling by a 3rd party provider specifically so that seniors understand what the consequences are as well as the advantages of reverse mortgages. These 3rd party counselors are also required to explain alternatives for funding for seniors 62 & older as well.
Your local loan officer or mortgage broker that you communicate with on pre-qualifying or determining about how much you may get from a reverse mortgage will provide you a list of approved 3rd party counselors for you to visit with prior to committing to a reverse mortgage.
In addition to reviewing several options with you, the 3rd party counselors will make sure you understand what will happen to your home once the reverse mortgage comes due.
The nice part about all of this is that as long as you are the primary resident in your home, the loan will not be due. This means that until you permanently move out, the home still belongs to you. This will all be explained by both your loan officer as well as the counselor you’ll work with on the reserve mortgage.
Many seniors choose to pay off the existing mortgage which can easily be done if the numbers work out and there is a lump sum remaining or monthly payments. In fact as a note to add to this reverse mortgage article is that you can usually elect to either accept a lump sum payment, take monthly payments or a combination of both.
COLE
If you’re a senior 62 years or older with equity in your home, you can supplement your retirement with a reverse mortgage.
This is basically where the lender pays the borrower instead of the borrower paying the mortgage to the lender.
You may be wondering how this works. Basically the lender will pay you either a lump sum or monthly payments determined by the value of the home and how old you are. The more valuable your home and the older you are, the more money you’ll be able to get.
The reverse mortgage comes due at the end of the permanent occupancy of the senior in the home. When you move out of the home permanently, the reverse mortgage comes due.
One of two things may happen at that point in time. The home may be refinanced with a regular mortgage. This works well if the heirs or seniors decide they want the home to “stay in the family” or be able to have a say in who gets the home.
If the seniors or heirs decide to “walk away” at that point in time without arranging for refinancing with a regular mortgage, the lender or bank will take ownership of the home.
The reverse mortgage is a “non-recourse” loan which means that the amount due will not exceed the appraised value of the home.
Reverse mortgages require counseling by a 3rd party provider specifically so that seniors understand what the consequences are as well as the advantages of reverse mortgages. These 3rd party counselors are also required to explain alternatives for funding for seniors 62 & older as well.
Your local loan officer or mortgage broker that you communicate with on pre-qualifying or determining about how much you may get from a reverse mortgage will provide you a list of approved 3rd party counselors for you to visit with prior to committing to a reverse mortgage.
In addition to reviewing several options with you, the 3rd party counselors will make sure you understand what will happen to your home once the reverse mortgage comes due.
The nice part about all of this is that as long as you are the primary resident in your home, the loan will not be due. This means that until you permanently move out, the home still belongs to you. This will all be explained by both your loan officer as well as the counselor you’ll work with on the reserve mortgage.
Many seniors choose to pay off the existing mortgage which can easily be done if the numbers work out and there is a lump sum remaining or monthly payments. In fact as a note to add to this reverse mortgage article is that you can usually elect to either accept a lump sum payment, take monthly payments or a combination of both.
COLE
Aug
23
How To Retire Online Using Turnkey Online Business System
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HomeBizReport asked:
www.123CallBrent.com A great review at Home Make Money Online Business get paid Make Money successful Online BusinessMake Money Online and Work at Home Internet based Business review fee Make Money no Online start Home based Business movie Make Money Online Business Work at Home easy ways to Make Money Online Free Tips legitimate Home Business Make Money now Online tutorial Business Make Money Online successful How can i Make Money Online with no investment fast Make Money Online quickly …
HORN
Aug
22
How to Avoid Ruining Retirement
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Emma Snow asked:
Wealth seems to be everyone’s dream; the ability to relax a little more, to not stress so much about finances and to enjoy the “good life.” So often it is believed that wealth is only attainable by those with large incomes. Those with smaller incomes may not put anything aside, assuming such small savings won’t make enough of a difference in the long run. In my experience in the financial services industry, there were several times when I would help an elementary school teacher or janitor with their sizeable 403(b) account. Obviously for them, small savings over time made a big difference. In the same category are those who have large incomes and assume they always will. They constantly spend to the top of their income level and set little or nothing aside for the future. Yes, I also remember helping doctors or attorneys take loans out of their 401(k) accounts. I found that it wasn’t so much what you made but everyday decisions that determined long-term success.
When I once asked a janitor of an elementary school how he had accumulated his 1.7 million dollar 403(b) he said, “I just started putting money into it when I first came to work here, a little bit each paycheck.” Now, 40 years later as he approached retirement with a steady pension and a large 403(b) account he was financially wealthy. Avoiding financial mistakes is the key for anyone to retire well. This article lists some of those mistakes and ways to steer clear of them.
Waiting Until You’re 55
Not starting to save soon enough is number one on our list. Beginning early to save for retirement can make a huge difference in the long run. To illustrate this, let’s assume we have two people saving for retirement, we’ll give them simple names that correspond with the age they started saving, Mr. 25 and Mr. 45. Mr. 25 puts $3,000 into an IRA each year until he retires at age 65. Assuming he gets an 8% growth rate on average, he amasses $839,343 or almost a million dollars by age 65. If Mr. 45 were to put the same amount aside but start at age 45 instead of 25, he would only have $148,269 saved, definitely not enough to start retirement with. For Mr. 45 to end up with the same amount as Mr. 25 he would have to save almost $17,000 per year until age 65. $17,000 per year for 20 years equals $340,000 cash out of pocket, whereas $3,000 per year for 40 years is only $120,000. Mr. 25 only had to save about one third the amount Mr. 45 did all because he started early. Letting compounding do the work for you allows you more money for other things you want.
1% Is Enough, Right?
Putting aside too small a percentage of income is another mistake people make. It may be difficult when just starting out and times are lean, but you will thank yourself in the long run if you make this a priority. Going back to Mr. 25 again from above, if he would have only put away $1,000 each year, his ending balance would have only been $279,781 in 40 years, again assuming the 8% growth rate. We know how much $3,000 per year would have saved him, but what about $6,000 per year? He would have $1,678,686. Doubling his savings doubles his end result.
I’m a Millionaire!
Not realizing just how much needs to be saved in order to retire is our next mistake. While the 1.6 million in the above example may seem like a lot of money, it won’t pay the bills in 40 years. Assuming prices go up by 3% each year, 1.6 million will only have the buying power of a half a million dollars in 40 years when Mr. 25 wants to retire. Assuming Mr. 25 lives to the ripe old age of 90, a 1.6 million dollar account will give him about $2,300 dollars of income each month in real terms. This assumes that he earns 6% on his money after he retires. Does it seem odd that our 1.6 million dollars is now only worth $2,300 dollars per month? Inflation is the culprit. In actuality Mr. 25 will be getting about $9,800 dollars out of his account each month in retirement, but because prices for everything will be so much higher in 40 years it will only be able to buy the same amount that $2,300 dollars buys today. This is what “real terms” means. Mr. 25 will have to determine if $2,300 per month will be enough to live off of in retirement. Most likely it will not be enough unless he really likes ramen noodles.
Do I Get a Checkbook with my 401(k)?
Using Retirement Accounts as income before retirement is becoming a mistake that more and more people are making. This is especially true for those who have employers contribute to their retirement accounts. While it is tempting to assume this is just extra money you can spend, it has terrible long-term effects. Taking as little as $5,000 out of your retirement account at age 30, is like taking out $35,000 in 35 years. If it would have been allowed to stay in the account and grow over 35 years, it would have accumulated to almost $35,000. The other problem is that you will most likely have to pay taxes and a 10% penalty on the money because it is being taken out before age 59 1/2. Now to get $5,000 after the taxes and penalty, you have to take out over $8,000, which would equal over $55,000 lost in 35 years.
I’m Sure my Basket Can Hold All of This
Not Diversifying or putting all your eggs in one basket is another financial blunder. I was a retirement specialist working with 401(k) and 403(b) account owners when the market crashed in 1999 and 2000. How vividly I remember talking with people in their fifties and sixties who in February of 2000 (right before the NASDAQ started falling) wanted to put their entire retirement account into technology. I discussed with them the advantages of diversification especially in such a volatile market. Some listened, but most didn’t. The comment I remember the most is, “I don’t have enough money to retire so I need it to grow really fast.” The result was buying in at an all time high and then either jumping out along the way down or riding the market to the bottom. Those who stayed in for even a year lost more than half of their retirement in a technology fund.
Compare that to those who were diversified across several markets, domestic and international, and several types of investments, equity, fixed-income and short-term. Someone in their fifties, planning on retiring in 10 years would be diversifying if they had about 60% in stocks and the rest in bonds and money markets. This type of portfolio still lost money during that volatile time, but not nearly as much as a technology fund did. Those with a diversified portfolio lost about 5-15% in that same time period that the technology sector lost 50-65%. Trying to earn money for retirement by putting all your eggs in one basket, especially when you are close to retirement, is almost as risky as using the slot machines in Las Vegas. If you are behind in your savings, your best bet is to start contributing the maximum allowed and push back retirement for a few more years.
Won’t Uncle Sam Take Care of Me?
Relying solely on Social Security will leave you with little income in retirement. In a message to the public issued by the Social Security and Medicare Board of Trustees in 2005 they stated, “We do not believe the currently projected long run growth rates of Social Security and Medicare are sustainable under current financing.” They went on to say that without major changes to Social Security, it will begin to fall short in 2017 and will only be able to fund 74% of benefits by 2041. The suggested solution is to either increase taxes 15% or decrease benefits 13%, neither of which are good for retirement. To continue to live the same lifestyle that you are accustomed to, saving for retirement is essential.
Another Trip to the Doctor?
Not preparing for healthcare in retirement is something that we have recently had to think about. There is a good possibility of Medicare not being able to meet our needs in the future or we may need our own health insurance to carry us until Medicare kicks in. Being prepared to pay for premiums or medical expenses in retirement is becoming a necessity. A 2004 study found that an average retiree spent 22% of their income on healthcare costs. For someone on a $50,000 a year retirement income, this equates to $11,000 per year. Take that over a 25 year retirement and you are up to $275,000 for healthcare costs alone. Long-term care such as nursing homes or in home assistance is another cost that should be prepared for. With less and less employers covering healthcare in retirement, this is another area that is often overlooked when planning for the future.
Avoiding these financial mistakes will determine your quality of life in retirement. The next step is to get started. There are many brokerage firms that will educate you about your options at no cost. They can help you open a retirement account or determine if you are contributing enough to your current retirement account. The can also help you decide on what types of investments are appropriate given your age, timeframe and risk tolerance. The most important thing to remember is that it is never too late to start saving and even a little money set aside makes a big difference in the long run.
BORGES
Wealth seems to be everyone’s dream; the ability to relax a little more, to not stress so much about finances and to enjoy the “good life.” So often it is believed that wealth is only attainable by those with large incomes. Those with smaller incomes may not put anything aside, assuming such small savings won’t make enough of a difference in the long run. In my experience in the financial services industry, there were several times when I would help an elementary school teacher or janitor with their sizeable 403(b) account. Obviously for them, small savings over time made a big difference. In the same category are those who have large incomes and assume they always will. They constantly spend to the top of their income level and set little or nothing aside for the future. Yes, I also remember helping doctors or attorneys take loans out of their 401(k) accounts. I found that it wasn’t so much what you made but everyday decisions that determined long-term success.
When I once asked a janitor of an elementary school how he had accumulated his 1.7 million dollar 403(b) he said, “I just started putting money into it when I first came to work here, a little bit each paycheck.” Now, 40 years later as he approached retirement with a steady pension and a large 403(b) account he was financially wealthy. Avoiding financial mistakes is the key for anyone to retire well. This article lists some of those mistakes and ways to steer clear of them.
Waiting Until You’re 55
Not starting to save soon enough is number one on our list. Beginning early to save for retirement can make a huge difference in the long run. To illustrate this, let’s assume we have two people saving for retirement, we’ll give them simple names that correspond with the age they started saving, Mr. 25 and Mr. 45. Mr. 25 puts $3,000 into an IRA each year until he retires at age 65. Assuming he gets an 8% growth rate on average, he amasses $839,343 or almost a million dollars by age 65. If Mr. 45 were to put the same amount aside but start at age 45 instead of 25, he would only have $148,269 saved, definitely not enough to start retirement with. For Mr. 45 to end up with the same amount as Mr. 25 he would have to save almost $17,000 per year until age 65. $17,000 per year for 20 years equals $340,000 cash out of pocket, whereas $3,000 per year for 40 years is only $120,000. Mr. 25 only had to save about one third the amount Mr. 45 did all because he started early. Letting compounding do the work for you allows you more money for other things you want.
1% Is Enough, Right?
Putting aside too small a percentage of income is another mistake people make. It may be difficult when just starting out and times are lean, but you will thank yourself in the long run if you make this a priority. Going back to Mr. 25 again from above, if he would have only put away $1,000 each year, his ending balance would have only been $279,781 in 40 years, again assuming the 8% growth rate. We know how much $3,000 per year would have saved him, but what about $6,000 per year? He would have $1,678,686. Doubling his savings doubles his end result.
I’m a Millionaire!
Not realizing just how much needs to be saved in order to retire is our next mistake. While the 1.6 million in the above example may seem like a lot of money, it won’t pay the bills in 40 years. Assuming prices go up by 3% each year, 1.6 million will only have the buying power of a half a million dollars in 40 years when Mr. 25 wants to retire. Assuming Mr. 25 lives to the ripe old age of 90, a 1.6 million dollar account will give him about $2,300 dollars of income each month in real terms. This assumes that he earns 6% on his money after he retires. Does it seem odd that our 1.6 million dollars is now only worth $2,300 dollars per month? Inflation is the culprit. In actuality Mr. 25 will be getting about $9,800 dollars out of his account each month in retirement, but because prices for everything will be so much higher in 40 years it will only be able to buy the same amount that $2,300 dollars buys today. This is what “real terms” means. Mr. 25 will have to determine if $2,300 per month will be enough to live off of in retirement. Most likely it will not be enough unless he really likes ramen noodles.
Do I Get a Checkbook with my 401(k)?
Using Retirement Accounts as income before retirement is becoming a mistake that more and more people are making. This is especially true for those who have employers contribute to their retirement accounts. While it is tempting to assume this is just extra money you can spend, it has terrible long-term effects. Taking as little as $5,000 out of your retirement account at age 30, is like taking out $35,000 in 35 years. If it would have been allowed to stay in the account and grow over 35 years, it would have accumulated to almost $35,000. The other problem is that you will most likely have to pay taxes and a 10% penalty on the money because it is being taken out before age 59 1/2. Now to get $5,000 after the taxes and penalty, you have to take out over $8,000, which would equal over $55,000 lost in 35 years.
I’m Sure my Basket Can Hold All of This
Not Diversifying or putting all your eggs in one basket is another financial blunder. I was a retirement specialist working with 401(k) and 403(b) account owners when the market crashed in 1999 and 2000. How vividly I remember talking with people in their fifties and sixties who in February of 2000 (right before the NASDAQ started falling) wanted to put their entire retirement account into technology. I discussed with them the advantages of diversification especially in such a volatile market. Some listened, but most didn’t. The comment I remember the most is, “I don’t have enough money to retire so I need it to grow really fast.” The result was buying in at an all time high and then either jumping out along the way down or riding the market to the bottom. Those who stayed in for even a year lost more than half of their retirement in a technology fund.
Compare that to those who were diversified across several markets, domestic and international, and several types of investments, equity, fixed-income and short-term. Someone in their fifties, planning on retiring in 10 years would be diversifying if they had about 60% in stocks and the rest in bonds and money markets. This type of portfolio still lost money during that volatile time, but not nearly as much as a technology fund did. Those with a diversified portfolio lost about 5-15% in that same time period that the technology sector lost 50-65%. Trying to earn money for retirement by putting all your eggs in one basket, especially when you are close to retirement, is almost as risky as using the slot machines in Las Vegas. If you are behind in your savings, your best bet is to start contributing the maximum allowed and push back retirement for a few more years.
Won’t Uncle Sam Take Care of Me?
Relying solely on Social Security will leave you with little income in retirement. In a message to the public issued by the Social Security and Medicare Board of Trustees in 2005 they stated, “We do not believe the currently projected long run growth rates of Social Security and Medicare are sustainable under current financing.” They went on to say that without major changes to Social Security, it will begin to fall short in 2017 and will only be able to fund 74% of benefits by 2041. The suggested solution is to either increase taxes 15% or decrease benefits 13%, neither of which are good for retirement. To continue to live the same lifestyle that you are accustomed to, saving for retirement is essential.
Another Trip to the Doctor?
Not preparing for healthcare in retirement is something that we have recently had to think about. There is a good possibility of Medicare not being able to meet our needs in the future or we may need our own health insurance to carry us until Medicare kicks in. Being prepared to pay for premiums or medical expenses in retirement is becoming a necessity. A 2004 study found that an average retiree spent 22% of their income on healthcare costs. For someone on a $50,000 a year retirement income, this equates to $11,000 per year. Take that over a 25 year retirement and you are up to $275,000 for healthcare costs alone. Long-term care such as nursing homes or in home assistance is another cost that should be prepared for. With less and less employers covering healthcare in retirement, this is another area that is often overlooked when planning for the future.
Avoiding these financial mistakes will determine your quality of life in retirement. The next step is to get started. There are many brokerage firms that will educate you about your options at no cost. They can help you open a retirement account or determine if you are contributing enough to your current retirement account. The can also help you decide on what types of investments are appropriate given your age, timeframe and risk tolerance. The most important thing to remember is that it is never too late to start saving and even a little money set aside makes a big difference in the long run.
BORGES
Aug
19
HD – Dead Space Trailer
Filed Under Retirement | Comments Off
Doomsale asked:
HD2400 are below minimum system requirements) -Hard Drive: 7.5 GB free space -Sound: DirectX 9.0c compatible sound card Internet Connection, Online Authentication, and Acceptance of end user license agreement required to play. EA may retire online features after 30 days notice posted on www.EA.com … Dead space trailer issac gravity attack scare gun HUD suit ship alien zombie claw limb evacuate help communications explosion bomb grenade bullet special fight HD high definition good quality …
GRISWOLD
Aug
17
SBARTSTV asked:
Award-Winning Actress Patty Duke Supports Social Security Its So Easy, Even the ‘Cousins’ Can Do It Award-Winning Actress Patty Duke is Back and Ready to Retire Online Gone are the days of traveling to your local Social Security Administration (SSA) office and filling out a paper application to retire. With Retire Online, a fully automated process, applying for retirement benefits is easy and convenient. Award-winning Actress Anna Marie Patty Duke, and the Commissioner of the Social …
PAGAN
Aug
17
Filed Under Retirement | Comments Off
M.J. Joseph asked:
When deciding on a retirement community for you or a loved one, there are many factors to take into consideration. Where do you want to live? What type of community do you want to live in? How much can you afford? Here are several of the many important questions to ask yourself or your parents when trying to decide on a retirement community.
1. Where do you or a loved one want to live?
Location is the key to beginning a search for a retirement community. Do you want to stay in the same town, city or state that you live in now? Many seniors decide to move to a warmer climate to enjoy their retirement. However, some seniors would rather experience all four seasons or would rather stay in their area. Whatever your choice, deciding what part of the world you want to live in is very important in trying to find a retirement community.
2. What type of community do you want to live in?
There are many different types of communities that are now available for retiring seniors. Try learning more about these communities and deciding which is best for you:
Active Retirement Communities
Assisted Living Retirement Communities
Independent Living Retirement Communities
Continuing Care Retirement Communities
Alzheimer’s Care Communities
Skilled Nursing Care Retirement Communities
After you find what type of community you want to live in, check out the cost. Also, make sure to check accreditation, licensing and the credentials of each prospective community. You want to be living in the best place for you, and need to be extra safe in doing the research for the community.
3. How are the local services?
When searching for a retirement community, look for grocery stores, gas stations, churches, hospitals, salons, pharmacies and different shops to make life easier for when you do move.
4. What are some living amenities?
Many retirement communities offer different types of housing for seniors. Many seniors prefer to choose places with elevators, wide hallways, shower chairs and good lighting that include meal plans and wheelchair accessibility. Some seniors choose to live in a community that offers a very active lifestyle. Many of the active lifestyle communities include golf, tennis and swimming activities, and concentrate on health and fitness to help you enjoy your retirement. Some of these might not apply to you, so just write down the living amenities you prefer to live with, and use that as a frame of reference when looking for a retirement community.
5. Is this place safe?
It is always important to keep safety in mind when looking for any home. Ask the following questions:
Is there security personnel on staff at night?
Is the retirement community located within the confines of a gated community?
How are the locks on the main door?
When finding a new place to live, it is nice to get to know what the neighborhood is like before moving so you are not caught off guard a week after you move in. Most of the time, you can tell whether a place is safe by looking at. Be sure to check during different times of the day. Ask could-be neighbors, gas station clerks, staff members or check with the local police department to see if the community is an ideal place for you.
6. Is the staff friendly?
An important aspect of a retirement community is a friendly and helpful staff. Many times people overlook the staff members when deciding on a retirement home. Remember, these people will be a major part of your life! Make a visit to the community and speak with actual staff members. As you walk through the community, observe how staff members and residents interact with each other. You want your retirement to be enjoyable, and it can be a lot more fun if the staff members in your community are easy to interact with.
Just as you would tour a house or apartment before buying or renting, you should tour a prospective retirement community to see where you fit in. After all, this is going to be a place where you plan on enjoying your retirement! Be sure it is right for you!
VICKERY
When deciding on a retirement community for you or a loved one, there are many factors to take into consideration. Where do you want to live? What type of community do you want to live in? How much can you afford? Here are several of the many important questions to ask yourself or your parents when trying to decide on a retirement community.
1. Where do you or a loved one want to live?
Location is the key to beginning a search for a retirement community. Do you want to stay in the same town, city or state that you live in now? Many seniors decide to move to a warmer climate to enjoy their retirement. However, some seniors would rather experience all four seasons or would rather stay in their area. Whatever your choice, deciding what part of the world you want to live in is very important in trying to find a retirement community.
2. What type of community do you want to live in?
There are many different types of communities that are now available for retiring seniors. Try learning more about these communities and deciding which is best for you:
Active Retirement Communities
Assisted Living Retirement Communities
Independent Living Retirement Communities
Continuing Care Retirement Communities
Alzheimer’s Care Communities
Skilled Nursing Care Retirement Communities
After you find what type of community you want to live in, check out the cost. Also, make sure to check accreditation, licensing and the credentials of each prospective community. You want to be living in the best place for you, and need to be extra safe in doing the research for the community.
3. How are the local services?
When searching for a retirement community, look for grocery stores, gas stations, churches, hospitals, salons, pharmacies and different shops to make life easier for when you do move.
4. What are some living amenities?
Many retirement communities offer different types of housing for seniors. Many seniors prefer to choose places with elevators, wide hallways, shower chairs and good lighting that include meal plans and wheelchair accessibility. Some seniors choose to live in a community that offers a very active lifestyle. Many of the active lifestyle communities include golf, tennis and swimming activities, and concentrate on health and fitness to help you enjoy your retirement. Some of these might not apply to you, so just write down the living amenities you prefer to live with, and use that as a frame of reference when looking for a retirement community.
5. Is this place safe?
It is always important to keep safety in mind when looking for any home. Ask the following questions:
Is there security personnel on staff at night?
Is the retirement community located within the confines of a gated community?
How are the locks on the main door?
When finding a new place to live, it is nice to get to know what the neighborhood is like before moving so you are not caught off guard a week after you move in. Most of the time, you can tell whether a place is safe by looking at. Be sure to check during different times of the day. Ask could-be neighbors, gas station clerks, staff members or check with the local police department to see if the community is an ideal place for you.
6. Is the staff friendly?
An important aspect of a retirement community is a friendly and helpful staff. Many times people overlook the staff members when deciding on a retirement home. Remember, these people will be a major part of your life! Make a visit to the community and speak with actual staff members. As you walk through the community, observe how staff members and residents interact with each other. You want your retirement to be enjoyable, and it can be a lot more fun if the staff members in your community are easy to interact with.
Just as you would tour a house or apartment before buying or renting, you should tour a prospective retirement community to see where you fit in. After all, this is going to be a place where you plan on enjoying your retirement! Be sure it is right for you!
VICKERY
Aug
14
Filed Under Retirement | Comments Off
Brenda Cyr asked:
When it comes to preparing for your retirement, most people do not know where to begin, and so they put it off. Once they realize that retirement is on the horizon, they panic and commence looking for retirement planning tools that will make a plan for them. It is never too early, or too late, to start planning for your retirement, but the sooner you start, the less stress you will have.
A few people employ high-priced firms to prepare a plan for them, and other people might purchase complex software package to assist them to develop a plan. While there is a place for this type of assistance for retirement planning, there are also free tools that you are able to use to get started. Here are three free tools that will aid you in planning for your retirement.
1.Pen and Paper- This is the easiest tool you’ll be able to use, and the one that will create the greatest difference in planning for your retirement. Make a list of your income and expenses, and keeping track of where your money goes comprises the first step of determining how much you will be able to save for retirement. If you create this list, and discover that you have nothing left when you deduct your expenses from your take home income, then it is time to devote some serious thought to your budget. See if you can find several areas to cut back to save some money to invest into your retirement fund.
2.Your Workplace- Most people have forgotten the speech they received from the human resources department when they were hired. The one about benefits, pensions, savings plans and all of that. This is a good time to either pull out your employee handbook, or make an appointment to meet with somebody in the personnel department. You will discover loads of information about what is provided through your work, and how you can become eligible to obtain the maximum benefits once you retire. Many places also offer local investment firms that assist their employees with decisions and provide help for retirement planning. This is like having the best investment advice free.
3.The Internet- There are numerous retirement planning tools available free on the World Wide Web. The AARP internet site provides tools to help you work out how much your retirement plans will cost in real world dollars. CNN Money has free retirement planning tools that can assist you work out investments, income, savings, and retirement goals. There are also several investment and banking web sites that offer free help and tools to help you construct a solid retirement program.
These three tips will help you to begin planning your retirement. Allow some time every week to work on ways to step-up your retirement savings, and to dream about the kind of retirement you would like to have. Use these free retirement planning tools to help you increase your retirement savings so you will be able to have the stress-free retirement you deserve.
CHAMBERLAIN
When it comes to preparing for your retirement, most people do not know where to begin, and so they put it off. Once they realize that retirement is on the horizon, they panic and commence looking for retirement planning tools that will make a plan for them. It is never too early, or too late, to start planning for your retirement, but the sooner you start, the less stress you will have.
A few people employ high-priced firms to prepare a plan for them, and other people might purchase complex software package to assist them to develop a plan. While there is a place for this type of assistance for retirement planning, there are also free tools that you are able to use to get started. Here are three free tools that will aid you in planning for your retirement.
1.Pen and Paper- This is the easiest tool you’ll be able to use, and the one that will create the greatest difference in planning for your retirement. Make a list of your income and expenses, and keeping track of where your money goes comprises the first step of determining how much you will be able to save for retirement. If you create this list, and discover that you have nothing left when you deduct your expenses from your take home income, then it is time to devote some serious thought to your budget. See if you can find several areas to cut back to save some money to invest into your retirement fund.
2.Your Workplace- Most people have forgotten the speech they received from the human resources department when they were hired. The one about benefits, pensions, savings plans and all of that. This is a good time to either pull out your employee handbook, or make an appointment to meet with somebody in the personnel department. You will discover loads of information about what is provided through your work, and how you can become eligible to obtain the maximum benefits once you retire. Many places also offer local investment firms that assist their employees with decisions and provide help for retirement planning. This is like having the best investment advice free.
3.The Internet- There are numerous retirement planning tools available free on the World Wide Web. The AARP internet site provides tools to help you work out how much your retirement plans will cost in real world dollars. CNN Money has free retirement planning tools that can assist you work out investments, income, savings, and retirement goals. There are also several investment and banking web sites that offer free help and tools to help you construct a solid retirement program.
These three tips will help you to begin planning your retirement. Allow some time every week to work on ways to step-up your retirement savings, and to dream about the kind of retirement you would like to have. Use these free retirement planning tools to help you increase your retirement savings so you will be able to have the stress-free retirement you deserve.
CHAMBERLAIN