Retirement

How is your retirement plan coming along? Do you have enough money set aside to help cover expenses when your retire? Below are different resources offering advice on creating a retirement plan,  determining the best path to follow, planning for social security, and more. 

Disclaimer: Please note the information, resources and links are provided as a service to our readers only, and could be used as a guideline.  SeniorCitizensofOhio.com does not recommend or endorse any person, business or organization listed below. You should consult with a financial planner, attorney, or family member before making any investments or purchasing anything from these sources.  Remember, if it sounds too good to be true, it probably is.  

    • When Should You Retire?
      by Personal Capital » Retirement Planning on January 28, 2022 at 1:05 am

      When should I retire? What is the average retirement age? Those are questions most of us will ask ourselves at some point in life. A recent study shows that with the COVID-19 pandemic, many people have adjusted their retirement timeline. For the majority of people, retirement is something you achieve in your sixties or later after spending four decades or more working. But in recent years, the FIRE movement, which stands for Financial Independence Retire Early, has gained momentum with people leaving the workforce younger to enjoy a slower-paced lifestyle. But how does one determine when to retire? How do you prepare for retirement? What are the pros and cons of traditional vs. early retirement? Finding the Best Age to Retire The traditional retirement age is around age 65. However, the best age to retire does not exist. When to retire is a personal decision that depends on individual preparation. But have you ever taken the time to determine what retirement looks like for you? The right time to retire depends on if you have enough money invested in sustaining your retirement expenses. A great way to start is by estimating your retirement number and working backward from there. Tip: Use this free retirement calculator to see if your portfolio is likely to support your retirement goals. How Age Affects Retirement Savings Income Even though there’s no perfect age to retire, the earlier you start to invest for retirement, the better off you will be due to the effects of compounding returns. Indeed, by starting early, you’ll likely need to invest less towards retirement because your investments will have more time to accumulate earnings in the stock market. Read More: Why To Start Saving For Retirement In Your 20s However, there are incentives to encourage you to invest in your retirement age even if you start later in life. There are tax-advantaged retirement accounts that allow you to contribute more towards your retirement when you are 50 and older. For instance, the 2022 maximum annual employee contribution limit for 401(k), 403(b), most 457 plans is  $20,500, but there’s also a $6,500 catch-up contribution for any plan participant who is 50 and older. Read More: How 401(k) Catch-Up Contributions Work Another way age affects your retirement is when it comes to social security benefits. There’s a concern that depending on when you retire, you might not get many benefits from Social Security. According to a 2020 Social Security Administration Trustees Report, by 2034, payroll taxes which provides most of the money for social security benefits is only expected to cover 78% of scheduled benefits. In addition, even though social security benefits eligibility starts at age 62, to maximize your social security benefits, you should wait until age 70 to take social security benefits. Postponing taking Social Security until age 70 makes your monthly benefits 32% larger than it will be at your full retirement age.  Keep in mind this is dependent on health and longevity factors as well, which is unique to each individual. Pros and Cons of Retiring at Different Ages No matter what age you retire, there are benefits and drawbacks to the various options. There are some aspects to consider. Pros and Cons of Early Retirement  Early retirement is when you retire before the traditional retirement age, which depending on when you were born, can be age 65, 66, or 67. The common perception is that retirement is something a person does in their older years – sixties or later. But, with the rise of the FIRE movement, more people are considering retirement at a younger age. The FIRE movement encourages people to become financially independent by generating enough passive income at a younger age to cover their expenses. Read More: How I Reached Coast FIRE While Raising 3 Kids There are pros and cons associated with early retirement. The most vivid argument for early retirement is not waiting until you’re older to slow down in life, travel the world, and take on any other projects instead of when you’re younger and most likely healthier. With early retirement, you can enjoy a more relaxed life while you’re younger.   Slowing down can positively impact your health, especially if you usually work long hours. However, retiring early can be a challenging social adjustment, especially if your friends are still working. It also requires a more aggressive financial plan before 62; social security can’t be part of your retirement plan. In addition, with early retirement, you must anticipate higher healthcare costs than you would pay in an employer-sponsored healthcare plan as you need to be 65 to be eligible for Medicare. Therefore, your early retirement plans must include a thorough analysis of healthcare costs and include the higher expense in your budget. When you retire early, you also have to save money to last a longer time period, which adds additional pressure. For instance, when you retire at 65, you may be able to make 30-year retirement plans to 95, but if you were to retire at 55, your plan would add another ten years. Pros and Cons of Retiring at the Traditional Age When you retire at a more traditional age in your mid-60s, you have more years to contribute towards retirement and accumulate compound interest. When you enjoy your job, you may not be eager to retire at the traditional age and might consider a late retirement. However, the older you are, the more likely you are to have health issues at retirement that may negatively impact the quality of your retirement. But for other people who may not have started investing in their retirement early or may be facing financial hardships, delayed retirement is the only option. Retirement Milestones There are a few milestones to keep in mind as you plan for your retirement. At age 55, you are eligible to start withdrawing your retirement plan savings without penalty if you leave your job or retire. At age 59 ½, you can make withdrawals from qualified IRAs without incurring penalties from the IRS as long as the plan allows it. At age 62, you’re eligible to start receiving Social Security benefits. However, if you elect to receive your benefits this early, the benefits will be reduced to approx 75% of what you would have received at 70. At age 65, you are eligible for Medicaid coverage. At age 66 or 67, you’re eligible for full retirement benefits, depending on when you were born. 70 is the latest age to start receiving social security benefits. By age 70 ½, or 72, you have to start taking required minimum distributions from tax-deferred retirement accounts, depending on when you were born. The Bottom Line There’s no ideal retirement age. Traditional and early retirement both have pros and cons. You have to look at your situation and decide which option is more appealing – and feasible – in your life. However, an alternative option to consider is semi-retirement: cutting back hours to do something different. It can allow you space to spend more time with loved ones, pursue a different career path, work on a passionate project, or start a business without the pressure of replacing your full-time income. Preparing for retirement is part of your overall financial plan. You can take a few actions now to get yourself on the right track. Download 65 Ways to Retire Smart, an actionable guide with insights from fiduciary financial advisors. The guide is free. Sign up for the Personal Capital Dashboard. Millions of people use these free and secure professional-grade online financial tools. You can use them to see all of your accounts in one place, analyze your spending, and plan for long-term financial goals. Consider talking to a fiduciary financial advisor for more detailed guidance on your retirement saving strategies. Get Started with Personal Capital’s Retirement Planner   Author is not a client of Personal Capital Advisors Corporation and is compensated as a freelance writer. The content contained in this blog post is intended for general informational purposes only and is not meant to constitute legal, tax, accounting or investment advice. Compensation not to exceed $500. You should consult a qualified legal or tax professional regarding your specific situation. Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money. Any reference to the advisory services refers to Personal Capital Advisors Corporation, a subsidiary of Personal Capital. Personal Capital Advisors Corporation is an investment adviser registered with the Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training nor does it imply endorsement by the SEC.

    • Creating Opportunities In A Market Correction: Rebalance, Roth, And Crypto
      by Forbes » Retirement on January 27, 2022 at 8:56 pm

      The market has started to create a ‘correction’ or a 10% decline. As of 1/24/22, the NASDAQ was in correction, the S&P 500 was down about 11.1% (from 1/3/22), and many cryptos are down as much as 50%. Down markets can be psychologically painful but can also provide significant opportunities.

    • Retirement Income: Making Your Money Last a Lifetime
      by Baby Boomer Retirement on January 27, 2022 at 8:54 pm

      Currently in the U.S., the typical Baby Boomer between the ages of 65 and 74 in the U.S. has financial assets with a median value of about $50,000 in 2019 values, according to the Federal Reserve.  This sum, in addition to your Social Security benefits and any other pensions you will receive, needs to last the rest of your life. How can you turn these assets and income sources into a comfortable retirement? Most retirees worry that they will spend their money too quickly, leaving them destitute at the end of their life. As a result, they are looking for a practical way to make sure their assets last as long as they do. What can you do to reduce your risk of outliving your money, while still being able to benefit from the money you have managed to put aside for your retirement? Compare Your Retirement Expenses to Income Your first step is to total up how much it costs you to live each month, including occasional expenses such as the cost of travel, home repairs, medical bills, and property taxes.   Then, total up the amount you will receive in Social Security benefits and other pensions, and compare the two figures.  Hopefully, the comparison of your income to your expenses will be very close. If not, you will either have to cut your cost of living, or make up the difference by increasing your income or retirement assets.  Even if the gap initially seems large, don't panic!  There are many ways to make up the difference. How to Cut Your Expenses Your first step is to cut your expenses, especially if you do not have a large amount of retirement savings. There are a number of ways to do this. Here are just a few suggestions: Downsize to a less expensive home, OR, if possible, pay off your current mortgage, OR refinance the mortgage so your payments are much lower.  Any of these changes could save you hundreds of dollars a month. Switch from original Medicare and an expensive Medicare Supplement plan and change to a Medicare Advantage plan, instead.  This could save you hundreds of dollars a month. Get rid of your current landline phone service, and use your cell phone, only. Look for the least expensive plans you can find for cell phone service, cable television, internet access and similar services you use. Eliminate rarely used streaming services and similar small expenses that have a way of adding up quickly. However, try not to eliminate services which you find useful, or that bring you pleasure, or that improve your safety and security. Consider a Reverse Mortgage If you want to remain in your current home, and have a large amount of equity in the house, you might consider getting a reverse mortgage which you could use to pay off your remaining mortgage without requiring you to make payments on the loan.  The downside of this is that the principal on the loan will remain, and interest on the loan will accumulate until you move out of the house.  By that time, the interest could have eaten up your equity, not leaving you anything to pass on to your heirs.   You can avoid the accumulating interest by making small payments on the second mortgage, if you can afford to.  However, before entering into a reverse mortgage, you should thoroughly investigate how much interest would accumulate, how much the monthly payments would be if you wanted to pay the interest off each month, and any other questions you have. While a reverse mortgage is not right for everyone, for some retirees it is a good way stay in their homes for the rest of their lives.  The older you are when you begin a reverse mortgage, the better choice this is, because there will be less time for the interest to accumulate and eat up your equity.  How to Increase Your Income Once you have reduced your expenses as much as you comfortably are able to, then you need to look at your options for increasing your income. The longer you work before you begin to collect your Social Security and pension benefits, up until age 70 for a worker and the mid-60s for widow's benefits, the more money you will receive each month.  If you are concerned about having a shortfall in retirement income, wait as long as possible to begin collecting these benefits. If you have already retired, another way to increase your income is to continue to work part-time after you leave your full-time pre-retirement job. There will be a cap on how much money you can earn, at first, if you are working and collecting Social Security simultaneously, prior to your full retirement age. However, this cap goes away once you are at your full retirement age.  This is another good reason to wait to collect your Social Security benefits.   If you have not retired yet, check the specific age limits at the time of your planned retirement, so you know if you will have a temporary cap on your earnings.  Once you are able to get your Social Security benefits and work without an income cap at the same time, the extra money could make you much more comfortable.  It could also help you continue to build up your savings, so you will have more money available when you no longer are able to work. Find an Easy Part-time Job Consider part-time jobs you can do from home or which will not be too exhausting for you.  For example, you may be able to tutor people online or help neighborhood children with their homework, give lessons in some skill you have (music, art, cooking, etc.), or sell your crafts or artwork.  Depending on your life and work experience, you might also be able to help people prepare their taxes, or deal with common computer problems, or be a dog walker or pet sitter.  If you like to write, you could consider writing online articles for a site like TextBroker. Do Not Get Scammed! You should not have to pay anyone anything in order to get a part-time job from home.  If someone asks you to buy something, it is a scam.  Start your own little home business, or work for a reputable company.  Check it out carefully with the Better Business Bureau and by looking for online reviews.  Decide How Much Money to Withdraw from Savings Each Year If your Social Security Benefits and pension will not cover your expenses, you can further enhance your income by using a small portion of your savings each month to make up the difference. The younger you are when you begin dipping into your savings to cover expenses, the less you will be able to use, so wait as long as you can before taking this step.  If you are in your 60's, it is advisable that you begin by taking out no more than 3% a year from your savings.  Each year, you can take an additional .03% of the total remaining balance to help compensate for inflation. Doing this, the money should last as much as 33 years or more, depending on the interest, dividends and asset appreciation over the years.  If you have a 401(k) or an IRA, you will not be required to start taking minimum distributions from those accounts until you are in your 70s (they periodically increase the age of these required distributions).  However, if you want to begin to enjoy the benefits of your savings before that age, and you feel you can afford it, you are not required to wait that long.   If you are able to wait until you are in your 70's before you start dipping into your financial assets, you could begin taking 4% a year, increasing it by .04% of the total remaining balance each year.  In this way, your money will last another 25 years or more.  Make sure you take out at least enough to meet the Required Minimum Distribution, so you do not get hit with a surprise tax bill on your assets.  Finally, if you are in your late 70s or older before making withdrawals, or if you have a reason to believe you are nearing the end of your life, you can start removing 5% a year, increasing the amount by .05% a year of the total remaining balance.  In this way, your money could last 20 or more years, which will meet the lifetime needs of most people. For a more detailed approach on how to make your money last during retirement, you will want to read, "How to Make Your Money Last: The Indispensable Retirement Guide." (Ad) It delves much deeper into the specifics of making sure you have a financially secure retirement.   Don't Forget to Set Aside an Emergency Fund Life comes with surprises, as we all know.  Over the years, you may need to purchase a new car or repair the old one, or you may have an adult child move in with you because of a setback in their life.  You may develop an expensive health problem, need to travel to see a sick relative, or decide to help a grandchild.  You may even need to hire a caregiver for a short time.  If you begin to dip excessively into your total assets to cover these expenses, you could face a major shortfall in the future, if you are not prepared. As a result, it is good advice to continue to set aside a portion of your income in an emergency savings account.  In fact, if you have adequate financial assets at the beginning of your retirement, you may find it helpful to set aside at least $5,000 to $10,000 in an emergency fund from the very beginning, so you are not forced to sell stocks when they are down.  Add to this fund whenever you can, and only remove money from it in a true emergency.  This extra emergency account will reduce your fear that you might need to dramatically cut the amount you can safely remove from your retirement savings each month. Interesting Statistics About Retirement Savings About 75% of grandparents have admitted that they are willing to offer financial help to their families. (Make sure your own expenses are covered first, though. Supporting adult children is one of the most common drains on the finances of retirees.) About one-third of retirees have more financial assets 17 to 18 years AFTER they retire than they did at the beginning.  This is because they often continue to save money and only use a small portion of their dividends to cover their expenses, which allows their assets to continue to grow.  This means that, with careful planning, you can become more financially secure the older you get.  Many retirees overestimate what their expenses will be after they retire.  After the first few years, they may find that they are not traveling and entertaining as much as they did when they were younger. Since the recession of 2008, there has been an increase in the purchase of multigenerational homes.  Because housing averages about 35 percent of the spending for people over age 65, sharing a home with an adult child can save a retiree a lot of money.  Another helpful guide to financial planning for retirement is the book "The Ultimate Retirement Guide for 50+: Winning Strategies to Make Your Money Last a Lifetime." (Ad)  Good planning is essential in your quest to not outlive your savings. Bottom Line:  If you cut your expenses, work as long as you can, build your pensions, and grow your savings, you can have a comfortable retirement.  Most of the recommendations in this article came from an AARP Magazine article dated April/May 2021. Enjoyed this post? Never miss out on future posts by following us.  You will receive a weekly email with the most current post.  If you are interested in learning more about retirement, Medicare, Social Security, common medical issues as we age, financial planning, where to retire and more, use the tabs or pull down menu at the top of the page to find links to hundreds of additional helpful articles.Disclosure: This blog may contain affiliate links. If you decide to make a purchase from an Amazon ad, I'll make a small commission to support this blog, at no extra cost to you. You are reading from the blog:  http://www.baby-boomer-retirement.com Photo credit:  Pixabay - Mohamed Hassan photographer

    • Retiree Organization Tells Election Assistance Commission to Follow the Law
      by Retired Americans on January 27, 2022 at 8:05 pm

      Requiring Voters to Provide Full Social Security Numbers to Register to Vote Violates the National Voter Registration Act and the Voting Rights Act Washington – The Alliance for Retired Americans today called on the U.S. Elections Assistance Commission (EAC) to stop permitting state elections offices to require that people provide their full Social Security numbers when submitting a voter registration form, explaining in a public comment letter that such requirements violate federal laws that protect the right to vote and prevent identity theft and fraud. “The U.S. Election Commission has allowed at least four states to violate the U.S. Constitution and several federal laws by requiring the collection of full Social Security numbers on their voter registration forms,” said Richard Fiesta, Executive Director of the Alliance for Retired Americans. “Requiring this personal information is unconstitutional and is prohibited under federal law. “This practice creates a burden for Americans trying to exercise their constitutional right to vote and also puts them at a higher risk of identity theft, financial scams and fraud,” Fiesta continued. “Voter registration information is publicly available, and Americans should not be forced to put their personal information and identity at risk in order to register to vote.” In comments submitted to the EAC, the Alliance noted that the proposed information to be collected through the Election Assistance Commission (“EAC”) National Voter Registration Form violates: The National Voter Registration Act and the Voting Rights Act, since full Social Security numbers are not necessary or material to determining an applicant’s eligibility to vote; The Privacy Act of 1974, which prohibits any federal, state, or local government agent from “deny[ing] to any individual any right, benefit, or privilege provided by law because of such individual’s refusal to disclose his Social Security account number”; The Fourteenth Amendment of the U.S. Constitution by imposing unconstitutional burdens on the right to vote in Tennessee, Kentucky, New Mexico, and Virginia by asking voters to put themselves at risk of identity theft in order to cast a ballot; and The First Amendment of the U.S. Constitution by infringing on the speech and association rights of voter advocacy organizations. “The Election Advisory Commission’s mission is to help states understand and comply with federal voting and election law. It should not direct states to violate the Constitution or federal laws. This guidance is both unconstitutional and dangerous, and should be corrected immediately,” Fiesta stated. ### Contact: Lisa Cutler, lcutler@retiredamericans.org The post Retiree Organization Tells Election Assistance Commission to Follow the Law appeared first on Retired Americans.