social security http://www.wisebread.com/taxonomy/term/3387/all en-US 7 Easiest Ways to Catch Up on Retirement Savings Later in Life http://www.wisebread.com/7-easiest-ways-to-catch-up-on-retirement-savings-later-in-life <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/7-easiest-ways-to-catch-up-on-retirement-savings-later-in-life" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/investing_money_for_retirement_in_piggy_bank.jpg" alt="Investing money for retirement in piggy bank" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>According to a survey by the Employee Benefit Research Institute, three in 10 workers report that preparing for retirement causes them emotional distress. Why? Well, because most people feel they are sorely behind when it comes to retirement savings.</p> <p>The Economic Policy Institute reports that baby boomer families, on average, have just a little over $160,000 saved for retirement. With longer life spans, inflation, and increasing health care costs, it's possible that many retirees won't have enough to comfortably sustain their retirements.</p> <p>If you feel behind with your retirement savings, you may be panicking. However, there's hope for you. If you're open to suggestions, a few smart moves will help you catch up on savings even late in the game. (See also: <a href="http://www.wisebread.com/7-retirement-planning-steps-late-starters-must-make?ref=seealso" target="_blank">7 Retirement Planning Steps Late Starters Must Make</a>)</p> <h2>1. Change your mindset</h2> <p>One of the best ways to take the pressure off catching up with retirement savings is to change your mindset.</p> <p>Rob Hill, owner of financial advisory firm R. Hill Enterprises, Inc., helps people plan for retirement and other stages of life. He says that in order to catch up with your savings, you need to first be more flexible with your idea of retirement. &quot;The first thing I would suggest is not looking at retirement as an age, but rather a financial position,&quot; he says.</p> <p>Hill explains that focus can ease anxiety and make a catch-up goal more feasible for some. He explains, &quot;The goal of retirement is not a pile of assets, it is cash flow that makes retirement possible.&quot;</p> <p>If you look at retirement in this light, you may discover you have more retirement runway than you thought and that building up your nest egg is a little more possible.</p> <h2>2. Make catch-up contributions</h2> <p>If you're over 50 years old, you can contribute more than usual to your 401(k). For 2018, employees within the age guidelines can contribute $18,500 plus a catch-up contribution of $6,000, for a total of $24,500. This approach can be even more helpful if your employer offers a match.</p> <p>Kevin Ward, of Park Elm Investment Advisors, notes another way to save: an IRA &mdash; either a traditional IRA or a Roth IRA. &quot;Aside from your employer-sponsored plan, you can save $5,500 in an IRA,&quot; he says. &quot;For those over 50, there is an additional catch-up contribution of $1,000, for a total of $6,500.&quot; (See also: <a href="http://www.wisebread.com/6-ways-meeting-the-2018-401k-contribution-limits-will-brighten-your-future?ref=seealso" target="_blank">6 Ways Meeting the 2018 401(k) Contribution Limits Will Brighten Your Future</a>)</p> <h2>3. Contribute to a health savings account (HSA)</h2> <p>Though HSAs were created as savings vehicles for health care expenses, there are some tax advantages and treatments that can make this type of account a supplemental retirement option. In order for you to open an HSA, you must have a qualified health care plan, like a high deductible health plan (HDHP).</p> <p>Shobin Uralil, founder of HSA management platform Lively, says placing money in an HSA has many benefits and &quot;loopholes&quot; that make this a great addition for retirement savings.</p> <p>&quot;You can save pretax money and then use pretax dollars to pay for qualified out-of-pocket medical expenses,&quot; he says. &quot;After the age of 65, you can use HSA funds for anything you want, not just qualified out-of-pocket medical expenses.&quot;</p> <p>It's also worth noting that HSAs have no mandatory distributions in retirement so you can save into your 70s, 80s, and beyond. This is helpful for anyone behind on retirement saving and needing more time to save. (See also: <a href="http://www.wisebread.com/how-an-hsa-could-help-your-retirement?ref=seealso" target="_blank">How an HSA Could Help Your Retirement</a>)</p> <h2>4. Be frugal</h2> <p>You might be excited about the idea of saving more money, but wondering how you'll actually achieve those higher savings rates. Your best bet is to reduce your current lifestyle expenses. Of course, you'll want to adjust your spending to a level that is comfortable for you. But keep in mind the ultimate goal of having enough money to support your retirement.</p> <p>The options for saving money are unlimited. With some creativity and motivation, you should be able to find some frugal habits that will help you make your savings goals &mdash; everything from downsizing your home, to eating out only once per month. (See also: <a href="http://www.wisebread.com/6-ways-you-can-cut-costs-right-before-you-retire-0?Ref=seealso" target="_blank">6 Ways You Can Cut Costs Right Before You Retire</a>)</p> <h2>5. Postpone collecting Social Security</h2> <p>This is another strategy that can help you earn more income during retirement. The Social Security Administration reports that postponing Social Security benefits past your full retirement age can boost future payments by up to 8 percent for every year the income is deferred until age 70.</p> <p>Tom Foster, national spokesperson at MassMutual, works with financial advisers and employers to educate them about 401(k) plans. He recommends postponing Social Security benefits because the returns are pretty significant if you can hold off. He notes, &quot;Few investment strategies net such a return, never mind one with a guarantee.&quot; (See also: <a href="http://www.wisebread.com/6-smart-ways-to-boost-your-social-security-payout-before-retirement?ref=seealso" target="_blank">6 Smart Ways to Boost Your Social Security Payout Before Retirement</a>)</p> <h2>6. Keep working</h2> <p>A 2013 Georgetown University study estimates that there will be as many as 55 million job openings by 2020 due to baby boomers retiring and leaving the workforce. So the chances are, there will be plenty of demand for those who want to stick around and work longer.</p> <p>Fortunately, we live in a wonderful time where the internet allows people to work longer, under flexible conditions from almost anywhere in the world. If you can keep working longer, it will add to your potential to save up even more money. (See also: <a href="http://www.wisebread.com/4-creative-remote-jobs-that-can-supplement-your-retirement-income?ref=seealso" target="_blank">4 Creative Remote Jobs That Can Supplement Your Retirement Income</a>)</p> <h2>7. Keep investing</h2> <p>It used to be that people drastically reduced their investment portfolios in anticipation of their &quot;golden years.&quot; In order to reduce the risk of losing the principal amount of their savings, a retiree might be prompted to go with a very conservative investing strategy by keeping their assets in cash, bonds, or a combination of both.</p> <p>Nowadays, people are living and working longer and may be able to invest and save more aggressively for longer periods of time.</p> <p>Cliff Caplan, CFP at Neponset Valley Financial Partners, suggests that people needing to save more should continue to invest for growth. &quot;Establish and continually fund a growth-oriented account that can benefit from lower long-term capital gains treatment,&quot; he says. &quot;Dollar cost averaging can also be used to reduce volatility in a portfolio.&quot; (See also: <a href="http://www.wisebread.com/7-reasons-to-invest-in-stocks-past-age-50?ref=seealso" target="_blank">7 Reasons to Invest in Stocks Past Age 50</a>)</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/aja-mcclanahan">Aja McClanahan</a> of <a href="http://www.wisebread.com/7-easiest-ways-to-catch-up-on-retirement-savings-later-in-life">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-roadblocks-to-retirement-and-how-to-clear-them">7 Roadblocks to Retirement (And How to Clear Them)</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-signs-youre-making-all-the-right-moves-for-retirement">8 Signs You&#039;re Making All the Right Moves for Retirement</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-save-for-retirement-when-you-are-unemployed">How to Save for Retirement When You Are Unemployed</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-reasons-to-invest-in-stocks-past-age-50">7 Reasons to Invest in Stocks Past Age 50</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-signs-its-time-to-retire">8 Signs It&#039;s Time to Retire</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401(k) catching up contributions cutting expenses HSA IRA late starters risk saving money social security stocks Tue, 16 Jan 2018 10:00:06 +0000 Aja McClanahan 2085769 at http://www.wisebread.com What to Do if You're Laid Off Before You Retire http://www.wisebread.com/what-to-do-if-youre-laid-off-before-you-retire <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/what-to-do-if-youre-laid-off-before-you-retire" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/desperate_fired_businessman_overwhelmed_with_thoughts.jpg" alt="Desperate fired businessman overwhelmed with thoughts" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>You had a plan. You were going to work for a few more years, and head gracefully and gleefully into retirement. But your company didn&rsquo;t cooperate. You&rsquo;ve found yourself laid off, and wondering what to do next.</p> <p>The job market is tough for older people, and if you are a few years away from your intended retirement date, you may be unsure of the best next steps. Can you retire early? If not, what jobs are out there for people your age? Do you even want to work full-time anyway?</p> <p>Everyone&rsquo;s situation is different, but there are options for older people who find themselves laid off before their planned retirement.</p> <h2>Look for a new full-time job</h2> <p>There&rsquo;s no question that folks over 50 may have a tough time in the job market. Ageism exists, especially in fields where employers assume young people will have more technical skills. But it&rsquo;s entirely possible to find a new position, and there are companies that will value the experience and knowledge of an older worker.</p> <p>The American Association of Retired Persons (AARP) names several great jobs for people over 50, including accountant, personal trainer, landscaper, and interpreter. Just keep in mind that it may take weeks or even months to land a position you want. This is why it&rsquo;s important to maintain an emergency fund with at least three to six months' worth of living expenses.</p> <h2>Find a fun part-time job</h2> <p>Recently, my family and I went to Pittsburgh and took a tour of the ballpark. Most of the tour guides were older men who appeared excited to be there, and the team seemed to appreciate the knowledge and enthusiasm they brought to the job.</p> <p>If you feel like you need to work to stay busy and bring in some dollars, but don&rsquo;t need to work full-time, try to find something that channels your passion. Maybe it&rsquo;s working outside doing landscaping or lawn care. Perhaps it&rsquo;s doing home improvement work, or tutoring students in English. If you can find something you enjoy and get paid for it, that may be better than landing a full-time job. (See also: <a href="http://www.wisebread.com/6-great-retirement-jobs?ref=seealso" target="_blank">6 Great Retirement Jobs</a>)</p> <h2>Seek consulting gigs</h2> <p>While companies aren&rsquo;t always eager to hire older workers on a full-time basis, they have been known to rely on them for expertise on a contract basis. Companies still must rely on older workers who have institutional knowledge and some specific experience. In fact, it&rsquo;s not unheard of for workers to be laid off only to return as a consultant, doing similar work. (I once met a guy who was brought back and found himself sitting at his same old desk!)</p> <p>If you do find yourself laid off, consider marketing your services on a contract or as-needed basis. You may be surprised at how lucrative some of these opportunities are, and you will have some job flexibility that may help you phase into retirement for good.</p> <h2>Adjust your budget</h2> <p>The good news about being laid off when you are older is that your living expenses are generally lower. But you&rsquo;ll still need to reduce your spending if you find yourself without a job. Track all of your expenses and see where you can cut costs. Savings may come from canceling your cable TV subscription, or reducing your food budget. You may save money on gas and other car expenses if you aren&rsquo;t working. You&rsquo;d be surprised where you can find ways to cut costs, and you may even find that you will be comfortable with a lower standard of living, allowing you to retire for good. (See also: <a href="http://www.wisebread.com/6-ways-you-can-cut-costs-right-before-you-retire-0?ref=seealso" target="_blank">6 Ways You Can Cut Costs Right Before You Retire</a>)</p> <h2>Go ahead and retire</h2> <p>Perhaps you planned to stop working at 63, but you were laid off at 59. You may think you need to keep working to hit your retirement savings goal, but you might be much closer than you think. Maybe your savings goal was larger than necessary and you&rsquo;re actually right on target. Perhaps you only need to make modest adjustments to your standard of living, like reducing your spending for a few years, or adjusting your investment strategy to boost your income now while still growing your nest egg.</p> <p>You may find yourself retired early, but those few years may not make much of a difference. If you have a financial adviser, talk with them about how to make your money work for you <em>now </em>and last a little longer. Your adviser may also be able to help you avoid any penalties and taxes from withdrawing money from your retirement accounts early. (See also: <a href="http://www.wisebread.com/5-ways-to-handle-a-forced-early-retirement?ref=seealso" target="_blank">5 Ways to Handle a Forced Early Retirement</a>)</p> <h2>Check if you can collect Social Security</h2> <p>Let&rsquo;s say you find yourself laid off at age 62. The good news is that you are old enough to begin receiving Social Security benefits, though your payments will not be as high as they would be if you waited another five years (until your full retirement age). At age 62, you&rsquo;ll receive about 70 percent of the maximum monthly benefit.</p> <p>If you can wait until you are older to collect, you&rsquo;ll end up receiving more benefits in the long run. But even a partial benefit is better than nothing, and may allow you to retire early. (See also: <a href="http://www.wisebread.com/5-questions-to-ask-before-you-start-claiming-your-social-security-benefits?ref=seealso" target="_blank">5 Questions to Ask Before You Start Claiming Your Social Security Benefits</a>)</p> <h2>Identify passive income sources</h2> <p>If you are unable to find a new job or unsure if you want to return to the workforce, it may be time to get creative in how you make money. It&rsquo;s entirely possible to earn money without a &ldquo;real&rdquo; job, if you know where to look. Adjusting your investment portfolio to earn money from dividend stocks is a popular option among older Americans. With dividends, companies pay a portion of their income to shareholders, and returns can be much higher than interest from the bank.</p> <p>Real estate can offer a passive income source as well. If you have the funds to buy an investment property, consider renting it out and earning money from tenants. (Just keep in mind there may be some work and expense associated with ownership.)</p> <p>If you are computer savvy, you may be able to make money from blogging or hosting videos on YouTube. This content can earn you money from advertising long after you&rsquo;re done producing it.</p> <p>The job market may be tougher for older citizens, but that doesn&rsquo;t mean you can&rsquo;t earn money. And who knows? Some of these sources may be able to continue to bring you income even after you retire for good. (See also: <a href="http://www.wisebread.com/5-ways-to-make-passive-income-online?ref=seealso" target="_blank">5 Ways to Make Passive Income Online</a>)</p> <h2>Start a business</h2> <p>Maybe you spent your work life wishing you could be your own boss, but the stars never quite aligned. Perhaps now is the time to take the plunge and become an entrepreneur. There&rsquo;s obviously some risk in starting a business, but you may be at a point in your life where you have some money saved and relatively low living expenses. You may have years of work experience that you can bring to the table to get the business launched, and you can now set your own work schedule.</p> <p>Your business doesn&rsquo;t necessarily have to involve starting the next Amazon.com. It might be something more low key, like a math tutoring business, a small handyman company, or selling handmade items.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/what-to-do-if-youre-laid-off-before-you-retire">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-plan-for-a-forced-early-retirement">How to Plan for a Forced Early Retirement</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-things-you-need-to-do-if-youre-retiring-in-2018">6 Things You Need to Do if You&#039;re Retiring in 2018</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-ways-to-handle-a-forced-early-retirement">5 Ways to Handle a Forced Early Retirement</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-retiring-with-debt-isnt-the-end-of-the-world">Why Retiring With Debt Isn&#039;t the End of the World</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-american-cities-where-you-can-retire-on-just-social-security">5 American Cities Where You Can Retire On Just Social Security</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement budgeting consulting entrepreneurship forced retirement laid off loss of income part-time jobs passive income side gigs social security Fri, 12 Jan 2018 09:30:09 +0000 Tim Lemke 2074049 at http://www.wisebread.com Why Playing It Safe With Your Money Is Actually Risky http://www.wisebread.com/why-playing-it-safe-with-your-money-is-actually-risky <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/why-playing-it-safe-with-your-money-is-actually-risky" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/retirement_chances.jpg" alt="Retirement chances" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>The stock market has had a good run lately, but all good things come to an end eventually. And many of us remember a time not too long ago when a big crash wiped out billions of dollars in investment gains.</p> <p>Fear of a downturn, however, should not be an excuse to get too conservative in your investment approach. While it may be tempting to avoid stocks and keep all your money in cash and bonds, there is a real risk that you may find yourself without enough saved for retirement.</p> <p>While many of us may view stocks as &ldquo;risky&rdquo; investments, the more risky move is to play it too safe. Here&rsquo;s why.</p> <h2>1. You may live a long time</h2> <p>It was once common for someone to work into their 60s and pass away in their 70s. It wasn&rsquo;t necessary to prepare for a retirement of more than 15 years or so. But now, there are many cases of people living into their 90s and beyond. In fact, it&rsquo;s not unheard of to have a retirement that lasts longer than your work life. Are you on track to save enough to last 30 or 40 years?</p> <p>Accumulating enough for this length of time requires the investor to expand their risk tolerance and invest largely in stocks, especially earlier in life. It&rsquo;s OK to shift to some cash and bonds later, but going too conservative will leave your nest egg short of what you need. (See also: <a href="http://www.wisebread.com/7-reasons-to-invest-in-stocks-past-age-50?ref=seealso" target="_blank">7 Reasons to Invest in Stocks Past Age 50</a>)</p> <h2>2. Interest rates are low</h2> <p>You may be tempted to put money in a savings account or in certificates of deposit due to their safety. But bank interest rates and bond yields are still very low by historical standards. Consider that you&rsquo;ll be lucky to get a 1.5 percent annual yield from a savings account, while bond yields are between 1 and 3 percent. With rates this low, your money may barely grow faster than the rate of inflation if you don&rsquo;t invest in something more aggressive. It&rsquo;s fine to keep a sizable fund in cash in the event of an emergency, but keeping the bulk of your retirement fund in low-interest accounts is not the ticket to a comfortable retirement.</p> <h2>3. There&rsquo;s no pension to help you</h2> <p>We&rsquo;ve all heard stories of our parents and grandparents walking into retirement with a hefty pension that took care of them for however long they had left on Earth. Those days are gone. While many employers still contribute to retirement through 401(k) plans, their overall contribution is less than in the past, or at least partially dependent on you setting aside some of your own money. It&rsquo;s now up to the individual to set aside enough money for a comfortable retirement, and this may require taking some risk and investing in stocks with a potential for growth. Play it too safe, and you may find yourself short on cash later in life. (See also: <a href="http://www.wisebread.com/if-youre-lucky-enough-to-receive-a-pension-here-are-6-things-you-need-to-do?ref=seealso" target="_blank">If You're Lucky Enough to Receive a Pension, Here Are 6 Things You Need to Do</a>)</p> <h2>4. You may end up helping your kids</h2> <p>You may envision your retirement as a time spent traveling with your spouse, lounging on beaches, and doing crossword puzzles. In truth, it may be all that, plus a hefty dose of financial and child care support for your kids. A survey from TD Ameritrade revealed that millennial parents receive an average $11,000 annually from their own parents in the form of financial assistance or free child care. While these older citizens are eager to help their kids, 47 percent of them do admit that they have to make sacrifices in their own life to offer this assistance.</p> <p>In planning for your retirement, are you taking into account the possible expense of helping out your own kids? This assistance can add tens of thousands of dollars to your retirement costs, so it&rsquo;s important to have an investment strategy that is aggressive enough to take these costs into account. (See also: <a href="http://www.wisebread.com/are-you-ruining-your-retirement-by-spoiling-your-kids?ref=seealso" target="_blank">Are You Ruining Your Retirement by Spoiling Your Kids?</a>)</p> <h2>5. Future benefits aren&rsquo;t guaranteed</h2> <p>You may be banking on Social Security and other government programs to help support you when you get older. We all hope they&rsquo;ll be in place when we retire, but the stability and future of those benefits is subject to the whims of our lawmakers. Social Security and Medicare both are facing long-term budget shortfalls, and many lawmakers have advocated for adjustments to benefits in order to ensure these programs remain solvent.</p> <p>It&rsquo;s impossible to predict what government benefits will exist for retirees decades into the future, but no one should assume they will remain as-is forever. Moreover, these benefits were never designed to support a robust, active retirement. By taking a more aggressive approach with your own saving and investing, you can accumulate enough to enjoy a good retirement regardless of what government benefits look like in the future. (See also: <a href="http://www.wisebread.com/5-sobering-facts-about-social-security-you-shouldnt-panic-over?ref=seealso" target="_blank">5 Sobering Facts About Social Security You Shouldn't Panic Over</a>)</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fwhy-playing-it-safe-with-your-money-is-actually-risky&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FWhy%2520Playing%2520It%2520Safe%2520With%2520Your%2520Money%2520Is%2520Actually%2520Risky.jpg&amp;description=Why%20Playing%20It%20Safe%20With%20Your%20Money%20Is%20Actually%20Risky"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/Why%20Playing%20It%20Safe%20With%20Your%20Money%20Is%20Actually%20Risky.jpg" alt="Why Playing It Safe With Your Money Is Actually Risky" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/why-playing-it-safe-with-your-money-is-actually-risky">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-make-sure-you-dont-run-out-of-money-in-retirement">How to Make Sure You Don&#039;t Run Out of Money in Retirement</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-plan-for-a-forced-early-retirement">How to Plan for a Forced Early Retirement</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-ways-to-protect-your-retirement-from-inflation">4 Ways to Protect Your Retirement From Inflation</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-roadblocks-to-retirement-and-how-to-clear-them">7 Roadblocks to Retirement (And How to Clear Them)</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-retirement-struggles-nobody-talks-about-and-how-to-beat-them">5 Retirement Struggles Nobody Talks About — And How to Beat Them</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment Retirement 401(k) plans benefits fear of investing growth inflation interest market downturns pensions risk social security Fri, 22 Dec 2017 10:00:06 +0000 Tim Lemke 2073022 at http://www.wisebread.com How to Plan for a Forced Early Retirement http://www.wisebread.com/how-to-plan-for-a-forced-early-retirement <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-plan-for-a-forced-early-retirement" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/mature_businesswoman_working_in_her_home_office.jpg" alt="Mature Businesswoman Working In Her Home Office" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Every working adult dreams of the day they can retire and take it easy. But for some, retirement is forced upon them sooner than expected. When this happens, a world of financial stress can follow.</p> <p>LIMRA Secure Retirement Institute found that 51 percent of workers retire between ages 61 and 65, while 18 percent retire even earlier than that. It may not have been in your plans to retire so soon, but life doesn't always go accordingly &mdash; things like declining health or caregiving for a loved one can force people to leave the workforce earlier than they anticipated.</p> <p>Retirement experts advise that in the face of this new trend, your retirement plan should include early retirement options and safeguards. Below are six things you can begin doing now to prepare for an unexpected early retirement.</p> <h2>1. Start planning early</h2> <p>Retiring just five years early &mdash; at age 60 versus 65 &mdash; can significantly impact the amount of income you may need to retire comfortably. One common retirement rule of thumb that can help you roughly determine how much you should save is the <em>four percent rule</em>.</p> <p>Financial experts believe you can safely withdraw about $4,000 a year per $100,000 of savings during retirement, and that would last you approximately 33 years. So, if your living expenses are $40,000 a year, you'd need to save $1 million. This simple rule does not account for inflation or other sources of income such as Social Security benefits, but experts believe it&rsquo;s a good baseline for gauging your retirement needs. (See also: <a href="http://www.wisebread.com/4-retirement-rules-of-thumb-that-actually-work?ref=seealso" target="_blank">4 Retirement &quot;Rules of Thumb&quot; That Actually Work</a>)</p> <p>Bumping up what you contribute to your retirement fund, even by just a few dollars a month, along with lowering your cost of living is a great way to prepare yourself and your family in case you have to retire prematurely.</p> <h2>2. Plan for inflation</h2> <p>While the four percent rule is a great place to start, if you know that early retirement is highly likely for you, you need to be more aggressive. Fidelity advises that your goal should be to save at least six times your current annual salary by the time you are 50, and 10 times your income by the time you are 67. If you are not near these targets, it&rsquo;s time to rearrange some things, rein in your spending, and begin aggressively saving.</p> <p>Another pitfall of retirement many people forget to plan for is inflation. Retirement investments have failed to keep pace with our aging population, Social Security cuts, and hedge against the investment risks brought on by the shift from traditional pensions to individual savings.</p> <p>When you retire, the world will be a more expensive place than it was while you were saving. You must understand and plan for the fact that $10 today will not buy the same thing in 2035. (See also: <a href="http://www.wisebread.com/4-ways-to-protect-your-retirement-from-inflation?ref=seealso" target="_blank">4 Ways to Protect Your Retirement From Inflation</a>)</p> <h2>3. Don&rsquo;t take Social Security early</h2> <p>In 2014, LIMRA found that 57 percent of men and 64 percent of women took their Social Security benefits early. But since monthly benefits rise five to eight percent annually between ages 62 and 70, the longer you can wait, the better off you'll be. For example, if your full retirement age is 66, but you begin collecting benefits early at 62, your benefit will be reduced by about 30 percent.</p> <p>In years past, once you hit 65, you were eligible for full Social Security benefits and could retire and receive a monthly check from the government. However, that is no longer the case &mdash; especially for younger workers who must put in more years to reach their full retirement age. Experts agree that you should only take your benefits early if you absolutely need to. Proper planning can prevent this from being your only option. (See also: <a href="http://www.wisebread.com/5-questions-to-ask-before-you-start-claiming-your-social-security-benefits?ref=seealso" target="_blank">5 Questions to Ask Before You Start Claiming Your Social Security Benefits</a>)</p> <h2>4. Consider a partial retirement option</h2> <p>&quot;Partial retirement&quot; simply means keeping a job on a part-time basis as a means to help stretch your retirement savings. By remaining in the workforce for a little while longer, you can defer retirement funds &mdash; such as Social Security, pensions, and even savings &mdash; until you decide to fully retire.</p> <p>Some places, such as government agencies, offer phased retirement plans. These plans allow you to supplement your income by working part time while still contributing to your retirement fund and allowing you to keep a portion of your benefit package. It&rsquo;s important to begin researching these things and understanding your options while you are able bodied. (See also: <a href="http://www.wisebread.com/4-reasons-you-might-have-a-phased-retirement?ref=seealso" target="_blank">4 Reasons You Might Have a &quot;Phased&quot; Retirement</a>)</p> <h2>5. Find a side gig</h2> <p>If your company does not offer a partial or phased retirement option, side gigs are a great way to supplement your income and help tide you over until you reach full retirement age. And while most side gigs don&rsquo;t come with benefits, you do get to set your own hours and work as you are able.</p> <p>Now is the time to look into different side or part time jobs that fit your ability, skill set, and situation. What interests and hobbies do you have that could become profitable? Write them down and research ways you can make money doing those things. You may also want to research jobs you could do from home that are not too physically demanding.</p> <p>Side gigs and part time jobs can also be good for your health. A 2016 Oregon State University study found that those who retire early die sooner than those who work beyond age 65. (See also: <a href="http://www.wisebread.com/9-easy-ways-retirees-can-earn-extra-income?ref=seealso" target="_blank">9 Easy Ways Retirees Can Earn Extra Income</a>)</p> <h2>6. Stick to a budget and pay off debt early</h2> <p>Surviving in retirement is not only dependent on how much you save, but also how much you spend. Most people have to scale back a bit during retirement due to a reduction in income. Scaling back after you retire is a tough thing to do. You have more free time to travel, indulge in hobbies, and spoil the grandkids rotten &mdash; all of which can quickly shrink your nest egg.</p> <p>Start now by creating and sticking to a conservative budget. The extra money you save should go into your retirement fund or toward paying down debt. Scale back on expenses where you can and consider downsizing before it's time to retire for good. Establishing disciplined spending habits now will carry over and benefit you later &mdash; when it really counts.</p> <p>A great way to reduce your overhead and free up some cash is to pay down your debt as quickly as possible and to get rid of your mortgage before you retire. The less debt you have, the more spending money you have. (See also: <a href="http://www.wisebread.com/6-ways-you-can-cut-costs-right-before-you-retire-0?ref=seealso" target="_blank">6 Ways You Can Cut Costs Right Before You Retire</a>)</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fhow-to-plan-for-a-forced-early-retirement&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FHow%2520to%2520Plan%2520for%2520a%2520Forced%2520Early%2520Retirement.jpg&amp;description=How%20to%20Plan%20for%20a%20Forced%20Early%20Retirement"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/How%20to%20Plan%20for%20a%20Forced%20Early%20Retirement.jpg" alt="How to Plan for a Forced Early Retirement" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/denise-hill">Denise Hill</a> of <a href="http://www.wisebread.com/how-to-plan-for-a-forced-early-retirement">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-to-do-if-youre-laid-off-before-you-retire">What to Do if You&#039;re Laid Off Before You Retire</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-roadblocks-to-retirement-and-how-to-clear-them">7 Roadblocks to Retirement (And How to Clear Them)</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-playing-it-safe-with-your-money-is-actually-risky">Why Playing It Safe With Your Money Is Actually Risky</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-ways-to-handle-a-forced-early-retirement">5 Ways to Handle a Forced Early Retirement</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-actions-women-can-take-right-now-to-get-their-retirement-on-track">5 Actions Women Can Take Right Now to Get Their Retirement On Track</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement benefits budgeting early retirement extra income financial planning forced retirement inflation phased retirement saving money social security Mon, 11 Dec 2017 09:30:10 +0000 Denise Hill 2068119 at http://www.wisebread.com How Divorce Can Impact Your Social Security Payments http://www.wisebread.com/how-divorce-can-impact-your-social-security-payments <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-divorce-can-impact-your-social-security-payments" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/wire_wrapped_wedding_figurines.jpg" alt="Wire wrapped wedding figurines" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Divorce can have long-reaching financial consequences that can make it harder to ensure a stable retirement for yourself. The good news is that the Social Security Administration continues to acknowledge your relationship with your former spouse, even if you have striven to forget about it. Divorced partners may potentially collect spousal benefits based on the work records of their ex-spouses. This can be a boon for retiring divorcées &mdash; especially those who earned less than their spouses.</p> <p>Here's what you need to know about how your benefits might be affected by a former marriage.</p> <h2>Social Security's rules for spousal benefits for divorced couples</h2> <p>Not every divorced beneficiary is eligible for spousal benefits based upon their ex-spouse's work record. The Social Security Administration has several rules in place that you must meet in order to be eligible.</p> <h3>Rule 1</h3> <p>The marriage must have lasted for at least 10 years. This is bad news for Kris Humphries (whose marriage to Kim Kardashian famously lasted only 72 days), but it does ensure that any long-term marriages will offer a modicum of financial protection to each spouse.</p> <h3>Rule 2</h3> <p>To collect spousal benefits based on your ex's work record, you have to remain single post-divorce. However, if you do end up remarrying and your subsequent marriage ends in death, divorce, or annulment, you might still be eligible for benefits based on your original ex-spouse's work record.</p> <h3>Rule 3</h3> <p>If you've remained single and your ex got remarried, the spousal benefits you collect will not affect the benefits that your ex and his or her new spouse are entitled to receive.</p> <h3>Rule 4</h3> <p>Even if your ex has not yet applied for benefits, you may collect spousal benefits based on his or her record. You just have to meet two requirements to collect these benefits:</p> <ol> <li> <p>Your ex-spouse must qualify for his or her own retirement benefits. That means he or she must have reached at least age 62 (the earliest age to collect benefits) and be eligible for benefits based on his or her own work record.</p> </li> <li> <p>You must have been divorced for at least two years before the date of your filing for spousal benefits.</p> </li> </ol> <h3>Rule 5</h3> <p>You may only collect divorced spousal benefits if you have reached age 62.</p> <h3>Rule 6</h3> <p>If you collect spousal benefits before reaching your full retirement age, you will receive the spousal benefit plus your own retirement benefit, minus a reduction amount. Both benefits will be reduced based on the number of months you have to go until your full retirement age.</p> <h2>Calculating spousal benefits</h2> <p>The spousal benefit can make a financial difference for divorcées who earned less than their exes. However, because of the way that spousal benefits are calculated, individuals who earned about the same amount as their spouses will see very little benefit &mdash; or possibly none at all. That's why it's important to understand exactly how spousal benefits are calculated.</p> <p>It all starts with a number that Social Security, in its infinite wisdom, refers to as the Primary Insurance Amount, or PIA. The PIA is the full amount of money to which you are entitled as of your full retirement age. Your PIA is calculated using the average amount of money you earned monthly during your 35 top earning years.</p> <p>Your spousal benefit is calculated using your PIA and your spouse's PIA, using the following formula:</p> <p style="margin-left: 40px;">50% of Spouse's PIA - Your PIA = Your Spousal Benefit</p> <p>For example, Charlotte and Ingram divorced several years ago. Charlotte was the breadwinner for most of their marriage, and her PIA is $1,800. Ingram's PIA is $850. Let's look at what they'd each potentially receive as spousal benefits:</p> <p style="margin-left: 40px;">50% of Charlotte's PIA - Ingram's PIA = Ingram's Spousal Benefit</p> <p style="margin-left: 40px;">(50% of $1,800) - $850 = $50</p> <p>Ingram's spousal benefit will be $50.</p> <p style="margin-left: 40px;">50% of Ingram's PIA - Charlotte's PIA = Charlotte's Spousal Benefit</p> <p style="margin-left: 40px;">(50% of $850) - $1,800 = -$1,375</p> <p>Charlotte's spousal benefit will be treated as $0.</p> <p>Since Charlotte earned so much more than her husband, she will not be eligible for spousal benefits based on his work record. (This is true whether they remain married or get divorced.)</p> <p>As for Ingram, $50 does not seem like much, but this spousal benefit will be added to his retirement benefit. This means he will have a monthly benefit of $900 (his PIA of $850 + his spousal benefit of $50), provided he waits until his full retirement age to take benefits.</p> <h2>The importance of timing</h2> <p>The longer you wait for Social Security benefits, the more you will receive &mdash; to the tune of nearly 8 percent per year between age 62 and age 70. This is also true for divorcées hoping to receive spousal benefits, although there is a point of diminishing returns when it comes to spousal benefits.</p> <p>Let's look at an example:</p> <p>Mina and Nicholas divorced after 25 years of marriage. Nicholas is eligible for a PIA of $2,400 as of his full retirement age, and Mina is eligible for a PIA of $1,000 at her full retirement age. Since Nicholas has a much higher PIA than Mina, he will not be eligible for spousal benefits. Mina's spousal benefits can be calculated as follows:</p> <p style="margin-left: 40px;">50% of Nicholas's PIA - Mina's PIA = Mina's Spousal Benefits</p> <p style="margin-left: 40px;">(50% of $2,400) - $1,000 = $200</p> <p>Mina's spousal benefit will be $200.</p> <p>However, when Mina chooses to take her benefits can affect just how much she will receive. Specifically, if she applies for her benefits before reaching her full retirement age, both her PIA and her spousal benefits will be reduced based on the number of months she has to go until her full retirement age.</p> <p>If she applies for her benefits after reaching her full retirement age, however, her PIA will be increased by what's known as delayed retirement credits. But those delayed retirement credits can nullify the spousal benefit, however, because she will receive either the PIA plus delayed retirement credits or the PIA plus spousal benefit &mdash; whichever one is greater.</p> <p>Let's say Mina's full retirement age is 67. Here are three of her timing options:</p> <h3>Mina's Option 1</h3> <p>She files for benefits at age 62, as soon as she is eligible for them. This means she'll be taking benefits 60 months before her full retirement age, which means her PIA will be reduced by 30 percent and her spousal benefit will be reduced by 32.5 percent. Mina's benefit will be calculated using the following formula:</p> <p style="margin-left: 40px;">(PIA - reduction amount) + (Spousal Benefit - reduction amount) = Total benefit before Full Retirement Age</p> <p style="margin-left: 40px;">(Mina's PIA - 30%) + (Mina's Spousal Benefit - 32.5%) = Mina's Benefit at 62</p> <p style="margin-left: 40px;">($1,000 - $300) + ($200 - $65) = $835</p> <p>Mina will receive a monthly benefit of $835 if she files at age 62.</p> <h3>Mina's Option 2</h3> <p>She waits to file for her benefits until she reaches her full retirement age. Mina will receive her PIA of $1,000, plus her spousal benefit of $200, for a total monthly benefit of $1,200.</p> <h3>Mina's Option 3</h3> <p>She waits to file for her benefits until she turns 70. Since her full retirement age is 67, waiting until age 70 will earn Mina an additional 124 percent in delayed retirement credits. Mina will receive her PIA of $1,000, plus her delayed retirement credit of $240, for a total monthly benefit of $1,240. Since her PIA plus delayed retirement credit is greater than her PIA plus spousal benefit (which would be $1,200), she will not receive her spousal benefit if she waits to file for benefits until age 70.</p> <h2>Social Security ever after</h2> <p>Understanding just how your Social Security benefits might be affected by your divorce is an important part of retirement planning. Make sure you know exactly what you are entitled to so you don't miss out on money that can help make your retirement more comfortable.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fhow-divorce-can-impact-your-social-security-payments&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FHow%2520Divorce%2520Can%2520Impact%2520Your%2520Social%2520Security%2520Payments.jpg&amp;description=How%20Divorce%20Can%20Impact%20Your%20Social%20Security%20Payments"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/How%20Divorce%20Can%20Impact%20Your%20Social%20Security%20Payments.jpg" alt="How Divorce Can Impact Your Social Security Payments" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/emily-guy-birken">Emily Guy Birken</a> of <a href="http://www.wisebread.com/how-divorce-can-impact-your-social-security-payments">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-smart-ways-to-boost-your-social-security-payout-before-retirement">6 Smart Ways to Boost Your Social Security Payout Before Retirement</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-times-you-need-to-update-your-will">6 Times You Need to Update Your Will</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-retirement-struggles-nobody-talks-about-and-how-to-beat-them">5 Retirement Struggles Nobody Talks About — And How to Beat Them</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/heres-what-happens-to-a-mortgage-in-a-divorce">Here&#039;s What Happens to a Mortgage in a Divorce</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-american-cities-where-you-can-retire-on-just-social-security">5 American Cities Where You Can Retire On Just Social Security</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement calculations divorce marriage pia retirement benefits social security spousal benefits Wed, 06 Dec 2017 10:00:07 +0000 Emily Guy Birken 2066565 at http://www.wisebread.com 5 Retirement Struggles Nobody Talks About — And How to Beat Them http://www.wisebread.com/5-retirement-struggles-nobody-talks-about-and-how-to-beat-them <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-retirement-struggles-nobody-talks-about-and-how-to-beat-them" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/retired_woman_laptop_520055262.jpg" alt="Woman beating common retirement struggles" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>If you have ever sat down with a financial planner, you know that one of the main questions that comes up is, &quot;How much income do you think you'll need when you retire?&quot;</p> <p>When I was asked this question, the first answer that popped into my head was, &quot;Hardly any!&quot; In the retirement scenario in my mind, my kids were independent and my home was paid off, leaving few financial obligations. When pressed, I acknowledged that I might need some money for taking fun vacations with all that free time I'll have, and for buying gifts for my grandchildren.</p> <p>While it's true that a lot of the big expenses of our working lives have ideally been paid off by retirement, retirees still face a lot of financial obligations. Retirement is not all learning to paint or strolling on the beach &mdash; despite what prescription drug ads may lead you to believe. A 2016 study by the U.S. General Accounting Office found that retirees on average spend 77 percent of what they spent while they were working, with spending declining decade by decade as retirees age. (See also: <a href="http://www.wisebread.com/9-unexpected-expenses-for-retirees-and-how-to-manage-them?ref=seealso" target="_blank">9 Unexpected Expenses for Retirees &mdash; And How to Manage Them</a>)</p> <p>Let's go through some of the retirement expenses you may not have accounted for, and how to deal with them.</p> <h2>1. Health care</h2> <p>While other expenses shrink after retirement, medical care spending increases. In the present day, the increase is modest. The same U.S. General Accounting Office report found that retirees ages 65 to 79 spend an average $5,000 a year on health care, compared to $3,900 for workers aged 50 to 64. But predictions for future health care expenses in retirement are dire.</p> <p>HealthView Services' 2017 Retirement Health Care Costs Data Report predicts that medical costs will rise 5.47 percent per year for the foreseeable future &mdash; meaning that today's 65-year-old may be spending $10,000 or more per year on health care by age 75, on top of Medicare coverage.</p> <p>&quot;Health care will be one of the most significant retirement expenditures; however, the savings required to cover this expense may be modest &mdash; especially if one has been utilizing an income replacement ratio (IRR) of 75% to 85%,&quot; warns the report.</p> <p>HealthView recommends talking to your planner not just about income replacement, but also about what you expect medical expenses to be based on your current health. Look at optimizing your retirement portfolio to address those needs. For example, some advisers recommend saving for retirement medical expenses using a health savings account &mdash; although these are only available to workers who have high-deductible health plans. (See also: <a href="http://www.wisebread.com/how-an-hsa-could-help-your-retirement?ref=seealso" target="_blank">How an HSA Could Help Your Retirement</a>)</p> <p>Managing health conditions proactively can also make a big difference in expenses over a lifetime.</p> <p>&quot;A 50-year-old male with type II diabetes can save (an average of) $5,000 per year in pre-retirement health expenses by shifting from Poorly Managed to Well Managed care,&quot; the report says.</p> <h2>2. Taxes</h2> <p>You might expect your income tax to disappear or decline steeply when you retire, but remember that withdrawals from 401(k) plans and traditional individual retirement accounts are taxable, as are most pensions and some Social Security benefits. If your retirement plan involves collecting rent on properties you own, well, that's taxable too. And if you have paid off your mortgage before retiring, remember that you just lost a big tax deduction in the form of mortgage interest payments.</p> <p>The problem of taxes during retirement is the reason many workers also invest in a Roth IRA or Roth 401(k) plan. Unlike a regular retirement account, which you fill with untaxed income, only paying taxes on withdrawals, a Roth takes income you already paid taxes on, and withdrawals are tax free. Since no one knows how tax rates when you retire will compare to tax rates today, many advisers recommend spreading investments across both kinds of accounts to hedge your bets. (See also: <a href="http://www.wisebread.com/heres-how-your-taxes-will-change-when-you-retire?ref=seealso" target="_blank">Here's How Your Taxes Will Change When You Retire</a>)</p> <p>Another thing to consider when retired is whether you plan to make charitable donations part of your estate plan. If you were going to give away thousands of dollars to charities in your will, for example, discuss with an accountant setting up a schedule of giving while you're alive, instead, so that you could take annual tax deductions that could reduce or eliminate taxes you owe.</p> <h2>3. Inflation</h2> <p>In recent years, inflation has been low, but the long term average annual rate of price increases is 3.22 percent. That means that if you retire with benefits and savings designed to cover 80 percent of your current income, those same benefits will cover a smaller portion of your current spending each year, if not invested to grow at a rate faster than inflation. This is why financial planners never advise keeping your life savings in cash, stuffed in a mattress.</p> <p>Of course in retirement you don't want to take on big risks with investments, since you can't earn more money to replace what you lose. But you also can't be too conservative or you risk having inflation shrink your savings each year. With interest rates as low as they are, you can't count on earnings from certificates of deposit to surpass inflation. For most retirees, that means you must have some money in stocks, bonds, or other investments. And you must stick to your investment plan, even if the market gets rocky. (See also: <a href="http://www.wisebread.com/7-reasons-to-invest-in-stocks-past-age-50?ref=seealso" target="_blank">7 Reasons to Invest in Stocks Past Age 50</a>)</p> <h2>4. End of life</h2> <p>When you plan your retirement, you're likely thinking more about all the golf you want to play or the traveling you want to do, not so much about spending your final years in a nursing home or planning your funeral. Unfortunately, those less fun expenses must also be planned for.</p> <p>Take a realistic look at how much assisted living and nursing homes cost. If you are still young enough to get it, look into long-term care insurance. Discuss with your family whether they expect you to move in with them if you need more care later in life, or if they would prefer you plan for nursing home care or assisted living. If long-term care needs seem imminent, meet with an attorney who specializes in making Title XIX plans; they can help you learn what assets can be shielded from being liquidated to pay for care. (See also: <a href="http://www.wisebread.com/is-long-term-care-insurance-worth-it?ref=seealso" target="_blank">Is Long Term Care Insurance Worth It?</a>)</p> <p>Medical expenses tend to jump in the final years, costing about $7,000 to $8,000 more per year in the last two years of life, according to HealthView Services.</p> <p>Consider prepaying funeral expenses so that it's not a cost hanging over your head as you enjoy retirement. And certainly meet with an estate planner as part of your retirement planning to make provisions for the distribution of wealth after you are gone. (See also: <a href="http://www.wisebread.com/9-end-of-life-cost-savings-your-survivors-will-thank-you-for?ref=seealso" target="_blank">9 End-of-Life Cost Savings Your Survivors Will Thank You For</a>)</p> <h2>5. Mandatory withdrawals</h2> <p>The moment you turn age 70 and a half, you are required to take minimum distributions from your IRA, 401(k), and other retirement accounts on a schedule set by the IRS. This doesn't sound like a problem &mdash; after all, this is what you saved all that money for. But what if you don't need to spend the required distribution this year? Unfortunately, you still have to withdraw it, and pay taxes on it, or the IRS will confiscate 50 percent of the money you were supposed to withdraw in the form of a tax penalty.</p> <p>While you can't change the IRS's schedule for required withdrawals, and you can't roll the distribution into a different tax-deferred account, you can plan for this requirement and schedule income and spending around it. For instance, you can avoid selling real estate or other investments, or scale back work hours if you are still working, and allow the income you are getting from your retirement account to replace other income. And of course, you can always invest your distribution outside of retirement accounts, if you don't need to spend it.</p> <p>Another way to conquer the mandatory distribution is to plan for it while saving for retirement, for example by putting some income into a Roth IRA, which doesn't have required distributions. As you approach retirement, if your IRA distributions look like they will be too large for you to use, you may also talk to a planner about converting a traditional account into a Roth.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F5-retirement-struggles-nobody-talks-about-and-how-to-beat-them&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F5%2520Retirement%2520Struggles%2520Nobody%2520Talks%2520About%2520%25E2%2580%2594%2520And%2520How%2520to%2520Beat%2520Them.jpg&amp;description=5%20Retirement%20Struggles%20Nobody%20Talks%20About%20%E2%80%94%20And%20How%20to%20Beat%20Them"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/5%20Retirement%20Struggles%20Nobody%20Talks%20About%20%E2%80%94%20And%20How%20to%20Beat%20Them.jpg" alt="5 Retirement Struggles Nobody Talks About &mdash; And How to Beat Them" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/carrie-kirby">Carrie Kirby</a> of <a href="http://www.wisebread.com/5-retirement-struggles-nobody-talks-about-and-how-to-beat-them">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-expensive-mistakes-of-the-newly-retired">9 Expensive Mistakes of the Newly Retired</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-signs-its-time-to-retire">8 Signs It&#039;s Time to Retire</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-age-milestones-that-impact-your-retirement">6 Age Milestones That Impact Your Retirement</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-questions-financial-advisers-hear-most-often">8 Questions Financial Advisers Hear Most Often</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-an-hsa-could-help-your-retirement">How an HSA Could Help Your Retirement</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement end of life costs expenses health care hidden costs inflation investments long term care required minimum distributions social security taxes Mon, 04 Dec 2017 09:00:07 +0000 Carrie Kirby 2065326 at http://www.wisebread.com 7 Roadblocks to Retirement (And How to Clear Them) http://www.wisebread.com/7-roadblocks-to-retirement-and-how-to-clear-them <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/7-roadblocks-to-retirement-and-how-to-clear-them" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/sticky_note_on_notice_board.jpg" alt="Sticky note on notice board" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>How often do you dream about retirement? It's nice to think about the day when you can stop answering to a boss, and instead spend your time relaxing, traveling, and enjoying life to the fullest. Well, if you want that dream to become a reality, you may need to make some significant life changes <em>now</em>. If you're guilty of the following things, you could end up working well past your planned retirement age. (See also: <a href="http://www.wisebread.com/how-much-should-you-have-saved-for-retirement-by-30-40-50?ref=seealso" target="_blank">How Much Should You Have Saved for Retirement by 30? 40? 50?</a>)</p> <h2>1. You simply aren't putting enough money away</h2> <p>Most people vastly underestimate the amount they need to stash away for their golden years. The problem comes from the fact that many financial planners will tell you to put between 10 and 15 percent of your income toward retirement. However, that assumes you started saving in your 20s.</p> <p>If you are now 40, and only started putting money away 10 years ago, you need a higher savings rate in order to make up for those missing years. In fact, you would have to put around 25 percent of your salary away each month and work until you're 70 in order to make up for the shortfall. And as always, compound interest is the real key to saving. By missing out on those years in your 20s, you will have significantly impacted your future nest egg. (See also: <a href="http://www.wisebread.com/how-to-start-saving-for-retirement-at-40?ref=seealso" target="_blank">How to Start Saving for Retirement at 40+</a>)</p> <h2>2. You aren't taking advantage of your employer's 401(k) match</h2> <p>Simply put, any kind of match that your employer gives you is free money, and it would be silly not to take advantage of every cent. The average match out there is 3 percent of your pay, although companies can vary greatly on what they offer. This means that if you only put in 2 percent of your salary, you are leaving 0.7 percent of your income on the table. It may not seem like a lot, but that can really add up over time.</p> <p>If your company offers you 50 percent on the dollar for up to 6 percent of your pay, you should be putting 6 percent away. If it's a dollar amount match, say $2,500 per year, make sure you put in at least that amount. (See also: <a href="http://www.wisebread.com/5-dumb-401k-mistakes-smart-people-make?ref=seealso" target="_blank">5 Dumb 401(k) Mistakes Smart People Make</a>)</p> <h2>3. Your plan is not aggressive enough</h2> <p>Most 401(k) plans have something called a &quot;target date&quot; that is used to figure out what your retirement portfolio will look like. If you have 30 years to go until retirement, you will almost certainly want at least a moderately aggressive portfolio. This will be comprised primarily of stocks, which offer higher gains, but are more volatile and can lose their value quickly. However, the stock market will always recover over time, and if you have that time to spare, this is the plan you should use.</p> <p>If you have less time to go until retirement, your portfolio will have way less stocks in it, opting instead for a larger percentage of bonds. These are much safer, but they don't have the ability to make as much money as stocks. If you came into the retirement savings habit late, you should talk to a professional about how to organize your portfolio. You simply may not have enough time to make money with a conservative plan, but could also risk losing money with a more aggressive one. (See also: <a href="http://www.wisebread.com/start-planning-now-for-when-your-target-date-fund-ends?ref=seealso" target="_blank">Start Planning Now for When Your Target-Date Fund Ends</a>)</p> <h2>4. You're spending too much of your disposable income</h2> <p>A coffee here. A magazine there. Eating out every week. These small expenditures really add up, and instead of saving the money you'll need to survive after you stop working, these frivolous buys are burning holes in your pocket.</p> <p>Yes, life's little luxuries are important for your morale and self-esteem from time to time, but get a handle on those expenses and budget accordingly. You may find that you're spending $40 a month just on coffee. That's $480 a year. Let's say you plan on retiring in 30 years, and you stop getting that morning coffee for one year. A good rate of return on retirement investments is about 8 percent. Thirty years down the road, that $480 will become almost $5,000. If you cut your daily coffee out entirely, it will add over $63,500 to your retirement fund in a 30 year period. Now think about it: Is that &quot;luxury&quot; really worth it? (See also: <a href="http://www.wisebread.com/7-effortless-ways-to-prevent-budget-busting-impulse-buys?ref=seealso" target="_blank">7 Effortless Ways to Prevent Budget-Busting Impulse Buys</a>)</p> <h2>5. Social Security benefits alone will not be enough</h2> <p>It seems unfair that we pay into the system all our working lives, and when it comes time to retire, we get very little back. But, that is simply the result of a population that is living longer, yet retiring at the same age of 65. There just isn't enough money in Social Security to totally support you unless you have almost everything completely bought and paid for by the time you retire, and even then, it will be tough going.</p> <p>Right now, benefits for retired workers average around $1,374 per month, or just over $16,400 annually. When you consider that the federal poverty line is currently $12,060 for a one-person household, that's a little too close for comfort.</p> <p>While it's possible to survive on that, barely, you have to ask yourself: Do you really want to spend the last 20+ years of your life scraping to make ends meet? (See also: <a href="http://www.wisebread.com/6-smart-ways-to-boost-your-social-security-payout-before-retirement?ref=seealso" target="_blank">6 Smart Ways to Boost Your Social Security Payout Before Retirement</a>)</p> <h2>6. You're using your home like a cash machine</h2> <p>It's so tempting to dig into the equity in our homes, especially when the housing market is strong and interest rates are so low. But, every time you refinance your home to take out money, and start another 30-year mortgage, you are seriously impacting the quality of your retirement.</p> <p>Ideally, by the time you retire, you'll want that home to be paid for; no mortgage left, only taxes and maintenance. But if you are 40 years old and just did a 30-year refinance to take out some cash, you've ensured you'll be paying that mortgage until you hit 70. Not only that, but every time you do a cash-out refi, you're spending money on fees.</p> <p>If you must refinance, consider doing a 10 or 15-year fixed rate term instead. Get that mortgage paid off quickly. You'll also pay thousands less in interest over the life of the loan. (See also: <a href="http://www.wisebread.com/3-times-a-refinance-is-the-wrong-move?ref=seealso" target="_blank">3 Times a Refinance Is the Wrong Move</a>)</p> <h2>7. You're not aiming to become a millionaire</h2> <p>When people start tucking away money for retirement, they don't really consider the lump sum they are going to need when they eventually stop working. And ask any average Joe if they will be a millionaire one day, and they will laugh at you and say something like, &quot;Yeah, right!&quot;</p> <p>But, everyone should be doing what they can to become a millionaire in retirement. While it may not be possible to hit that figure exactly, you should still aim as high as you can.</p> <p>It's commonly advised that by the time you hit retirement age, you should have <em>at least</em> 10 times your current salary in your retirement account. With the current median income hovering around the $60K mark, that means that you should have just over half a million dollars in your fund if you retire this year. If you're a higher earner, let's say you earn $120K a year, that figure should be over a million. (See also: <a href="http://www.wisebread.com/heres-how-far-1-million-will-actually-go-in-retirement?ref=seealso" target="_blank">Here's How Far $1 Million Will Actually Go in Retirement</a>)</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F7-roadblocks-to-retirement-and-how-to-clear-them&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F7%2520Roadblocks%2520to%2520Retirement%2520%2528And%2520How%2520to%2520Clear%2520Them%2529.jpg&amp;description=7%20Roadblocks%20to%20Retirement%20(And%20How%20to%20Clear%20Them)"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/7%20Roadblocks%20to%20Retirement%20%28And%20How%20to%20Clear%20Them%29.jpg" alt="7 Roadblocks to Retirement (And How to Clear Them)" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/paul-michael">Paul Michael</a> of <a href="http://www.wisebread.com/7-roadblocks-to-retirement-and-how-to-clear-them">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-ways-to-protect-your-retirement-from-inflation">4 Ways to Protect Your Retirement From Inflation</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-signs-its-time-to-retire">8 Signs It&#039;s Time to Retire</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-plan-for-a-forced-early-retirement">How to Plan for a Forced Early Retirement</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/half-of-americans-are-wrong-about-their-retirement-savings">Half of Americans Are Wrong About Their Retirement Savings</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/three-of-the-toughest-decisions-youll-face-in-retirement">Three of the Toughest Decisions You&#039;ll Face in Retirement</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401(k) benefits golden years homeownership nest egg poverty refinance saving money social security stocks Wed, 29 Nov 2017 10:00:06 +0000 Paul Michael 2062578 at http://www.wisebread.com 13 Financial Steps to Take Before Retiring Abroad http://www.wisebread.com/13-financial-steps-to-take-before-retiring-abroad <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/13-financial-steps-to-take-before-retiring-abroad" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/happy_couple_enjoying_their_retirement.jpg" alt="Happy couple enjoying their retirement" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>If things go well for you, retirement can last for decades. But your retirement savings might not, especially if you live in a high-cost area. Households with a resident aged 65 or older have a median income of just $38,515, according to the U.S. Census Bureau. It's no wonder that the number of Americans retiring abroad grew 17 percent between 2010 and 2015, now numbering some 400,000, according to the Social Security Administration. (See also: <a href="http://www.wisebread.com/5-countries-where-you-can-retire-for-1000-a-month?ref=seealso" target="_blank">5 Countries Where You Can Retire for $1,000 a Month</a>)</p> <p>But retiring abroad isn't as simple as going on vacation. How will you access your savings or benefits from overseas? Can you buy property? What about medical care? All these questions can be addressed with some pre-takeoff financial planning. (See also: <a href="http://www.wisebread.com/9-things-to-know-before-retiring-abroad?Ref=seealso" target="_blank">9 Things to Know Before Retiring Abroad</a>)</p> <h2>1. Find a retiree-friendly destination</h2> <p>Some places have incentives like tax breaks and visa offers to attract American retirees, such as Panama and Costa Rica's <em>pensionado </em>programs. You may also qualify for senior citizen benefits established for locals, such as Ecuador's senior discount program, which offers savings on airfare, utilities, and sporting events.</p> <p>In addition, it's a good idea to consult the <a href="https://travel.state.gov/content/passports/en/country.html" target="_blank">State Department's country-specific information</a> about visa laws, health and safety conditions, and how much money you'd be allowed to bring into the country with you. (See also: <a href="http://www.wisebread.com/5-countries-that-welcome-american-retirees?ref=seealso" target="_blank">5 Countries That Welcome American Retirees</a>)</p> <h2>2. Find out if you can get Social Security payments there</h2> <p>Six in 10 retirees rely on Social Security for at least half their income, according to the Social Security Administration, making this a pretty important consideration. Fortunately, the SSA can send you your check if you move abroad to most countries, with the notable exceptions of Cuba and Cambodia. For certain other countries, including Ukraine, you can get your payments, but only if you meet certain conditions such as appearing at a U.S. embassy or consulate every six months.</p> <p>The Social Security Administration offers the <a href="https://www.ssa.gov/international/payments_outsideUS.html" target="_blank">Payments Abroad Screening Tool</a> to help you figure out if you'll be able to collect payments overseas.</p> <p>If you are a non-U.S. citizen receiving Social Security because you worked in the U.S. or are a dependent of someone who did, the rules on receiving payments overseas are more complicated. Consult the SSA booklet, <a href="https://www.ssa.gov/pubs/EN-05-10137.pdf" target="_blank">Your Payments While You Are Outside the United States</a> for the full story.</p> <p>Many American embassies worldwide have a <a href="https://www.ssa.gov/foreign/foreign.htm" target="_blank">Federal Benefits Unit</a> to help retirees with any Social Security issues.</p> <h2>3. Hire a new financial adviser</h2> <p>The wave of Americans retiring abroad has given rise to a new specialty in the financial industry: Cross-Border Planning. A cross-border specialist will help you understand local income tax laws so you don't risk over- or underpaying. They can also help you safely move spending money from the U.S. to your new home, and guide you through many other issues you might never have considered.</p> <p>It's almost impossible to find someone who knows the laws of every country, so use the <a href="http://crossborderplanning.com/about_us.htm" target="_blank">Cross-Border Financial Planning Alliance</a> to find someone who specializes in your chosen country.</p> <h2>4. Figure out what to do with your bank accounts</h2> <p>You should keep your U.S. bank account open to handle any expenses and bills you have stateside, and open another one in your new home country. Ask your U.S. bank if they charge a fee for making withdrawals from foreign automatic teller machines; if they do, you might want to upgrade your account or change banks before you move.</p> <p>For your foreign account, Expat Info Desk recommends choosing a large, well-known bank and transferring your money using an international currency exchange service. These are companies that transfer large amounts of money to an account in a foreign country, and they may offer a better conversion rate. Another option is to ask your home bank if they operate in your destination country.</p> <p>If you have more than $10,000 worth of assets in foreign accounts, the IRS notes you must report this to the U.S. government every year by filing a Report of Foreign Bank and Financial Accounts (FBAR) or face penalties of up to $100,000.</p> <h2>5. Stay on good terms with the U.S. Department of Treasury</h2> <p>Even though you no longer live in the U.S., if you maintain citizenship, you need to pay any taxes you owe. The Internal Revenue Service offers guidance on how and when to <a href="https://www.irs.gov/individuals/international-taxpayers/taxpayers-living-abroad" target="_blank">file a tax return from overseas</a>.</p> <p>Don't imagine that you'll be out of sight, out of mind to the U.S. government. In fact, it's actually more important for you to pay up than it is for citizens living at home, because if you owe more than $50,000 in delinquent payments, you could lose your passport.</p> <h2>6. Get online</h2> <p>Although mail service is unreliable in some parts of the world, internet connections are nearly ubiquitous. Even if you have always used paper statements and written checks before, now is a good time to embrace online banking to avoid delays and the cost of international postage.</p> <h2>7. Rent a home, then learn about buying</h2> <p>The Australian Expat Investor suggests renting at first, unless you have already been visiting your new country for years and are sure you're there to stay. You'll need to learn about the rules for tenancy in your new country. Don't be surprised if you have to pay an entire year's rent in advance. Even if you don't actually sign a lease before you move abroad, you should put aside the money you'll need and find out how to transfer it.</p> <p>Once you're established in your new country, look into whether purchasing a home might be a good financial move. It could cut your costs and serve as an investment if the local property market is on the upswing. (See also: <a href="http://www.wisebread.com/how-to-choose-the-perfect-country-to-retire-in?ref=seealso" target="_blank">How to Choose the Perfect Country to Retire In</a>)</p> <h2>8. Tap your U.S. home for income or capital</h2> <p>If you'll be leaving behind a home you own, you may not want to sell it at first. But you could consider renting out all or part of it. Some retirees use Airbnb to flexibly get income from their U.S. home, while reserving its availability for when they come back to visit. (See also: <a href="http://www.wisebread.com/5-easy-ways-to-make-good-money-from-airbnb?ref=seealso" target="_blank">5 Easy Ways to Make Good Money From Airbnb</a>)</p> <p>If you want to refinance your U.S. property to get money to buy a home overseas, look into doing that before you go. Homeowners who try to refinance from overseas may face a lot more confusing paperwork and hurdles.</p> <h2>9. Make an estate plan</h2> <p>If you have never made a will or considered putting assets in a revocable trust, talk to an estate attorney before you go, and get this taken care of. Find a lawyer who is knowledgeable about handling such things while living abroad, so they can advise you on whether your U.S. will can provide for distributing foreign assets, or if you'll need a second will created in your new home country.</p> <p>If you already have an estate plan, consult an attorney to see if any amendments will need to be made to cover assets located abroad.</p> <h2>10. Make a health care plan</h2> <p>Health care tends to be one of the greatest expenses in retirement. And unlike Social Security, you will not be able to use your Medicare benefits overseas. One decision to make is whether to enroll in Medicare anyway, so that it's still available to you on visits home or if you need to return to the States unexpectedly.</p> <p>Since most people don't have to pay a premium for Medicare Part A, which covers domestic hospitalization, some nursing home care, and hospice care, keeping that is a no brainer. Should you also pay for Medicare Part B, which helps pay for doctor visits and some prescriptions, among other expenses? That depends on how likely it is that you will ever return to the United States. If you don't carry Part B, and you must return because you become disabled and need help from your children, for example, you may have to go without coverage for months while waiting for the annual enrollment period, and you may also face premium penalties.</p> <p>Since Medicare is off the table for any care you need while overseas, you'll need to plan for financing that. Fortunately, health care in other countries is less expensive than it is in the United States. For example, the average per capita medical spending in Mexico is just over $1,000, compared just under $10,000 in the United States, according to the Organization for Economic Cooperation and Development. So paying for health care expenses out of pocket or buying local insurance or a hospital membership plan may be reasonable, with many expats saying they pay under $100 a month.</p> <h2>11. Buy insurance for everything else</h2> <p>Besides your health, you'll also need to insure your property. Understanding what insurance local laws require may be a lot harder in other markets than it is in the United States. It's a good idea to consult your local real estate agent about what insurance policy to get.</p> <h2>12. Get a financial power of attorney</h2> <p>You may need an adult son or daughter, or other representative, to make financial moves in your place while you are overseas. It's a good idea to leave them with a financial power of attorney document so that they can sign for you, for example, while selling property or other investments. (See also: <a href="http://www.wisebread.com/what-is-power-of-attorney?ref=seealso" target="_blank">What Is Power of Attorney?</a>)</p> <h2>13. Make an exit plan</h2> <p>Some retirees plan to enjoy their new home country while their health lasts, then return stateside if they become ill or disabled. If that's you, you'll want domestic long-term care insurance, and/or a nest egg in U.S. accounts to live off when you return. (See also: <a href="http://www.wisebread.com/is-long-term-care-insurance-worth-it?ref=seealso" target="_blank">Is Long Term Care Insurance Worth It?</a>)</p> <p>Even if you plan to live in the new country for the rest of your life, if you want your remains returned to the U.S., you'll need to plan for that. Look into emergency evacuation/repatriation insurance to help with medically equipped flights home or transportation of remains.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/13%20Financial%20Steps%20to%20Take%20Before%20Retiring%20Abroad.jpg" alt="13 Financial Steps to Take Before Retiring Abroad" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/carrie-kirby">Carrie Kirby</a> of <a href="http://www.wisebread.com/13-financial-steps-to-take-before-retiring-abroad">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-almost-anyone-can-afford-to-retire-in-mexico">How Almost Anyone Can Afford to Retire in Mexico</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-retirement-struggles-nobody-talks-about-and-how-to-beat-them">5 Retirement Struggles Nobody Talks About — And How to Beat Them</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/retire-for-half-the-cost-in-these-5-countries">Retire for Half the Cost in These 5 Countries</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-ways-travel-in-retirement-keeps-you-young">6 Ways Travel in Retirement Keeps You Young</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-overcome-these-4-common-retirement-fears">How to Overcome These 4 Common Retirement Fears</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement Travel expats foreign countries health care long term care retiring abroad social security Mon, 20 Nov 2017 09:00:07 +0000 Carrie Kirby 2056087 at http://www.wisebread.com How to Overcome These 4 Common Retirement Fears http://www.wisebread.com/how-to-overcome-these-4-common-retirement-fears <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-overcome-these-4-common-retirement-fears" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/mature_businesswoman_portrait_in_her_office.jpg" alt="Mature Businesswoman Portrait In Her Office" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Modern retirement is a somewhat daunting prospect. Unlike previous generations, today's workers generally cannot count on a pension to fund their retirements &mdash; which means the buck stops with you when it comes to saving up the necessary money to live comfortably after you hang up your hat. Add to that the constant rhetoric about Social Security's imminent demise and the spiraling costs of health care for an aging population, and it's no wonder that thinking about retirement is heartburn-inducing.</p> <p>But even though many common retirement fears are perfectly rational, you do not have to feel overwhelmed by your concerns. Here's how you can overcome four of the most common retirement fears and plan for a fulfilling retirement.</p> <h2>I can't count on Social Security</h2> <p>The Social Security Trust Fund has been losing value since 2013, and it is projected to be entirely depleted by the year 2034. This fact is often touted as a reason for current workers to give up on the idea of receiving Social Security benefits at all once they reach full retirement age.</p> <p>After all, the Trust Fund will be empty by the time many current workers retire, and projected tax revenues will cover only 79 percent of promised benefits. This could mean anyone who is entitled to a $1,500 monthly benefit will only receive $1,185.</p> <h3>How to overcome this fear</h3> <p>While it is absolutely true that the Trust Fund will be depleted in less than 20 years, that does not mean that Social Security will simply dry up for current workers. American workers can count on Social Security to be there when they retire, no matter how old or young they are.</p> <p>Here's why you don't need to panic: To begin with, the dwindling of the Trust Fund is neither new nor imminent. It's also important to note that the United States is the only country in the world that attempts to predict the 75-year longevity of its social insurance funds, which means we are in a position to do something about the anticipated shortfall.</p> <p>Over the next couple of decades, it is likely that our government will make relatively small changes to the Social Security program in order to make up the 21 percent anticipated shortfall that will occur once the Trust Fund has run dry.</p> <p>In addition, 79 percent of promised benefits is much more than nothing. Even if we face the worst case scenario of no solution being proposed between now and 2034 (which seems unlikely, considering how popular Social Security is), there will still be something available for current workers, even if it is less than what was originally promised. (See also: <a href="http://www.wisebread.com/5-sobering-facts-about-social-security-you-shouldnt-panic-over?ref=seealso" target="_blank">5 Sobering Facts About Social Security You Shouldn't Panic Over</a>)</p> <h2>I'm going to outlive my money</h2> <p>Not having enough money in retirement is a truly frightening thought. And since it is impossible to know for certain how much money you will need in retirement, it's not possible to entirely dispel this fear, even if you have a robust retirement account.</p> <p>However, most Americans have very little money set aside for retirement. According to an Employee Benefit Research Institute survey from April 2017, 47 percent of American workers have less than $25,000 set aside for retirement. Considering the fact that it is prudent to withdraw no more than 4 percent of your nest egg per year during retirement to avoid outliving your savings, $25,000 would only net $1,000 of retirement income per year, which is nowhere near enough to live on.</p> <h3>How to overcome this fear</h3> <p>If you are among the 47 percent of American workers with less than $25,000 saved for retirement, the best way to deal with your fear of outliving your savings is to increase those savings.</p> <p>As of 2017, you can contribute up to $18,000 per year to a 401(k) or 403(b) plan, plus an additional $6,000 if you are over age 50. You may also contribute $5,500 to an IRA, plus an additional $1,000 if you are over 50. Maximizing those contributions can do a great deal to help you prepare for retirement. Even if contributing the maximum is out of your financial reach right now, upping your contribution by 1 or 2 percent can make a big difference in your nest egg's health.</p> <p>If you are already saving as much as you can for retirement and still worry about outliving your money, doing some research into the costs of what you want to do in retirement can help you overcome those fears. Knowing the real costs of retirement when you have already been a diligent saver can help you put your fears in perspective. (See also: <a href="http://www.wisebread.com/7-retirement-planning-steps-late-starters-must-make?ref=seealso" target="_blank">7 Retirement Planning Steps Late Starters Must Make</a>)</p> <h2>Illness in retirement will bankrupt me</h2> <p>According to Fidelity Benefits Consulting, the average cost of medical expenses for a 65-year-old couple retiring in 2016 will be an estimated $260,000. What's even more frightening about this enormous dollar figure is the fact that Fidelity based its calculations on 65-year-old retirees &mdash; meaning that the hypothetical retiring couple is already eligible for Medicare.</p> <p>Health care costs are undeniably high, and retirees are vulnerable to the high cost of medical care since it is difficult to shop around for better prices or stretch a fixed income. This means it's perfectly reasonable to worry that you might get sick after you retire and spend down all of your nest egg.</p> <h3>How to overcome this fear</h3> <p>It's true that health care is likely to be one of your biggest expenses in retirement, but that does not necessarily mean that an illness will bankrupt you.</p> <p>The first thing to do is learn about what you can expect from Medicare. Medicare Part A covers inpatient hospital care, home health care, and hospice care. Part B functions much like the typical health insurance you are familiar with from your workplace. Between these two, Medicare will cover about 80 percent of most of your medical needs. If you have a tough medical diagnosis, Medicare will cover your treatment, and careful money management can help you stay financially fit. (See also: <a href="http://www.wisebread.com/5-common-medicare-myths-debunked?ref=seealso" target="_blank">5 Common Medicare Myths, Debunked</a>)</p> <p>However, Medicare does not cover long-term care. This type of care &mdash; which describes the nonmedical help the elderly might need for daily living &mdash; is the aspect of your health care that can quickly overwhelm a nest egg.</p> <p><a href="http://www.wisebread.com/is-long-term-care-insurance-worth-it" target="_blank">Long-term care insurance</a> is a good option for some middle-income retirees, as it will make sure assets are protected in case you need long-term care. This kind of insurance can be pricey, however, which can put the cost out of reach for some retirees.</p> <p>If long-term care insurance is not in the cards for you, recognize that Medicaid will pay for your long-term care once you have exhausted your own resources. This is hardly an ideal option, but it can help ease your stress if you recognize that you will be able to get the care you need, no matter your financial situation.</p> <h2>I won't know who I am in retirement</h2> <p>The 2002 Jack Nicholson movie <em>About Schmidt</em> does an excellent job of showing how isolating retirement can be for some career-oriented workers. Nicholson's Warren Schmidt feels lost after retiring from several decades of working at an insurance company, and he returns to his office to try to recapture some of his sense of himself as an expert in his field, only to be brushed off by the young man who has taken his job.</p> <p>It's natural to be afraid of such a major life transition, particularly if you have always defined yourself by your career. Entering retirement without the structure of a daily routine can induce anxiety and fear, which can hardly help you to start writing your new chapter.</p> <h3>How to overcome this fear</h3> <p>One of the most important things our culture needs to do is stop looking at work and retirement as two distinct things, and start looking at them as two different parts of your whole life. Both your career and your retirement are your life, and you need to see it all as something that you can use to define yourself.</p> <p>That means structuring your life while you are working to include the things you will want to do when you are retired. For instance, if you dream of traveling in retirement, don't wait until you are retired to start your journeys. If you commit to making trips while you are still working, you will be well-prepared to be a traveler in retirement, and you will already define yourself by more than just your work.</p> <p>The best part about working to overcome this fear is that it gives you the opportunity to do the fun things you love while you are still in the midst of your career. With a little advance planning, retirement can provide a fulfilling evolution of the identity you've cultivated throughout your career.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fhow-to-overcome-these-4-common-retirement-fears&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FHow%2520to%2520Overcome%2520These%25204%2520Common%2520Retirement%2520Fears.jpg&amp;description=How%20to%20Overcome%20These%204%20Common%20Retirement%20Fears"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;">&nbsp;<img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/How%20to%20Overcome%20These%204%20Common%20Retirement%20Fears.jpg" alt="How to Overcome These 4 Common Retirement Fears" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/emily-guy-birken">Emily Guy Birken</a> of <a href="http://www.wisebread.com/how-to-overcome-these-4-common-retirement-fears">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-retirement-struggles-nobody-talks-about-and-how-to-beat-them">5 Retirement Struggles Nobody Talks About — And How to Beat Them</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/13-financial-steps-to-take-before-retiring-abroad">13 Financial Steps to Take Before Retiring Abroad</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-face-these-7-scary-facts-about-retirement-saving">How to Face These 7 Scary Facts About Retirement Saving</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-questions-financial-advisers-hear-most-often">8 Questions Financial Advisers Hear Most Often</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-common-medicare-myths-debunked">5 Common Medicare Myths, Debunked</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement health care long term care medicare outliving money retirement fears social security Wed, 18 Oct 2017 08:00:07 +0000 Emily Guy Birken 2037739 at http://www.wisebread.com How to Protect Your Child From Identity Theft http://www.wisebread.com/how-to-protect-your-child-from-identity-theft <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-protect-your-child-from-identity-theft" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/computer_hacker_stealing_information_with_laptop.jpg" alt="Computer hacker stealing information with laptop" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Your ex-spouse calls you, but the name on the caller ID is your child's. You receive a hospital bill for a C-section supposedly performed on your eight-year-old son. Or, you bring your child to the bank to open her first savings account, and are denied because they say she has a record of bad checks.</p> <p>All these are warning signs for a surprisingly prevalent crime: child identity theft. Most adults are aware that their own names and Social Security numbers can be hijacked by scammers who open fraudulent accounts in their names; not everyone realizes that the same thing can and does happen to kids.</p> <p>Identity theft can interfere with college, job prospects, buying a car, or getting that first mortgage. So it's important for you to understand how to protect your kids from this fraud. (See also: <a href="http://www.wisebread.com/the-comprehensive-guide-to-identity-theft-everything-you-need-to-know?ref=seealso" target="_blank">The Comprehensive Guide to Identity Theft: Everything You Need to Know</a>)</p> <h2>Fraudsters love kids</h2> <p>You might think a kid's identity wouldn't appeal to scammers. After all, kids have no credit history and they're not even old enough to get their own credit cards. But the victim being under 18 is generally not a problem for opening new accounts. The credit bureaus don't know the applicant's age, says Eva Velasquez, CEO and President of the Identity Theft Resource Center.</p> <p>And, a blank credit history can be attractive to a criminal who might have many blemishes on his or her own report, says Robert Chappell, a state police captain who wrote <em>Child Identity Theft: What Every Parent Needs to Know</em>.</p> <p>Even better, from a crook's perspective, is the fact that the crime can go undetected for years since no one usually thinks to check a kid's credit report.</p> <p>&quot;In many instances, the first time a young adult might discover they're a victim of identity theft is when they try to apply for a loan for college and are denied because someone else either already destroyed their credit or already took out a student loan using their Social Security number,&quot; Velasquez says.</p> <h2>How does your child's info get out there?</h2> <p>Anyone with access to a child's Social Security number and date of birth can apply for accounts and services in their name. There are a number of ways scammers can get their hands on those vital digits:</p> <h3>Paperwork</h3> <p>When this information is written on school or sports team forms, it's seen by staff. If forms aren't shredded properly before disposal, it can also be found in recycling bins by thieves. To defend against these risks, be judicious about what you write on forms.</p> <p>&quot;Leave the Social Security number blank. A Social Security number is like gold to a thief,&quot; Chappell says.</p> <h3>Hacking</h3> <p>When hackers broke into health insurance company Anthem's database in 2015, tens of millions of children's records were among those compromised. There's not much you can do to prevent a breach like that, but if you get a letter notifying you that your child's account was involved in a hack, take advantage of any credit monitoring service offered.</p> <h3>Friends and family</h3> <p>Disturbingly, often the person who steals a child's identity is a relative or close friend.</p> <p>Even parents are sometimes tempted to put their children's names and Social Security numbers on account applications if their own credit is bad. To prevent a relative from exploiting your child's identity, Chappell advises keeping kids' sensitive documents under lock and key, just as you should your own.</p> <p>&quot;Don't carry your child's Social Security card around in your wallet or allow your child to carry their Social Security card,&quot; Chappell advises. &quot;It's just not needed on a daily basis.&quot;</p> <h2>What should you do if your child's identity is stolen?</h2> <p>Follow these tips from the Federal Trade Commission and other experts:</p> <ul> <li> <p>File a police report and report the crime to the FTC at <a href="https://www.identitytheft.gov/" target="_blank">IdentityTheft.gov</a>.</p> </li> <li> <p>Contact the three major credit bureaus to request your credit reports (you can access all three credit reports via <a href="http://www.annualcreditreport.com" target="_blank">AnnualCreditReport.com</a>). Ask each bureau to remove any fraudulent accounts. Then freeze your credit so no new accounts can be opened.</p> </li> <li> <p>Contact the appropriate creditor to explain that the fraudulent account was opened in a minor's name.</p> </li> <li> <p>Consider paying for a credit monitoring service.</p> </li> <li> <p>Visit the <a href="https://www.identitytheft.gov/" target="_blank">FTC's Identity Theft Resource site</a> for more help.</p> </li> </ul> <p><span style="background-color: transparent; font-size: 13px; color: rgb(0, 0, 0);"></p> <h2 style="text-align: center;">&nbsp;</h2> <h2 style="text-align: center;"><span style="background-color: transparent; color: rgb(0, 0, 0); font-size: 13px;">Like this article? Pin it!</span></h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fhow-to-protect-your-child-from-identity-theft&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FHow%2520to%2520Protect%2520Your%2520Child%2520From%2520Identity%2520Theft.jpg&amp;description=How%20to%20Protect%20Your%20Child%20From%20Identity%20Theft"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><span style="background-color: transparent; color: rgb(0, 0, 0); font-size: 13px;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/How%20to%20Protect%20Your%20Child%20From%20Identity%20Theft.jpg" alt="How to Protect Your Child From Identity Theft" width="250" height="374" /></span></p> <p></span></p> <p>&nbsp;</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/carrie-kirby">Carrie Kirby</a> of <a href="http://www.wisebread.com/how-to-protect-your-child-from-identity-theft">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-protect-your-credit-after-the-equifax-breach">How to Protect Your Credit After the Equifax Breach</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-protect-your-retirement-account-from-a-hack">How to Protect Your Retirement Account From a Hack</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-spot-a-credit-repair-scam">How to Spot a Credit Repair Scam</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-freeze-your-credit">How to Freeze Your Credit</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-signs-your-identity-was-stolen">9 Signs Your Identity Was Stolen</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance children credit freezes federal trade commission fraud identity theft kids protections security breach social security Tue, 17 Oct 2017 08:30:11 +0000 Carrie Kirby 2035898 at http://www.wisebread.com 5 Common Medicare Myths, Debunked http://www.wisebread.com/5-common-medicare-myths-debunked <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-common-medicare-myths-debunked" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/medicare_application_form_with_stethoscope.jpg" alt="Medicare application form with stethoscope" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>There is no larger health insurance program in the United States than Medicare. According to the Centers for Medicare &amp; Medicaid Services, more than 57 million people were receiving health benefits through the program as of March 2017.</p> <p>But just because millions are on Medicare doesn't mean that most people, especially those who have yet to hit 65, understand how this government program works. Most people instead believe several easily debunked myths about what Medicare does, how financially healthy it is, and what it doesn't do.</p> <h2>1. Medicare won&rsquo;t be around for me</h2> <p>You might worry that Medicare won't be around to cover your health care needs by the time you retire. Here's some good news: Medicare is not broke ... yet.</p> <p>The Medicare program had about $200 billion in reserves at the end of 2015. So the program does have money.</p> <p>There is some concern, though. Medicare is projected to run a surplus every year through 2020, when a growing number of Baby Boomers will start retiring. This means that Medicare will then run at an annual deficit beginning in 2021. If nothing is done to prevent this, the program will exhaust its reserves by the year 2028.</p> <p>That will be a big problem if it is allowed to happen. There are possible solutions, though, even though they will require some financial pain. The most obvious one would be to raise Medicare taxes. That won't make anyone happy, but it is the simplest way to ensure that Medicare does have enough dollars to cover all of its beneficiaries.</p> <h2>2. There's only one type of Medicare</h2> <p>Medicare is a complicated system. In fact, there are actually <em>four </em>types of Medicare coverage.</p> <p>Medicare Part A and Part B are part of what is known as original Medicare. Medicare Part A, known as hospital insurance, covers inpatient care received at hospitals and nursing facilities. Part B covers services and supplies that you need to treat health conditions. This part of Medicare covers outpatient care, preventive services, ambulance rides, and medical equipment.</p> <p>Medicare Part C is a bit more complicated: It's the part of the program that makes it possible for private health insurance companies to provide Medicare private health plans &mdash; in the form of HMOs and PPOs &mdash; known as Medicare Advantage Plans. You can elect to receive your medical benefits through a combination of Medicare Part A and Medicare Part B or from one of these private Advantage Plans. (See also: <a href="http://www.wisebread.com/8-tips-for-getting-the-most-out-of-your-medicare-plan?ref=seealso" target="_blank">8 Tips for Getting the Most Out of Your Medicare Plan</a>)</p> <p><a href="http://www.wisebread.com/how-to-compare-medicare-part-d-plans-a-beginner-s-guide" target="_blank">Medicare Part D</a> subsidizes the cost of your prescription drugs. This part of the program is often referred to as the Medicare prescription drug benefit.</p> <h2>3. You'll never have to pay for health insurance once you're on Medicare</h2> <p>Medicare will cover much of your health insurance needs. But there are some costs that you'll still need to cover on your own.</p> <p>For instance, Medicare does come with deductibles that you must pay before the insurance kicks in. These deductibles can change each year. For 2017, Medicare Part A comes with a $1,316 deductible per benefit period for your hospital stays. This means that if you do end up in the hospital, you'll have to pay this amount out of your own savings before Medicare will cover the rest of your expenses.</p> <p>Medicare Part B has a deductible of $183 for 2017. Again, you'll have to pay this amount before your Medicare coverage kicks in. And even after Part B coverage begins, you'll still have a copay. Medicare Part B generally covers 80 percent of your medical services. You'll have to cover the remaining 20 percent of these costs on your own.</p> <p>There are also coinsurance payments. If you must stay in a hospital for more than 60 days, you'll have to make a coinsurance payment for your Medicare Part A benefits.</p> <h2>4. Medicare covers all my medical needs</h2> <p>There are some medical services that Medicare does not provide any coverage for. Unfortunately, these services aren't exactly frivolous ones.</p> <p>Medicare does not provide dental coverage. It also doesn't pay for vision examinations for glasses. You can't rely on Medicare to cover the costs of dentures or hearing aids. And if you need long-term care, Medicare again won't provide coverage.</p> <p>You can purchase specialized insurance programs to cover these medical expenses. But you'll have to pay for the plans on your own. (See also: <a href="http://www.wisebread.com/is-long-term-care-insurance-worth-it?ref=seealso" target="_blank">Is Long Term Care Insurance Worth It?</a>)</p> <h2>5. I won't have to pay any premiums for Medicare</h2> <p>Most people won't pay any monthly premiums for their Medicare Part A coverage. That's the good news. The bad news? You will pay a monthly premium for Medicare Part B.</p> <p>As of 2017, the Part B premium stood at $134 a month. Medicare, though, says that most people who get Social Security benefits pay less than that, for an average monthly premium of $109. This premium is usually deducted directly from your Social Security benefits. You won't be writing a check each month, but you'll still be paying for that Part B coverage.</p> <p>You'll also have to pay a premium each month if you elect to sign up for a Medicare Part C plan. These premiums will vary depending on your plan. Medicare Part D comes with a monthly premium, too, though this will vary according to your specific plan.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F5-common-medicare-myths-debunked&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F5%2520Common%2520Medicare%2520Myths%252C%2520Debunked.jpg&amp;description=5%20Common%20Medicare%20Myths%2C%20Debunked"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/5%20Common%20Medicare%20Myths%2C%20Debunked.jpg" alt="5 Common Medicare Myths, Debunked" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/5-common-medicare-myths-debunked">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-get-health-insurance-if-you-missed-the-open-enrollment-deadline">How to Get Health Insurance If You Missed the Open Enrollment Deadline</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-one-question-you-need-to-answer-to-choose-the-best-health-care-plan">The One Question You Need to Answer to Choose the Best Health Care Plan</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/women-pay-more-for-health-care-heres-how-to-pay-less">Women Pay More for Health Care — Here&#039;s How to Pay Less</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/health-insurance-how-to-fight-back-against-4-common-claim-denials">Health Insurance: How to Fight Back Against 4 Common Claim Denials</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-your-group-life-insurance-is-not-enough">Why Your Group Life Insurance Is Not Enough</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Health and Beauty Insurance coverage deductibles health care medical medicare myths premiums retirement social security Thu, 05 Oct 2017 08:00:06 +0000 Dan Rafter 2030973 at http://www.wisebread.com How to Face These 7 Scary Facts About Retirement Saving http://www.wisebread.com/how-to-face-these-7-scary-facts-about-retirement-saving <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-face-these-7-scary-facts-about-retirement-saving" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/how_much_savings_will_you_need_to_retire.jpg" alt="How much savings will you need to retire" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Articles warning about our lack of retirement preparedness are a dime a dozen, and maybe that's part of the problem. We hear the warnings so often that we've become numb to them.</p> <p>Maybe packing the scariest statistics into one article will have more impact and motivate more of us to get in the retirement savings game. That's what this article is designed to do. But brace yourself: The picture isn't pretty.</p> <h2>1. You might not be saving enough</h2> <p>According to the Employee Benefit Research Institute (EBRI), about two out of every five workers today (44 percent) are not saving <em>any</em> money for retirement. None.</p> <p>Even among today's oldest workers &mdash; those closest to retirement &mdash; many have far too little saved for their later years. Among workers age 55 or older, 45 percent have less than $100,000 saved.</p> <p>If these folks really kick their savings into gear &mdash; let's say they end up with $250,000 by the time they finish their career &mdash; that still won't provide much to live on. A standard <a href="http://www.wisebread.com/4-retirement-rules-of-thumb-that-actually-work?ref=internal" target="_blank">retirement rule of thumb</a> says you can withdraw 4 percent of your nest egg every year without having to worry about draining your account before you die. At $250,000, that translates into just $10,000 of annual retirement income. (See also: <a href="http://www.wisebread.com/10-signs-you-arent-saving-enough-for-retirement?ref=seealso" target="_blank">10 Signs You Aren't Saving Enough for Retirement</a>)</p> <h2>2. You might outlive your money</h2> <p>Among the many risks financial planners talk about is <em>longevity risk</em>; the danger of living a long life. It may sound kind of funny to frame that as a risk since most of us would <em>like </em>to live a long life. However, running out of money before you run out of time wouldn't be very funny at all.</p> <p>A man who is 65 years old today can expect to live another 19.2 years, according to the Social Security Administration's Life Expectancy Calculator. A 65-year-old woman can expect to live another 21.6 years.</p> <p>Are you on track to save enough to cover your retirement expenses that long?</p> <h2>3. If you're young, you're probably not saving aggressively enough</h2> <p>Many millennials &mdash; people with the best opportunity to take advantage of compounding interest &mdash; are investing far too conservatively. A 2014 UBS Investor Watch survey found that millennials were almost as likely as baby boomers to describe their risk tolerance as conservative. The same survey found millennials holding over half their assets in cash.</p> <p>When you're young, the riskiest thing you can do with your investments is to play it too safe. Doing so will make it hard to outpace inflation and you'll miss out on much of the growth that compounding can provide. (See also: <a href="http://www.wisebread.com/5-facts-millennials-should-know-about-retirement-planning?ref=seealso" target="_blank">5 Facts Millennials Should Know About Retirement Planning</a>)</p> <h2>4. You can't count on Social Security to fill in much of the gap</h2> <p>As of July 2017, the average Social Security retirement benefit was just $1,325 per month. Even scarier, the Social Security Administration notes that Social Security provides 90 percent or more of the income received by about one in five elderly married couples, and two in five elderly singles.</p> <p>A big part of the problem is that many people claim benefits as soon as they qualify &mdash; age 62. That guarantees the lowest possible monthly benefit. Waiting until full retirement age (67 for anyone born in 1960 or later), or even better, age 70, will boost monthly benefits substantially. (See also: <a href="http://www.wisebread.com/6-smart-ways-to-boost-your-social-security-payout-before-retirement?ref=seealso" target="_blank">6 Smart Ways to Boost Your Social Security Payout Before Retirement</a>)</p> <h2>5. You shouldn't count on working for pay in your later years</h2> <p>Plan B for a growing number of today's workers is to retire after the typical retirement age of 65. For many, it isn't that they love their job so much; it's that they know they'll need the money.</p> <p>But their aspirations don't match reality. According to EBRI, 52 percent of today's workers <em>expect</em> to retire after age 65 or never retire, whereas just 14 percent of today's over-65 crowd <em>actually</em> retired that late or never retired.</p> <p>In fact, 48 percent of today's retirees left the workforce <em>earlier</em> than planned &mdash; mostly due to health issues or the need to care for a loved one.</p> <h2>6. You may have no idea how much you should be saving for retirement</h2> <p>EBRI found that just 41 percent of all of today's workers have tried to figure out how much they will need to have saved by the time they retire in order to live comfortably. Those that <em>have</em> run the numbers tend to save more for retirement. (See also: <a href="http://www.wisebread.com/this-one-thing-could-be-the-key-to-retiring-rich?Ref=seealso" target="_blank">This One Thing Could Be the Key to Retiring Rich</a>)</p> <h2>7. You may not be able to afford your later life health care costs</h2> <p>A recent Fidelity study found that a couple retiring this year would need $275,000 to cover their health care premiums, copays, deductibles, and out-of-pocket costs for prescription drugs over the course of their retirement. (See also: <a href="http://www.wisebread.com/9-unexpected-expenses-for-retirees-and-how-to-manage-them?ref=seealso" target="_blank">9 Unexpected Expenses for Retirees &mdash; And How to Manage Them</a>)</p> <p>What that figure <em>doesn't </em>include is long-term care, and yet, today's 65-year-olds have a 70 percent chance of needing some type of long-term care before they die, according to the U.S. Department of Health and Human Services. And that care is costly. Genworth's latest annual Cost of Care survey found that a private room in a nursing home cost nearly $7,700 per month in 2016, or over $92,000 per year. (See also: <a href="http://www.wisebread.com/is-long-term-care-insurance-worth-it?ref=seealso" target="_blank">Is Long Term Care Insurance Worth It?</a>)</p> <p>If these scary statistics have convinced you to take action, here are three of the most important steps to take: Run the numbers to figure out how much you should be saving for retirement, make saving a priority, and wait at least until full retirement age before claiming Social Security benefits.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fhow-to-face-these-7-scary-facts-about-retirement-saving&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FHow%2520to%2520Face%2520These%25207%2520Scary%2520Facts%2520About%2520Retirement%2520Saving.jpg&amp;description=How%20to%20Face%20These%207%20Scary%20Facts%20About%20Retirement%20Saving"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/How%20to%20Face%20These%207%20Scary%20Facts%20About%20Retirement%20Saving.jpg" alt="How to Face These 7 Scary Facts About Retirement Saving" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/matt-bell">Matt Bell</a> of <a href="http://www.wisebread.com/how-to-face-these-7-scary-facts-about-retirement-saving">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-retirement-struggles-nobody-talks-about-and-how-to-beat-them">5 Retirement Struggles Nobody Talks About — And How to Beat Them</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-signs-its-time-to-retire">8 Signs It&#039;s Time to Retire</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-age-milestones-that-impact-your-retirement">6 Age Milestones That Impact Your Retirement</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/heres-how-you-should-budget-your-social-security-checks">Here&#039;s How You Should Budget Your Social Security Checks</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/three-of-the-toughest-decisions-youll-face-in-retirement">Three of the Toughest Decisions You&#039;ll Face in Retirement</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401(k) expenses health care IRA not saving enough outliving money scary facts social security Wed, 04 Oct 2017 09:00:06 +0000 Matt Bell 2030771 at http://www.wisebread.com Three of the Toughest Decisions You'll Face in Retirement http://www.wisebread.com/three-of-the-toughest-decisions-youll-face-in-retirement <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/three-of-the-toughest-decisions-youll-face-in-retirement" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/senior_couple_thave_a_breakfast_at_cafe.jpg" alt="Senior couple thave a breakfast at cafe" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>After spending a lifetime saving for retirement, you might think (or hope) the tough financial work is over. But in reality, retirement will bring several <em>new</em> financial challenges. Here are three of the key questions you'll need to address along with some recommendations.</p> <h2>1. When should I take Social Security?</h2> <p>There are many options here, especially when coordinating benefits with a spouse. Understanding the rules around three important age milestones can help you think through the best choice. (See also: <a href="http://www.wisebread.com/5-questions-to-ask-before-you-start-claiming-your-social-security-benefits?ref=seealso" target="_blank">5 Questions to Ask Before You Start Claiming Your Social Security Benefits</a>)</p> <h3>Age 62</h3> <p>This is when you first become eligible to receive Social Security benefits. If you opt to take them this early, you'll get the smallest monthly benefit. While it's true that you may end up collecting benefits for the longest period of time by starting at age 62, if you can afford to do so, it's generally best to wait at least until your full retirement age (FRA). At that point, your monthly benefit will increase by 30 percent.</p> <p>If you're planning to continue working to some degree in your early to mid 60s, this may be another reason to wait. Claiming Social Security benefits before your FRA will trigger an &quot;earnings test.&quot; After you earn a certain amount (about $17,000 in 2017), for every two dollars of income, your Social Security benefits will be reduced by one dollar.</p> <p>You can learn more about the <a href="https://www.ssa.gov/oact/cola/rtea.html" target="_blank">earnings test</a> on the Social Security Administration's website.</p> <h3>Full retirement age</h3> <p>If you were born in 1960 or later, your <a href="https://www.ssa.gov/planners/retire/retirechart.html" target="_blank">full retirement age is 67</a>. That's the age at which you become eligible to receive what the Social Security Administration deems to be your &quot;full&quot; benefit.</p> <p>An important consideration related to your FRA has to do with spousal benefits. If you earned significantly more than your spouse over your careers, his or her spousal benefit (half your full retirement age benefit) may be larger than his or her own benefit. While your spouse could file for spousal benefits as early as age 62, he or she will get the maximum amount only if you <em>both</em> wait until your full retirement ages before claiming benefits.</p> <h3>Age 70</h3> <p>While it may sound as if full retirement age is when you'll qualify for your maximum benefit, waiting until age 70 will actually give you more. When I checked my benefits on the Social Security Administration website, I found that waiting until age 70 would boost my monthly benefit amount by nearly <em>28 percent </em>versus claiming it at my FRA of 67.</p> <p>In addition to qualifying for this higher monthly benefit, another important reason to consider waiting this long has to do with the potential impact on your spouse. Let's say you're the husband and have been the higher earner. When you pass away, your wife will be able to trade her benefit for your larger benefit, which she will receive for the rest of her life. (See also: <a href="http://www.wisebread.com/6-smart-ways-to-boost-your-social-security-payout-before-retirement?ref=seealso" target="_blank">6 Smart Ways to Boost Your Social Security Payout Before Retirement</a>)</p> <h2>2. How much of my nest egg can I withdraw?</h2> <p>A long-standing rule of thumb is that you can safely withdraw 4 percent of your nest egg each year, bumping that amount up by the rate of inflation each year, without having to worry about depleting your savings before you die.</p> <p>However, there are many moving parts to this equation. Your cost of living will probably vary throughout retirement, and so will the stock market's performance.</p> <p>So, instead of adhering to a fixed formula, rerun the numbers each year using what some planners call a <em>dynamic withdrawal strategy</em>: Determine how much to withdraw based on the performance of your portfolio and your spending needs.</p> <h2>3. Which nest egg funds should I tap first?</h2> <p>If you have money in various accounts, such as a taxable account, a tax-deferred account (traditional IRA/401(k)), and a tax-free account (Roth IRA/401(k)), here's a recommended path for greatest tax efficiency.</p> <p>Generally, it's best to use money in your <em>taxable </em>accounts first, which allows funds in tax-advantaged accounts to continue growing on a tax-deferred or tax-free basis.</p> <p>Next, use money from your traditional IRA or 401(k) accounts. In fact, you <em>have to </em>start taking money from these accounts beginning at age 70&frac12;. That's when required minimum distribution (RMD) rules kick in. If you don't withdraw at least a specific minimum amount, you'll owe stiff penalties to the IRS.</p> <p>One factor to keep in mind is that if you have substantial balances in traditional IRA or 401(k) accounts, waiting to tap any of this money until age 70&frac12; may make your RMDs so large that they'll push you into a higher tax bracket. If that's the case, you may want to start taking some withdrawals from these accounts earlier than age 70&frac12;.</p> <p>It's usually best to save your Roth IRA money for last since they are not subject to RMD rules. If you don't need the money, you can let it continue growing tax-free.</p> <h2>Stay in the game</h2> <p>While retirement may be a time when you want to step away from some of the many responsibilities you had during your working years, it's important that you stay proactive with regard to your finances. Making well thought out decisions in the three areas discussed above will go a long way toward helping you enjoy financial peace of mind in your later years.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fthree-of-the-toughest-decisions-youll-face-in-retirement&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FThree%2520of%2520the%2520Toughest%2520Decisions%2520You%2527ll%2520Face%2520in%2520Retirement.jpg&amp;description=Three%20of%20the%20Toughest%20Decisions%20You'll%20Face%20in%20Retirement"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/Three%20of%20the%20Toughest%20Decisions%20You%27ll%20Face%20in%20Retirement.jpg" alt="Three of the Toughest Decisions You'll Face in Retirement" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/matt-bell">Matt Bell</a> of <a href="http://www.wisebread.com/three-of-the-toughest-decisions-youll-face-in-retirement">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-tax-day-is-april-15-and-other-weird-financial-deadlines">Why Tax Day Is April 15 and Other Weird Financial Deadlines</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-age-milestones-that-impact-your-retirement">6 Age Milestones That Impact Your Retirement</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-every-retirement-saver-should-know-about-required-minimum-distributions">What Every Retirement Saver Should Know About Required Minimum Distributions</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-roadblocks-to-retirement-and-how-to-clear-them">7 Roadblocks to Retirement (And How to Clear Them)</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-signs-its-time-to-retire">8 Signs It&#039;s Time to Retire</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401(k) benefits decisions full retirement age IRA questions required minimum distributions social security withdrawals Wed, 27 Sep 2017 08:00:06 +0000 Matt Bell 2025922 at http://www.wisebread.com 8 Signs It's Time to Retire http://www.wisebread.com/8-signs-its-time-to-retire <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/8-signs-its-time-to-retire" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/senior_woman_relaxing_0.jpg" alt="Senior woman relaxing" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>There will come a time when you consider making the shift from worker bee to retiree. But knowing the best moment to stop working is not always easy to determine. How do you know whether your money will last once you stop earning a salary? Is there a &quot;magic age,&quot; when retiring makes sense, or do you just go with a gut feeling?</p> <p>There's no science to knowing when to retire, but there may be some signs to follow. If most or all of these apply to you, maybe it's time to submit that resignation and begin the next chapter of your life.</p> <h2>1. You have enough money for the retirement you want</h2> <p>It's impossible to know precisely how much you'll need in retirement, but there are some basic calculations you can make to see how long your money will last if you stop working.</p> <p>You must first calculate what your annual living expenses will be. Research shows that people tend to spend less as they get older, but be sure to factor in the potential costs of new activities like travel, eating out, and caring for grandchildren. Then, examine how much money you have saved, and what the return on that money might be as you age. Match those numbers up with your expected life span. There are other things to consider, such as whether you plan to draw equity from your home. There are many online calculators that can help you with these figures.</p> <p>Generally speaking, if you take the annual expenses you expect and multiply them by 25, you'll be in the ballpark of what you need to retire comfortably. Once you are approaching this number, it may be a sign that you can stop working. (See also: <a href="http://www.wisebread.com/6-ways-you-can-cut-costs-right-before-you-retire-0?ref=seealso" target="_blank">6 Ways You Can Cut Costs Right Before You Retire</a>)</p> <h2>2. You must collect distributions from your retirement plan</h2> <p>If you have a 401(k) or IRA, there comes a point at which you are required to take distributions. For most people, this age is 70-&frac12;. You can delay taking 401(k) distributions until after you stop working, but not for the money in a traditional IRA. If you are being forced to take distributions, there's not much incentive to continue working.</p> <h2>3. You can collect the maximum in Social Security</h2> <p>The government incentivizes people to retire later by offering them more money from Social Security if they wait longer to collect it. You can begin collecting benefits as early as age 62, but those benefits will be higher if you wait longer. Those approaching retirement age can get full benefits if they wait until age 67, and may get additional credits if they wait until age 70. If you're already getting the maximum benefit from the government, perhaps it's a sign that you're ready to retire for good. (See also: <a href="http://www.wisebread.com/6-smart-ways-to-boost-your-social-security-payout-before-retirement?ref=seealso" target="_blank">6 Smart Ways to Boost Your Social Security Payout Before Retirement</a>)</p> <h2>4. Your expenses are the lowest they've been in years</h2> <p>Your house is completely paid off. The kids are out of the house and college is paid for. You're not yet at the point where you have high medical expenses. Your cost of living hasn't been this low in decades. Sure, you may have big ticket things you want to pay for (travel, for example), but your day-to-day existence no longer requires a bi-weekly paycheck. It's still important to assess whether you have enough saved to last, but if you've downsized your lifestyle to a super-low level, it may no longer be necessary to keep working.</p> <h2>5. You no longer get any pleasure from work</h2> <p>We've all heard stories about older people who continue working simply because it makes them happy. Often, working gives them purpose and a sense of satisfaction that can't be replaced in retirement. But what if you're not one of these people? What if the work itself isn't rewarding, and you find yourself drained rather than energized by it? Then it may be time to consider retiring, assuming that your financial ducks are lined up well. Life is too short to work at an unsatisfying job if you don't have to.</p> <h2>6. Your health is starting to decline</h2> <p>In a perfect world, you will be healthy and spry enough to take advantage of all that retirement can offer. You will be perfectly able to handle that long bike tour through the south of France, and those backpacking trips on the Pacific Crest Trail. You'll have energy to spend time and keep up with your grandkids. But, if you are starting to see your health fade, perhaps it's time to stop working before you're unable to enjoy retirement the way you wish.</p> <h2>7. Your spouse wants you to</h2> <p>If your significant other is done working and has an urge to begin the next chapter of their life, perhaps it's that time for you as well. Many of the happiest retired couples are those that retire at the same time, and make post-work plans together. How fun is your spouse's retirement going to be if you're still schlepping into the office every day? (See also: <a href="http://www.wisebread.com/5-money-conversations-couples-should-have-before-retirement?ref=seealso" target="_blank">5 Money Conversations Couples Should Have Before Retirement</a>)</p> <h2>8. You are confident in your post-work plans</h2> <p>Many people continue working because they honestly don't know what they'd do otherwise. But if you have mapped out your retirement life, have a good sense of how you'll fill your days, and feel excited about what you want to do, that's a sign you may be ready to retire. If work is actually preventing you from moving forward on your plans, maybe it's time to think seriously about stopping work, assuming you are also ready financially.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F8-signs-its-time-to-retire&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F8%2520Signs%2520Its%2520Time%2520to%2520Retire.jpg&amp;description=8%20Signs%20Its%20Time%20to%20Retire"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/8%20Signs%20Its%20Time%20to%20Retire.jpg" alt="8 Signs It's Time to Retire" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/8-signs-its-time-to-retire">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-retirement-struggles-nobody-talks-about-and-how-to-beat-them">5 Retirement Struggles Nobody Talks About — And How to Beat Them</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-roadblocks-to-retirement-and-how-to-clear-them">7 Roadblocks to Retirement (And How to Clear Them)</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-age-milestones-that-impact-your-retirement">6 Age Milestones That Impact Your Retirement</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-expensive-mistakes-of-the-newly-retired">9 Expensive Mistakes of the Newly Retired</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-face-these-7-scary-facts-about-retirement-saving">How to Face These 7 Scary Facts About Retirement Saving</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401(k) downsizing expenses Health leisure required minimum distributions saving money social security working Thu, 14 Sep 2017 08:00:06 +0000 Tim Lemke 2020506 at http://www.wisebread.com How to Help Your Parents Retire http://www.wisebread.com/how-to-help-your-parents-retire <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-help-your-parents-retire" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/all_grown_up_but_still_her_mother's_daughter.jpg" alt="All grown up, but still her mother&#039;s daughter" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>One of the toughest transitions into adulthood is when you realize that you need to help your parents instead of the other way around.</p> <p>Add money into the mix, and that can make an already awkward transition feel even more uncomfortable. Money is often a taboo topic in families, and parents sometimes have trouble letting go of the idea that you are a child rather than someone who can help them with financial planning. It may feel easier to just assume Mom and Dad have everything covered for their financial future, and let the chips fall where they may.</p> <p>But helping your parents prepare for retirement is one of the best gifts you can give the people who raised you. That's because even the most financially savvy planners may run into issues, questions, or problems that they are not sure how to handle. You can help your parents get ready for retirement, and grow closer in the process.</p> <p>Here's what you need to know about helping your parents retire.</p> <h2>Prioritize your own retirement savings</h2> <p>Most parents know that it's smarter to save for retirement before putting money into the kids' college funds. After all, students can take out loans for school, but there are no loans for retirement. Adult children should prioritize retirement savings over paying for their parents' retirement needs.</p> <p>It may seem strange to prioritize your own retirement as a part of helping your parents retire, but it's an important first step in financially protecting your entire family. Taking care of your parents' retirement instead of saving for your own means that you will simply be passing money problems from one generation to the next. By putting your own retirement savings first, you are teaching your kids how to responsibly plan for their own financial futures.</p> <p>Being prepared to have your parents use their assets for as long as they last will also allow you to make the best use of programs like Medicaid, which requires long-term care recipients to have exhausted their own assets before it kicks in. Rather than exhaust your own finances, plan to protect your future retirement so your kids are not left with another tough decision in 30 years.</p> <h2>Introduce the initial conversation</h2> <p>To be able to help your parents retire, you need to know where they stand financially so you can best help them fill in the gaps and prepare for that major transition. If you're lucky, your parents have already looped you in on what they have saved, where it is, what plans they have for the future, and who they trust as their financial adviser to make the decisions. (See also: <a href="http://www.wisebread.com/6-things-youll-encounter-when-taking-over-a-loved-ones-finances?ref=seealso" target="_blank">6 Things You'll Encounter When Taking Over a Loved One's Finances</a>)</p> <p>Where it gets tricky is if your parents shut down any money conversations and change the subject to &quot;something more pleasant.&quot; If you know your parents will not feel comfortable talking openly about their money planning with you, frame the conversation as an opportunity for you to learn together.</p> <p>For instance, you might mention that you want to look over your 401(k) information and would love to chat with them about how they handle their retirement accounts. In addition, you could invite them to read a book with you about financial planning so you can use the information as a jumping off point for personal discussion.</p> <h2>Talk about the day-to-day details</h2> <p>Knowing where your parents hope to live and how they intend to spend their time in retirement will give you (and them) a baseline understanding of how much they will need in retirement. Encourage Mom and Dad to talk about how they want their lives to look in retirement. Do they want to stay in place, move closer to grandchildren, or sell everything and live in an RV?</p> <p>In addition to helping you get a better sense of their financial needs in retirement, these conversations will also help your parents enjoy the anticipation of planning for retirement.</p> <h2>Learn more about Social Security and Medicare</h2> <p>While spending an afternoon navigating Social Security and Medicare's websites is no one's idea of fun, taking the time to determine your parents' eligibility for these programs can help you better understand what to expect from their government entitlements. You and your parents can check out the eligibility questionnaires at <a href="http://www.medicare.gov/" target="_blank">Medicare.gov</a> and <a href="http://www.benefits.gov/" target="_blank">Benefits.gov</a> to find out what benefits are available and whether your parents qualify.</p> <h2>Meet with a financial adviser</h2> <p>No one expects you (or your parents!) to know everything about the complexities of planning for retirement. Together with your parents, take the time to interview and hire a financial adviser to help with the details of building your parents' retirement.</p> <p>A financial adviser is also in a good position to help your parents make sure their estate planning is up-to-snuff and that all of their accounts have properly named beneficiaries. Even if Mom and Dad are uncomfortable talking about these issues with you &mdash; who wants to think about their own deaths, after all? &mdash; having a trusted financial adviser can help make sure they have all the necessary estate planning paperwork in place.</p> <h2>Keep talking</h2> <p>If money conversations are uncomfortable, you might feel like having that single afternoon of financial planning with your parents is sufficient. But checking in with your parents regularly is an essential part of helping them prepare for retirement. This lets them know you are there to help them with any difficult issues or decisions.</p> <p>Continuing the conversation can also help <a href="http://www.wisebread.com/how-to-protect-elderly-loved-ones-from-financial-scams?ref=internal" target="_blank">protect your parents against scams</a>. According to a 2015 True Link Financial report on financial elder abuse, annual losses from elder fraud totaled over $36 billion. By staying connected with your parents and offering to help them with financial decisions, they will be less likely to fall victim to a predatory scammer because you will be there to help sniff out anything untoward.</p> <h2>Paying it back to Mom and Dad</h2> <p>Your parents took care of you throughout your childhood (and maybe a little into adulthood, too). Now it's your turn to look out for them. Give your parents the gift of some help with retirement planning, so they can relax and enjoy the end of their career and the beginning of the next phase of their lives.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fhow-to-help-your-parents-retire&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FHow%2520to%2520Help%2520Your%2520Parents%2520Retire.jpg&amp;description=How%20to%20Help%20Your%20Parents%20Retire"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/How%20to%20Help%20Your%20Parents%20Retire.jpg" alt="How to Help Your Parents Retire" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/emily-guy-birken">Emily Guy Birken</a> of <a href="http://www.wisebread.com/how-to-help-your-parents-retire">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-save-for-retirement-while-caring-for-kids-and-parents">How to Save for Retirement While Caring for Kids and Parents</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-roadblocks-to-retirement-and-how-to-clear-them">7 Roadblocks to Retirement (And How to Clear Them)</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-signs-its-time-to-retire">8 Signs It&#039;s Time to Retire</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-plan-for-a-forced-early-retirement">How to Plan for a Forced Early Retirement</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-questions-financial-advisers-hear-most-often">8 Questions Financial Advisers Hear Most Often</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Family Retirement assistance caregiving financial help medicare parents saving money scams social security Tue, 12 Sep 2017 08:00:06 +0000 Emily Guy Birken 2019028 at http://www.wisebread.com