Retirement http://www.wisebread.com/taxonomy/term/417/0 en-US 9 Retirement Hotspots That Are Cheaper Now Than Ever Before http://www.wisebread.com/9-retirement-hotspots-that-are-cheaper-now-than-ever-before <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/9-retirement-hotspots-that-are-cheaper-now-than-ever-before" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/glimpse_of_andalusia.jpg" alt="Glimpse of Andalusia" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Financial considerations are the biggest factor for many people when deciding where they want to enjoy their retirement years. As the strength of the dollar continues its hold against other currencies, it&rsquo;s providing us with far more purchasing clout when it comes to buying other currencies.</p> <p>This in turn is helping to make many destinations even more affordable to U.S. citizens who are looking to decamp to foreign locales. Here are nine retirement hot spots that are cheaper than you thought. (See also: <a href="http://www.wisebread.com/retire-for-half-the-cost-in-these-5-countries?ref=seealso" target="_blank">Retire for Half the Cost in These 5 Countries</a>)</p> <h2>1. Panama</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5197/casco_viejo_nightlife_0.jpg" width="605" height="340" alt="" /></p> <p>With its interesting mix of advanced amenities and lush natural landscapes, Panama has been one of the most popular retirement hot spots in Latin America for a number of years. The capital, Panama City, is a skyscraper-filled, modern metropolis with a well developed infrastructure to rival any city in the U.S.</p> <p>The U.S. dollar is actually legal currency in Panama so you&rsquo;ll be able to see just what value you&rsquo;re getting without any conversions. The cost of living in Panama is comparatively low. Numbeo puts it at around 26 percent of what it is in the U.S., with expenses such as health care and real estate working out extremely cheaply. (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> <h2>2. Mexico</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5197/museo_soumaya_in_mexico_city.jpg" width="605" height="340" alt="" /></p> <p>Hopping over the border to Mexico has always been a convenient option for U.S. citizens wanting somewhere nearby to retire to. Rich with incredible culture, fascinating history, a great coastline, and a mouthwatering cuisine, Mexico is both familiar and exotic at the same time.</p> <p>The exchange rate hit a high in 2017, meaning U.S. dollars go further there now. That, combined with a cost of living of around 60 percent lower than in the U.S., means your dollar will go a lot further in Mexico than it would at home.</p> <p>While drug-related crime has risen in recent years, there are many retirement communities that are completely safe. (See also: <a href="http://www.wisebread.com/how-almost-anyone-can-afford-to-retire-in-mexico?ref=seealso" target="_blank">How Almost Anyone Can Afford to Retire in Mexico</a>)</p> <h2>3. Spain</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5197/glimpse_of_andalusia.jpg" width="605" height="340" alt="" /></p> <p>Spain frequently tops the list of the most popular retirement destinations for Europeans. It&rsquo;s little wonder when you consider the number of major cities, the stunning beachside resorts along the coastline, and the slow pace of life.</p> <p>The dollar is closing in on par with the Euro and the country has only just pulled out of a financial crisis that began in 2008. As a result, U.S. citizens have more purchasing power than ever in Spain right now, making the prospect of retiring here even more enticing. The cost of living stands at about 27 percent lower than the U.S., according to Numbeo, so it&rsquo;s no surprise that there are over 5.5 million foreign nationals living in Spain.</p> <h2>4. Ecuador</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5197/fruit_market_otavalo_ecuador.jpg" width="605" height="340" alt="" /></p> <p>If you&rsquo;re a lover of the great outdoors, then Ecuador could be the ideal choice as your retirement location. It&rsquo;s home to portions of the Andes mountain range and the Amazon Rainforest, some of the most untouched Pacific Coast beaches in South America, and the remarkable Galápagos Islands.</p> <p>Pricewise it comes in at around 50 percent cheaper than the U.S., according to Numbeo, so you&rsquo;ll have plenty of cash left over for exploring and adventuring each month. Ecuador adopted the U.S. dollar in 2000 as its official currency so your nest egg won&rsquo;t be affected by exchange charges or currency fluctuations. (See also: <a href="http://www.wisebread.com/5-incredible-places-to-retire-abroad-that-anyone-can-afford?ref=seealso" target="_blank">5 Amazing Places to Retire Abroad That Anyone Can Afford</a>)</p> <h2>5. Costa Rica</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5197/wild_caribbean_beach_of_Costa_rica.jpg" width="605" height="340" alt="" /></p> <p>Costa Rica is famous among surfers all over the world for its awesome swells, but in recent years it&rsquo;s also been making waves of a different kind. People of retirement age are flocking here for its year-round tropical climate, stunning beaches, and green landscapes.</p> <p>Numbeo reports that the cost of living is around 34 percent less in Costa Rica, so it&rsquo;s easy to see why up to 100,000 American citizens have decided to call Costa Rica home. Exchange rates to the Costa Rican Colon have been steadily rising over the past year, peaking at around 591 to the dollar.</p> <h2>6. Malaysia</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5197/classic_local_rickshaw.jpg" width="605" height="340" alt="" /></p> <p>Malaysia is one of the most diverse countries in Asia, making it a continuously interesting place to live. It has influences from Malay, Chinese, and Indian populations clearly visible in the culture and cuisine, with an added bonus that English is widely spoken. It also has bustling, modern cities that have the same amenities, restaurants, and funky bars that you&rsquo;re used to in the U.S.</p> <p>Many retirees enjoy a better standard of living here than they would be able to afford in the U.S. thanks to the cost of living being around 52 percent lower, according to Numbeo. Health care is one of the biggest reasons that retirees come to Malaysia &mdash; its quality is so good that a medical tourism boom has sprung up.</p> <h2>7. Malta</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5197/boats_in_bugibba_bay_malta.jpg" width="605" height="340" alt="" /></p> <p>Thanks to the laid back island life with year-round sun, Malta is a popular destination for retirees. This tiny archipelago of just three islands lies in the Mediterranean Sea between the South coast of Italy and North Africa and has a population of around only 400,000.</p> <p>Many of Malta&rsquo;s residents are English speaking, and one of the islands, Gozo, is home to a particularly large expat community with a big American contingent. Numbeo reports that prices here are around 13 percent cheaper than in the U.S. overall, but it&rsquo;s possible to live for much cheaper.</p> <h2>8. Portugal</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5197/beautiful_beach_in_carvoeiro_algarve_portugal.jpg" width="605" height="340" alt="" /></p> <p>Europeans have been retiring to Portugal for decades, attracted by the warm weather, the picturesque coastline, and government tax breaks offered to overseas retirees. But the secret is slowly beginning to reach U.S. shores as Americans start to realize just what they&rsquo;re missing out on.</p> <p>Portugal has some impressive infrastructure boasting world class golf courses, fantastic restaurants, and some of the highest rated health care in the world. Despite all of this, the cost of living here is still relatively low, and you&rsquo;ll pay around 34 percent less in Portugal than in the U.S., according to Numbeo.</p> <h2>9. Thailand</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5197/the_best_of_landscape_in_chiang_mai.jpg" width="605" height="340" alt="" /></p> <p>One of the most popular tourist destinations in the world, Thailand is also a hot spot for retirees from all over the globe. Thanks to its diversity, it&rsquo;s possible to settle down in a vast city, a lush green mountainous region, or even a secluded island with golden beaches.</p> <p>Despite its popularity, Thailand remains one of the cheapest countries in Asia to live in, with costs at over 43 percent less than in the U.S., according to Numbeo. The exchange rate has dropped in recent months, but is still considered favorable for expats wanting to move here now. (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 style="text-align: center;">Like this post? Pin it!</h2> <div align="center"><a data-pin-do="buttonBookmark" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <div><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/9%20Retirement%20Hotspots%20That%20Are%20Cheaper%20Now%20Than%20Ever%20Before%20%282%29.jpg" style="float: left; width: 31%; margin-right: 3%; margin-bottom: 0.5em;" alt="" /></p> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/9%20Retirement%20Hotspots%20That%20Are%20Cheaper%20Now%20Than%20Ever%20Before.jpg&#10;" style="float: left; width: 31%; margin-right: 3%; margin-bottom: 0.5em;" alt="" /> <img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/9%20Retirement%20Hotspots%20That%20Are%20Cheaper%20Now%20Than%20Ever%20Before%20%281%29.jpg" style="float: left; width: 31%; margin-right: 0%; margin-bottom: 0.5em;" alt="" /></p> </div> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/nick-wharton">Nick Wharton</a> of <a href="http://www.wisebread.com/9-retirement-hotspots-that-are-cheaper-now-than-ever-before">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-choose-the-perfect-country-to-retire-in">How to Choose the Perfect Country to Retire In</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-incredible-places-to-retire-abroad-that-anyone-can-afford">5 Incredible Places to Retire Abroad That Anyone Can Afford</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/14-useful-items-hotels-usually-provide-for-free">14 Useful Items Hotels Usually Provide for Free</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/x-exciting-world-cities-you-can-afford-to-retire-in">4 Exciting World Cities You Can Afford to Retire In</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/11-ways-to-get-the-most-value-from-your-all-inclusive-vacation">11 Ways to Get the Most Value From Your All-Inclusive Vacation</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement Travel international travel moving retire abroad retirement retirement tips travel travel tips Wed, 18 Oct 2017 08:30:11 +0000 Nick Wharton 2038473 at http://www.wisebread.com 5 Ways to Get the Most From Your Employer’s Automated Retirement Plan http://www.wisebread.com/5-ways-to-get-the-most-from-your-employer-s-automated-retirement-plan <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-ways-to-get-the-most-from-your-employer-s-automated-retirement-plan" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/arrows_pointing_in_positive_direction_on_401k_statement.jpg" alt="Arrows Pointing In Positive Direction On 401(k) Statement" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>An increasing number of companies are automating their 401(k) plans &mdash; automatically enrolling new hires and even automatically choosing investments for employees. If that's true of your employer, don't be lulled into a false sense of confidence. Just because many decisions are being made for you doesn't necessarily mean they're the <em>right</em> decisions. Here's what you need to know.</p> <h2>1. Stay in</h2> <p>The starting point of automated retirement plans is automated enrollment. To not participate, you have to opt <em>out. </em>Don't do that. For the vast majority of employees, participation is a good thing.</p> <h2>2. Invest enough</h2> <p>Most automated plans set employee contributions at very low rates, such as 3 percent of salary, at least initially. Many employees, perhaps assuming that's how much they <em>should</em> be investing, never change their contribution rate.</p> <p>However, 3 percent of salary is almost certainly not enough &mdash; not enough to get the full company match if that's available, and not enough to save adequately for retirement. So, use a free online retirement planning calculator to find out how much you should be saving and set your contribution rate accordingly.</p> <p>If you can't afford to contribute enough right away, see if your company's plan offers <em>auto-escalation</em>, which will automatically increase your contribution rate over time. If it does, signing up would help you follow through on your good intentions.</p> <h2>3. Choose the right investment(s)</h2> <p>Your plan may automatically invest your contributions in a target-date fund. Such funds have many benefits, but also a few features you should watch out for. The primary benefits are that they come with preset asset allocations based on the year of your intended retirement, and they automatically become more conservatively invested as you near your target retirement date. (See also: <a href="http://www.wisebread.com/what-you-need-to-know-about-the-easiest-way-to-save-for-retirement?ref=seealso" target="_blank">What You Need to Know About the Easiest Way to Save for Retirement</a>)</p> <p>The primary thing to watch out for is that not all target-date funds are created equal. Funds from different fund companies all designed with the same target retirement date in mind can have very different stock/bond allocations.</p> <p>It would be best to determine your optimal asset allocation using a tool such as Vanguard's free <a href="https://personal.vanguard.com/us/FundsInvQuestionnaire" target="_blank">Investor Questionnaire</a>. Then choose the target-date fund that most closely matches that allocation. It might be one with an earlier or later target retirement date than your actual planned retirement date, depending on your optimal asset allocation.</p> <h2>4. Don't pay too much in fees</h2> <p>If a target-date fund is the default investment in your 401(k) plan, and if you like the idea of using a target-date fund, you should still check the fund's expense ratio. The lower, the better. For example, with a fund charging an expense ratio of 0.75 percent, you'll pay $7.50 in fees each year for every $1,000 you have invested. If the expense ratio is 0.25 percent, you'll pay $2.50 per year for every $1,000 invested.</p> <p>If the default fund's expense ratio is on the high side (to give you a point of reference, Vanguard charges just 0.16 percent for its 2040 target-date fund), see if your plan gives you access to a brokerage window. If so, you should be able to choose a target-date fund from among many fund companies, which should enable you to choose a lower-cost fund. (See also: <a href="http://www.wisebread.com/watch-out-for-these-5-sneaky-401k-fees?ref=seealso" target="_blank">Watch Out for These 5 Sneaky 401K Fees</a>)</p> <p>Another option is to see if your plan offers index funds, which typically have very low expense ratios. If so, consider using such funds to build a portfolio that matches your optimal asset allocation. You may be able to do so using as few as three funds.</p> <h2>5. Keep your hands off the money</h2> <p>Some companies with automatic retirement plans are finding that many participants are surprised by how quickly money has built up in their accounts. Surprise is quickly followed by a desire for that money, which is then followed by a loan.</p> <p>It would be far better to remember what the money is for (retirement!) and keep your hands off. One of the key ingredients for successful investing is time. Pulling money from your account, even temporarily, gives it less time to compound. Plus, if you borrow against your account and then leave your employer &mdash; whether by your choice or your employer's &mdash; you'll have to repay the entire loan, usually within 60 days.</p> <p>Automation has been very effective at driving up participation rates in 401(k) plans, which has been beneficial for thousands of people. However, to get the most out of your employer's automated plan, make sure the automated choices are truly the best choices for you. If they're not, don't be afraid to make some manual changes.</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-ways-to-get-the-most-from-your-employer-s-automated-retirement-plan&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F5%2520Ways%2520to%2520Get%2520the%2520Most%2520From%2520Your%2520Employers%2520Automated%2520Retirement%2520Plan.jpg&amp;description=5%20Ways%20to%20Get%20the%20Most%20From%20Your%20Employers%20Automated%20Retirement%20Plan"></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%20Ways%20to%20Get%20the%20Most%20From%20Your%20Employers%20Automated%20Retirement%20Plan.jpg" alt="5 Ways to Get the Most From Your Employer&rsquo;s Automated Retirement Plan" 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/5-ways-to-get-the-most-from-your-employer-s-automated-retirement-plan">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-face-4-ugly-truths-about-retirement-planning">How to Face 4 Ugly Truths About Retirement Planning</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-traps-to-avoid-with-your-401k">7 Traps to Avoid With Your 401(k)</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/bookmark-this-a-step-by-step-guide-to-choosing-401k-investments">Bookmark This: A Step-by-Step Guide to Choosing 401(k) Investments</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-age-milestones-that-impact-your-retirement">6 Age Milestones That Impact Your 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/15-retirement-terms-every-new-investor-needs-to-know">15 Retirement Terms Every New Investor Needs to Know</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401(k) automated retirement plans contributions expense ratios fees loans target date funds Wed, 18 Oct 2017 08:30:06 +0000 Matt Bell 2037239 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-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-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-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/13-crucial-social-security-terms-everyone-needs-to-know">13 Crucial Social Security Terms Everyone Needs to Know</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/7-things-financial-advisers-wish-you-knew-about-retirement">7 Things Financial Advisers Wish You Knew About 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/how-to-help-your-parents-retire">How to Help Your Parents Retire</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/heres-how-your-taxes-will-change-when-you-retire">Here&#039;s How Your Taxes Will Change When You Retire</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 Choose the Perfect Country to Retire In http://www.wisebread.com/how-to-choose-the-perfect-country-to-retire-in <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-choose-the-perfect-country-to-retire-in" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/happy_senior_couple_sitting_on_a_sail_boat.jpg" alt="Happy Senior Couple Sitting on a Sail Boat" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Many of us harbor dreams of retiring overseas in some far-flung, exotic country. Whether it&rsquo;s for pure adventure, to make retirement dollars stretch further, or both, retiring abroad is becoming more common. But choosing exactly where to go can be difficult. Without proper planning and consideration, a country that appears perfect on the surface could end up being a nightmare. (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> <p>I know just how daunting the task of choosing a country can be. I&rsquo;ve been living a semiretired life in multiple countries over the past eight years and I&rsquo;ve written many articles on early retirement. I&rsquo;ve found it helps to start with a list of all the countries where you can envision yourself living. Maybe it will be made up of places you&rsquo;ve fallen in love with while visiting in the past. Perhaps you&rsquo;ll include countries you&rsquo;ve never visited, but have heard are great retirement havens for Americans. From there, follow these guidelines to shorten your list and eventually pin down the perfect retirement destination for you. (See also: <a href="http://www.wisebread.com/retire-for-half-the-cost-in-these-5-countries?ref=seealso" target="_blank">Retire for Half the Cost in These 5 Countries</a>)</p> <h2>Figure out your finances</h2> <p>Finding a country that fits your finances is probably the most important part of the puzzle. It&rsquo;s crucial that you opt for someplace where you can enjoy the lifestyle that you dream of without draining your bank account in the process. (See also: <a href="http://www.wisebread.com/5-american-cities-where-you-can-retire-on-just-social-security?ref=seealso" target="_blank">5 American Cities Where You Can Retire On Just Social Security</a>)</p> <p>As a first step, you need to calculate exactly how much you have in your retirement savings and how much you can withdraw every month. Then, project how much income you&rsquo;ll have from other sources, such as Social Security or any private pension or annuity plans you have. Account for any taxes you might have to pay, and come up with a ballpark figure for how much you&rsquo;ll be able to spend every month during retirement. (See also: <a href="http://www.wisebread.com/5-incredible-places-to-retire-abroad-that-anyone-can-afford?ref=seealso" target="_blank">5 Incredible Places to Retire Abroad That Anyone Can Afford</a>)</p> <h2>Rule out unaffordable destinations</h2> <p>Once you have your estimated income, start researching the cost of living in each place on your dream list and determine whether it fits your finances. Tools like <a href="https://www.numbeo.com/cost-of-living/" target="_blank">Numbeo</a> and <a href="https://www.expatistan.com/cost-of-living" target="_blank">Expatistan</a> are great for estimating the cost of living in different countries. Cross out the places you can&rsquo;t afford. This will naturally narrow down which countries are realistic to put on a short list. (See also: <a href="http://www.wisebread.com/5-countries-where-you-can-retire-for-1000-a-month?ref=seealso2" target="_blank">5 Countries Where You Can Retire on $1,000 a Month</a>)</p> <h2>Check out the quality and affordability of health care</h2> <p>Health care is one of the most significant factors to take into account when choosing a retirement destination. Medicare generally won&rsquo;t cover you outside of the U.S., so you need to put a plan in place for how you&rsquo;ll afford any medical requirements. Fortunately, some of the most affordable countries to live in also have top class medical services, but it&rsquo;s something you&rsquo;ll need to research for each country on your list. (See also: <a href="http://www.wisebread.com/dont-let-these-expenses-spoil-your-retirement-abroad?ref=seealso" target="_blank">Don't Let These Expenses Spoil Your Retirement Abroad</a>)</p> <p>If the health care is cheap, it may be possible to just pay as you go, but you should also look into suitable insurance plans. In particular, think about how you&rsquo;d pay for treating a major illness or catastrophic injuries.</p> <h2>Take your hobbies and interests into account</h2> <p>No doubt you have a good idea of how you&rsquo;d like to fill your free time once you&rsquo;re not working anymore. But make sure you double check that you&rsquo;re able to do the things you love most in the country of your choice.</p> <p>If you&rsquo;re a keen golfer, there&rsquo;s no point in selecting a country that has no golf courses, as it&rsquo;s probably something you&rsquo;ll want to do more of in retirement. Don&rsquo;t just assume that every country will have the facilities or resources you need for your hobbies and pastimes.</p> <h2>Consider your security</h2> <p>Unrest and crime are two factors that can quickly endanger your life, affect your finances, and hamper your dreams. Though it&rsquo;s impossible to predict what will happen in the future, it is possible to make educated assumptions based on the historical and current security situation in the city, region, and country you&rsquo;re considering. Is it somewhere prone to civil unrest, gang activity, or petty crime? Are there upcoming elections that may significantly alter the political landscape?</p> <p>Check out the <a href="https://travel.state.gov/content/passports/en/country.html" target="_blank">U.S. State Department&rsquo;s travel website</a>, which provides advice on every country in the world. Also read articles and check with local residents to see whether any problems reported in the media ring true in real life.</p> <h2>Research visa options and other relevant laws</h2> <p>Residency laws differ from country to country and can come with significant costs attached. Check these requirements thoroughly. In most cases, you can find information put out by the country&rsquo;s immigration office online. You can also contact the closest consulate or embassy of the country you&rsquo;re considering. Often, you will need to apply for residency while you&rsquo;re outside that country, but check first. (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> <p>Consider other relevant laws and regulations, too. Perhaps you won&rsquo;t be allowed to work if you&rsquo;re on a retiree visa, or you won&rsquo;t be allowed to buy property in certain areas. You may or may not be subject to local taxes, as well. Remember also that moving overseas does not preclude the requirement to <a href="https://www.irs.gov/individuals/international-taxpayers/taxpayers-living-abroad" target="_blank">pay taxes in the U.S.</a>, even if it&rsquo;s necessary to pay them in your new home.</p> <h2>Consider cultural fit</h2> <p>Moving to a new country, not understanding the language, and trying to adjust to the culture all at the same time can be a singularly isolating experience. Ask yourself if you&rsquo;re ready to learn a new language if necessary, and whether you&rsquo;re able to change to fit in with the culture of the places you&rsquo;re considering. Are there things that you don&rsquo;t like about a particular culture that you think you&rsquo;d grow accustomed to? On the other hand, could annoying local biases or customs that you&rsquo;ve put up with on a vacation grow unbearably wearisome once you&rsquo;re living in that place full-time?</p> <h2>Get to know the weather</h2> <p>It&rsquo;s a good idea to check year-round weather forecasts, too. Even if you think you&rsquo;re familiar with the outlook somewhere, it could drastically change throughout the year. If you&rsquo;ve always visited during high season, make a conscious effort to check what the weather is like during low season. There&rsquo;s often a reason why tourists don&rsquo;t visit then. Temperatures may rise or drop to uncomfortable levels, storms may make living dangerous or at least inconvenient, and drawn-out rains may just make everyone miserable. Many weather websites or destination-specific websites have data on historical temperatures and precipitation for every month of the year. (See also: <a href="http://www.wisebread.com/33-places-to-retire-if-you-love-the-rain?ref=seealso" target="_blank">33 Places to Retire If You Love the Rain</a>)</p> <h2>Do a test run</h2> <p>Possibly the biggest mistake that retirees can make before heading abroad is to take the plunge without having tested the waters first. Do yourself a big favor and complete a test run in the country that you settle on. It may cost you a little extra, but the expense is usually worth it.</p> <p>Consider where you&rsquo;ll go if you don&rsquo;t like your new retirement country. Maybe you&rsquo;ll want to move back to the home you own in the U.S. If so, it makes sense not to sell right away. Perhaps you can rent it out temporarily while you do your test run.</p> <p>Then make a semi-permanent move. Rent a temporary home, preferably furnished, and get by with whatever you can take in suitcases. Give yourself enough time to experience different seasons, get to know a few people, and see if your monthly budget will really work. If it doesn&rsquo;t work out, you may be disappointed, but at least you&rsquo;ll have minimized your moving expenses and you&rsquo;ll have a place to go when you move back. (See also: <a href="http://www.wisebread.com/4-questions-you-need-to-answer-before-relocating-in-retirement?ref=seealso" target="_blank">4 Questions You Need To Answer Before Relocating in Retirement</a>)</p> <h2 style="text-align: center;">Like this post? Pin it!</h2> <div align="center"><a data-pin-do="buttonBookmark" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <div><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/How%20to%20Choose%20the%20Perfect%20Country%20to%20Retire%20In%20%284%29_0.jpg" style="float: left; width: 31%; margin-right: 3%; margin-bottom: 0.5em;" alt="" /></p> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/How%20to%20Choose%20the%20Perfect%20Country%20to%20Retire%20In%20%281%29.jpg" style="float: left; width: 31%; margin-right: 3%; margin-bottom: 0.5em;" alt="" /> <img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/How%20to%20Choose%20the%20Perfect%20Country%20to%20Retire%20In%20%283%29.jpg" style="float: left; width: 31%; margin-right: 0%; margin-bottom: 0.5em;" alt="" /></p> </div> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/nick-wharton">Nick Wharton</a> of <a href="http://www.wisebread.com/how-to-choose-the-perfect-country-to-retire-in">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-retirement-hotspots-that-are-cheaper-now-than-ever-before">9 Retirement Hotspots That Are Cheaper Now Than Ever Before</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-incredible-places-to-retire-abroad-that-anyone-can-afford">5 Incredible Places to Retire Abroad That Anyone Can Afford</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-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-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-incredible-world-cities-you-can-afford">5 Incredible World Cities You Can Afford</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/dont-let-poor-health-kill-your-retirement-fund">Don&#039;t Let Poor Health Kill Your Retirement Fund</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement Travel living expenses moving retirement retirement fund retiring abroad saving money Mon, 16 Oct 2017 08:30:10 +0000 Nick Wharton 2035913 at http://www.wisebread.com Best Money Tips: Avoid These Big Retirement Money Mistakes http://www.wisebread.com/best-money-tips-avoid-these-big-retirement-money-mistakes <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/best-money-tips-avoid-these-big-retirement-money-mistakes" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/retired_couple_bills_175268010.jpg" alt="Couple making big retirement money mistakes" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Welcome to Wise Bread's <a href="http://www.wisebread.com/topic/best-money-tips">Best Money Tips</a> Roundup! Today we found articles on retirement money mistakes to avoid, easy ways to handle rejection, and time management tips for beginners.</p> <h2>Top 5 Articles</h2> <p><a href="http://www.kiplinger.com/slideshow/retirement/T047-S014-5-big-retirement-money-mistakes-to-avoid/index.html">5 Big Retirement Money Mistakes to Avoid</a> &mdash; Don't lose track of an old 401(k) account. Whether you roll it into an IRA or not, someone should be managing that money. [Kiplinger]</p> <p><a href="http://www.easyways.net/10-easy-ways-handle-rejection/">10 Easy Ways To Handle Rejection</a> &mdash; Keep your rejection off the Internet, especially when you're still angry, bitter, or hurt. [easyWays]</p> <p><a href="https://timemanagementninja.com/2017/10/10-time-management-tips-for-beginners/">10 Time Management Tips for Beginners</a> &mdash; You don&rsquo;t need expensive software or gadgets to develop a time management system. Your phone probably has built-in apps that will help. Even a pad of paper will work. [Time Management Ninja]</p> <p><a href="https://www.popsugar.com/smart-living/All-Inclusive-Resorts-Worth-43714504">The Pros and Cons of All-Inclusive Resorts</a> &mdash; An all-inclusive resort package can be an easy, stress-free option for first-time travelers who are nervous about planning a vacation on their own. [PopSugar Smart Living]</p> <p><a href="https://blog.cheapism.com/cut-retirement-costs-18160/">21 Ways to Cut Costs in Retirement</a> &mdash; Seniors can take advantage of club memberships that offer a variety of services and discounts, such as AARP, AAA, and Costco. [Cheapism]</p> <h2>Other Essential Reading</h2> <p><a href="http://commoncentsmom.com/2017/10/simple-things-can-improve-mental-health/">Simple Things You Can Do to Improve Your Mental Health</a> &mdash; Yesterday was Mental Health Day, but every day is a good day to work on your mental well-being. [Common Cents Mom]</p> <p><a href="https://www.moneyspruce.com/ways-jeopardizing-wealth/">Ways You Are Jeopardizing Your Wealth</a> &mdash; Don't waste your time looking for the next get rich quick scheme &mdash; they're always too good to be true!&nbsp; [Money Spruce]</p> <p><a href="https://www.dumblittleman.com/best-way-to-pay-off-student-loans/">5 Simple Ways to Pay Off College Debt Faster</a> &mdash; If you have multiple sources of debt, go over your repayment methods for ways to pay off those debts more quickly. [Dumb Little Man]</p> <p><a href="https://www.moneytalksnews.com/6-stores-that-allow-coupon-stacking/">6 Stores That Allow Coupon Stacking</a> &mdash; Popular drugstores like CVS, Rite-Aid, and Walgreens allow you to stack manufacturer coupons and store coupons for greater savings. [Money Talks News]</p> <p><a href="https://www.csmonitor.com/Technology/2017/1004/With-cyber-crime-on-the-rise-businesses-look-for-insurance-against-hackers">With cyber crime on the rise, businesses look for insurance against hackers</a> &mdash; Cyber crime insurance to protects a business's sensitive information from potential threats. [The Christian Science Monitor]</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/amy-lu">Amy Lu</a> of <a href="http://www.wisebread.com/best-money-tips-avoid-these-big-retirement-money-mistakes">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-choose-the-perfect-country-to-retire-in">How to Choose the Perfect Country to Retire In</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-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> <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-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-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-countries-where-you-can-retire-for-1000-a-month">5 Countries Where You Can Retire for $1,000 a Month</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/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> </ul> </div> </div> </div> </div><br/></br> Retirement best money tips retirement mistakes Wed, 11 Oct 2017 20:05:59 +0000 Amy Lu 2034653 at http://www.wisebread.com 7 Reasons to Invest in Stocks Past Age 50 http://www.wisebread.com/7-reasons-to-invest-in-stocks-past-age-50 <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/7-reasons-to-invest-in-stocks-past-age-50" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/man_sitting_on_floor_with_piggy_bank_under_money_rain.jpg" alt="Man sitting on floor with piggy bank under money rain" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Conventional investing wisdom says that as people age, they should put less of their money in stocks and more into stable investments such as bonds and cash. This is sound advice based on the idea that in retirement you want to protect your assets in case there is a major market downturn.</p> <p>But there are still strong arguments to continue investing in stocks even as you get older. Few people recommend an all-stock portfolio, but reducing stock ownership down to zero doesn't make sense, either.</p> <p>Consider that many mutual funds geared toward older investors still comprise hefty doses of stocks. The 2020 Retirement Fund from T. Rowe Price, for example, is made up of 70 percent stocks for retirees at age 65, and is still made up of 25 percent stocks when that same retiree is past 90 years of age.</p> <p>Why does owning stocks make sense even for older investors? Let's examine these possible motivations.</p> <h2>1. You're going to live a lot longer</h2> <p>If you are thinking about retirement as you approach age 60, it's important to recognize that you still may have several decades of life remaining. People are routinely living into their 90s or even past 100 these days. Do you have enough savings to last 40 years or more? While it's important to protect the assets you have, you may find that higher returns from stocks will be needed in order to accrue the money you need.</p> <h2>2. You got a late start</h2> <p>If you started investing early and contributed regularly to your retirement accounts over the course of several decades, you may be able to take a conservative investing approach in retirement. But if you began investing late, your portfolio may not have had time to grow enough to fund a comfortable retirement. Continuing to invest in stocks will allow you to expand your savings and reach your target figure. It still makes sense to balance your stocks with more conservative investments, but taking on a little bit more risk in exchange for potentially higher returns may be worth it. (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>3. Other investments don't yield as much as they used to</h2> <p>Moving away from stocks was good advice for older people back when you could get better returns on bonds and bank interest. The 30-year treasury yield right now is about 2.75 percent. That's about half what it was a decade ago and a third of the rate from 1990. Interest from cash in the bank or certificates of deposit will generate a measly 1.5 percent or less. The bottom line is that these returns will barely outpace the rate of inflation and won't bring you much in the way of useful income.</p> <h2>4. Some stocks are safer than others</h2> <p>Not all stocks move up and down in the same way. While stocks are generally more volatile than bonds and cash, there are many that have a strong track record of steady returns and relative immunity from market crashes. Take a look at mutual funds comprised of large-cap companies with diversified revenue streams. Consider dividend-producing stocks that don't move much in terms of share price, but can generate income. To find these investments, search for those that lost less than average during the Great Recession and have a history of low volatility.</p> <h2>5. Dividend stocks can bring you income</h2> <p>Dividend stocks are not only more stable than many other stock investments, but also they can generate cash flow at a time when you're not bringing in other income. A good dividend stock can produce a yield of more than 4 percent, which is more than what you'll get from many other non-stock investments right now. This will help ensure the growth of your portfolio is at least outpacing inflation.</p> <p>If you are unsure about which dividend stocks to buy, take a look at a well-rated dividend mutual fund. The T. Rowe Price Dividend Growth Fund [NYSE: PRDGX], for example, has a three-year total return of more than 10 percent, outpacing the S&amp;P 500. Its overall returns also dropped less than the S&amp;P 500 during the Great Recession.</p> <h2>6. Busts are often followed by bigger booms</h2> <p>A person who retired 10 years ago would have stopped working right when the market crashed, and there's a good chance they may have lost a significant chunk of their savings. That's bad. But it's important to note that in the decade since, the S&amp;P 500 has gone up every year at an average of more than 8.5 percent annually. In other words, someone who lost a lot from the crash of 2007&ndash;2008 will have gotten all of their money back and much more if they stayed invested in stocks.</p> <p>This is not to suggest that older investors should be unreasonably aggressive, but they should be aware that a single bad year or two probably won't completely wipe you out financially. If your retirement is long, you may see some market busts, but you'll also see some long stretches of good returns.</p> <h2>7. You may still be helping out your kids</h2> <p>When you're retired, you're supposed to be done with child rearing and helping out your kids financially, right? Unfortunately, it seems that older Americans are continuing to lend a hand to their children even as they grow into adulthood and have children of their own.</p> <p>A recent survey from TD Ameritrade said that millennial parents between the ages of 19 and 37 receive an average of more than $11,000 annually in the form of money or unpaid child care from their parents. With these additional costs on the horizon, those approaching retirement age may still want to invest in stocks to build their nest egg further. (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 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-reasons-to-invest-in-stocks-past-age-50&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F7%2520Reasons%2520to%2520Invest%2520in%2520Stocks%2520Past%2520Age%252050.jpg&amp;description=7%20Reasons%20to%20Invest%20in%20Stocks%20Past%20Age%2050"></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%20Reasons%20to%20Invest%20in%20Stocks%20Past%20Age%2050.jpg" alt="7 Reasons to Invest in Stocks Past Age 50" 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/7-reasons-to-invest-in-stocks-past-age-50">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-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-2 views-row-even"> <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-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-you-need-to-know-about-the-easiest-way-to-save-for-retirement">What You Need to Know About the Easiest Way to Save for 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/is-there-such-a-thing-as-a-safe-investment">Is There Such a Thing as a &quot;Safe&quot; Investment?</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-threats-to-a-secure-retirement">9 Threats to a Secure Retirement</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment Retirement adult children bonds cash dividend stocks giving money to kids income late starters life span living longer risk saving money stocks yields Thu, 05 Oct 2017 09:00:06 +0000 Tim Lemke 2031342 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/how-to-overcome-these-4-common-retirement-fears">How to Overcome These 4 Common Retirement Fears</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/three-of-the-toughest-decisions-youll-face-in-retirement">Three of the Toughest Decisions You&#039;ll Face in 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-signs-its-time-to-retire">8 Signs It&#039;s Time to Retire</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/heres-how-you-should-budget-your-social-security-checks">Here&#039;s How You Should Budget Your Social Security Checks</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 Yes, You Can Pay for Education With an IRA http://www.wisebread.com/yes-you-can-pay-for-education-with-an-ira <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/yes-you-can-pay-for-education-with-an-ira" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/education_fund_coins_652348714.jpg" alt="Education fund in jar" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>When most people think of saving for a college education, they usually think of 529 savings plans or Coverdell Education Savings Accounts (ESA). These accounts allow you to grow your money by investing in select mutual funds, much like a typical retirement account does. (See also: <a href="http://www.wisebread.com/5-smart-places-to-stash-your-kids-college-savings?ref=seealso" target="_blank">5 Smart Places to Stash Your Kid's College Savings</a>)</p> <p>While both of these accounts are great investment tools to pay for a college education, there's another option you may not have considered. A Roth IRA can also be used for educational expenses. There are pros and cons for each way to save for college. Here's a brief rundown:</p> <table> <tbody> <tr> <td> <p><strong>Coverdell ESA</strong></p> </td> <td> <p><strong>529 savings plans</strong></p> </td> <td> <p><strong>Roth IRA</strong></p> </td> </tr> <tr> <td> <p>No tax deduction from contributions.</p> </td> <td> <p>No tax deduction from contributions.</p> </td> <td> <p>No tax deduction from contributions.</p> </td> </tr> <tr> <td> <p>Withdraw your contributions tax free.</p> </td> <td> <p>Withdraw your contributions tax free.</p> </td> <td> <p>Withdraw your contributions tax free. (If you withdraw interest, it will be taxed.)</p> </td> </tr> <tr> <td> <p>Annual contribution limit: $2,000 per beneficiary.</p> </td> <td> <p>No annual contribution limit but most states limit total contributions to $300,000.</p> </td> <td> <p>Annual contribution limit: $5,500, or $6,500 if age 50 or over.</p> </td> </tr> <tr> <td> <p>Anyone can contribute but the amount they can contribute is limited by their modified adjusted gross income. Ability to contribute phases out once modified AGI reaches $220,000.</p> </td> <td> <p>&nbsp; Anyone can&nbsp; &nbsp; &nbsp; contribute.</p> </td> <td> <p>Must have income in order to contribute. People with high incomes ($181,000 for married couple) are prohibited from contributing.</p> </td> </tr> <tr> <td> <p>Can be used for higher education and qualified K-12 expenses. Beneficiary must use account by age 30.</p> </td> <td> <p>Can only be used for higher education expenses.</p> </td> <td> <p>Can be used for higher education, first home purchase, qualified medical expenses, and retirement.</p> </td> </tr> <tr> <td> <p>Account under guardian's name won't impact beneficiary's FAFSA.</p> </td> <td> <p>Account under guardian's name won't impact beneficiary's FAFSA.</p> </td> <td> <p>Withdrawals will increase your earned income and can affect beneficiary's FAFSA.</p> </td> </tr> </tbody> </table> <h2>Roth IRAs</h2> <p>A Roth IRA differs from a traditional IRA in that the income you contribute is already taxed. The beauty of a Roth IRA is that the distribution you take from your contributions is <em>not </em>taxable (as long as the use is approved).</p> <p>Let's say your child is a college freshman. You withdraw $15,000 from your Roth IRA for their first year of school. None of this money will be taxed, as long as it is from your own contributions and not from the interest earned. Withdrawals are considered returns of contributions initially, for tax purposes. They are considered interest earnings second.</p> <p>Now, you are likely thinking, &quot;But aren't IRA withdrawals subject to penalties if you withdraw them early?&quot; Generally, yes. Normally, you must be age 59 &frac12; or older, and have had the account for at least five years to withdraw without incurring a 10 percent tax penalty. Why? Well, all IRAs are retirement funds, primarily. They are designed to be withdrawn only as folks approach retirement.</p> <p>But no penalty applies if the withdrawal is for qualified educational purposes (or a first home purchase, or qualified medical bills). Even if your child or grandchild has a scholarship for full tuition, it's no problem. Roth IRAs can be used for any qualified educational expense, including room, board, books, and supplies.</p> <p>If your child or grandchild ends up not going to college, or not needing all the money, you can simply keep the money to continue funding your retirement. Note that to place money back into a Roth IRA, it will be subject to annual contribution limits ($5,500 if under age 50, and $6,500 if age 50 or older).</p> <h2>Traditional IRAs</h2> <p>You can also use traditional IRAs to pay for college. Essentially, traditional IRAs reverse the tax advantage of a Roth. You get a tax deduction upfront for all money contributed to a traditional IRA &mdash; but all withdrawals will be taxed at the federal and state level.</p> <p>As with a Roth IRA, if traditional IRA distributions before age 59 &frac12; are used for qualified educational expenses, they are not subject to the 10 percent penalty. However, they will be subject to tax. The IRS will get its money whenever you withdraw from a traditional IRA, regardless of what you withdraw it for.</p> <p>Because of the tax implications, while it is <em>possible </em>to use a traditional IRA for educational expenses, it may not be the most prudent move. If you want to tap into IRAs for college expenses, a Roth IRA is the better bet financially.</p> <h2>An important caveat</h2> <p>Realistically, tapping your IRA to pay for your child's education should rarely be your first choice. It can be a smart move if you have a considerable amount saved and a lot of time left before retirement to pay it back. Otherwise, you'll be draining the account of funds you very much need. It may be wiser to use an educational savings account to save for your child's education instead. (See also: <a href="http://www.wisebread.com/why-saving-too-much-money-for-a-college-fund-is-a-bad-idea?ref=seealso" target="_blank">Why Saving Too Much Money for a College Fund Is a Bad Idea</a>)</p> <p>However, there are still benefits of using an IRA over an educational savings account if you know your retirement will still be secure. For example, by combining the funds into one account, you will have more flexibility in choosing whether to spend your savings on education &mdash; and how much &mdash; or to continue to hold it for your retirement.</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%2Fyes-you-can-pay-for-education-with-an-ira&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FHow%2520To%2520Pay%2520For%2520Your%2520College%2520Education.png&amp;description=Yes%2C%20You%20Can%20Pay%20for%20Education%20With%20an%20IRA"></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%20Pay%20For%20Your%20College%20Education.png" alt="Yes, You Can Pay for Education With an IRA" 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/anum-yoon">Anum Yoon</a> of <a href="http://www.wisebread.com/yes-you-can-pay-for-education-with-an-ira">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-when-you-are-unemployed">How to Save for Retirement When You Are Unemployed</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/should-you-save-for-college-using-a-529-prepaid-tuition-plan">Should You Save for College Using a 529 Prepaid Tuition 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/which-retirement-account-is-right-for-you">Which Retirement Account Is Right for You?</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-smart-places-to-stash-your-kids-college-savings">5 Smart Places to Stash Your Kid&#039;s College 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/this-one-thing-could-be-the-key-to-retiring-rich">This One Thing Could Be the Key to Retiring Rich</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Education & Training Retirement college contributions distributions higher education qualified expenses Roth IRA saving money traditional ira Wed, 04 Oct 2017 08:00:07 +0000 Anum Yoon 2029157 at http://www.wisebread.com This One Thing Could Be the Key to Retiring Rich http://www.wisebread.com/this-one-thing-could-be-the-key-to-retiring-rich <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/this-one-thing-could-be-the-key-to-retiring-rich" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/beautiful_young_woman_at_home_0.jpg" alt="Beautiful young woman at home" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Writing things down is a powerful exercise. Productivity experts and personal growth coaches have long known this truth, and frequently promote writing down goals and priorities as a way to take control of life and achieve more. Does the power of writing apply to your financial life, as well? Turns out that it does in a very significant way.</p> <h2>Written plans lead to more retirement savings</h2> <p>A recent report from Charles Schwab makes it clear that writing down your financial goals can have a huge effect on how well you do in reaching them. According to the report, people with a written retirement plan are almost twice as likely to increase their 401(k) contributions and rebalance their portfolio. And that's not all a written plan can do for you: You're also twice as likely to stick to your savings goals if you've written down your plan.</p> <p>Despite the obvious power of a written financial plan, most people don't have one. According to the Schwab report, even though about two-thirds of Americans have a financial plan, only a quarter of us have that plan in writing.</p> <p>Is it really a plan if it's not in writing? Maybe, but it's certainly not as powerful.</p> <p>Writing things down makes them seem more real and helps you understand clearly how to reach the goals you're setting. A survey from Wells Fargo found that folks with a <a href="https://newsroom.wf.com/press-release/wells-fargogallup-survey-us-investor-optimism-rises-highest-level-16-years" target="_blank">written retirement plan</a> felt much more secure about reaching their financial goals for retirement. It isn't that the amount needed for retirement changes, but that a written plan helped these individuals understand exactly what they needed to do to reach their retirement goals.</p> <h2>Start getting your plan on paper</h2> <p>How do you get your financial plan written down? Start simple and start right now: Get a piece of paper or open up a computer document, and start writing down your goals. Focus on three main areas: an income goal, a budget goal, and a long-term savings goal.</p> <p>The key is to just get started and remember that you can adjust your plan as you gain more information. Until you have everything written down, you don't really know what you're aiming for or if your goals are even possible. (See also: <a href="http://www.wisebread.com/half-of-americans-are-wrong-about-their-retirement-savings?ref=seealso" target="_blank">Half of Americans Are Wrong About Their Retirement Savings</a>)</p> <h2>Get some professional help to improve your plan</h2> <p>Once you've gotten some basic ideas down on the page, consult a professional financial adviser to help you turn those basic thoughts into a viable financial plan. Over two-thirds of the people who do have a written financial plan got help from a financial professional.</p> <p>Getting professional help is a good idea for two reasons: First, it helps you to actually finish that plan you started. Second, having professional advice will result in a better financial plan. An adviser can help you ask questions, look at issues, and develop solutions you might have missed on your own. (See also: <a href="http://www.wisebread.com/7-things-financial-advisers-wish-you-knew-about-retirement?ref=seealso" target="_blank">7 Things Financial Advisers Wish You Knew About Retirement</a>)</p> <h2>Turn your plan into actions</h2> <p>Once you have your plan written down, you need to translate it into regular actions.</p> <p>For example, if you set a savings goal that you want to meet in five years, you'll divide that into a monthly savings amount. Now you have a monthly savings target (and we know that, with a written plan, you're much more likely to reach it). When you turn the goals on your plan into actions, you can quickly assess whether you're making progress or not.</p> <h2>Automate your financial actions</h2> <p>As much as possible, automate the actions that you derive from your financial plan. Set up automatic transfers into your savings account, for example, or have a certain percentage of your paycheck deposited into your savings account rather than your checking account.</p> <p>Those small automations take the work out of reaching your financial plan. The easier you make it on yourself, the more likely you are to stick to your plan. (See also: <a href="http://www.wisebread.com/5-ways-to-automate-your-finances?ref=seealso" target="_blank">5 Ways to Automate Your Finances</a>)</p> <h2>Review your financial plan regularly</h2> <p>A written plan is not a static thing, so you need to review it regularly and adjust it as needed. Perhaps you get a salary increase or an unexpected windfall; how will you apply it? Review your plan, decide where to apply your wealth increase, and adjust your plan as needed.</p> <p>It's a great idea to set an annual appointment with your financial adviser; you can use that time to review your plan together. Then you can apply that professional insight to any adjustments you make to your plan, and move forward with even greater financial efficiency.</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%2Fthis-one-thing-could-be-the-key-to-retiring-rich&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FThis%2520One%2520Thing%2520Could%2520Be%2520the%2520Key%2520to%2520Retiring%2520Rich.jpg&amp;description=This%20One%20Thing%20Could%20Be%20the%20Key%20to%20Retiring%20Rich"></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/This%20One%20Thing%20Could%20Be%20the%20Key%20to%20Retiring%20Rich.jpg" alt="This One Thing Could Be the Key to Retiring Rich" 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/annie-mueller">Annie Mueller</a> of <a href="http://www.wisebread.com/this-one-thing-could-be-the-key-to-retiring-rich">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-things-financial-advisers-wish-you-knew-about-retirement">7 Things Financial Advisers Wish You Knew About 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/yes-you-can-pay-for-education-with-an-ira">Yes, You Can Pay for Education With an IRA</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-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> <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-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-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-dumb-ira-mistakes-even-smart-people-make">5 Dumb IRA Mistakes Even Smart People Make</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement advice contributions financial advisers money goals saving money strategy writing things down written plan Fri, 29 Sep 2017 08:00:06 +0000 Annie Mueller 2028009 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/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-4 views-row-even"> <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-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 Bookmark This: A Step-by-Step Guide to Choosing 401(k) Investments http://www.wisebread.com/bookmark-this-a-step-by-step-guide-to-choosing-401k-investments <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/bookmark-this-a-step-by-step-guide-to-choosing-401k-investments" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/real_estate_agent_working_with_client_online.jpg" alt="Real estate agent working with client online" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>It's no secret that 401(k) fund options are notoriously opaque. While target-date funds provide convenience to investors, they often come with higher fees than alternative investment vehicles, have highly variable returns, and aren't a good fit for many retirement savers. Let's simplify things, and review a low-stress strategy for building a solid two-to-three-fund portfolio for your 401(k).</p> <h2>The downsides to target-date funds</h2> <p>Designed to gradually adjust your investment mix as you approach retirement age, target-date funds have exploded in popularity since their designation as qualified default investment alternatives by the 2006 Pension Protection Plan. The upsides of target-date funds are that they're easy to select (96 percent of Vanguard plans make it the default investment option), they automatically rebalance, and they offer appropriate investment diversification. (See also: <a href="http://www.wisebread.com/what-you-need-to-know-about-the-easiest-way-to-save-for-retirement?ref=seealso" target="_blank">What You Need to Know About the Easiest Way to Save for Retirement</a>)</p> <p>However, all that convenience comes at a high price. A 2015 review of over 1,700 target-date funds by FutureAdvisor determined that their average expense ratio (the annual fee charged to shareholders to cover operating expenses) was a relatively high 1.02 percent, meaning that you'd pay $51 every year for every $5,000 in your balance. Assuming an average investment return of 7 percent per year, you would miss out on an extra $4,998 in retirement savings over a 30-year period.</p> <p>On top of high fees, some target-date funds' returns barely cover their high annual expense ratios. The same review of 1,700 target-date funds pointed out that the lowest five-year average annual returns were 2.9 percent. (Returns are expressed net of expense ratios.) As of September 2017, 2.9 percent is not that much higher than the rate of a five-year CD at a credit union.</p> <p>Here's a better alternative to target-date funds.</p> <h2>Your guide to choosing your 401(k) investment options</h2> <p>In his 2013 letter to Berkshire Hathaway shareholders, Warren Buffett (aka The Oracle of Omaha) provided an investment strategy that would &quot;be superior to those attained by most investors who employ high-fee managers.&quot; Buffett recommended putting 90 percent of one's investments in a very low-cost S&amp;P 500 index fund, and the remaining 10 percent in short-term government bonds. This is the same advice that he has set in his will. (See also: <a href="http://www.wisebread.com/the-5-best-pieces-of-financial-wisdom-from-warren-buffett?ref=seealso" target="_blank">The 5 Best Pieces of Financial Wisdom From Warren Buffett</a>)</p> <p>More and more 401(k) plans are offering passively managed index funds that track a benchmark, such as the S&amp;P 500. And for good reason: The Vanguard 500 Index Investor Shares Fund [Nasdaq: VFINX] has an annual expense ratio of 0.14 percent, just a $7 annual fee for a balance of $5,000. That's $44 in annual savings when you compare it to a target-date fund with a 1.02 percent annual expense ratio.</p> <p>Worried that this approach doesn't provide you enough diversification? Think again: An index fund tracking the S&amp;P 500 is investing in 500 large-cap companies. That's as diversified as you can get. (See also: <a href="http://www.wisebread.com/how-too-much-investment-diversity-can-cost-you?ref=seealso" target="_blank">How Too Much Investment Diversity Can Cost You</a>)</p> <p>Let's use Buffett's advice to build your 401(k) plan's portfolio.</p> <h3>Step 1: Check your plan for a U.S. equities index fund</h3> <p>There is a good chance that your 401(k) plan offers a low-cost S&amp;P 500 index fund. Buffett personally recommends an S&amp;P 500 Vanguard index fund. Vanguard is an investment management company known for having very low fees compared to competitors, especially on its index funds. In 2016, close to 60 percent of Vanguard plans offered an index core giving you access to broadly diversified index funds for U.S. stocks. In truth, you can do just as well with other index funds tracking the S&amp;P 500, such as the Fidelity 500 Index Investor [Nasdaq: FUSEX] and the Northern Stock Index [Nasdaq: NOSIX].</p> <p>In the event, that you don't have access to a low-cost index fund tracking the S&amp;P 500 through your workplace 401(k), you have two action items. First, see if your plan offers another large cap index fund (one investing in large U.S. companies based on a market index). This type of fund normally invests at least 80 percent of its assets in securities within its benchmark index, such as the Fidelity Large Cap Stock Fund [Nasdaq: FLCSX] and the Vanguard U.S. Growth Fund [Nasdaq: VWUSX]. Second, contact your plan administrator and request adding a low-cost S&amp;P 500 index fund.</p> <h3>Step 2: Check your plan for a fund of short-term investment-grade bonds</h3> <p>Just like there are index funds for investing in equities, there are also index funds for investing in bonds. For example, there is the Vanguard Short-Term Investment-Grade Fund [Nasdaq: VSFTX], which has an annual expense ratio of 0.20 percent, or $10 in fees for a balance of $5,000.</p> <p>Don't have access to such a fund? Look for a low-cost fund giving you the most exposure to high- and medium-quality, investment-grade bonds with short-term maturities, including corporate bonds, pooled consumer loans, and U.S. government bonds. Why short-term maturities? Short-term bonds tend to have low risk and low yields, ensuring that one portion of your nest egg remains stable at all times &mdash; something you'll really benefit from during any recessions.</p> <p>Then, request that your plan administrator add a low-cost index fund for domestic bonds.</p> <h3>Step 3: Allocate 90 percent to the equities index fund and 10 percent to the bonds index fund</h3> <p>Now you're ready to rebalance your portfolio. Using your online portal, look for an option that says &quot;exchange funds&quot; or &quot;transfer money between funds&quot; to move your nest egg dollars from your existing investments into the equities index fund and bonds index fund. (Note: Depending on your plan rules, including vesting rules, you may not be able to move 100 percent of your balance until a certain date. In that case, move everything that you can and the remaining once it becomes eligible.)</p> <p>Exchange your entire 401(k) balance and allocate 90 percent of that amount to the equities index fund and 10 percent to the bonds index fund. Confirm your transaction.</p> <h3>Step 4: Adjust your future contributions</h3> <p>To keep future contributions going into the right place, adjust your paycheck investment mix so that 90 percent of withholdings go to the equities index fund and 10 percent go into the bonds index fund.</p> <p>If your 401(k) offers an automatic rebalance feature, opt-in for it so that your portfolio is automatically readjusted to the 90/10 without you moving a finger. If your 401(k) doesn't offer that feature, plan to manually rebalance your account once a year.</p> <h3>Step 5: Revisit the 90/10 allocation at important life changes</h3> <p>Marriage. Birth of your first child. Purchase of your first home. Being able to start making catch-up contributions. Reaching age 59 1/2. These and more critical milestones in your life may require you to adjust your 90/10 allocation. As you get closer to retirement age, you should gradually shift from a growth strategy (selecting funds that exhibit signs of above-average growth) to an income strategy (picking funds that provide a steady stream of income) so that you hold fewer stocks and more bonds. The beauty of a target-date fund is that is does all of this for you automatically as you age. Without one, you'll need to stay on top of this occasional rebalancing yourself.</p> <h2>The bottom line</h2> <p>One of the main reasons that your 401(k) will perform better is that you're minimizing fees. If you were to allocate 90 percent of a $5,000 401(k) balance into the Vanguard 500 Index Investor Shares Fund [Nasdaq: VFINX] and 10 percent into the Vanguard Short-Term Investment-Grade Fund [Nasdaq: VSFTX], you would just pay $7.30 in annual fees. That's $43.70 in annual savings over putting the entire $5,000 in a target-date fund with a 1.02 percent annual expense ratio. It doesn't sound like a large amount of savings, but compounded over the years it can add up to thousands of dollars more in your retirement fund.</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%2Fbookmark-this-a-step-by-step-guide-to-choosing-401k-investments&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FA%2520Step%2520By%2520Step%2520Guide%2520To%2520Choosing%2520Investments.jpg&amp;description=A%20Step-by-Step%20Guide%20to%20Choosing%20401(k)%20Investments"></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/A%20Step%20By%20Step%20Guide%20To%20Choosing%20Investments.jpg" alt="A Step-by-Step Guide to Choosing Investments" 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/damian-davila">Damian Davila</a> of <a href="http://www.wisebread.com/bookmark-this-a-step-by-step-guide-to-choosing-401k-investments">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-warren-buffett-says-you-should-invest-in-index-funds">Why Warren Buffett Says You Should Invest in Index Funds</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-ways-to-get-the-most-from-your-employer-s-automated-retirement-plan">5 Ways to Get the Most From Your Employer’s Automated Retirement 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/7-things-you-need-to-know-about-investing-in-company-stock">7 Things You Need to Know About Investing in Company Stock</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-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-5 views-row-odd views-row-last"> <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> </ul> </div> </div> </div> </div><br/></br> Investment Retirement 401(k) bonds equities expense ratios fees index portfolio rebalancing s&p 500 short-term bonds target-date funds Warren Buffett Thu, 21 Sep 2017 08:31:06 +0000 Damian Davila 2023013 at http://www.wisebread.com What to Do If You're Retiring With Debt http://www.wisebread.com/what-to-do-if-youre-retiring-with-debt <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-retiring-with-debt" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/old_couple_having_problems_with_their_home_finances.jpg" alt="Old couple having problems with their home finances" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>For a growing number of older Americans, the golden years have been tarnished by debt. If you're retired or will be soon, and too much debt is weighing you down, here are three common sources of senior debt, along with some suggestions for breaking free.</p> <h2>1. Mortgage debt</h2> <p>One of the tenets of wise money management is to be mortgage-free by the time you retire, ridding yourself of what is likely your biggest expense as you enter what may be a lower- and fixed-income season of life. However, for a growing number of older people, that is not the case.</p> <p>According to the Federal Reserve, about 42 percent of households where the head of household is 65 to 74 years old had mortgage debt (a mortgage or home equity loan) in 2013 &mdash; up from 32 percent in 2004 and just 19 percent in 1992. Many such borrowers refinanced their mortgages in order to take advantage of low interest rates, but in doing so, reset the 15- or 30-year mortgage clock.</p> <p>What to do? If your overall housing costs, including taxes and insurance, take up more than 25 percent of your monthly gross income, consider downsizing. Reducing or eliminating your mortgage and lowering what you pay for property taxes, homeowners insurance, utilities, and maintenance could do wonders for your financial peace of mind. (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. Student loan debt</h2> <p>Much has been made of how indebted today's college graduates are. What's less well known is that the fastest-growing segment of the population with education debt is the 60-plus crowd. Most such borrowers took out loans for their kids or grandkids via Parent PLUS loans, or they co-signed on a student loan and now find themselves responsible for the payments.</p> <p>According to the Consumer Financial Protection Bureau, the number of people age 60 or older with student loans quadrupled between 2005 and 2015 to 2.8 million.</p> <p>What to do? Look into loan consolidation or rehabilitation (if you're behind on the payments). Both are preferable to default, in which case the government could reduce your Social Security benefits in order to collect.</p> <h2>3. Credit card debt</h2> <p>The overuse of plastic isn't just something that plagues the young. According to the National Council on Aging, in 2012, nearly one-third of households headed by someone age 60 or older carried a credit card balance. Are these older households simply living beyond their means? Some probably are, but an AARP survey found that over half the older households with credit card debt put their medical care on plastic.</p> <p>What to do? If your credit card debt is unmanageable, consider contacting a local affiliate of the <a href="https://www.nfcc.org/" target="_blank">National Foundation for Credit Counseling</a>. They may be able to negotiate lower interest rates. In addition, if you haven't done so already, don't put medical bills on your credit card. Instead, see if you can work out a payment plan directly with the medical provider, which may offer more favorable terms. (See also: <a href="http://www.wisebread.com/the-fastest-method-to-eliminate-credit-card-debt?ref=seealso" target="_blank">The Fastest Method to Eliminate Credit Card Debt</a>)</p> <h2>Other ways to ditch your debt</h2> <p>No matter how old you are, an important key to getting out of debt is margin &mdash; creating a gap between your income and expenses so you've got the money to make extra payments on your debts. There are only two sides to the margin equation: income and expenses.</p> <h3>Increase income by picking up a part-time job</h3> <p>By definition, retirement means not working anymore, so the idea of going back to work may not fill your heart with joy. However, even a temporary part-time job can make a big difference in how quickly you get out of debt. (See also: <a href="http://www.wisebread.com/6-great-retirement-jobs?ref=seealso" target="_blank">6 Great Retirement Jobs</a>)</p> <p>Start thinking of where you could work. How about consulting with your former employer, hanging out a shingle as a sole proprietor, or simply picking up some hours at a local retailer?</p> <p>Keep in mind that if you started claiming Social Security benefits before your normal retirement age, earning too much from a part-time job may reduce those benefits. Learn more on the <a href="https://www.ssa.gov/oact/cola/rtea.html" target="_blank">Social Security Administration's website</a>.</p> <h3>Decrease expenses by taking your kids off the payroll</h3> <p>It's common for parents to help their adult children with everything from health insurance premiums to cellphone bills. According to a Merrill Lynch study, nearly 70 percent of people age 55 or older with adult children are doing so.</p> <p>Wouldn't it be easier for you to cut them off if you realized that doing so would not only benefit you, but it would benefit them as well? That's one of the key messages in the classic book, <em>The Millionaire Next Door</em>. Authors Thomas Stanley and William Danko found that adults who receive &quot;financial outpatient care&quot; from their parents tend to become dependent on such help and end up saving and investing less than those who do not receive money from their parents. (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>There's plenty of time to retire debt</h2> <p>It may be discouraging to find yourself buried in bills at a time of life when you had hoped to slow down and enjoy the fruit of all your years of labor. However, increases in longevity mean you probably still have plenty of time to reap those rewards. What'll make all the difference is how quickly you implement the ideas mentioned above.</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%2Fwhat-to-do-if-youre-retiring-with-debt&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FWhat%2520to%2520Do%2520If%2520You%2527re%2520Retiring%2520With%2520Debt.jpg&amp;description=What%20to%20Do%20If%20You're%20Retiring%20With%20Debt"></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/What%20to%20Do%20If%20You%27re%20Retiring%20With%20Debt.jpg" alt="What To Do If You're Retiring With Debt" 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/what-to-do-if-youre-retiring-with-debt">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-of-the-fastest-ways-to-go-broke-in-retirement">4 of the Fastest Ways to Go Broke 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/4-red-flags-that-your-retirement-plan-may-be-off-track">4 Red Flags That Your Retirement Plan May Be Off Track</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-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-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-happens-to-your-debt-after-you-die">What Happens to Your Debt After You Die?</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-one-couple-paid-off-147k-of-debt-even-while-unemployed">How One Couple Paid Off $147k of Debt (Even While Unemployed)</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Debt Management Retirement adult children co-signed credit card debt expenses giving money increasing income kids mortgages student loans Tue, 19 Sep 2017 08:00:07 +0000 Matt Bell 2021474 at http://www.wisebread.com Why Your Daily Latte Won't Sink Your Retirement Savings http://www.wisebread.com/why-your-daily-latte-wont-sink-your-retirement-savings <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/why-your-daily-latte-wont-sink-your-retirement-savings" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/women_friends_enjoyment_coffee_times_concept.jpg" alt="Women Friends Enjoyment Coffee Times Concept" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>If you pay attention to personal finance literature, you have undoubtedly come across some iteration of the &quot;latte factor&quot; &mdash; the idea that forgoing a daily small luxury will add up to big savings over time. Financial author David Bach coined the term over a decade ago to help consumers better understand the high costs of little luxuries. (See also: <a href="http://www.wisebread.com/9-ways-to-save-money-on-your-cup-of-coffee?ref=seealso" target="_blank">9 Ways to Save Money on Your Daily Cup of Coffee</a>)</p> <p>The personal finance sphere has taken Bach's idea and run with it. In fact, you can't swing a bag of artisan coffee on the internet without hitting an editorial, think piece, or other article explaining how the latte factor is costing you your future.</p> <p>But giving up your daily coffee will not mean the difference between enjoying a comfortable retirement and working until you're 80. There is a lot more going on than just the fact that $5 per day adds up to a great deal of money per year.</p> <p>Here's what most latte factor articles fail to take into account.</p> <h2>Financial shaming can make savers give up before they've started</h2> <p>While David Bach's original intent with the latte factor was to empower consumers to make more mindful choices with their money, his idea has often been used to <em>shame </em>people for their financial choices.</p> <p>Shaming is an unproductive way to motivate a person because it generally backfires. The constant drumbeat of the latte factor can make it sound like the only way to save for retirement (or any other big investment) is to give up daily luxuries. Individuals who feel guilty about their latte habit might decide that it's not worth trying to save for retirement if it means giving up their favorite luxury.</p> <p>The fact of the matter is that people can save money for their futures while also enjoying a daily latte. But the use of shaming language about having little luxuries can make it sound like these financial priorities are mutually exclusive.</p> <h2>Your money psychology can make it tough to see these savings</h2> <p>The latte factor math is unassailable. If you purchase a $5 latte every work day for 50 weeks out of each year, that adds up to $1,250 &mdash; which could certainly be a nice addition to your retirement account.</p> <p>The problem is that the latte factor math assumes that you can keep track of the daily $5 that you are spending. Most people's brains don't work like that. A cognitive bias known as the <em>denomination effect</em> makes people less likely to spend big bills compared to small ones. Five dollar bills can be quite difficult to hold onto, because they seem to be worth so little &mdash; even though the end result of $1,250 is quite big.</p> <p>Adding up those unspent five-spots to put them into a retirement account requires a certain type of money psychology that is exceedingly rare. For most people, refraining from buying a $5 coffee would just mean you spend the money on something else, rather than putting it aside for retirement savings.</p> <h2>It's easier to save money on big costs</h2> <p>People who actually spend $5 every single day on coffee are probably not paying close attention to where any of their money goes. If you are spending money every day on a small luxury, you are probably also spending money regularly on big luxuries &mdash; and those are a great deal easier to cut out than the small ones.</p> <p>Rather than focus on the difficult-to-track $5 holes in your budget, start with ways to reduce the bigger line items in your budget. Are you overspending on housing, food, transportation, entertainment, or utilities? Making a cut in one of those areas will not require you to keep track of small amounts of money to see a big difference, which make them a much smarter place to find extra funds to send to your retirement account.</p> <p>Even if you are a generally frugal person, you don't need to ax your beloved small luxuries to find extra money in your budget. Instead, spend some time thinking about which purchases and experiences are the most enjoyable or meaningful for you. Deciding what you want to spend your money on makes it easier to let go of the spending that doesn't matter as much to you. You'll enjoy your spending more that way, while still having savings to send to your retirement accounts.</p> <h2>Automating your savings allows you to have your latte and drink it, too</h2> <p>One aspect of David Bach's advice that often gets lost in discussions of the latte factor is the importance of automating. Bach suggests cutting out your daily indulgence and setting up an automatic transfer of the savings to your retirement or savings account &mdash; which would solve the whole problem of trying to keep track of those saved $5 bills.</p> <p>However, you don't need to give up your daily luxuries to be able to harness the power of automation. Once you have identified any spending items you're willing to cut, funnel the savings into your retirement account. If a daily latte is your favorite part of your morning ritual, then feel free to keep it and cut something else to automate that savings.</p> <h2>Daily luxuries can help keep you motivated to save</h2> <p>Living on a shoestring is exceedingly difficult. You have to say no to yourself constantly, which can lead to something called the &quot;what the hell&quot; effect. This effect describes how we tend to believe that refraining from spending money is an all or nothing proposition, so the moment we give in to temptation a little bit, we might as well throw our own guidelines out the window: &quot;What the hell, I've already bought myself a latte, I might as well go buy some new shoes!&quot;</p> <p>It's easier to go the distance while saving for retirement if you let yourself have some indulgences. You will no longer feel like the slog to retirement is going to be a daily misery that you might as well rebel against. Instead, your daily latte can make any other sacrifices easier to bear, and help you adjust to a new savings normal. Cutting out the latte on top of anything else can trigger the &quot;what the hell&quot; effect and make it even harder for you to save.</p> <h2>Enjoy your simple pleasures</h2> <p>The latte factor is an important thought exercise, but it should never become a hard-and-fast rule for how to live your life. Building daily luxuries into your life is an important part of enjoying your time, both during your career and after you retire. As long as you are willing to be mindful about your spending in general, you don't need to sacrifice small pleasures to afford retirement.</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%2Fwhy-your-daily-latte-wont-sink-your-retirement-savings&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FWhy%2520Your%2520Daily%2520Latte%2520Wont%2520Sink%2520Your%2520Retirement%2520Savings.jpg&amp;description=Why%20Your%20Daily%20Latte%20Wont%20Sink%20Your%20Retirement%20Savings"></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/Why%20Your%20Daily%20Latte%20Wont%20Sink%20Your%20Retirement%20Savings.jpg" alt="Why Your Daily Latte Wont Sink Your Retirement Savings" 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/why-your-daily-latte-wont-sink-your-retirement-savings">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-ways-you-can-cut-costs-right-before-you-retire-0">6 Ways You Can Cut Costs Right 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/how-to-find-the-savings-strategy-that-works-for-you">How to Find the Savings Strategy That Works For You</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-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-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-come-up-with-1000-in-the-next-30-days">How to Come Up With $1,000 in the Next 30 Days</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/the-easy-way-to-save-up-a-big-travel-budget">The Easy Way to Save Up a Big Travel Budget</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement automated savings cognitive bias cutting costs daily latte expenses Latte Factor psychology saving money shame small luxuries Fri, 15 Sep 2017 08:00:05 +0000 Emily Guy Birken 2019385 at http://www.wisebread.com How to Save for Retirement While Caring for Kids and Parents http://www.wisebread.com/how-to-save-for-retirement-while-caring-for-kids-and-parents <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-save-for-retirement-while-caring-for-kids-and-parents" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/three_generations_women_laughing_in_the_kitchen.jpg" alt="Three generations women laughing in the kitchen" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>As a member of the sandwich generation, you're not only raising your children, you're also caring for your aging parents. The financial burden, not to mention the daily responsibilities, can leave you struggling to invest in your own financial future. Here are some ways you can still save for your retirement while caring for those who depend on you. (See also: <a href="http://www.wisebread.com/5-money-strategies-for-the-sandwich-generation?ref=seealso" target="_blank">5 Money Strategies for the Sandwich Generation</a>)</p> <h2>1. Make your financial future a priority</h2> <p>Your financial future matters as much as the current responsibilities you have. Consider the stress you experience as you try to navigate life while being a parent and caring for your own aging parents. Do you want to repeat the cycle of stress by failing to plan for your retirement? No, of course you don't. However, by letting guilt and the needs of the moment dictate your financial choices, you may end up in that place. (See also: <a href="http://www.wisebread.com/6-financial-steps-to-take-when-your-aging-parents-move-in?ref=seealso" target="_blank">6 Financial Steps to Take When Your Aging Parents Move In</a>)</p> <p>When you're juggling medical bills and child care costs, retirement may seem far away and unimportant. It isn't. You deserve to have your financial needs met in the future as much as your children and parents deserve to have good care now.</p> <h2>2. Take advantage of employer programs</h2> <p>If your employer offers any sort of matching contribution to your 401(k), take full advantage of that opportunity.</p> <p>As you're able, increase the amount of money you're putting into your 401(k) from each paycheck. Having it automatically deducted &mdash; which is how most employers handle contributions &mdash; will keep you from depending on these savings for your daily expenses. Your goal is to bring your savings amount to the point of maximum matching contributions from your employer. It's an easy win, as those matching contributions double your savings.</p> <h2>3. Take advantage of tax-free savings</h2> <p>If you don't have a 401(k), now is the time to set up a traditional IRA. It's another way to maximize your retirement savings, as a traditional IRA will generally allow you to defer taxes on the money you save until much later &mdash; when you start withdrawing it. Deferring taxes enables you to save more now, while you're living in the sandwich generation budget crunch.</p> <h2>4. Find and apply for available tax benefits</h2> <p>Some additional tax breaks exist for adult children who are providing full-time care for their aging parents. Talk to your CPA about the requirements for claiming your elderly parents as a dependent.</p> <p>Additionally, examine your options for claiming tax deductions for medical care and other dependent expenses such as transportation, food, and supplies. Not all costs will qualify for tax deductions, but those that do can save you a good chunk of money that can go straight into your retirement savings.</p> <h2>5. Liquidate the assets your parents no longer need</h2> <p>It can be difficult to work through big financial decisions with your aging parents, but doing so can help you both navigate the somewhat rough financial waters of elder care. (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>Identify the assets that are used very little but require ongoing maintenance, such as a house that's not lived in, or a boat or car that sits unused. These unused assets are financial drains. Work together to come up with a plan for liquidating them. Then put the money gained from their sale into an account that pays for your parents' monthly expenses. This relieves the financial burden you're carrying so that less of your income is required for your parents, and more of your income can go to your retirement savings.</p> <h2>6. Reduce a big, ongoing expense</h2> <p>The goal here isn't to come up with a one-time win, but to find a monthly cost that eats up your income and find a way to reduce it. Then you'll take that difference and add it to your monthly savings.</p> <p>Make a list of your monthly expenses, rank them from most to least expensive, and start going down the list with your goal in mind. You can shop for better insurance rates and a cheaper cellphone plan. You can sell the expensive car you're still making payments on, buy a cheaper one outright, and put the amount you used to spend on a car payment directly into your savings. The key is to make sure that the amount you save goes into savings; don't let it get absorbed into your budget and spent on other things.</p> <h2>7. Take a money challenge</h2> <p>A <a href="http://www.wisebread.com/7-smart-money-challenges-you-can-totally-do?ref=internal" target="_blank">money challenge</a> is a fun but temporary way to reduce your costs and increase your savings by cutting an expense for a short amount of time. It's doable because it's temporary, which also makes it fun. You might not want to haggle over expenses or shop from thrift stores all the time; however, you can do it for a month or so and use what you save to add to your retirement.</p> <h2>8. Invest in a hobby that makes money</h2> <p>Taking on yet another responsibility may seem impossible. However, prioritizing your own interests &mdash; in this case, one that can make you some money &mdash; is a good idea. You need time to dedicate to your own interests in this time of intense caregiving. If you put time into developing a <a href="http://www.wisebread.com/10-awesome-money-making-hobbies?ref=internal" target="_blank">hobby that has income potential</a>, you'll be able to add to your retirement fund.</p> <p>If finding the time is an issue (and of course it is!), don't be shy about asking family members and friends to pitch in on child care and parent care. You may handle most of the responsibility for your aging parents, but you don't have to do everything yourself. Set up a schedule so that adult siblings, cousins, and community members take on caregiving for a day or afternoon out of the week. Use that time to work on your side hustle, and funnel the money you make from it straight into your retirement savings.</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-save-for-retirement-while-caring-for-kids-and-parents&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FHow%2520to%2520Save%2520for%2520Retirement%2520While%2520Caring%2520for%2520Kids%2520and%2520Parents.jpg&amp;description=How%20to%20Save%20for%20Retirement%20While%20Caring%20for%20Kids%20and%20Parents"></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%20Save%20for%20Retirement%20While%20Caring%20for%20Kids%20and%20Parents.jpg" alt="How to Save for Retirement While Caring for Kids and Parents" 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/annie-mueller">Annie Mueller</a> of <a href="http://www.wisebread.com/how-to-save-for-retirement-while-caring-for-kids-and-parents">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-help-your-parents-retire">How to Help Your Parents 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/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/why-your-daily-latte-wont-sink-your-retirement-savings">Why Your Daily Latte Won&#039;t Sink Your Retirement Savings</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-you-can-cut-costs-right-before-you-retire-0">6 Ways You Can Cut Costs Right Before You Retire</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/half-of-americans-are-wrong-about-their-retirement-savings">Half of Americans Are Wrong About Their Retirement Savings</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Family Retirement aging parents caregiving cutting costs extra income IRA raising kids sandwich generation saving money taxes Thu, 14 Sep 2017 08:31:09 +0000 Annie Mueller 2019188 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-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-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-2 views-row-even"> <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> <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/these-5-expenses-will-probably-cost-you-a-lot-less-in-retirement">These 5 Expenses Will Probably Cost You a Lot Less in 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/9-expensive-mistakes-of-the-newly-retired">9 Expensive Mistakes of the Newly Retired</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