Retirement http://www.wisebread.com/taxonomy/term/417/all en-US Best Money Tips: Cheapest Cities for Retirees http://www.wisebread.com/best-money-tips-cheapest-cities-for-retirees <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/best-money-tips-cheapest-cities-for-retirees" 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_city_000084004751.jpg" alt="Married couple finding cheapest cities for retirees" 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 the cheapest cities for retirees, the best time to visit top vacation destinations for big savings, and affordable but romantic Valentine&rsquo;s Day ideas.</p> <h2>Top 5 Articles</h2> <p><a href="http://www.kiplinger.com/slideshow/retirement/T006-S001-cheapest-places-where-you-ll-want-to-retire/index.html">Cheapest Places Where You'll Want to Retire</a> &mdash; In Hot Springs, Arkansas, housing and health care for retirees are particularly low, at 24.1% and 12.2% below the national average, respectively. [Kiplinger]</p> <p><a href="http://www.cheapism.com/blog/4120/best-time-to-go">When to Hit 10 Top Vacation Destinations for Big Savings</a> &mdash; Vacation rentals in London are cheapest a few weeks before mid-July. [Cheapism]</p> <p><a href="http://parentingsquad.com/13-inexpensive-but-romantic-valentines-day-ideas">13 Inexpensive But Romantic Valentine's Day Ideas</a> &mdash; Hop into your car and take a long drive through a scenic area nearby. [Parenting Squad]</p> <p><a href="http://www.popsugar.com/smart-living/Signs-Hoarding-Tendencies-33911301">11 Signs You Have Hoarding Tendencies</a> &mdash; Do you make piles of things to deal with later&hellip;and let those piles sit for days? [PopSugar Smart Living]</p> <p><a href="http://www.stackthechips.com/7-crazy-things-that-we-do-with-our-money/">7 Crazy Things That We Do With Our Money</a> &mdash; With online rental and streaming services, it doesn't make sense to buy a film that you haven't seen. [Stack The Chips]</p> <h2>Other Essential Reading</h2> <p><a href="http://www.thefrugaltoad.com/household/your-health-how-to-stay-safe-with-medicine">Your Health: Staying Safe with Medicine</a> &mdash; Keep medicine in their original containers and out of reach of children. Make sure they're stored properly! Some meds require refrigeration. [The Frugal Toad]</p> <p><a href="http://adebtfreestressfreelife.com/3-surefire-strategies-to-end-under-earning-and-change-your-financial-circumstances/">3 Surefire Strategies to Value Yourself And Stop Working for Free</a> &mdash; Be honest! Take a hard look at your situation and analyze your justifications, thoughts, and feelings. [A Debt Free Stress Free Life]</p> <p><a href="http://gradmoneymatters.com/money-making-ideas/5-tasks-that-you-can-outsource.html">5 Tasks You Can Outsource</a> &mdash; Spend your time on things that matter. Email management is one of those tasks that you can easily hand off to a virtual assistant. [Grad Money Matters]</p> <p><a href="http://www.biblemoneymatters.com/practice-an-attitude-of-gratitude-to-improve-your-finances/">Practice An Attitude Of Gratitude To Improve Your Finances</a> &mdash; Practicing gratitude allows you to appreciate what you have and stop focusing on what you don't. [Bible Money Matters]</p> <p><a href="http://ptmoney.com/marriage-money/">8 Tips to Secure Your Marriage (and Money) for Years to Come</a> &mdash; Decide ahead of time who will take care of which financial tasks. [PT Money]</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-cheapest-cities-for-retirees">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/if-you-want-your-401k-to-grow-stop-doing-these-6-things">If You Want Your 401K to Grow, Stop Doing These 6 Things</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/dont-let-poor-health-kill-your-retirement-fund">Don&#039;t Let Poor Health Kill Your Retirement Fund</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/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-4 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-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-occasions-when-you-should-definitely-hire-a-financial-advisor">7 Occasions When You Should Definitely Hire a Financial Advisor</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement best money tips retirement Thu, 11 Feb 2016 20:00:06 +0000 Amy Lu 1654680 at http://www.wisebread.com Best Money Tips: The Best and Worst States to Retire http://www.wisebread.com/best-money-tips-the-best-and-worst-states-to-retire <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/best-money-tips-the-best-and-worst-states-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/old_couple_bikes_000019588725.jpg" alt="Couple finding best and worst states to retire" 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 the best and worst states to retire, ways to keep your money safe while traveling, and cancer-causing foods you should avoid.</p> <h2>Top 5 Articles</h2> <p><a href="http://www.moneytalksnews.com/these-are-the-10-best-and-worst-states-retire/">These Are the 10 Best (and Worst) States to Retire</a> &mdash; Most retirees choose where to retire based on good weather or where their children live. But children often move, and good weather alone doesn't lead to happiness or contentment. [Money Talks News]</p> <p><a href="http://www.csmonitor.com/Business/Saving-Money/2016/0204/Seven-ways-to-keep-your-money-secure-while-traveling">Seven ways to keep your money secure while traveling</a> &mdash; See if you can get a travel debit card linked to a temporary checking account with your bank. You'll be able to leave your regular debit cards at home, and the funds in your regular account will be safe if a thief gets ahold of your travel debit card. [The Monitor]</p> <p><a href="http://www.lifed.com/cancer-causing-foods-you-should-never-eat">16 Cancer Causing Foods You Should Never Eat</a> &mdash; Processed meats can increase your risk for cancer. Eating the equivalent of four slices of bacon raises the risk of getting colorectal cancer by 18%. [Life'd]</p> <p><a href="http://www.artofmanliness.com/2016/02/04/12-tips-for-getting-the-most-out-of-your-trip-to-a-museum/">12 Tips for Getting the Most Out of Your Trip to a Museum</a> &mdash; You might be able to navigate a museum just fine on your own, but guided tours, programs, and classes can really enhance the experience. [The Art of Manliness]</p> <p><a href="http://www.pickthebrain.com/blog/3-uncommon-ways-to-be-more-positive/">3 Uncommon Ways To Be More Positive</a> &mdash; It's easy to get stuck in the past and focus on the bad experiences. Writing down your goals and dreams helps you shift your focus to the future and reminds you of what you're working towards. [Pick The Brain]</p> <h2>Other Essential Reading</h2> <p><a href="http://www.positivityblog.com/index.php/2016/02/04/how-to-stop-being-so-lazy/">How to Stop Being So Lazy: 10 Simple Habits</a> &mdash; Allow yourself small breaks between blocks of focused work. You'll feel energetic and motivated longer and be able to do better quality work. [The Positivity Blog]</p> <p><a href="http://www.shebudgets.com/life-hacks/hosting-cost-effective-dinner-parties-that-dont-break-the-bank/66308">Hosting Cost-Effective Dinner Parties That Don&rsquo;t Break the Bank</a> &mdash; Grill something! When the weather is nice, everyone (including the chef) can hang out outside and enjoy really inexpensive grilled meat and sides. [SheBudgets]</p> <p><a href="http://www.popsugar.com/smart-living/How-Meditation-Increases-Productivity-40064496">4 Ways Meditation Increases Your Productivity and Wellness</a> &mdash; Doing breathing exercises can help calm your mind and nervous system, allowing you to be in the present. [PopSugar Smart Living]</p> <p><a href="http://adebtfreestressfreelife.com/how-to-clean-your-bathroom-in-just-10-minutes/">How To Quick Clean Your Bathroom In Just 10 Minutes</a> &mdash; Don't wait until your bathroom has collected layers and layers of grime to do a deep scrub. Regular, 10-minute cleanings is all you need to keep this high-traffic space sparkling! [A Debt Free Stress Free Life]</p> <p><a href="http://www.cleverdude.com/content/2-ways-for-couples-to-resolve-spending-conflict/">2 Ways For Couples To Resolve Spending Conflicts</a> &mdash; When you can't agree on how to spend funds, use something to break the tie randomly. The next time you're in the same position, the tie-breaker goes to the other partner. [Clever Dude]</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-the-best-and-worst-states-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/dont-choose-these-10-cities-if-you-want-to-retire-comfortably">Don&#039;t Choose These 10 Cities If You Want to Retire Comfortably</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/stop-making-these-10-bogus-retirement-savings-excuses">Stop Making These 10 Bogus Retirement Savings Excuses</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/is-it-safe-to-re-finance-your-home-close-to-retirement">Is it Safe to Re-Finance Your Home Close to 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-much-should-you-have-saved-for-retirement-by-30-40-50">How Much Should You Have Saved for Retirement by 30? 40? 50?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-important-things-to-know-about-your-401k-and-ira-in-2016">5 Important Things to Know About Your 401K and IRA in 2016</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement best money tips places to retire Mon, 08 Feb 2016 20:00:03 +0000 Amy Lu 1651694 at http://www.wisebread.com Stop Making These 10 Bogus Retirement Savings Excuses http://www.wisebread.com/stop-making-these-10-bogus-retirement-savings-excuses <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/stop-making-these-10-bogus-retirement-savings-excuses" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/000018814419.jpg" alt="Realizing it&#039;s time to stop making bogus retirement savings excuses" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Saving for retirement can often feel like a drag, and many of us come up with excuses for avoiding it. After all, who wants to think about finances at age 70 when you're decades away and enjoying life <em>now</em>?</p> <p>But no matter what excuse you come up with, there's no denying that putting as much money aside as you can &mdash; as early as you can &mdash; will help you maintain your lifestyle even after you stop working.</p> <p>Here are some of the top excuses people use to avoid saving for retirement, and why they're way off-base. (See also: <a href="http://www.wisebread.com/8-steps-to-starting-a-retirement-plan-in-your-30s">8 Steps to Starting a Retirement Plan in Your 30s</a>)</p> <h2>1. &quot;I Have a Pension&quot;</h2> <p>If your company is one of the few remaining organizations that offers a defined benefit plan, that's great. But it should not be a reason to refrain from saving additional money for retirement. Having additional savings on top of your pension can make retirement that much sweeter. And pensions have been under assault in recent years, with companies and governments backing off of promises to retirees due to financial troubles. Protect against this uncertainty by opening an individual retirement account (otherwise known as an IRA).</p> <h2>2.&quot;I'm Self-Employed&quot; or &quot;My Company Doesn't Offer a Retirement Plan&quot;</h2> <p>You may not have access to an employer-sponsored retirement plan, but that does not mean you can't save a lot for retirement. Any individual can open a traditional IRA or Roth IRA and contribute up to $5,500 annually. With a traditional IRA, contributions are made from your pre-tax income. With a Roth IRA, you pay taxes up-front, so that you won't have to pay them when you withdraw the money at retirement age. In addition, the federal government now offers a &quot;<a href="https://myra.gov/">myIRA</a>&quot; plan, which works like a Roth IRA and allows anyone to invest in treasury securities with no startup costs or fees.</p> <h2>3. &quot;I Won't Be at This Company for Very Long&quot;</h2> <p>One of the key advantages to 401K plans offered by employers is that they are portable. This means that any money you contribute to a plan will follow you wherever you go. In some cases, contributions from your company need to &quot;vest&quot; for a certain amount of time before you get to keep the them, but usually only for a year or so. There's no real downside to contributing to a company retirement plan, even if you don't plan to be there for very long.</p> <h2>4. &quot;The Expenses Are High&quot;</h2> <p>It's very true that many investment products, including mutual funds, have high costs tied to them. It's annoying to buy funds and notice an expense ratio of more than 1%, thus reducing your potential profits. But fees are not a good enough reason to avoid investing, altogether. Over the long haul, your investments will easily rise in value and more than offset any costs. And if you direct your investments to low-cost mutual funds and ETFs, you'll likely find the fees aren't so objectionable. Look for mutual funds with expense ratios of less than 0.1%, and for those that trade without a commission.</p> <h2>5. &quot;I Need to Fund My Kids' College Education&quot;</h2> <p>Putting money aside to pay for college is a wonderful idea, but it should not be done at the expense of your own retirement. Your kids can always work to pay for college or even take out loans, if necessary. But you can't borrow for your own retirement, and you don't want to find yourself working into old age because you didn't save for yourself. In an ideal world, you can save for both college and your own retirement, but you should always think of your own retirement first.</p> <h2>6. &quot;My 401K Plan Isn't Very Good&quot; or &quot;My Company Doesn't Match Contributions&quot;</h2> <p>I'll occasionally hear someone say that they won't contribute to their retirement plan because it's a bad one. No employer match, bad investment options, or high fees can kill any motivation to save. But contributing to even a bad 401K is better than not saving at all. And if you're not thrilled with the offered 401K plan, you can take a look at traditional or Roth IRAs, or even stocks and mutual funds in taxable accounts. There are many bad retirement plans out there, but they are almost all better than nothing.</p> <h2>6. &quot;I Don't Understand Investing&quot;</h2> <p>There's no question that investing can be a very intimidating thing. It takes a while to grasp even the basics of how to invest, and the number of investment products can be bewildering. Don't let fear hold you back from achieving your dreams in retirement. These days, there's a lot of great free information about investing that can help you get started. And many discount brokerages, such as Fidelity, offer free advice if you have an account. Certified Financial Planners are also plentiful &mdash; and often reasonably priced &mdash; and can help you establish a plan to save for retirement and keep you on track.</p> <h2>7. &quot;I Don't Earn Enough&quot;</h2> <p>It's definitely hard to think about retirement when you're having trouble making ends meet now. But it's important to recognize setting aside even a modest amount of money each month can help you achieve financial freedom. Consider that even $25 a month into an index fund can grow to tens of thousands of dollars after 30 years.</p> <h2>8. &quot;I'm Young &mdash; I Have Plenty of Time&quot;</h2> <p>If you're not saving for retirement when you're young, you are costing your future self a lot of money. Thanks to the magic of compound interest and earnings, someone who begins saving in their early 20s can really see big gains over time. If you have $10,000 at age 20 and begin setting aside $200 a month until age 65, you'll have nearly a million dollars, based on an average market return. But if you wait until age 35, you'll end up with barely one-third of that.</p> <h2>9. &quot;It's Too Late for Me&quot;</h2> <p>It's true that the earlier you start investing, the more money you'll likely end up with. But hope is not entirely lost for those who are approaching retirement age but have not saved. Even five to 10 years of aggressive saving and the right investments can result in a nice nest egg. Older people can take advantage of higher limits on contributions to retirement plans including IRAs and 401Ks.</p> <h2>10. &quot;I'll Get Social Security&quot;</h2> <p>You've been contributing to Social Security all your life, but that doesn't mean it guarantees a comfortable retirement. A typical Social Security benefit these days is about $1,300 a month. That's enough to keep you from starving, but you won't be able to do much else. Moreover, concerns over federal budget deficits suggest there is no guarantee of Social Security funds being available when you retire. For certain, there is constant talk by lawmakers of entitlement reform, which could mean to lower benefits or other changes.</p> <p><em>What's your excuse for not saving for retirement?</em></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/stop-making-these-10-bogus-retirement-savings-excuses">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/8-steps-to-starting-a-retirement-plan-in-your-30s">8 Steps to Starting a Retirement Plan in Your 30s</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-ways-to-guarantee-income-in-retirement">6 Ways to Guarantee Income 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/how-to-plan-for-retirement-when-you-re-ready-to-retire">How to Plan for Retirement When You’re Ready to Retire</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/retirement-accounts-and-money-to-spend">Retirement accounts and money to spend</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-retirement-rules-you-should-be-breaking">6 Retirement Rules You Should Be Breaking</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401k compound interest excuses IRA pensions savings social security Mon, 08 Feb 2016 18:00:05 +0000 Tim Lemke 1649873 at http://www.wisebread.com Is it Safe to Re-Finance Your Home Close to Retirement? http://www.wisebread.com/is-it-safe-to-re-finance-your-home-close-to-retirement <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/is-it-safe-to-re-finance-your-home-close-to-retirement" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/house_payments_money_000007934078.jpg" alt="Learning if it&#039;s safe to refinance your home close to retirement" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Lower mortgage rates can save you hundreds of dollars on your monthly payments. Refinancing your mortgage to a new one with a lower rate would then seem to make sense.</p> <p>But what if you're approaching retirement? Is refinancing a smart move when you're planning to leave the workforce in five years or less?</p> <p>Not surprisingly, the answer depends on your unique financial situation and your goal from a refinance. (See also: <a href="http://www.wisebread.com/4-mortgage-secrets-only-your-broker-knows">4 Mortgage Secrets Only Your Broker Knows</a>)</p> <h2>Consider the Time Factor</h2> <p>If your main goal is to reduce your monthly costs, refinancing might make sense. But if you plan on moving from your home shortly &mdash; in, say, less than five years &mdash; then a refinance might not be the best option. That's because refinancing a home loan isn't free. The typical refinance costs thousands of dollars &mdash; money that you'll usually roll into your new loan amount and pay off over time when you make your regular monthly payments.</p> <p>It might take you several years to save enough money each month to recover the closing costs. If you're moving too soon (and retirees often move from their homes sooner than they originally planned), you might not generate enough monthly savings to even pay back those initial closing costs.</p> <p>Then there's the time factor. A refinance, unless you are reducing the term of your loan at the same time, means that you'll be paying off your mortgage for a longer number of years. As a retiree, you might instead prefer to pay off your current mortgage in a shorter amount of time.</p> <p>&quot;One consideration is the length of the term on the new loan,&quot; said Arvin Sahakian, co-founder and vice president of BeSmartee, a start-up designed to help consumers search for mortgage loans online. &quot;When people refinance their mortgage, they are re-setting the loan term and essentially starting over again.&quot;</p> <p>As an example, if you are paying off a 30-year fixed-rate mortgage that you have been making payments on for 15 years, you'll have an additional 15 years left to pay off that loan. If you refinance that loan to a new 30-year one, you've just increased the lifespan of your mortgage by another 15 years. Do you want that monthly payment hovering over you for another 15 years, even if refinancing will result in immediate monthly savings?</p> <p>That's not an easy question to answer, especially when you consider how much of your payments on a new mortgage loan, even one with a lower interest rate, will go toward interest instead of principal.</p> <p>&quot;The first few years of mortgage payments on a new loan are designed to go toward the interest, and less towards the principal,&quot; Sahakian said. &quot;As the years go by, more of the monthly payments go toward the principal, and less toward the interest, so this is another important consideration.&quot;</p> <h2>What the Numbers Say</h2> <p>It's important for every homeowner to crunch some numbers before deciding to refinance. But it's <em>especially</em> important for those nearing retirement who might need to recover their refinancing closing costs in as few months as possible.</p> <p>Say you owe $150,000 on a 30-year fixed-rate mortgage with an interest rate of 5%. Your monthly payment, not including insurance and taxes, will be about $805. If you refinance that same amount to a 30-year fixed-rate loan with an interest rate of 3.95%, your monthly payment will drop to about $711 a month &mdash; a savings of about $94 a month, or $1,128 a year.</p> <p>That sounds good, right? But remember, refinancing can be expensive. Say refinancing that $150,000 costs $4,500 in closing fees. It will take you almost four years to save enough from your refinance to pay back these closings costs. Is that worth it? If you stay in your home for eight years or more, it might be. If you end up moving in five years, it might not be.</p> <p>But say you owe $200,000 on a 30-year fixed-rate loan with an interest rate of 5%. Then your monthly payment, again not counting taxes and insurance, would be about $1,073. If you refinance that $200,000 to a new 30-year fixed-rate loan but at an interest rate of 3.95%, your monthly payment would fall to about $949 a month. That's a savings of $124 a month, or $1,488 a year. If your loan closing cost that same $4,500, it would take you just a bit more than three years to generate enough savings to pay for your closing costs. That shorter time frame might make it more worthwhile for homeowners nearing retirement.</p> <p>There is another factor to consider, though. If you'll absolutely need to reduce your monthly living expenses after you retire, then refinancing might make sense, even if it will take you longer to recover the costs of closing.</p> <p>&quot;Many Americans who retire typically see their retirement income fall to nearly half of what they earned while they worked full time,&quot; Sahakian said. &quot;This is one of the considerations borrowers should account for when making a decision about refinancing. Will they be able to afford the monthly payments associated with the mortgage, insurance, and property taxes on their retirement income?&quot;</p> <p><em>Are you considering a home refinance?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/is-it-safe-to-re-finance-your-home-close-to-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-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-mortgage-secrets-only-your-broker-knows">4 Mortgage Secrets Only Your Broker Knows</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/quicken-loans-review-competitive-rates-and-good-customer-service">Quicken Loans Review: Competitive Rates and Good Customer Service</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-you-should-consider-an-adjustable-rate-mortgage">Why You Should Consider an Adjustable-Rate Mortgage</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/2-things-you-must-know-about-the-new-mortgage-rules">2 Things You Must Know About the New Mortgage Rules</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/3-hidden-dangers-of-refinancing-your-mortgage">3 Hidden Dangers of Refinancing Your Mortgage</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing Retirement closing costs home loans interest rates mortgages refinancing Mon, 08 Feb 2016 14:00:06 +0000 Dan Rafter 1649872 at http://www.wisebread.com 6 Retirement Products That Aren't Worth Your Money http://www.wisebread.com/6-retirement-products-that-arent-worth-your-money <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-retirement-products-that-arent-worth-your-money" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/financial_nest_egg_000061502802.jpg" alt="Finding out which retirement products aren&#039;t worth your money" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Saving for retirement is actually quite simple. But there are many products out there that make it seem more complicated than it actually is. Others simply cost more than they're worth.</p> <p>As you approach retirement age, you may hear about all kinds of ways to ensure that you have enough money to continue to live comfortably. But steering clear of the following products may ultimately help you keep more money in your pocket.</p> <h2>1. Variable Annuities</h2> <p>A variable annuity might make sense for those approaching retirement, but generally doesn't for those who are already retired. That's because the idea behind a variable annuity is that you invest a sum of money and get a stream of income at a future date. Try to access your money early, and you might pay a penalty. Current retirees are better off with an immediate payout annuity, which requires you to pay an up-front lump sum, and then provides regular payments immediately. It's worth noting that variable annuities can have fees of as much as 3.5%, according to Kiplinger.</p> <h2>2. Reverse Mortgages</h2> <p>We've all seen the ads on television, and the concept seems simple enough: You use the equity in your home to help fund your retirement via a guaranteed income stream. Reverse mortgages are a legitimate retirement product, but there are downsides, including high closing costs and fees. Plus, the equity in your house won't last forever, and by tapping it, you leave less for your heirs when they inherit the home. (See also:&nbsp;<a href="http://www.wisebread.com/5-downsides-of-a-reverse-mortgage">5 Downsides of a Reverse Mortgage</a>)</p> <h2>3. Long-Term Care Insurance</h2> <p>It's daunting to think about the costs of your care as you age. Assisted living and nursing home care can cost anywhere from $40,000 to $90,000 a year. A long stay in a nursing home might mean you'll outlast your savings and leave very little to your family.</p> <p>An insurance policy for long-term care might seem like a good investment, but it's important to know that the premiums can run upwards of $2,000 annually for a healthy couple at age 60. If your golden years are healthy and more independent than you expected, you may pay more in premiums than what your care would cost. Retirees are likely better off investing well and trying to save as much as possible for their retirement &mdash; unless they have good reason to believe they'll make use of long-term care facilities or services.</p> <h2>4. Whole Life Insurance</h2> <p>On the surface, whole life insurance seems like a swell product: You get life insurance along with some tax-free growth. But whole life insurance is generally more expensive than term life insurance, and the investment returns are usually less than what you might find elsewhere.</p> <h2>5. Junk Bonds</h2> <p>It certainly makes sense for retirees to have bonds in their portfolios, but they should steer clear of these types of high-yield bonds, which don't perform particularly well unless the economy is doing great. And if the economy is doing poorly, they could be crushed. If you're close to retirement and still looking for yield, take a look at stable dividend stocks instead. If you want safety, go with lower-risk bonds or cash.</p> <h2>6. Non-Traded REITs</h2> <p>Real estate investment trusts (REITS) can be great investments for retirees, because they offer high dividend income with low volatility. However, there are some REITs that are public, but not traded on any public exchange. The Financial Industry Regulatory Authority has issued a warning about these products, because upfront fees are high, and they are often difficult to sell. If you want real estate in your portfolio, look to some of the larger REITs like Simon Property Group or Boston Properties, or find a good REIT mutual fund or ETF.</p> <p><em>Where are you keeping your retirement funds?</em></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/6-retirement-products-that-arent-worth-your-money">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/dont-know-what-annuities-are-you-might-be-missing-out">Don&#039;t Know What Annuities Are? You Might Be Missing Out</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/9-unexpected-expenses-for-retirees-and-how-to-manage-them">9 Unexpected Expenses for Retirees — And How to Manage Them</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-retirees-are-using-annuities-instead-of-early-social-security">Why Retirees Are Using Annuities Instead of Early Social Security</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-much-do-i-need-to-retire-how-much-can-i-spend">How much do I need to retire? How much can I spend?</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-9-most-important-lessons-i-learned-about-money-when-i-became-a-landlord">The 9 Most Important Lessons I Learned About Money When I Became a Landlord</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement annuities insurance junk bonds REITs reverse mortgages Tue, 19 Jan 2016 14:00:03 +0000 Tim Lemke 1638138 at http://www.wisebread.com 5 Reasons Women Might Retire With More Wealth http://www.wisebread.com/5-reasons-women-might-retire-with-more-wealth <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-reasons-women-might-retire-with-more-wealth" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_money_pink_000007951788.jpg" alt="Learning reasons why women might retire with more wealth" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>We hear a lot about how women might be shortchanged in terms of earnings, but there are also plenty of ways women can excel financially. From potentially stronger savings and investment habits, to longer lifespans, women enjoy some serious wealth-building advantages, as well. Here are five reasons women might retire with more wealth.</p> <h2>1. More Women Are Gaining Higher Education</h2> <p>In fact, women are handily defeating men in the college game. Because women are more likely to <a href="https://www.washingtonpost.com/news/storyline/wp/2014/12/11/women-are-dominating-men-at-college-blame-sexism/">graduate from college</a> than their male counterparts, they enter the workforce in better shape. Sure, women are more likely to enter lower-paid areas of the education and health sectors, but they are also breaking into business and <a href="https://www.washingtonpost.com/news/morning-mix/wp/2015/04/14/study-finds-surprisingly-that-women-are-favored-for-jobs-in-stem/">STEM programs</a> at an increasing rate.</p> <p>While college loan debt can slow down your plans to save, the correlation between college and increased earnings is still present. The trick is to start investing as soon as you begin to see your margin of expendable income widen, ideally before age 30.</p> <h2>2. Women Are Living and Working Longer</h2> <p>That's right: Women typically live longer, and thus have more healthful years during which they may work. That means continuing to work in later years &mdash; when earnings may be higher, and more returns from compound interest on savings enjoyed. It also means a postponed retirement, which allows your investments to grow for longer.</p> <p>Check out this handy guide to <a href="http://www.wisebread.com/how-much-should-you-have-saved-for-retirement-by-30-40-50">reaching your investing goals</a>.</p> <h2>3. Women Are Better Savers at all Income Levels</h2> <p>The road is full of unexpected hurdles to saving, and expensive emergencies are all but inevitable. The good news for female workers is that women are <a href="https://institutional.vanguard.com/iam/pdf/GENDRESP.pdf?cbdForceDomain=true">better at saving</a> than men in general. If that weren't enough, the same study showed that women are also better at managing their 401K accounts than men.</p> <p>It still takes discipline, however, to work this psychology to your advantage. Make specific goals and stick to them.</p> <h2>4. Forgoing Children Could Mean More Savings</h2> <p>On the fence about starting a family? According to the 2014 census, 48% of women between the ages of 18 and 44 <a href="http://www.huffingtonpost.com/2015/04/09/childless-more-women-are-not-having-kids-says-census_n_7032258.html">do not have children</a>. Clearly, women are increasingly waiting to have kids, or deferring the option altogether.</p> <p>Consider that this may mean more money for those women down the line. Delaying kids can mean more time to solidify your career and earnings, amass savings, and reduce debt before the financial pressures of kids arrive. If you are a 20- or 30-something still weighing the options, avoiding the fate of the <a href="http://www.pewsocialtrends.org/2013/01/30/the-sandwich-generation/">sandwich generation</a> might be a deciding factor in postponing or entirely forgoing children.</p> <h2>5. Women Are Less Likely to Make Risky Trades</h2> <p>In addition to being better savers, more educated, and having more working years in which to save, women are also less likely to gamble their savings in poor investments. Women are generally <a href="http://www.nextavenue.org/do-women-and-men-differ-retirement-savers/">more risk averse</a> than men.</p> <p>That said, there is no reason not to learn how to pick more varied investments and take a slightly higher risk (hopefully for greater rewards) every now and then. Try listening to these <a href="http://www.wisebread.com/the-5-best-money-podcasts">great money podcasts</a> to pick up tips and stay up to date with the market.</p> <p>Women enjoy a variety of natural advantages when it comes to earning and managing money. The key is making full use of them to strengthen your financial roadmap.</p> <p><em>Are you taking steps to secure your retirement?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/amanda-meadows">Amanda Meadows</a> of <a href="http://www.wisebread.com/5-reasons-women-might-retire-with-more-wealth">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-4"> <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/stop-making-these-10-bogus-retirement-savings-excuses">Stop Making These 10 Bogus Retirement Savings Excuses</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-important-things-to-know-about-your-401k-and-ira-in-2016">5 Important Things to Know About Your 401K and IRA in 2016</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-penalty-free-ways-to-withdraw-money-from-your-retirement-account">7 Penalty-Free Ways to Withdraw Money From Your Retirement Account</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/4-reasons-why-a-roth-ira-may-be-better-than-your-401k">4 Reasons Why a Roth IRA May be Better Than Your 401(k)</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/12-surprising-things-women-should-know-about-retirement-planning">12 Surprising Things Women Should Know About Retirement Planning</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement education gender IRA savings 401k women Thu, 31 Dec 2015 14:00:03 +0000 Amanda Meadows 1629244 at http://www.wisebread.com Best Money Tips: Smart Retirement Strategies for Women http://www.wisebread.com/best-money-tips-smart-retirement-strategies-for-women <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/best-money-tips-smart-retirement-strategies-for-women" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/smart_woman_thinking_000080192057.jpg" alt="Woman using smart retirement strategies for women" 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 smart retirement strategies for women, DIY cleaning products that you can make for pennies, and lessons we can learn from Jedi Master Yoda.</p> <h2>Top 5 Articles</h2> <p><a href="http://www.kiplinger.com/slideshow/retirement/T037-S001-smart-retirement-strategies-for-women/index.html">9 Smart Retirement Strategies for Women</a> &mdash; If you're a stay-at-home parent with no outside income, you can still open a spousal IRA or Roth IRA as long as your spouse has a paying job. [Kiplinger]</p> <p><a href="http://www.popsugar.com/smart-living/DIY-Cleaning-Products-28901279">Make These 69 DIY Cleaning Products For Pennies</a> &mdash; Stop wasting your dollars on store-bought dish soap! Make your own at home and personalize the scents with essential oils. [PopSugar Smart Living]</p> <p><a href="http://www.dumblittleman.com/2015/12/15-lessons-can-learn-jedi-master-yoda.html">15 Lessons You Can Learn From Jedi Master Yoda</a> &mdash; Yoda teaches that to grow, you need to unlearn what you have learned. Your attitude and perspective need to change if you want to make progress. [Dumb Little Man]</p> <p><a href="http://www.lifehack.org/350330/50-small-things-that-make-up-a-perfect-day">50 Small Things That Make Up A Perfect Day</a> &mdash; When you're having a bad day, doing one of these small things can make it better. [Lifehack]</p> <p><a href="http://www.experian.com/blogs/news/about/achieve-financial-goals/">Creating Financial Goals You&rsquo;ll Actually Achieve</a> &mdash; Join Experian's #CreditChat tomorrow at 3 p.m. EST for a discussion on creating smart financial goals. [Experian]</p> <h2>Other Essential Reading</h2> <p><a href="http://www.csmonitor.com/Business/Saving-Money/2015/1226/After-Christmas-sales-What-to-expect-this-year">After Christmas sales: What to expect this year</a> &mdash; If you hurry, you may still be able to snag great deals on electronics like cameras and audio equipment! [The Monitor]</p> <p><a href="http://adebtfreestressfreelife.com/housekeeping-tips-for-the-domestically-challenged/">Housekeeping Tips for The Domestically Challenged</a> &mdash; Don't compare the state of your home to someone else's. Be kind to yourself and just do the best you can. [A Debt Free Stress Free Life]</p> <p><a href="http://timemanagementninja.com/2015/12/10-things-to-get-done-when-no-one-is-in-the-office/">10 Things to Get Done When No One is in the Office</a> &mdash; Take advantage of a quiet workplace to tackle admin tasks that usually don&rsquo;t get done due to interruptions and higher priorities. [Time Management Ninja]</p> <p><a href="http://productivitytheory.com/how-to-recognize-when-a-coworker-needs-help/">How to Recognize When a Coworker Needs Help</a> &mdash; Don't ignore odd behaviors. Your co-worker may be struggling but not sure how to ask for help. Make it clear you're concerned and want to give support if you can. [Productivity Theory]</p> <p><a href="http://parentingsquad.com/5-ways-to-start-the-new-year-off-right-as-a-family">5 Ways to Start the New Year Off Right as a Family</a> &mdash; Plan fun adventures as a family! They don't have to be expensive trips; try monthly outings to local events, morning hikes, scavenger hunts, or evening plays. [Parenting Squad]</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-smart-retirement-strategies-for-women">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-5"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-reasons-women-might-retire-with-more-wealth">5 Reasons Women Might Retire With More Wealth</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/12-surprising-things-women-should-know-about-retirement-planning">12 Surprising Things Women Should Know About Retirement Planning</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-steps-for-a-womans-financial-self-defense">6 Steps for a Woman&#039;s Financial Self-Defense</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/stop-making-these-10-bogus-retirement-savings-excuses">Stop Making These 10 Bogus Retirement Savings Excuses</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/is-it-safe-to-re-finance-your-home-close-to-retirement">Is it Safe to Re-Finance Your Home Close to Retirement?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement best money tips retirement strategies women Tue, 29 Dec 2015 20:00:04 +0000 Amy Lu 1629155 at http://www.wisebread.com How Much Can You Afford to Risk In a Play Money Account? http://www.wisebread.com/how-much-can-you-afford-to-risk-in-a-play-money-account <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-much-can-you-afford-to-risk-in-a-play-money-account" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/man_measuring_funds_000068915471.jpg" alt="Man learning how much to keep in his play money account" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Do you have a &quot;play money&quot; account &mdash; a self-directed brokerage account that you invest in for fun or to take greater risks? If you do, you're not alone. But be careful: Don't let the fun of testing out your own investment strategies make you short more important accounts such as your IRA, 401K, or <a href="http://www.wisebread.com/is-building-an-emergency-fund-always-a-good-idea">emergency fund</a>.</p> <p>There's nothing wrong with having such an investment account. Not only can they be fun, but they can also teach consumers whether their investment ideas have merit or if they are more likely to flop. The problem comes when consumers become so focused on their &quot;play money&quot; that they invest to the detriment of their other accounts.</p> <p>So how much is too much to invest in such an account? That depends on your individual financial situation. But here are some guidelines for how much you should be investing in your other, essential accounts before you drop big bucks on &quot;play money.&quot;</p> <h2>Emergency Fund</h2> <p>Life is filled with unexpected expenses, and some of them are big. Your car's transmission fails? That could be a thousand-dollar repair. Your hot water heater goes on the fritz? Get ready for an unexpected multi-hundred-dollar replacement.</p> <p>That's where an emergency fund comes in. As its name suggests, the dollars in this fund are reserved for those unexpected expenses. Not having an emergency fund can be trouble: If you don't have the dollars to cover that new furnace, the odds are high that you'll place that expense on a credit card.</p> <p>And what if you lose your job? An emergency fund can help cover your daily expenses while you search for new work.</p> <p>Financial experts recommend that consumers build an emergency fund that can cover at least six months of normal daily expenses. If your fund is larger, that's even better. The smart move, then, is to make sure that you have a sizable emergency fund saved up <em>before </em>you set aside any dollars for a &quot;play money&quot; account.</p> <h2>Retirement Accounts</h2> <p>How much will you need for retirement? That depends largely on the type of retirement you want to live. If you want to travel the world, you'll need more money than if you simply want to spend more time with your grandchildren. Don't shortchange your retirement years by investing too much in a &quot;play money&quot; account and too little in an IRA or 401K.</p> <p>It can get complicated determining how much money you'll need to save for retirement each year. But there are a few general rules of thumb that you can use to determine how much money you'll need after you leave the workforce.</p> <p>Financial planners have long recommended that retirees plan on spending from 60% to 90% of their most recent after-tax annual income each year of their retirement. As an example, say you were earning $50,000 each year immediately before your retirement at an effective tax rate of 15. You were then living on $42,500 in income after taxes each year.</p> <p>If you decide that you'd like to live on 85% of this amount each year in retirement, you'd need $36,125 in income every year you are not working. You can get this income from a variety of sources, including everything from Social Security payments to pension income to withdrawals from your savings.</p> <p>Again, make sure that you are saving as much as you need for retirement before you start a &quot;play money&quot; account. If your employer offers a 401K plan, withdraw the maximum amount from each of your paychecks to fund it. If you can't afford to do this, then you can't afford a &quot;play money&quot; account, either.</p> <p><em>Do you have a play money account?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/how-much-can-you-afford-to-risk-in-a-play-money-account">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-6"> <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/learn-how-to-invest-with-these-5-stock-market-games">Learn How to Invest With These 5 Stock Market Games</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-steps-to-starting-a-retirement-plan-in-your-30s">8 Steps to Starting a Retirement Plan in Your 30s</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-ways-to-boost-your-odds-of-retiring-early">5 Ways to Boost Your Odds of Retiring Early</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/whats-the-right-percentage-of-cash-for-your-portfolio">What&#039;s the Right Percentage of Cash for Your Portfolio?</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-tell-if-youre-on-track-for-retirement">How to Tell if You&#039;re on Track for Retirement</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment Retirement emergency funds play money risk savings Mon, 07 Dec 2015 14:00:27 +0000 Dan Rafter 1618545 at http://www.wisebread.com 5 Important Things to Know About Your 401K and IRA in 2016 http://www.wisebread.com/5-important-things-to-know-about-your-401k-and-ira-in-2016 <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-important-things-to-know-about-your-401k-and-ira-in-2016" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/2016_money_finances_000078468345.jpg" alt="Learning important changes coming to your 401K in 2016" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>We can all agree that investing in a 401K, IRA, or Roth, while being a scary proposition at times, is quite frankly the best use of our money for saving long term. Retirement might be a long way off for you, but it's important to stay on top of the changes that take place for these accounts each year. They could shift your overall direction of planning for your financial future.</p> <p>Here is a list of what will and won't change for your 401K and IRA in 2016.</p> <h2>No Change</h2> <p>Before we look at what's new, let's look at what's staying the same.</p> <h3>1. Contribution Limits</h3> <p>&quot;No change&quot; usually implies something good is happening because it's consistent. In this case, no change for contribution limits means that you are limited to the same amount of money you could put away in 2015 for 2016. In 401K plans, that is $18,000 for people under the age of 50 &mdash; and in IRA and Roth plans, the contribution max will remain at $5,500 for those age 50 or younger.</p> <p>This may not seem like a big deal, but over time the ability to put away less for your retirement means that you will need to earn more on your money that is already invested. According to Vanguard 401K data, only about 10% of participants put away the max every year. There's no escaping the truth that the more you put away, the better off you are going to be in the long run.</p> <h3>2. 401K/IRA Combo</h3> <p>Many people believe that you can only have a 401K or an IRA, but not both. That simply isn't true. In fact, having a separate IRA and a 401K can be a smart financial strategy. The downside of having both is that depending on your income, you may or may not be phased out of deducting your contributions to both plans.</p> <p>In 2016, the income limitations will stay the same. If your adjusted gross income is between $61,000&ndash;$71,000 for single and head of household, or between $98,000&ndash;$118,000 for married couples, your deductible amount for contributions to your IRA will be phased out. If your income is lower, you will receive the full deduction. If your income is over those limits, you won't be able to deduct any portion of your contributions.</p> <h2>Change</h2> <p>And here are the details set to change &mdash; make sure you update your contributions to match.</p> <h3>3. Roth Income Threshold Limits Increase</h3> <p>Roth plans are very popular, especially with the Millennial demographic. They work in reverse of an IRA. Your contributions are made on an <em>after-tax</em> basis, but your distributions in retirement are tax-free. The objective is that you will be in a higher tax bracket when you retire, hence why you will ultimately save money on taxes that would've been due if you had an IRA. Roth plans have their own contribution income limits and are quite generous. In 2016, the contributions income threshold limits will increase by $1,000.</p> <h3>4. IRA for Non-Working Spouse</h3> <p>What about those spouses that don't work, but still want to contribute to an IRA? In 2016, IRA income limits will increase for spouses without retirement accounts by $1,000.</p> <p>If your spouse contributes to a <a href="http://www.wisebread.com/7-penalty-free-ways-to-withdraw-money-from-your-retirement-account">retirement account</a> at work, but <em>you</em> don't work, you can set up your own IRA and contributions will be tax deductible up to $184,000 for couples filing jointly. Your contributions begin to phase out from $184,000&ndash;$194,000, and are completely phased out above that income level (meaning they wouldn't be tax deductible). You can always still contribute up to the IRA contribution max, but you just wouldn't receive the deduction.</p> <h3>5. Saver's Credit</h3> <p>The saver's credit is arguably one of the most overlooked tax credits. It rewards lower income individuals and families for saving for their retirement in any retirement plan. If you qualify for this credit, it is worth anywhere from 10%&ndash;50% of the contributed amount &mdash; up to $2,000 for individuals and $4,000 for couples. The credit is available to singles with an income under $30,750, and for couples, under $61,500.</p> <p>Make sure your accountant is aware if you qualify for this credit so you can take advantage of this great benefit. Consider it the government's matching program for your retirement contributions.</p> <p><em>How's your 401K doing?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/shannah-game">Shannah Game</a> of <a href="http://www.wisebread.com/5-important-things-to-know-about-your-401k-and-ira-in-2016">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-7"> <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/should-you-choose-a-roth-401k-or-a-regular-401k">Should You Choose a Roth 401k or a Regular 401k?</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-reasons-why-a-roth-ira-may-be-better-than-your-401k">4 Reasons Why a Roth IRA May be Better Than 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/4-reasons-why-you-must-open-a-roth-ira-before-april-15">4 Reasons Why You Must Open a Roth IRA Before April 15</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/optimize-your-ira-and-401k">Optimize Your IRA and 401(k)</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/three-easy-steps-to-take-for-a-better-401k">3 Easy Steps to Take for a Better 401k</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment Retirement 401k contributions IRA Roth saver's credit taxes Tue, 01 Dec 2015 14:00:24 +0000 Shannah Game 1617390 at http://www.wisebread.com 9 Unexpected Expenses for Retirees — And How to Manage Them http://www.wisebread.com/9-unexpected-expenses-for-retirees-and-how-to-manage-them <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/9-unexpected-expenses-for-retirees-and-how-to-manage-them" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/grandparents_with_grandchild_000017586301.jpg" alt="Retiree couple learning how to manage unexpected expenses" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>So you've made the decision to retire. Congratulations! All that hard work and saving has paid off, and now you're ready to relax.</p> <p>If you've worked all your life and were diligent about saving, you may have most of your life expenses covered and funds saved for long-term care as you get older. And for the most part, retirees find that their overall expenses decline as they age. But there still could be unexpected costs that you haven't taken into account.</p> <p>Here are nine things that might hit your wallet harder now that you're retired:</p> <h2>1. Health Insurance</h2> <p>Yes, you may be getting Medicare, but that doesn't cover everything. Many retirees find that to get proper coverage, they will need to pay for a Medicare supplement. And even if you are covered under Medicare Part B, you may have to pay co-payments and deductibles. Older citizens should budget for additional <a href="http://www.wisebread.com/avoid-these-5-costly-health-insurance-mistakes">healthcare costs</a>, even if they believe they are fully covered.</p> <h2>2. Childcare</h2> <p>You thought you were done with childrearing? Think again. According to the Census bureau, about <a href="https://www.census.gov/prod/2013pubs/p70-135.pdf">23% of preschoolers</a> are cared for at least part time by a grandparent. Now that you're retired, you are more available to help with occasional babysitting or even full-time childcare for the grandkids. You're doing it out of love, but you may incur expenses ranging from extra food, kids' clothes, furniture, and kids' activities.</p> <p>If you're worried about the costs, be honest with the children's parents about how much you're spending and ask that they contribute. If the kids have certain favorite foods they like to eat at your house, buy those items in bulk. (My grandmother used to have a seemingly unlimited supply of chicken noodle soup for when I came over.) And don't be afraid to have the kids play with older and used toys, because there's a good chance they won't know the difference.</p> <h2>3. Utilities</h2> <p>When you went to work, there was no need to keep the AC or the furnace going during the day. But now that you're home, you may be adjusting that thermostat to make things more comfortable. (And this is exacerbated by the fact that older people are generally more sensitive to cold.) Plus, you may watch TV, use the computer, and run the appliances more often. All of this can add up to higher utility bills. Consider keeping the house at a slightly warmer temperature in the summer and slightly cooler in winter. You'll get used to it. Also, make the switch to LED light bulbs, and look into finding the most energy-efficient appliances you can buy.</p> <h2>4. Car Insurance</h2> <p>Auto insurance rates generally decline between the ages of 25 and 65, but they increase after that. That's because insurance companies view older drivers as a bigger risk, due to impaired vision, other physical problems, or decline in cognitive function. For older drivers, it pays to shop around for the best rates and even take a driving refresher course to prove you're still good behind the wheel.</p> <h2>5. Car Maintenance and Gas</h2> <p>When you were working, maybe you had a short commute or simply walked to the train station. Now, you're home all day and running to see friends, take care of grandkids, or volunteer. You would be surprised how much more you drive in retired life.</p> <p>To keep these costs in check, buy a small vehicle that suits your needs or even consider an electric or hybrid car. And when you do drive, plan your errands and trips strategically to cut down on excess mileage. Many retirees are also moving back into cities, where they can get around without a car at all. But be careful; moving to the city can be expensive. Speaking of...</p> <h2>6. Urban Living</h2> <p>The Washington Post reported that between 2000 and 2010, more than a million baby boomers moved to within five miles of a city center. Empty nesters no longer have to concern themselves with yard size, school districts, or other factors that keep them in the suburbs. But city living can be expensive. Housing costs more, and there's a temptation to spend money when you're surrounded by great restaurants, theatres, museums, and shopping. You might offset some of this expense with reduced transportation costs, but it you still may want to monitor your spending.</p> <h2>7. Charitable Giving</h2> <p>Older people tend to be very generous, and use some of their retirement savings to give back to causes that they've always wanted to support. According to Morningstar, charitable giving rates are relatively small and steady up until age 60. After that, giving comprises an increasing percentage of a person's annual expenses &mdash; up to 20% for America's oldest citizens. It's great to give, but be sure you can still cover your day-to-day costs and have enough saved for a long life. Consider donating shares of stock instead of cash, as you can avoid capital gains taxes and won't dip into your everyday savings.</p> <h2>8. Lawn Care and Landscaping</h2> <p>You always liked mowing your own lawn and doing your own yard work, but as you've gotten a little older, keeping up with the property isn't as easy as it once once. There's no shame in hiring someone to cut the grass or do some landscaping, but that work isn't free. Getting your lawn mowed might cost you $35&ndash;$40 each time, resulting in hundreds of dollars each month. To save money, do as much yard maintenance as you can on your own as long as you feel you are able. When you need help, seek out a neighbor or grandkid who might do it for free or cheap. (Heck, mowing my grandfather's lawn was the first paid gig I ever had.)</p> <h2>9. More Expensive Travel</h2> <p>You saved all your life to finally take a few big trips in retirement. And that's great, but be sure to take into account some extra expenses you might incur as an older citizen. For one thing, travel insurance is more expensive for older folks, because they are statistically more likely to cancel trips due to health-related problems. And even if you do go on a trip, you may find yourself paying extra for transportation or luggage handling when you may have previously taken care of things yourself. Be sure to factor in these extra costs when booking your next adventure.</p> <p><em>How is retirement costing you more than you expected?</em></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/9-unexpected-expenses-for-retirees-and-how-to-manage-them">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-8"> <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-retirement-products-that-arent-worth-your-money">6 Retirement Products That Aren&#039;t Worth Your Money</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-much-can-you-afford-to-spend-in-retirement">How Much Can You Afford to Spend 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/8-reasons-why-your-retirement-cost-calculations-may-be-wrong">8 Reasons Why Your Retirement Cost Calculations May Be Wrong</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/dont-despair-over-small-retirement-savings">Don&#039;t Despair Over Small Retirement Savings</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/dont-know-what-annuities-are-you-might-be-missing-out">Don&#039;t Know What Annuities Are? You Might Be Missing Out</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement child care elder care expenses insurance older americans seniors Mon, 30 Nov 2015 14:00:25 +0000 Tim Lemke 1616759 at http://www.wisebread.com Best Money Tips: Things You Can Save for Retirement Besides Money http://www.wisebread.com/best-money-tips-things-you-can-save-for-retirement-besides-money <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/best-money-tips-things-you-can-save-for-retirement-besides-money" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/couple_paying_bills_000046468662.jpg" alt="Couple finding things to save for retirement besides money" 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 things you can save for retirement besides money, ways social media is making you poor, and changes to the homebuying process that you need to know about.</p> <h2>Top 5 Articles</h2> <p><a href="https://aboutlife.com/blog/Retirement/Save-For-Retirement-Besides-Money">3 Things to Save For Retirement Besides Money</a> &mdash; If you plan to do some traveling after you retire, save up your airmiles, hotel rewards and points, and discounted gift cards to use in your golden years. [aboutLife]</p> <p><a href="http://creativemoney.biz/2015/11/10/is-social-media-making-you-poor/">Is Social Media Making You Poor?</a> &mdash; With social media, it's easy to compare the life you lead to the seemingly perfect lives of the friends you follow. But remember, not everything is as it seems; most photos are carefully framed and edited, and what you see might not be the reality. [Creative Money]</p> <p><a href="http://www.forbes.com/sites/learnvest/2015/11/12/house-hunting-again-3-need-to-know-ways-the-process-has-changed/">House Hunting Again? 3 Need-to-Know Ways The Process Has Changed</a> &mdash; There are new specialty mortgages that can help cover improvement costs if you buy a fixer-upper. [Forbes]</p> <p><a href="http://www.popsugar.com/smart-living/Cyber-Monday-2015-39047972">12 Things Major Retailers Have Released About Cyber Monday</a> &mdash; Expect deep discounts at eBay &mdash; up to 90%! [PopSugar Smart Living]</p> <p><a href="http://inexpensively.com/articles/budgeting-your-thanksgiving-dinner/">Budgeting Your Thanksgiving Dinner</a> &mdash; Once you have a menu, create a master ingredient list that includes everything you need for every recipe, with quantities. Then, check your pantry! [Inexpensively]</p> <p>Other Essential Reading</p> <p><a href="http://www.thefrugaltoad.com/frugal-living/downsizing-your-living-quarters-the-trend-towards-smaller-homes">Downsizing Your Living Quarters: The Trend Towards Smaller Homes</a> &mdash; Tiny homes are easier to maintain, leave a smaller environmental footprint, and tend to be more budget-friendly. [The Frugal Toad]</p> <p><a href="http://www.moneyunder30.com/keep-money-at-one-bank-or-not">Should You Keep All Of Your Money At One Bank? Probably Not</a> &mdash;Reaching your financial goals become much easier when you make it more difficult to borrow money from yourself for things you don't really need. [Money Under 30]</p> <p><a href="http://blog.allstate.com/5-ways-to-make-your-small-space-feel-bigger/">5 Ways to Make Your Small Space Feel Bigger</a> &mdash; Use a neutral palette for your walls with brighter focal points to make your home seem bigger. [The Allstate Blog]</p> <p><a href="http://www.sidehustlehq.com/how-to-avoid-side-hustle-burnout/">How to Avoid Side Hustle Burnout</a> &mdash; Don't let your side hustle take over your life. If you want to maintain a healthy work-life balance, be sure to set a time limit for work and separate your personal and professional spaces. [Side Hustle HQ]</p> <p><a href="http://parentingsquad.com/5-tips-to-help-parents-prep-for-the-holiday-season-rush">5 Tips to Help Parents Prep for the Holiday Season Rush</a> &mdash; Don't try to do everything by yourself. Ask your spouse and kids to pitch in! [Parenting Squad]</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-things-you-can-save-for-retirement-besides-money">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-9"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-simple-ways-to-boost-an-underperforming-401k">5 Simple Ways to Boost an Underperforming 401(k)</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-retire-during-a-recession">How to Retire During a Recession</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-ways-to-retire-early">14 Ways to Retire Early</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-canada-s-tfsa-is-totally-awesome">Why Canada’s TFSA Is Totally Awesome</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-much-money-will-you-need-to-retire">How Much Money Will You Need to Retire?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement best money tips retirement savings Fri, 13 Nov 2015 19:15:13 +0000 Amy Lu 1612001 at http://www.wisebread.com 7 Penalty-Free Ways to Withdraw Money From Your Retirement Account http://www.wisebread.com/7-penalty-free-ways-to-withdraw-money-from-your-retirement-account <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/7-penalty-free-ways-to-withdraw-money-from-your-retirement-account" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/ira_401k_000006195210.jpg" alt="Learning ways to withdraw from your 401k without penalty" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>While it's true that 401Ks have a higher contribution limit ($18,000 in 2015) than traditional IRAs and Roth IRAs ($5,500 for most people or $6,500 if you're age 50 or older in 2015), it would be a mistake to dismiss traditional IRAs and Roth IRAs as part of your retirement strategy.</p> <p>One of the major advantages of having an IRA is that it offers much more flexibility when it comes to taking distributions before age 59 1/2. Under most circumstances, early distributions from a 401K trigger a 10% penalty fee from the IRS on top of applicable income and capital gains taxes. But IRAs are subject to far fewer limitations in many cases &mdash; often, they're free from the 10% penalty for early withdrawals.</p> <p>Here are seven circumstances under which you can withdraw money before age 59 1/2 from an IRA without triggering an IRS penalty.</p> <h2>1. Health Insurance Premiums During Unemployment</h2> <p>If you're unemployed and can't jump on somebody's health plan for coverage, you're probably going to be stressed out about meeting your monthly premiums. Fortunately, once you've been unemployed for at least 12 continuous weeks, the IRS lets you take a penalty-free early distribution from your IRA to cover your health insurance monthly premiums. (To avoid any doubts about how you're using your IRA monies, consider opening a new bank account to handle deposits from your IRA and payments to your health provider.)</p> <p>Some additional points to remember are that the IRA distributions need to take place during either the year you received the unemployment compensation or the following, and that the IRA distributions need to take place no later than 60 days after you have been reemployed.</p> <h2>2. Large Medical Bills</h2> <p>Uncle Sam also gives you a break when you use an IRA withdrawal to pay for unreimbursed medical expenses greater than 10% (or 7.5% if you or your spouse was born before January 2, 1950) of your adjusted gross income for the year of the distribution.</p> <p>While the IRS doesn't require you to itemize your deductions to take advantage of this exception, you should keep a record of all of your medical, dental, and prescription expenses that weren't reimbursed or paid by others. Remember that you can't include the cost of non-prescription drugs (except insulin) or other purchases for general health, such as vitamins, diet foods, or health club dues. Costs of cosmetic procedures aren't eligible, either.</p> <p>However, you can include 23.5 cents per mile that you drove your car for medical reasons. Refer to the Schedule A of Form 1040 to find out the entire list of eligible expenses that you can use to calculate your total unreimbursed medical expenses.</p> <h2>3. First Home Purchases</h2> <p>If the dream property for which you've been waiting so long finally becomes available and you're up to $10,000 short on the down payment, you can tap into your IRA without a penalty.</p> <p>As long as your total IRA withdrawal for first-time home buying is not greater than $10,000, you can even split your withdrawals over more than one year. Not only can you use these monies to buy your own home, but also to pay qualified costs of buying, building, or rebuilding a property. Just make sure that those qualified costs are paid within 120 days after receiving your IRA distribution.</p> <p>Attention couples: If you keep separate IRA plans, each one of you can withdraw up to $10,000 without penalty to pool at total of $20,000 for a first home purchase.</p> <h2>4. Higher Education Expenses</h2> <p>Whether it is for your own education or that of your spouse, children, or grandchildren, you can take a penalty-free withdrawal from your IRA to cover qualified higher education expenses, including tuition, fees, books, supplies, and equipment required for the enrollment or attendance at an eligible educational institution.</p> <p>Other eligible education expenses include the cost of room and board for individuals that are at least half-time students and special needs services in connection with enrollment or attendance. While there is no limit to the amount of your withdrawal free from the 10% penalty tax, keep in mind that your monies may count as income for the student, and may thus impact their eligibility for financial aid.</p> <h2>5. Debts to the IRS</h2> <p>Uncle Sam wants so badly to collect on your unpaid taxes and arrears that he's willing to forego the 10% penalty tax on your IRA withdrawal. However, as in all other scenarios in this list, you do have to pay applicable income taxes, including capital gains.</p> <p>While using part of your IRA balance to pay all or part of your tax debts may not sound that great, it's better than trying to avoid a levy. Under the second scenario, you may have no bargaining power.</p> <h2>6. Rollovers From Traditional IRAs to Roth IRAs</h2> <p>Unlike traditional IRAs, Roth IRAs are funded with after-tax dollars. This means that you don't owe any taxes on withdrawals after age 59 1/2. Plus, once your Roth IRA has been open for at least five years, you can withdraw your contributions at any time without penalty (note that earnings on your contributions <em>are</em> subject to IRS penalties).</p> <p>If you were to transfer funds from your traditional IRA to a Roth IRA, you would pay applicable income taxes now, but no 10% penalty tax on contributions if you wait five years to withdraw those funds from your Roth IRA. Each transfer has its own five-year waiting period and you can only do one IRA rollover per year.</p> <h2>7. Periodic Income Distributions</h2> <p>Last but not least, you can take penalty-free distributions from your IRA by taking a series of substantially equal periodic payments (SEPP) over your life expectancy or the life expectancies of you and your designated beneficiary. The IRS website offers a useful list of frequently asked questions on <a href="http://www.irs.gov/Retirement-Plans/Retirement-Plans-FAQs-regarding-Substantially-Equal-Periodic-Payments">setting up a SEPP plan</a>.</p> <p>If you're planning to set up a SEPP for early retirement, remember that there maybe some financial risks involved. So, before taking your first periodic income distribution, consult your accountant or financial advisor to check your calculations. (See also: <a href="http://www.wisebread.com/4-reasons-early-retirement-might-be-financially-risky?ref=seealso">4 Reasons Early Retirement Might Be Financially Risky</a>)</p> <h2>The Bottom Line</h2> <p>Taking an early distribution of your IRA may be a last resort to make your financial goals, such as a first home purchase, happen. As you can see from these seven examples, there are ways for you to take an early withdrawal from an IRA without the 10% tax penalty. While these strategies may not be for everybody, some of them can be true game changers. Consult IRS Publication 590-B for more details.</p> <p><em>Have you used your IRA to take early withdrawals without a penalty? Share with us how you did in the comments section.</em></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/7-penalty-free-ways-to-withdraw-money-from-your-retirement-account">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-10"> <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/should-you-choose-a-roth-401k-or-a-regular-401k">Should You Choose a Roth 401k or a Regular 401k?</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/stop-making-these-10-bogus-retirement-savings-excuses">Stop Making These 10 Bogus Retirement Savings Excuses</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-important-tax-changes-for-2016">5 Important Tax Changes for 2016</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-important-things-to-know-about-your-401k-and-ira-in-2016">5 Important Things to Know About Your 401K and IRA in 2016</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/4-reasons-why-a-roth-ira-may-be-better-than-your-401k">4 Reasons Why a Roth IRA May be Better Than Your 401(k)</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement Taxes 401k borrowing health insurance home buying IRA medical bills penalties sepp Thu, 05 Nov 2015 13:15:18 +0000 Damian Davila 1605093 at http://www.wisebread.com How Much Can You Afford to Spend in Retirement? http://www.wisebread.com/how-much-can-you-afford-to-spend-in-retirement <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-much-can-you-afford-to-spend-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/retirement_fund_money_000049360888.jpg" alt="Figuring out how much you spend in retirement each year" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>You've finally reached retirement. Your days of fighting rush hour traffic to get to the office are over. But now you face a new challenge: How much of your retirement savings should you spend each year? It's a big question: Spend too much and you might find yourself out of money 10, 15, or 20 years into retirement.</p> <p>&quot;There are different ways to approach retirement spending,&quot; says Celandra Deane-Bess, chair of the national practice group on retirement for Philadelphia, Pennsylvania-based PNC Financial Services Group. &quot;As you get closer to retirement age, we recommend that you take a more detailed look at your income and your living situation. There are so many factors that can alter how much you can afford to spend each year in retirement.&quot;</p> <p>Planning your retirement spending isn't something you can do with a simple formula, though the following formulas can give you a starting point.</p> <h2>Inflation and the 60%&ndash;90% Rule</h2> <p>Deane-Bess says that many retirees plan for their annual cost of living, because of inflation, to rise 2% to 3% each year. That's a good starting point. But she also pointed to research showing that some costs of living are growing faster than the rate of inflation. This includes one of the major ones that impact retirees: health care costs.</p> <p>Retirees will need to adjust that annual cost-of-living increase upward to account for the rise in healthcare costs, including the rising costs of prescription medications.</p> <p>One rule of thumb that retirees have long followed is that they should spend from 60% to 90% of their after-tax annual income each year in retirement. So, if you were earning $50,000 each year before you retired and you had an effective tax rate of 15%, you were living on $42,500 after taxes each year.</p> <p>If you decide that you need to spend 85% of your most recent after-tax yearly income in retirement, you'd need to have $36,125 available to you each year after retirement. You can generate that yearly income from your savings, pensions, Social Security, and any other regular streams of income you might have.</p> <p>Again, though, this is only a general rule of thumb. You can change how much of your pre-retirement income you'll actually need during your retirement years, Deane-Bess said. If you move to a less expensive home or community, for example, you might need to spend 60% of your pre-retirement income each year. If you live in a higher-cost area, you might need to spend the full 90% each year.</p> <h2>The 4% Rule</h2> <p>Another rule of thumb? The 4% rule. This rule says that you should withdraw 4% of <a href="http://www.wisebread.com/8-steps-to-starting-a-retirement-plan-in-your-30s">your retirement-savings</a> portfolio in the first year of retirement for your living expenses. You should then withdraw that same dollar amount, plus enough extra income to account for inflation, every other year of retirement.</p> <p>It's important to note, though, that this formula rests on the assumption that your retirement will last 30 years. If you're particularly healthy, and you might be retired for more than three decades, you might have to withdraw fewer dollars each year to make your money last.</p> <h2>Expect Some Expenses to Rise</h2> <p>&quot;People often forget that there are actually a few expenses in retirement that go up,&quot; Deane-Bess says. &quot;Everyone assumes that their expenses will go down in retirement. But not all of them do.&quot;</p> <p>For instance, if you are going to be home more often after retirement, your utility bills will typically rise. That's because your heat will be on all day and you'll be using more electricity because you'll be home more often.</p> <p>Some retirees also spend more on leisure, entertainment, or travel during their after-work years. Instead of taking one big trip a year, they might plan on taking two or three. They might take more frequent smaller trips to see their grandchildren.</p> <p>The takeaway? You need to look at your own retirement plans &mdash; where you'll be living, what you'll be doing &mdash; when deciding how much money you can afford to spend each year. Start with the rules of thumb, but tweak them to meet your needs.</p> <p>For instance, Deane-Bess said that retirees who want to travel frequently or live in a higher-cost community might need to withdraw just 2.5% to 3% of their savings portfolio every year.</p> <p>&quot;We are starting to see a pullback from some of the rules of thumb,&quot; Deane-Bess says. &quot;I have been in the industry for 18 years. When I started, there were lots of rules of thumb. But things are changing. Today, it's about taking a more detailed look at your individual retirement plans.&quot;</p> <p><em>How much do you plan to spend in retirement?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/how-much-can-you-afford-to-spend-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-11"> <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-states-with-the-lowest-taxes-for-retirees">7 States With the Lowest Taxes for Retirees</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-reasons-why-your-retirement-cost-calculations-may-be-wrong">8 Reasons Why Your Retirement Cost Calculations May Be Wrong</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/stop-making-these-10-bogus-retirement-savings-excuses">Stop Making These 10 Bogus Retirement Savings Excuses</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-to-guarantee-income-in-retirement">6 Ways to Guarantee Income 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-unexpected-expenses-for-retirees-and-how-to-manage-them">9 Unexpected Expenses for Retirees — And How to Manage Them</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement cost of living expenses inflation social security spending Thu, 05 Nov 2015 11:15:12 +0000 Dan Rafter 1605094 at http://www.wisebread.com 8 Steps to Starting a Retirement Plan in Your 30s http://www.wisebread.com/8-steps-to-starting-a-retirement-plan-in-your-30s <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/8-steps-to-starting-a-retirement-plan-in-your-30s" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_retirement_fund_000048250694.jpg" alt="Woman saving for money for retirement " title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>It's simple: The sooner you start a retirement plan, the more you'll have during your golden years. What's not so simple is figuring out what you need to get started once you're ready. Fortunately, we have some simple tips to help you start a retirement plan in your 30s.</p> <h2>1. Get Real About Your Expectations</h2> <p>According to the United States Department of Labor, the average American spends 20 years in retirement, so you need to make saving for retirement a priority. However, if you haven't started saving yet, it's never too late to start planning for your golden years. In fact, Forbes found that 60% of millennials in their 20s haven't even thought about retirement at all, so you aren't alone.</p> <p>Before you can start thinking about what you will contribute to your retirement plan, you need to figure out what your retirement goals are. Then, you can better determine the right upfront investment, how much you should save every year, and what the correct asset allocation is for your risk tolerance and expectations.</p> <h2>2. How Much Will You Need in Retirement?</h2> <p>Most experts estimate that a person needs 70%&ndash;90% of their pre-retirement income after retirement. Take advantage of a <a href="http://www.bloomberg.com/personal-finance/calculators/retirement/">simple retirement calculator</a> to find out how much you can save by retirement or a <a href="http://www.schwab.com/public/schwab/investing/retirement_and_planning/saving_for_retirement/retirement_calculator">more detailed calculator</a> that will help you determine the right retirement plan and asset allocation.</p> <h2>3. Take Advantage of Compounding Interest</h2> <p>With compounding interest, you can benefit from earning interest on your interest. The longer you are invested in a retirement plan, the more money you will make because the interest will just keep growing exponentially. Compound interest can significantly boost your contributions over the long-run because it will make your account grow at a faster rate than it could with simple interest alone.</p> <p>For example, if you start saving at age 25 (with an annual return of 7% after fees), you only have to save about $4,830 annually to reach $1 million by age 65. If you wait until age 40, you'll need to save $15,240 per year, which is more than triple the amount, all thanks to compounding interest.</p> <h2>4. Find Out About Employer Contributions</h2> <p>The first thing you need to do is enroll in your workplace retirement plan, such as a 401K, 403(b), 457, or pension. If you aren't already enrolled, you may be missing out on free money.</p> <p>Often, a company will match your contribution, up to a certain amount. For instance, they may offer to match up to 20% of what you contribute. This is like free money and should be considered an additional source of income that will pay off after retirement.</p> <p>Once you are participating in the retirement plan, you should try to contribute the max amount, or at least as much as you can afford. For 2015, you can contribute up to $18,000 per year to your 401K (and $6,000 more at age 50 and older), so try reaching the max limit, if you can.</p> <p>Make sure you learn what your plan includes, such as how much you need to contribute and how long you need to stay in the plan to receive your employer's contribution. You may also be able to receive some benefits from your spouse's employee retirement plan.</p> <h2>5. Set Up Automatic Contributions</h2> <p>You can even sign up for automatic contributions to make things easier. The more you contribute, the lower your taxes will be at the end of the year, so there will be a slight payoff now, and a big payoff later. Look for low-fee mutual or index funds so that you are spending less on fees and enjoying more in your account.</p> <h2>6. Open an IRA</h2> <p>You can contribute up to $5,500 per year (or more if you are age 50 or over) to a traditional Individual Retirement Account (IRA) or a Roth IRA. You may need to speak to a financial planner about which type of retirement account is right for you. Keep in mind that a Roth IRA is more flexible and you can even use up to $10,000 from your Roth IRA to purchase your first home. IRAs also have tax advantages and automatic contribution options.</p> <h2>7. Save More</h2> <p>Wells Fargo recommends saving at least 10% of your income at this stage of your life. Contributing at least 10% of your income into a retirement plan will add up quickly every year. If you can't commit to this amount, then save as much as you can and gradually increase your contribution as soon as you are able. More recent estimates agree that as you age, you may want to save more &mdash; closer to 15%&ndash;20% of your income.</p> <p>Find additional sources of income that you can save, such as tax refunds and year-end bonuses. If you are expecting a raise, increase your savings by the same percentage as your raise amount. Try <a href="http://www.wisebread.com/7-habits-of-the-financially-successful">minimizing your spending and debt</a> so that you have more available for your savings and retirement accounts.</p> <h2>8. Start With an Emergency Fund</h2> <p>Before you begin saving for retirement, make sure you are set up for the here and now. Most financial experts recommend keeping at least three to six months' worth of expenses in an accessible savings account, in case you ever need emergency funding. The last thing you want to do is pull money from your retirement account before retirement, so make sure your savings account is set up before you start worrying about retirement.</p> <p>If you still aren't sure if you're saving enough money, or don't know where to get started, you may want to speak with a certified financial planner. They can help you organize your personal finances and create the right plan for your retirement goals.</p> <p><em>Do you have a retirement plan in place? What are your tips for getting started? Please share your thoughts in the comments!</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/andrea-cannon">Andrea Cannon</a> of <a href="http://www.wisebread.com/8-steps-to-starting-a-retirement-plan-in-your-30s">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-12"> <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/stop-making-these-10-bogus-retirement-savings-excuses">Stop Making These 10 Bogus Retirement Savings Excuses</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/retirement-accounts-and-money-to-spend">Retirement accounts and money to spend</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-much-can-you-afford-to-risk-in-a-play-money-account">How Much Can You Afford to Risk In a Play Money Account?</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/the-sep-ira-is-how-the-self-employed-do-retirement-like-a-boss">The SEP-IRA Is How the Self-Employed Do Retirement Like a BOSS</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-plan-for-retirement-when-you-re-ready-to-retire">How to Plan for Retirement When You’re Ready to Retire</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 30s 401k compound interest emergency funds IRAs millennials savings Thu, 29 Oct 2015 13:16:02 +0000 Andrea Cannon 1599238 at http://www.wisebread.com 6 Ways to Guarantee Income in Retirement http://www.wisebread.com/6-ways-to-guarantee-income-in-retirement <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-ways-to-guarantee-income-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/roth_ira_401k_000008885505.jpg" alt="Learning how to guarantee income in retirement" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>There's nothing like having the peace of mind and security that comes from knowing you'll have steady income throughout retirement. Unless you're expecting a guaranteed pension, or know that your social security insurance (SSI) payments will be sufficient, there's little way of knowing you won't outlive your savings. Whether you're retirement age and have <a href="http://www.wisebread.com/how-to-enjoy-retirement-if-you-havent-saved-enough">not saved enough</a> or simply exploring your options, here are six ways that you can guarantee income in retirement.</p> <h2>1. Pensions</h2> <p>If you or someone you know works for the federal government, you're probably familiar with pension plans. Pensions are similar to <a href="http://www.wisebread.com/4-ways-to-boost-your-401k-returns">401K plans</a> in that employers match up to 25% of your contributions in some cases, but pensions also offer <em>guaranteed</em> income after retirement. The two most common types of plans are defined benefit (DB) and defined contribution (DC) plans. DB plans pay out a fixed benefit while payouts from DC plans are determined based on the investment's performance. Both plans will require that your tenure is extended in the period before retiring.</p> <h2>2. Social Security Insurance</h2> <p>As long as you've worked for at least 10 years and earn 40 credits, you'll qualify for SSI benefits once you reach retirement age (age 66 for most). In 2015, the IRS says that for every $1,250 you earn, you <a href="http://www.ssa.gov/pubs/EN-05-10072.pdf">accumulate one credit</a> and can earn a maximum of four a year. Credits never disappear even if you take an extended leave of absence and return to work or change jobs. Per credit earnings will rise with wage increases. Estimated by today's calculations, you would need to have earned at least $5,000 per year for 10 years, or $50,000 in wages to qualify for SSI.</p> <h2>3. Retirement and Investment Accounts</h2> <p>Even if the assets within your retirement portfolio (stocks, bonds, CDs, ETFs, etc.) have accumulated enough wealth that your annual withdrawals will meet your income needs, you should still make certain that your yearly returns can outpace inflation (averaging 3% annually). If not, you could suddenly find yourself having to live drastically below your means. For example, if at age 65 you have a nest egg of $1,000,000 and start taking annual withdrawals of 5% (or $50,000), you'd need an annual return of over 8% in order to replenish your coffers.</p> <h2>4. Annuity</h2> <p>If you need the type of guaranteed income assurance that retirement accounts and investment portfolios cannot provide, then you need an annuity. Annuities guarantee a monthly or annual payout for as long as you're alive. There are two types of annuities: fixed income and variable income. With fixed annuities, the money you invest today is guaranteed a predefined payout. Variable annuity payouts are based on the performance of your investment (if gains are realized, payouts will be higher). Payouts can begin at whatever age you choose, and continue for the rest of your life, or for a predetermined term.</p> <h2>5. Reverse Mortgage</h2> <p>A reverse mortgage is a type of home equity loan which pays out an annuity-like cash stream based on your home's accumulated equity. Typically, reverse mortgages are reserved for borrowers age 62 or older. The money borrowed can be paid out as one lump sum payment, or issued in installments for the life of the loan. But reverse mortgages are known for their high fees and aren't always a good deal, especially if you wish to retain or pass-on ownership of your home.</p> <h2>6. Longevity Insurance</h2> <p>Longevity insurance is an insurance contract that guarantees the money invested today will generate payments in retirement. As with other forms of guaranteed income, the longer you wait to start taking payments, the higher annual payouts will be. These products allow investors to make a lump sum initial investment (or smaller amounts over time) in order to receive guaranteed payments later. For example, if a woman aged 45 invested $50,000 today, she could start taking payments at 65 and receive roughly $7,650 in annual income for the rest of her life.</p> <p>Of course, the best approach to retirement income is generally asset diversification. The more income streams you can draw on, the less likely you'll be to ever run out.</p> <p><em>What steps are you taking to guarantee retirement income?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/qiana-chavaia">Qiana Chavaia</a> of <a href="http://www.wisebread.com/6-ways-to-guarantee-income-in-retirement">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. 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How much can I spend?</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-important-things-to-know-about-your-401k-and-ira-in-2016">5 Important Things to Know About Your 401K and IRA in 2016</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401k annuties longevity insurance pensions reverse mortgage social security Tue, 27 Oct 2015 13:16:59 +0000 Qiana Chavaia 1599240 at http://www.wisebread.com