Retirement http://www.wisebread.com/taxonomy/term/417/all en-US 5 Financial Moves Now That You'll Regret When You Retire http://www.wisebread.com/5-financial-moves-now-that-youll-regret-when-you-retire <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-financial-moves-now-that-youll-regret-when-you-retire" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/money_uh_oh_175531215.jpg" alt="Learning financial moves now that you&#039;ll regret when you retire" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>We all make thousands of decisions every day. Come tomorrow, many of them won't matter much at all. But some decisions do have long-lasting implications. Here are five choices that may leave you longing for a do-over in retirement.</p> <h2>1. Borrowing From Your 401K</h2> <p>It's relatively easy to borrow from most 401K plans. However, the purpose of your 401K isn't to save for a down payment on a house or college bills. It's to build a nest egg for retirement. The more you nibble away at that, the less you'll have for your later years. The best approach? Consider your workplace retirement funds to be off limits &mdash; until retirement.</p> <h2>2. Resetting Your Mortgage Clock Past Your Retirement Age</h2> <p>Interest rates are very low, which has prompted many people to refinance their mortgages. It can be wise to swap out a high interest rate loan for one at a lower rate. However, if this is the home you plan to live in during retirement, make sure your new mortgage will be retired by the time you are. That may mean opting for a shorter term (15 or 20 years instead of 30) or committing to making extra monthly payments. (Use <a href="http://financialmentor.com/calculator/mortgage-payoff-calculator">this calculator</a> to help you figure out how much extra to pay.)</p> <h2>3. Claiming Social Security Too Early</h2> <p>There are some people who may benefit by claiming their Social Security benefits at the earliest possible age &mdash; 62. If longevity doesn't run in your family or if you absolutely have no other options but to take the money sooner than later, go ahead. But good things come to those who wait. When it comes to delaying the start of Social Security, those who can hold off will get quite a boost in benefits.</p> <p>When I looked up my own benefits (<a href="https://secure.ssa.gov/SiView.do">here's where to look up yours</a>), I saw that I'm eligible for $1,780 per month if I claim benefits at age 62. If I wait until my Full Retirement Age of 67, that amount jumps to $2,694 &mdash; a 51% increase. And if I wait until age 70, I would receive $3,441 per month &mdash; nearly twice as much as my age-62 benefit.</p> <p>And here's the other benefit from waiting. Men, I hope I'm not the first to break this to you, but you're probably going to die before your wife, unless she's a lot older than you are. And if your Social Security benefit is larger than hers, the more you can maximize yours, the more it'll benefit your wife once you're gone. That's because upon your death, she'll have the choice of continuing to take her benefit or yours.</p> <p>Social Security claiming strategies are so varied, complex, and important that it would probably benefit you to seek additional guidance via <a href="http://www.socialsecuritysolutions.com/">Social Security Solutions</a> or <a href="http://maximizemysocialsecurity.com/">Maximize My Social Security</a>.</p> <h2>4. Ignoring Inflation</h2> <p>I talked with a newly-retired woman recently who thought she was set for life. She took her savings, divided by her estimated number of years remaining, and was satisfied with her answer. Until I rained on her parade by asking how she planned to account for inflation.</p> <p>She didn't like the idea of investing any of her money in the stock market because she thought that was too risky. And yet, keeping all of her money in a bank savings account virtually guarantees that her buying power will steadily decline. Even a modest annual inflation rate of 2% will cut buying power nearly in half over the course of a 30-year retirement.</p> <p>Most retirees will need to accept the idea of maintaining some level of exposure to the stock market with their investment portfolio in order to make sure their money lasts as long as they do.</p> <h2>5. Counting on Paid Work in Your Later Years</h2> <p>One of today's most significant retirement-related disconnects is the difference between the number of today's workers who are planning to work in retirement (I know, it sounds like an oxymoron) and the number of retirees who actually do still work.</p> <p>An increasing number of people still in the workforce are pushing back their retirement date &mdash; some because they want the mental stimulation that comes from work, some because they realize they'll need the money. And yet, nearly half of people who are now retired left the workforce sooner than intended, many times because of health issues.</p> <p>By the same token, nearly two-thirds of today's workers expect to work for pay to some degree after retiring from their main career, whereas less than one-third of those who are now retired have worked for pay since ending their main career.</p> <p>The best advice? Plan physically, emotionally, and vocationally to work longer than you might prefer while you plan financially to retire earlier than you think you will.</p> <p>Clearly, what you don't do as you prepare for a successful retirement is just as important as what you do. Avoiding the five miscues just discussed will help you prepare well.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/matt-bell">Matt Bell</a> of <a href="http://www.wisebread.com/5-financial-moves-now-that-youll-regret-when-you-retire">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-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/12-money-moves-to-make-the-moment-you-decide-to-retire">12 Money Moves to Make the Moment You Decide to Retire</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-smart-ways-to-boost-your-social-security-payout-before-retirement">6 Smart Ways to Boost Your Social Security Payout Before Retirement</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/stop-falling-for-these-6-social-security-myths">Stop Falling for These 6 Social Security Myths</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-of-the-fastest-ways-to-go-broke-in-retirement">4 of the Fastest Ways to Go Broke in Retirement</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <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> </ul> </div> </div> </div> </div><br/></br> Retirement 401k full retirement age inflation Mistakes money moves mortgages regrets social security Thu, 01 Dec 2016 11:00:08 +0000 Matt Bell 1843961 at http://www.wisebread.com 15 Retirement Terms Every New Investor Needs to Know http://www.wisebread.com/15-retirement-terms-every-new-investor-needs-to-know <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/15-retirement-terms-every-new-investor-needs-to-know" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/retirement_blocks_73115095.jpg" alt="New investor learning retirement terms" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Congratulations! By starting your retirement fund, you've taken one of the most important steps toward a comfortable retirement. But as a novice investor, you may feel a bit overwhelmed with all the available information, including contribution limits, early penalty fees, and Roth 401Ks. To help you make sense of it all, let's review 15 key terms you should know:</p> <h2>1. 401K</h2> <p>The 401K is the most popular qualified employer-sponsored retirement plan in the U.S. The two most common types of 401K plans are the traditional 401K, to which you contribute with pretax dollars, and the Roth 401K, which accepts contributions with after-tax dollars. Earnings in a traditional 401K grow on a tax-deferred basis (you'll pay taxes on the funds when you withdraw them during retirement) and those in a Roth 401K grow tax-free forever, since you've paid taxes upfront.</p> <h2>2. After-Tax Contributions</h2> <p>Only certain types of retirement accounts, such as Roth 401Ks and Roth IRAs, accept contributions with after-tax dollars. When you contribute to a retirement account with after-tax dollars, your retirement funds grow tax-free forever, since you've already paid Uncle Sam.</p> <h2>3. Catch-Up Contribution</h2> <p>Retirement investors who are 50 and older at the end of the calendar year can make extra annual &quot;catch-up&quot; contributions to qualifying retirement accounts. Catch-up contributions allow older savers to make up for lower contributions to their retirement accounts in earlier years. In 2016 and 2017, catch-up contributions of <a href="https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-catch-up-contributions">up to $6,000</a> (on top of traditional annual contribution limits) are allowed for 401Ks and up to $1,000 for IRAs.</p> <h2>4. Contribution Limits</h2> <p>Every year, the IRS sets a limit as to how much you can contribute to your retirement accounts. In 2016, you can <a href="https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-ira-contribution-limits">contribute up to $5,500</a> ($6,500 if age 50 or over) to traditional and Roth IRAs and <a href="https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-contributions">up to $18,000</a> ($24,000 if age 50 or over) to a traditional or Roth 401K. These annual contribution limits to retirement accounts remain unchanged for 2017. If you exceed your contribution limit, you'll receive a penalty fee from the IRS, unless you take out excess moneys by a certain date.</p> <h2>5. Early Distribution Penalty</h2> <p>To discourage retirement savers from withdrawing funds before retirement age, the IRS imposes an additional 10% penalty on distributions before age 59 &frac12; on certain retirement plans. Keep in mind that you're always liable for applicable income taxes whether you take a distribution from your retirement plan before or after age 59 &frac12;. Under certain circumstances, you're allowed to <a href="http://www.wisebread.com/7-penalty-free-ways-to-withdraw-money-from-your-retirement-account">withdraw money early</a> from a retirement account without the penalty.</p> <h2>6. Fee</h2> <p>You've heard that there is no such thing as a free lunch and no retirement plan is exempt from this rule. There's always a cost for the employer or employee, or both. Always check the prospectus from any fund for its annual expense ratio and any other applicable fee. An annual expense ratio of 0.75% means that for every $1,000 in your retirement account, you're charged $7.50 in fees. And that's assuming that you don't trigger any other fees! (See also: <a href="http://www.wisebread.com/watch-out-for-these-5-sneaky-401k-fees?ref=seealso">Watch Out for These 5 Sneaky 401K Fees</a>)</p> <h2>7. Index Fund</h2> <p>An index fund is a type of mutual fund that tracks of a basket of securities (generally a market index, such as the Standard &amp; Poor's 500 or the Russell 2000). An index fund is a passively managed mutual fund that provides broad market exposure, low investment cost, and low portfolio turnover. Due to its low annual expense ratios, such as 0.16% for the Vanguard 500 Index Investor Shares [Nasdaq: <a href="https://finance.yahoo.com/quote/vfinx">VFINX</a>], index funds have become a popular way to save for retirement. (See also: <a href="http://www.wisebread.com/3-steps-to-getting-started-in-the-stock-market-with-index-funds?Ref=seealso">3 Steps to Getting Started in the Stock Market With Index Funds</a>)</p> <h2>8. IRA</h2> <p>Unlike a 401K, an individual retirement account (IRA) is held by custodians, including commercial banks and retail brokers. The financial institutions place the IRA funds in a variety of investments following the instructions of the plan holders. A traditional IRA accepts contributions with pretax dollars, and a Roth IRA accepts contributions with after-tax dollars. An advantage of using a Roth IRA is that it provides several exemptions to the early distribution penalty.</p> <h2>9. 401K Loan</h2> <p>Some retirement plans allow you to take a loan on a portion of your available balance &mdash; generally, 50% of your vested account balance, or <a href="https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-loans">up to $50,000</a>, whichever is less. While the loan balance is generally due within five years, it becomes fully due within 60 days from separating from your employer. (See also: <a href="http://www.wisebread.com/5-questions-to-ask-before-you-borrow-from-your-retirement-account?ref=seealso">5 Questions to Ask Before You Borrow From Your Retirement Account</a>)</p> <h2>10. Mutual Fund</h2> <p>By pooling funds from several investors, money managers are able to invest in a wide variety of securities, ranging from money market instruments to equities. Investing in a mutual fund enables an individual retirement investor to gain access to a wide variety of investments that she wouldn't necessarily have access to on her own. Depending on its investment strategy, mutual funds can have a wide variety of fees. So, make sure to read the fine print. (See also: <a href="http://www.wisebread.com/4-sneaky-investment-fees-to-watch-for?ref=seealso">4 Sneaky Investment Fees to Watch For</a>)</p> <h2>11. Pretax Contribution</h2> <p>When you contribute to your employer-sponsored retirement account with pretax dollars, you're allowed to reduce your taxable income. For example, if you were to make $50,000 per year and contribute $5,000 to your 401K with pretax dollars, then you would only have to pay applicable income taxes on $45,000! You delay taxation until retirement age when you're more likely to be in a lower tax bracket.</p> <h2>12. Required Minimum Distribution (RMD)</h2> <p>You can't keep moneys in your retirement account forever. At age 70 &frac12;, you generally have to start taking withdrawals from an IRA, SIMPLE IRA, SEP IRA, or 401K. An RMD is the minimum amount required by law that you have take out from your retirement account each year to avoid a penalty from the IRS. You can use of one of these <a href="https://www.irs.gov/retirement-plans/plan-participant-employee/required-minimum-distribution-worksheets">requirement minimum distribution work sheets</a> to calculate your RMD.</p> <h2>13. Rollover</h2> <p>When you separate from your employer, you generally have up to 60 days to transfer moneys in your previous retirement account to a new retirement account accepting those moneys. This process is known as a rollover. In a direct rollover, the process is automatic; in an indirect rollover, you receive a cash-out check from your previous employer to rollover the moneys to a new qualifying retirement account. (See also: <a href="http://www.wisebread.com/a-simple-guide-to-rolling-over-all-of-your-401ks-and-iras?ref=seealso">A Simple Guide to Rolling Over All of Your 401Ks and IRAs</a>)</p> <h2>14. Target-Date Fund</h2> <p>A target-date fund is a retirement investment fund that seeks to provide higher returns to young investors and gradually reduce risk exposure as they get closer to retirement age. Since the Pension Protection Act granted target-date funds the status of qualified default investment alternative in 2006, these type of funds have gained popularity. About half of 401K participants <a href="https://www.ebri.org/publications/ib/index.cfm?fa=ibDisp&amp;content_id=3347">hold a target-date fund</a>.</p> <h2>15. Vesting</h2> <p>In any retirement account, only money that is fully vested truly belongs to you. While all of your contributions and the matching contributions from your employer to your retirement account are always fully vested, some employer contributions, such as company stock, may follow a vesting schedule. In <em>cliff vesting</em>, you only become fully vested after a certain period of time. In <em>graded vesting</em>, you gradually gain ownership of those employer contributions.</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/15-retirement-terms-every-new-investor-needs-to-know">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-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-2 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-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-penalty-free-way-to-withdraw-retirement-money-early">The Penalty-Free Way to Withdraw Retirement Money 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/401k-or-ira-you-need-both">401K or IRA? You Need Both</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-ways-to-strengthen-your-finances-before-retirement">5 Ways to Strengthen Your Finances Before Retirement</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401k contributions employer-sponsored retirement index funds IRA new investors Roth savings target date funds taxes terms Thu, 17 Nov 2016 11:00:14 +0000 Damian Davila 1834559 at http://www.wisebread.com 4 Ways Couples Are Shortchanging Their Retirement Savings http://www.wisebread.com/4-ways-couples-are-shortchanging-their-retirement-savings <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/4-ways-couples-are-shortchanging-their-retirement-savings" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/couple_retired_happy_62784562.jpg" alt="Retired couple shortchanging their retirement savings" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Whether retirement is decades away or if it is knocking on your door, there are some key mistakes that couples sometimes make when planning for their retirement. It's not too late to fix them, and addressing these problems now can potentially stave off issues in the future.</p> <p>Are you and your spouse making these retirement mistakes?</p> <h2>Relying on One's Spouse's Retirement</h2> <p>One common mistake that couples make is that they only rely on <em>one </em>spouse's income and retirement savings. While you might be able to live comfortably off one spouse's income now, when you are healthy, you have to calculate just how much you and your spouse will both need in retirement. Hopefully you will both be healthy well into your last years, but plan for the &quot;what ifs.&quot; Have both partners contribute to separate retirement accounts, if you both are working. If one spouse is self-employed or a freelancer, there are still retirement options for them.</p> <p>Even if one spouse does not work, they can still contribute to an IRA account. Carol Berger, CFP&reg;, of Berger Wealth Management, says that spousal IRA accounts are available for married couples who file taxes jointly. Berger says, &quot;This allows a contribution to be made for the nonworking spouse and helps his or her retirement nest egg grow. For example, in 2016, a nonworking spouse can contribute up to $5,500 to an IRA in their name ($6,500 if age 50 or older).&quot;</p> <h2>Putting Your Kids First</h2> <p>There is no doubt that you love your children and that it is easy to put their needs above retirement needs. However, don't delay on saving for retirement for your kids' sake. Saving for retirement should always trump saving for college education. Furthermore, retirement savings should not be dipped into to pay for college.</p> <p>The simple reason is that your children will have access to scholarships, loans, and work to help support them through college. Even if they graduate with a heavy load of debt, they have a long time to pay it off. There are no scholarships for retirement, and I am guessing the last thing you want to do is return to work.</p> <p>&quot;Time does not favor waiting because you lose the benefits of compounding,&quot; says Good Life Wealth Management president, Scott Stratton, CFP&reg;, CFA. &quot;If you put $5,000 into an IRA and earn 8% for 25 years, you'd have $34,242. Invest the same $5,000 10 years before retirement, and you'd only have $10,794. Or to put it another way, if you waited until 10 years before retirement, you'd have to invest $15,860 &mdash; instead of $5,000 &mdash; to reach $34,242.&quot;</p> <h2>Avoiding the Issue</h2> <p>Money is not always the easiest thing to talk about, however, if you avoid the issue, then you will only cause the problem to grow. Sit down with your spouse and talk about your present financial situation. Talk about where you want to be financially in the next year, in five years, and in retirement.</p> <p>If you both agree that you want to spend your retirement traveling and not tied to credit card debt or a mortgage payment, then you need to put in place the right money habits now.</p> <p>You should develop realistic action steps that will help you reach your financial goals a year from now, five years from now, and most importantly, in retirement. That means you might have to tighten your budget and pay more toward debt. Having clear financial goals will also help you stand firm as a couple when it is tempting to refinance the house to redo the backyard. (See also: <a href="http://www.wisebread.com/7-retirement-planning-steps-late-starters-must-make?ref=seealso">7 Retirement Planning Steps Late Starters Must Make</a>)</p> <h2>Not Planning for Medical Costs</h2> <p>As discussed briefly above, many couples forget to financially plan for medical costs. It is easy to think, &quot;We won't need that much money in retirement because we won't buy anything or have to care for kids.&quot; However, medical expenses can add up quickly, especially in the last years of life. The cost of caretakers, regular doctor's visits, special medications, and even residency at a hospice can drain retirement savings in a matter of a few years.</p> <p>The worst thing is that many adult children are stuck with the financial burden of their parents' medical costs. Nearly one in 10 people over 40 are considered in the &quot;<a href="http://www.wisebread.com/6-ways-the-sandwich-generation-can-get-ahead">sandwich generation</a>.&quot; This means they are caring for their own children while also caring for aging parents. The Associated Press-NORC Center for Public Affairs Research reports that Medicare doesn't cover the most common types of long-term care and that a nursing home can cost as much as <a href="http://www.apnorc.org/news-media/Pages/News+Media/Poll-Sandwich-generation-worried-about-own-long-term-care-.aspx">$90,000 per year</a>. If retirement funds don't cover the necessary care for aging parents, their children will either have to foot the bill or try to take care of their parents themselves.</p> <p>Jody Dietel, Chief Compliance Officer at WageWorks says that there is a retirement tool that is often overlooked. A <a href="http://www.wisebread.com/how-an-hsa-saves-you-money">health savings account</a> (HSA) can help cover medical costs. Dietel says, &quot;It's important to understand that there's a place for both a 401K and an HSA. Establishing an HSA gives you the ability to amass savings to be used exclusively for health care expenses and preventing the need to dip into 401K funds for medical-related costs in retirement.&quot;</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/ashley-eneriz">Ashley Eneriz</a> of <a href="http://www.wisebread.com/4-ways-couples-are-shortchanging-their-retirement-savings">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/dont-despair-over-small-retirement-savings">Don&#039;t Despair Over Small Retirement Savings</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/10-signs-you-arent-saving-enough-for-retirement">10 Signs You Aren&#039;t Saving Enough for Retirement</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/15-retirement-terms-every-new-investor-needs-to-know">15 Retirement Terms Every New Investor Needs to Know</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/new-job-dont-make-these-7-mistakes-with-your-benefits">New Job? Don&#039;t Make These 7 Mistakes With Your Benefits</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401k couples expenses health care health savings accounts HSA income IRA marriages medical costs Mon, 14 Nov 2016 10:00:06 +0000 Ashley Eneriz 1830892 at http://www.wisebread.com 5 Questions Couples Must Ask Before Retirement http://www.wisebread.com/5-questions-couples-must-ask-before-retirement <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-questions-couples-must-ask-before-retirement" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/couple_sailboat_89092071.jpg" alt="Couple asking questions before retirement" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>What kind of retirement do you imagine? Do you picture taking a long cruise, traveling to international destinations, and racking up the frequent-flier miles? What if your partner is dreaming about a retirement of lazy days spent reading books, watching movies, and visiting the grandkids?</p> <p>Those retirements are two very different kinds. And if you and your partner can't agree on a version of your after-work years that satisfies both of you, your retirement might be a stormy one.</p> <p>Fortunately, you can boost the odds that you and your partner will enjoy your retirement years by asking five key questions before you leave the working world.</p> <h2>1. What Kind of Retirement Do You Want?</h2> <p>This is the most basic of questions, but it might be the most important. Couples need to hammer out exactly what kind of life they want to lead after their working years are over.</p> <p>When you're working, much of your life is planned out for you. You know when you have to be on the job, for instance. If you're raising kids, your weeks are often filled with band practices, soccer games, and gymnastics meets. You and your partner might not even spend much time together during an average week.</p> <p>But when you retire? That all changes. Those hours in the office are now hours spent at home. You and your partner need to determine what you want to fill those hours with. You might want to travel and take on new hobbies. Your partner might prefer quiet days with favorite books.</p> <p>The type of retirement you want also impacts how much money you'll need to save. You'll need more money if you plan to travel the globe and less if you picture quiet nights in your existing home.</p> <p>If you discuss this before retirement, you might be able to work out compromises. Maybe you agree to take two trips a year. Maybe you agree that you'll investigate a new hobby while your partner plows through <em>War and Peace</em>. But you won't be able to agree on anything if you don't first talk about what your ideal retirements look like.</p> <h2>2. Where Do You Want to Live?</h2> <p>Do you want to stay in your current home? Or perhaps you'd like to sell your home and move into an apartment in the middle of downtown? These are both good choices. But you and your partner need to discuss them before you retire. You don't want to be dreaming of a downtown apartment if your partner is making plans for a new sunroom in your current home.</p> <p>And what about your grandkids? Do you want to move closer to them? Or do you want to stay put? This, again, is another conversation that you must have before retirement.</p> <h2>3. When Do You Want to Retire?</h2> <p>You might plan on working late into your 70s. Your partner might be counting down the days to 67. Make sure you and your partner discuss when you both plan on retiring.</p> <p>Your partner might expect that you'll both retire at the same time. Don't make it a surprise that you want to retire earlier or later. The timing of your retirement plays an important role in how much you have to save each year to meet your retirement goals. So talk about this choice early and often.</p> <p>And if you change your mind? Don't keep it a secret from your partner.</p> <h2>4. How Much Money Do You Need?</h2> <p>This might be the most perplexing question of all to couples. It's also the one that couples need to talk about early in their relationship. Couples need to agree on how much money they'll need each year to live a comfortable retirement. If they don't? The odds are high that money issues will be a constant source of tension.</p> <p>How much money couples need in retirement varies depending on the lifestyles that they want. Couples who want to travel during their retirement will need more money. Those who want to spend their time visiting their grandkids will need less.</p> <p>Those couples who plan on living in a pricey seniors' center or an urban apartment building will probably need more money than those who plan to live for as long as possible in a home that they have already paid off.</p> <p>There are plenty of formulas for determining how much money couples should save during retirement. Your best bet, though, might be to meet with a financial adviser who can help you and your partner work through your retirement goals and determine the best way to save for them.</p> <h2>5. Who Will Do What Chores?</h2> <p>You might have been happy with being the home's main cook if your partner worked longer hours. But what about when you are both retired? Will you still want to handle the bulk of the cooking chores then? Maybe not.</p> <p>It pays to talk with your partner about who will handle the bills, cook the meals, clean the house, and mow the lawn once retirement arrives. The old ways of splitting these chores might no longer make sense after you both settle into retirement.</p> <p>Again, not talking about this issue could cause tension. You might not be thrilled to serve your partner dinner if that partner spent all day watching TV or reading a book. So don't be shy about the chores conversation. It might be time to work out a new household schedule.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/5-questions-couples-must-ask-before-retirement">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-10-worst-states-for-retirees">The 10 Worst States 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/5-incredible-world-cities-you-can-afford">5 Incredible World Cities You Can Afford</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-american-cities-where-you-can-retire-on-just-social-security">5 American Cities Where You Can Retire On Just Social Security</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-ways-millennials-are-changing-marriage">4 Ways Millennials Are Changing Marriage</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-ways-couples-are-shortchanging-their-retirement-savings">4 Ways Couples Are Shortchanging Their Retirement Savings</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement chores couples family grandchildren lifestyle marriage moving relocating retirement planning saving money traveling Thu, 10 Nov 2016 09:00:09 +0000 Dan Rafter 1830271 at http://www.wisebread.com Stop Falling for These 6 Social Security Myths http://www.wisebread.com/stop-falling-for-these-6-social-security-myths <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/stop-falling-for-these-6-social-security-myths" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/social_security_card_76556001.jpg" alt="Learning to stop falling for social security myths" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Over 166 million taxpayers pay into Social Security, which pays benefits to over 65 million Americans. As with any program as large and sprawling as Social Security, myths about how it works can run rampant &mdash; and since the facts tend to require more than a sound bite to explain, those myths become entrenched in our collective consciousness as fact.</p> <p>But not only are these Social Security myths untrue, believing them can cause you to make poor decisions about your Social Security benefits. Here are six of the most common and harmful myths about Social Security, debunked:</p> <h2>1. The Government Is Raiding the Social Security Trust Fund</h2> <p>You will often hear people complain about how untrustworthy our government is, and offer the fact that Congress &quot;raids&quot; the Social Security Trust Fund as proof. While it is true that the Trust Fund is where excess Social Security taxes are placed for future beneficiaries, and it is also true that the government uses money in this account to pay for government programs, it is simply not true that the fund is being &quot;raided.&quot;</p> <p>Here's what's going on. Money placed in the Social Security Trust Fund may sound like it is being put in a vault somewhere for the safekeeping of future beneficiaries. But that's not how money works. Not only would that be a security risk, but the money in such a vault would lose value to inflation. In order to maintain and increase the value of the trust fund, the money must be invested in government programs.</p> <p>Think of it this way: Any time you invest money commercially &mdash; whether by putting it in an interest-bearing bank account or by buying stocks or bonds &mdash; you are probably aware that the institution is immediately spending the money you have invested. The private institution spends your investment with the understanding that it will earn profits and be able to pay you back, with interest.</p> <p>The government is no different. It spends money invested in the Social Security Trust Fund on infrastructure, military spending, government salaries, welfare, and the like, knowing that those investments will earn interest. But unlike a private institution, this kind of government spending is backed by the full faith and credit of the U.S. government.</p> <p>The government's spending of money from the Social Security Trust Fund is just as valid a use of invested money as is the lending and spending that a bank or corporation does with investors' money.</p> <h2>2. Social Security Is Going Bankrupt</h2> <p>This myth is based on a kernel of truth &mdash; specifically, Social Security benefit payments exceed payroll tax revenues and have done so since 2010. In order to maintain promised benefits, Social Security has had to dip into the Social Security Trust Fund. As of 2013, the Trust Fund began losing value, and it will become entirely depleted by 2037.</p> <p>This is the point at which most analysis stops, and that is why you will often hear the myth that Social Security is circling the drain. But it is impossible for Social Security to go bankrupt, because it was always designed as an immediate transfer of funds from current workers to current beneficiaries. (When there were more workers than beneficiaries, excess taxes were placed in the Trust Fund. This was the case until 2009). The program does not count on a specific pool of money, but on the tax revenue of current workers.</p> <p>That being said, once the Trust Fund is depleted, tax revenue is only expected to pay for approximately 79% of promised benefits. This is the shortfall you will hear experts referring to when discussing the future of Social Security. But it does not spell the end of the program. It is just a shortfall that we need to find a way to make up.</p> <p>Social Security was created specifically so it could be changed and tweaked to meet the changing needs of Americans &mdash; changing needs like this anticipated shortfall. We might have little faith in Washington right now, but it is specifically the job of our government to make changes to Social Security to deal with this coming shortfall. Eventually, they'll get around to it.</p> <h2>3. It's the Baby Boomers' Fault We're in This Mess</h2> <p>There are plenty of articles out there that place the blame for Social Security's financial woes squarely at the feet of the baby boomer generation &mdash; the largest-ever generation of Americans, born between 1946 and 1964. There are 76 million baby boomers, and having that many people retire over a couple of decades places an enormous burden on Social Security. Since our system is based upon an immediate transfer from current workers to current retirees, having the boomers retire all at once puts too many retirees into the equation.</p> <p>But the boomers' retirement is hardly a surprise. They've been around for six or seven decades now, and we have seen this mass boomer retirement phase coming for many years. According to Virginia P. Reno and Joni Lavery in the Social Security brief <a href="https://www.nasi.org/usr_doc/SS_Brief_022.pdf">Can We Afford Social Security When Baby Boomers Retire?</a>, &quot;Policymakers began to plan as early as 1983, when Congress lowered the cost of Social Security benefits for boomers and later generations by raising the age at which unreduced retirement benefits will be paid.&quot;</p> <p>Believe it or not, our government has been trying for quite some time to prepare for this moment. Part of the reason we had such a surplus in the Social Security Trust Fund was because of our preparation for the mass retirement of the boomer generation. We are far better prepared for the boomers than many doomsayers might have you believe.</p> <h2>4. Waiting for Benefits Means You Risk Not Getting Your Fair Share</h2> <p>It is possible to take Social Security benefits as early as age 62, although your benefits will be permanently reduced by up to 25% to 30 percent by taking them early. Wait until your full retirement age (66 for individuals born between 1943 and 1954, rising to age 67 for anyone born in 1960 or later), and you will receive your full benefits. If you can wait until age 70, you will receive delayed retirement credit equal to approximately 8% per year between your full retirement age and 70.</p> <p>If you calculate the break-even analysis on your Social Security benefits, it often looks like you're better off by taking early benefits. Early, reduced benefits offer you more lifetime benefits for nearly 15 years into the break-even analysis.</p> <p>The problem with this thinking is that the only way for you to &quot;win&quot; these calculations is to die young. It would actually be far worse for you to take early benefits and then live a long life on a reduced income. It is much smarter to delay your benefits as long as possible to provide yourself with the largest benefit you can get.</p> <h2>5. Immigrants Are Taking Social Security Benefits They Didn't Pay For</h2> <p>This myth is an election year favorite, and it conflates Social Security benefits with Supplemental Security Income (SSI) benefits. Social Security benefits are only available to beneficiaries who either paid into the system themselves, or who are the dependents of those who paid into the system. If you have not paid any Social Security payroll taxes (or you haven't been the dependent of someone who has), you are not getting Social Security benefits. Period.</p> <p>SSI, on the other hand, is a welfare program designed to provide aid to the elderly and disabled, and SSI benefits are paid through general governmental revenues. Immigrants are eligible to collect SSI benefits, but only if they show the same level of extreme need as any other SSI beneficiary.</p> <h2>6. Privatizing Social Security Would Make the System Fairer</h2> <p>The possibility of privatizing Social Security is a common suggestion for fixing many of the problems inherent in such a large government program. These suggestions often promise that privatization will be cheaper for the government, more lucrative for beneficiaries, and fairer for everyone since you will get out what you put in.</p> <p>Unfortunately, none of those three promises would be true. Social Security is a very efficiently run program, with administrative expenses totaling less than 1% of the program's budget. But creating and maintaining individual investment accounts would be incredibly expensive, since it would incur broker commission fees and/or mutual fund management fees, which would either come from the program budget or individual investors.</p> <p>In addition, it is unlikely that the majority of beneficiaries would be able to improve upon their Social Security &quot;return on investment&quot; through investment accounts, since humans are notoriously irrational investors. Social Security benefits are guaranteed, while investment returns are not.</p> <p>Finally, attempting to create pay-for-what-you-get fairness in a social insurance program like Social Security is a non-starter. The intention of Social Security is to provide guaranteed income to the elderly, the disabled, and their families, by spreading the cost of that income over all of society. Strict fairness in such a system would leave our most vulnerable citizens in abject poverty or worse. It's also important to note that the transition costs of privatizing Social Security have been estimated at nearly <a href="http://www.ncpssm.org/Document/ArticleID/14">$5 trillion over the first two decades</a>. Those costs would need to be paid by current workers, who would potentially be paying into their privatized accounts and still be paying taxes that go toward current beneficiaries &mdash; which would feel incredibly unfair.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/emily-guy-birken">Emily Guy Birken</a> of <a href="http://www.wisebread.com/stop-falling-for-these-6-social-security-myths">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-smart-ways-to-boost-your-social-security-payout-before-retirement">6 Smart Ways to Boost Your Social Security Payout Before Retirement</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/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-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/tiny-nestegg-retire-abroad">Tiny Nestegg? Retire abroad!</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-american-cities-where-you-can-retire-on-just-social-security">5 American Cities Where You Can Retire On Just Social Security</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-financial-moves-now-that-youll-regret-when-you-retire">5 Financial Moves Now That You&#039;ll Regret When You Retire</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Retirement baby boomers benefits Congress full retirement age government immigrants myths privatized social security ssi Mon, 07 Nov 2016 10:30:29 +0000 Emily Guy Birken 1827091 at http://www.wisebread.com New Job? Don't Make These 7 Mistakes With Your Benefits http://www.wisebread.com/new-job-dont-make-these-7-mistakes-with-your-benefits <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/new-job-dont-make-these-7-mistakes-with-your-benefits" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_shaking_hands_77096849.jpg" alt="Woman making mistakes with new job benefits" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>In September 2016, total nonfarm payroll employment in the U.S. <a href="http://www.bls.gov/news.release/empsit.nr0.htm">rose by 156,000</a>. If you were among those Americans who recently landed a new gig &mdash; or plan on landing one within the near future &mdash; congratulations! But as you get your benefits and retirement planning set up at your new workplace, don't make these seven mistakes.</p> <h2>1. Not Setting Up Your New Retirement Account Before December 31st</h2> <p>Make to sure to set up your new employer-sponsored retirement account before December 31st. Otherwise, you won't be able to reduce your 2016 taxable income by making contributions before Tax Day (April 17th, 2017) or the day you file your federal tax return, whichever is earlier. If you wait until the new year to set up your retirement account, any contributions made before Tax Day will reduce your 2017 taxable income &mdash; and you'll lose the opportunity to reduce your 2016 AGI (Adjusted Gross Income) by any contributed amount.</p> <h2>2. Not Completing a 401K or IRA Indirect Rollover</h2> <p>If you had a balance of less than $5,000 in your previous job's 401K or IRA plan, there is a good chance that you received an automatic cashout with a 20% withholding from your employer for applicable taxes. From the last day of your employment, you have 60 days to put the entire balance of the previous retirement account (including the mentioned 20% withholding!) into a new employer-sponsored retirement account that accepts rollovers. This process is known as an indirect rollover.</p> <p>You'll get that 20% withholding money back from the IRS in next year's tax return. In the event that your new employer's retirement account doesn't accept a rollover from your previous account, consider opening an IRA with a local financial institution before the 60-day deadline. (See also: <a href="http://www.wisebread.com/a-simple-guide-to-rolling-over-all-of-your-401ks-and-iras?ref=seealso">A Simple Guide to Rolling Over All of Your 401Ks and IRAs</a>)</p> <h2>3. Leaving W-4 Forms Alone</h2> <p>Depending on a variety of factors, your old W-4 tax withholdings may not cut it at your new gig. To figure out whether you're withholding too much (or too little), grab all of your latest pay stubs, find a copy of last year's tax return, and visit the online <a href="https://www.irs.gov/individuals/irs-withholding-calculator">IRS Withholding Calculator</a>.</p> <p>After punching in your data, this tool will provide recommendations on how to adjust your W-4 with your new employer to make sure that you meet your tax liability and minimize your refund. There's no sense in over-withholding and expecting a large refund, since the IRS doesn't pay interest while it sits on excess withholdings. That's money better kept in a savings or retirement account, where it can gain interest and compound over time.</p> <h2>4. Missing the Deadline to Make an Additional Estimated Tax Payment</h2> <p>If the IRS Withholding Calculator were to tell you that you're seriously behind your tax liability, you'll probably need to make amends <em>pronto, </em>lest you end up owing Uncle Sam at tax time. It's to your benefit to make an additional estimated tax payment to reduce or eliminate such a liability. For example, in the event that you know that there is an end-of-year bonus or commission check arriving before January 17, 2017, you have the option to use part of that check to make an estimated tax payment with <a href="https://www.irs.gov/pub/irs-pdf/f1040es.pdf">Form 1040-ES</a>.</p> <p>Make sure to use the IRS Withholding Calculator to estimate the right amount to mail to the IRS with Form 1040-ES and keep a photocopy of both the form and check for your own records.</p> <h2>5. Not Enrolling in a New FSA Plan Within 30 Days</h2> <p>You have up to 30 days from your hire date to enroll in an employer's flexible spending account (FSA). If you miss that deadline, you'll have to wait until your company renews its FSA plan, your plan administrator announces an open enrollment period, or you have a qualifying life event, such as changing marital status or having a baby.</p> <h2>6. Forgetting About Balances in Previous FSA Accounts</h2> <p>You may be so busy training at your new job and completing paperwork that you forget about remaining benefits at your previous employer. Check the rules from your previous FSA account regarding the expiration date of available money once you separate from your old employer. Most FSA plans provide a grace period to use the money, but some of those deadlines may be as early as the end of the month in which you separate from your employer. Unless you use your FSA funds in full by the applicable deadline, you'll lose them all.</p> <h2>7. Going More Than Two Months Without Health Coverage</h2> <p>As you're transitioning from one job to the other, keep an eye on the start and end dates of previous and current health plans. Under the Affordable Care Act (ACA), better known as Obamacare, you owe a fee for any period greater than two months in which you, your spouse, or your tax dependents don't have qualifying health coverage. In most cases, the penalty fee is 1/12 per month of <a href="https://www.healthcare.gov/fees/fee-for-not-being-covered/">2.5% of your household income</a> or $695 per adult, whichever is higher.</p> <p>Being uncovered for only one to two months, qualifies you for a <a href="https://www.healthcare.gov/exemptions-tool/#/results/2015/details/short-gap">short gap exemption</a> and you're not liable for the fee. Find out whether or not you're able to claim a health coverage exemption with <a href="https://www.healthcare.gov/exemptions-tool/#/">HealthCare.gov's Exemption Screener</a>.</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/new-job-dont-make-these-7-mistakes-with-your-benefits">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-health-insurance-benefits-youre-probably-not-using">6 Health Insurance Benefits You&#039;re Probably Not Using</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/still-without-health-insurance-here-s-how-much-the-penalties-will-cost-you">Still Without Health Insurance? Here’s How Much the Penalties Will Cost You</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/left-a-job-do-a-rollover">Left a job? Do a rollover.</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/going-without-health-insurance-in-2015-heres-what-itll-cost-you">Going Without Health Insurance in 2015? Here&#039;s What It&#039;ll Cost You</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-vital-things-to-remember-when-buying-health-insurance">5 Vital Things to Remember When Buying Health Insurance</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Career Building Insurance Retirement 401 k affordable care act benefits employers flexible spending health care IRA medical insurance new job obamacare rollovers taxes Mon, 31 Oct 2016 10:00:07 +0000 Damian Davila 1822947 at http://www.wisebread.com Best Money Tips: Make These 7 Moves to Retire Early http://www.wisebread.com/best-money-tips-make-these-7-moves-to-retire-early <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/best-money-tips-make-these-7-moves-to-retire-early" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/couple_early_retirement_76985889.jpg" alt="Couple making moves to retire early" 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 smart moves for early retirement, how to have a tailgating party indoors, and ways to save money on a family vacation.</p> <h2>Top 5 Articles</h2> <p><a href="http://www.savethebills.com/7-smart-moves-reaching-early-retirement-goals/">7 Smart Moves For Reaching Your Early Retirement Goals</a> &mdash; Aim to save 10% of your income to put into an emergency fund. When that's fully-funded, save 10% of your income for a retirement account. [Save The Bills]</p> <p><a href="http://www.popsugar.com/smart-living/How-Tailgate-Indoors-42427885">How to Have a Backyard Tailgating Party Without a Backyard</a> &mdash; No grill? No problem! Cook on a grill plan to get the same tailgating flavors. [PopSugar Smart Living]</p> <p><a href="http://www.frugalvillage.com/2016/10/20/follow-these-5-tips-to-save-money-on-a-family-vacation/">Follow These 5 Tips to Save Money on a Family Vacation</a> &mdash; Planning your itinerary in advance will allow you to take advantage of Groupon and LivingSocial deals for the activities you want to do. [Frugal Village]</p> <p><a href="http://momsneedtoknow.com/8-reasons-why-that-pinterest-recipe-failed/">8 Reasons Why That Pinterest Recipe Failed</a> &mdash; When a recipe says to use parchment paper&hellip;use it! Parchment paper prevents sticking and ensures even cooking. [Moms Need to Know]</p> <p><a href="http://www.getrichslowly.org/blog/2016/10/20/save-money-on-thanksgiving/">How to Save Money on Thanksgiving Day</a> &mdash; Look for discounted turkey deals. Some stores may even offer a free turkey if you spend over a certain amount on groceries in a single trip. [Get Rich Slowly]</p> <h2>Other Essential Reading</h2> <p><a href="http://www.lazymanandmoney.com/10-ways-frugal-living-prepares-emergency/">10 Ways Frugal Living Prepares You for an Emergency</a> &mdash; When you live frugally, you improvise and find ways to reuse or repurpose the things you already have. This is an important skill to have during an emergency when your resources are limited. [Lazy Man and Money]</p> <p><a href="https://christianpf.com/how-to-raise-non-materialistic-children/">7 Thoughtful Ways To Raise Non-Materialistic Children</a> &mdash; Christmas (and other holidays) is not an excuse to overindulge your children. Rein in the gifts and find ways to celebrate the true spirit of the season without overspending. [Seed Time]</p> <p><a href="http://couplemoney.com/real-estate/makeover-your-bathroom-for-cheap/">5 Tips to Makeover Your Bathroom without Breaking the Bank</a> &mdash; Don't replace dingy or outdated bathroom cabinets if the frame is still good. You can replace just the doors and reface the visible surfaces to update the look. [Couple Money]</p> <p><a href="http://moneypantry.com/swap-barter-websites/">35 Bartering &amp; Swapping Sites: Best Places to Trade Your Stuff Online</a> &mdash; You can trade pretty much anything online, from cars and houses to a wide range of services. [Money Pantry]</p> <p><a href="http://everythingfinanceblog.com/18467/save-on-your-taxes.html">7 Ideas You Can Use to Save on Your Taxes</a> &mdash; Invest in education. The money you put toward tuition or saving for your children&rsquo;s college education is usually tax deductible. [Everything Finance]</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-make-these-7-moves-to-retire-early">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-reasons-early-retirement-might-be-financially-risky">4 Reasons Early Retirement Might Be Financially Risky</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/just-saving-more-is-not-the-answer">Just Saving More Is Not the Answer</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/how-one-woman-retired-at-60-and-traveled-the-world">How One Woman Retired at 60 and Traveled the World</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-ways-to-handle-a-forced-early-retirement">5 Ways to Handle a Forced Early Retirement</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement best money tips early retirement Fri, 21 Oct 2016 09:30:27 +0000 Amy Lu 1817174 at http://www.wisebread.com The Penalty-Free Way to Withdraw Retirement Money Early http://www.wisebread.com/the-penalty-free-way-to-withdraw-retirement-money-early <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/the-penalty-free-way-to-withdraw-retirement-money-early" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/saving_money_retirement_85578577.jpg" alt="Withdrawing retirement early without any penalties" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>It's widely know that for most retirement plans, including an IRA and 401K, there is a cost to withdrawing money before you reach 59-&frac12; years of age. Take money out of a traditional IRA or 401K early and you're stuck paying taxes plus a 10% early withdrawal fee. If you withdraw money from a Roth IRA early, you'll have to pay tax on any withdrawn gains.</p> <p>There are some ways to avoid this penalty, including one mechanism that may be unknown to many investors.</p> <p>It's called a SEPP (stands for Substantially Equal Periodic Payment), and it may help some investors access their money early without a cost. The basic idea behind a SEPP is that you can receive regular payments (usually annually) from your retirement account, as long as they are a consistent amount and you do so for a certain length of time.</p> <p>Here are some key things you need to know.</p> <h2>1. You Must Take Withdrawals for at Least Five Years</h2> <p>Once you begin a SEPP program, you are required to make regular withdrawals for five years or until you are 59-1/2, whichever comes last (with some exceptions for disability or market decline). So for example, a person who is 56 must make withdrawals until they are 61. A person who is 45 must continue to make withdrawals for the next 14-1/2 years. Thus, it's generally not a good idea to embark on a SEPP program if you are young. If you stop the program before the required time is up, you must pay the IRS all of the waived penalties, plus interest.</p> <h2>2. Calculating Your Payments Is, Well, Complicated</h2> <p>Okay, so you're required to make regular withdrawals of the same amount of money. But how much should you be withdrawing? There are three main methods of determining this.</p> <h3>The Required Minimum Distribution Method</h3> <p>In simple terms, divide your total account balance by your life expectancy. (The IRS has a table to help you determine this.) Under this method, the amount you withdraw must be recalculated each year and could change.</p> <h3>The Fixed Amortization Method</h3> <p>Under this system, payments are based on the life expectancy of the account holder and a chosen interest rate.</p> <h3>The Annuity Method</h3> <p>To determine payments under this system, divide your account balance by an annuity factor that is based on your age.</p> <p>Generally speaking, the Required Minimum Distribution method is the most straightforward and will result in the smallest payments. This makes it a better choice for investors who do not want to deplete their accounts as quickly. However, payments must be recalculated each year, whereas the other two options only require calculations to be made once.</p> <h2>3. It's Not a Good Idea for an Emergency</h2> <p>There may be times when you are tempted to withdraw from your retirement account to take care of a financial emergency. But a SEPP isn't designed to help you with that. The five-year requirement makes it impossible to make a single withdrawal or even a small series of withdrawals. If you have a one-time emergency, you're better off find other methods to get cash quickly.</p> <h2>4. It Won't Always Work for a 401K</h2> <p>If you're considering using a SEPP to withdraw money from a 401K plan, the IRS requires you to first separate from the employer that maintains the plan. So once again, this is not a decision to make lightly. That said, 401K plans from previous employers are acceptable, as are any rollover IRAs you created from past plans.</p> <h2>5. It Is Not Easily Adjustable</h2> <p>Once you sign up for a SEPP program, there's no way to cancel it before the required time. If you find that your payments are too much, you can change your calculation method to the Required Minimum Distribution method. But this change is only allowed once.</p> <h2>6. You Must Stop Contributing</h2> <p>Once you decide to use a SEPP program, you can't adjust the balance of the retirement account. That means no more adding money to the account and no separate withdrawals. Any change to the account balance could lead to the SEPP being disqualified, in which case you're on the hook for all of the penalties and taxes, plus interest.</p> <h2>7. Withdrawing Money Early Means You Will Have Less Later</h2> <p>It's important to remember that a retirement account is called a <em>retirement </em>account for a reason. Your goal should be to ensure that money in the account lasts for the entire time after you are done working. That could mean decades. So if you are withdrawing money early, understand that you are reducing the amount that will be available to you later in life.</p> <h2>8. You Probably Need Professional Help</h2> <p>A SEPP is not an easy thing to understand or set up yourself. A tax and investment adviser will help you understand if a program is right for your particular situation, and walk you through the steps to determine the proper payments.</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/the-penalty-free-way-to-withdraw-retirement-money-early">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-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-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/15-retirement-terms-every-new-investor-needs-to-know">15 Retirement Terms Every New Investor Needs to Know</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-questions-to-ask-before-you-borrow-from-your-retirement-account">5 Questions to Ask Before You Borrow From Your Retirement Account</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/should-you-choose-a-roth-401k-or-a-regular-401k">Should You Choose a Roth 401k or a Regular 401k?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401k annuity IRA penalties sepp substantially equal periodic payment taxes withdrawals Tue, 18 Oct 2016 10:30:09 +0000 Tim Lemke 1815050 at http://www.wisebread.com 5 Ways American Retirement Is Changing http://www.wisebread.com/5-ways-american-retirement-is-changing <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-ways-american-retirement-is-changing" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/older_woman_retirement_93789725.jpg" alt="Woman learning ways American retirement is changing" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Somebody once said, &quot;Retirement can be a great joy if you can figure out how to spend time without spending money.&quot; And because of the ever-rising cost of living, this quote is more true than ever. The whole concept of retirement isn't what it used to be, and retirement planning sure isn't, either.</p> <p>Just like you can expect to require a higher goal for your nest egg for a comfortable retirement, you can expect many other ways in which your retirement life will be different from that of previous generations. Let's reviews some of the ways the scope of retirement is changing in the U.S., including financial and social changes.</p> <h2>1. Fewer Americans Expect Social Security as Major Source of Income</h2> <p>More and more American workers are expecting Social Security to play a smaller role in their income during retirement. In 2016, only 35% of U.S. workers expect Social Security to be a <a href="https://www.ebri.org/pdf/briefspdf/EBRI_IB_422.Mar16.RCS.pdf">major source of income</a> in retirement. There are two reasons behind this. First, 32% of workers aren't confident in the ability of the Social Security Administration (SSA) to continue providing benefits of at least equal value to the benefits provided to current retirees. Second, given this lower confidence in the SSA, 46% of workers expect employer-sponsored retirement saving plans to be a major source of income in 2016, up from <a href="https://www.ebri.org/pdf/briefspdf/EBRI_IB_03-2010_No340_RCS.pdf">43% in 2010</a>.</p> <h2>2. More Americans Are Postponing Their Retirement Age</h2> <p>Given that nearly seven in 10 Americans have less than $1,000 saved for retirement, it shouldn't be surprising that 77% of them are postponing retirement. For 26 years, the Retirement Confidence Survey from the Employee Benefit Research Institute (EBRI) has been tracking the American worker's confidence in their ability to afford a comfortable retirement. This survey is clearly showing an increasing retirement age trend over the long-term.</p> <p>The good news is that upon reaching your full retirement age, ranging from 65 to 67 depending on your birth year, you get 100% of the benefits that you're entitled to. For every additional year past your full retirement age that you wait to retire, you can get up to an 8% increase in benefits through delayed retirement credits from the SSA. (See also: <a href="http://www.wisebread.com/6-smart-ways-to-boost-your-social-security-payout-before-retirement?ref=seealso">6 Smart Ways to Boost Your Social Security Payout Before Retirement</a>)</p> <h2>3. More Americans Are Expecting to Never Retire</h2> <p>Never retiring may seem like a strange notion, but consider that continuing to work part-time or full-time past age 70-1/2 can allow you to delay your required minimum distributions from certain retirement plans, including traditional 401Ks, Roth 401Ks, and IRAs. By rolling over your old retirement account to an eligible new employer-sponsored plan, you can continue to contribute to your new retirement plan and delay applicable income taxes. Not everybody can do this, such as those who are <a href="https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-required-minimum-distributions">owners of 5% or more</a> of the business sponsoring the retirement account.</p> <p>Before trying this strategy, consult with your previous and new retirement plan administrators and your financial adviser to avoid any potential penalties and have a full picture of the process.</p> <h2>4. $2 Million Is the New $1 Million</h2> <p>More and more financial advisers are making the case to upgrade the old rule of thumb of $1 million for retirement to $2 million. Consider the following:</p> <ul> <li>In 2016, the <a href="http://www.usnews.com/education/best-colleges/paying-for-college/slideshows/10-student-loan-facts-college-grads-need-to-know">average student loan balance</a> was $37,172, <a href="http://blogs.wsj.com/numbers/congatulations-to-class-of-2014-the-most-indebted-ever-1368/">up from $33,000</a> two years earlier.</li> <li>&nbsp;</li> <li>In the last four years, rents are rising quickly, with a <a href="http://www.cnbc.com/2016/06/16/rents-now-top-list-of-fastest-rising-prices.html">3.8% increase</a> in 2016, alone.<br /> &nbsp;</li> <li>According to NerdWallet, in 2015, the average U.S. household carrying debt had a $15,675 credit card balance, a $27,865 auto loan balance, and a $172,341 mortgage balance.</li> </ul> <p>In 2012, 30% of adults age 65 and older <a href="http://www.urban.org/features/how-retirement-changing-america">had outstanding debt</a>, up from 44% in 1998. Given that more Americans depend on debt to get by, many have to address the fact that some debts don't just go away even after they're gone. Combine that with ever-rising living costs and you can understand why some of us need to plan for a higher retirement saving goal. (See also: <a href="http://www.wisebread.com/what-happens-to-your-debt-after-you-die?ref=seealso">What Happens to Your Debt After You Die?</a>)</p> <h2>5. Americans Are Living Longer</h2> <p>Another reason why more Americans are deciding to postpone their retirement age and looking into bigger nest eggs is that they are living longer. Back in 1980, the life expectancies for American men and women were <a href="http://u.demog.berkeley.edu/~andrew/1918/figure2.html">70.0 and 77.4</a>, respectively. According to the latest data from the SSA, a man and a woman reaching age 65 today can expect to live, on average, until age <a href="https://www.ssa.gov/planners/lifeexpectancy.html">84.3 and age 86.6</a>, respectively. However, about 25% of those 65-year old Americans will live past age 90 and 10% of them will live past age 95.</p> <p>Knowing that you're very likely to live longer should be great motivator to set up your retirement plan and have your retirement strategy in place. Even if you're 15, 10, or even five years away from retirement, you can still take several steps to boost your nest egg. (See also: <a href="http://www.wisebread.com/7-retirement-planning-steps-late-starters-must-make?ref=seealso">7 Retirement Planning Steps Late Starters Must Make</a>)</p> <p>Today is the best day to get your retirement saving plan back on track.</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/5-ways-american-retirement-is-changing">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-american-cities-where-you-can-retire-on-just-social-security">5 American Cities Where You Can Retire On Just Social Security</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-smart-ways-to-boost-your-social-security-payout-before-retirement">6 Smart Ways to Boost Your Social Security Payout Before Retirement</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/13-crucial-social-security-terms-everyone-needs-to-know">13 Crucial Social Security Terms Everyone Needs to Know</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/stop-falling-for-these-6-social-security-myths">Stop Falling for These 6 Social Security Myths</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-financial-moves-you-should-make-five-years-before-retirement">5 Financial Moves You Should Make Five Years Before Retirement</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement America changing retirement life expectancy millions postponing retirement social security united states Tue, 18 Oct 2016 09:00:08 +0000 Damian Davila 1815054 at http://www.wisebread.com 6 Smart Ways to Boost Your Social Security Payout Before Retirement http://www.wisebread.com/6-smart-ways-to-boost-your-social-security-payout-before-retirement <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-smart-ways-to-boost-your-social-security-payout-before-retirement" 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_retirement_78209735.jpg" alt="Couple boosting their social security payout before retirement" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>According to the Employee Benefit Research Institute, <a href="https://www.ebri.org/pdf/briefspdf/EBRI_IB_422.Mar16.RCS.pdf">84% of U.S. workers</a> expect their Social Security benefit to be a significant source income during retirement. So, let's plan ahead with these six smart ways to boost that monthly Social Security check before retirement:</p> <h2>1. Check Reported Earnings on Your Social Security Statements</h2> <p>In September 2014, the Social Security Administration (SSA) began mailing Social Security Statements to workers at ages 25, 30, 35, 40, 45, 50, 55, and 60 and over, who aren't yet receiving Social Security benefits and don't have a <em>my Social Security</em> account. You should receive those statements about three months before your birthday at each one of those ages.</p> <p>Once you receive one, check your reported earnings for each year to make sure they match your W-2 forms. The SSA uses your average earnings over your lifetime to calculate your benefit amount, so any errors on reported earnings may alter the benefit to which you're entitled. Since you may have many employers during your lifetime, you're the only person who can look at your earnings history and know whether it's complete and correct.</p> <p>If any earnings before the previous year are missing or shown incorrectly, contact the SSA right away at 1-800-772-1213 (7 a.m. to 7 p.m. on your local time). Have your W-2 or tax return for those years available when you call.</p> <h2>2. Sign Up for a my Social Security Account</h2> <p>There's no need to wait five years before getting your next Social Security Statement. By creating you're my Social Security account at <a href="http://www.ssa.gov/myaccount">www.ssa.gov/myaccount</a>, you'll be able to check your reported earnings once a year to verify that those posted amounts are correct.</p> <p>Additionally, you'll receive updated estimates of your future retirement, disability, and survivors benefits. If you meet certain requirements, you'll also be able to request a replacement Social Security card through the my Social Security online portal.</p> <h2>3. Reach Full Retirement Age</h2> <p>When you have earned the necessary 40 credits (individuals with disabilities, recipients of survivor benefits, and some minors may need fewer credits) to qualify for retirement benefits, you can start receiving those benefits as early as age 62. Whether you receive a digital or paper copy of your Social Security statement, you'll receive an estimated benefit of your retirement benefits at age 62.</p> <p>You'll quickly realize that the estimated benefit at age 62 is much lower than the one at your full retirement age. For example, if you were born between 1943 and 1954, your full retirement age would be 66. If you were to start getting retirement benefits at age 62, they would be <a href="https://www.ssa.gov/planners/retire/1943.html">reduced to 75%</a> of what they would be four years later. For every month that you delay retirement past age 62, you would gain an additional 0.4% in retirement benefits until you reach your full retirement age. Depending on your birth year, your full retirement age ranges from <a href="https://www.ssa.gov/planners/retire/retirechart.html">65 to 67</a>.</p> <h2>4. Obtain Delayed Retirement Credits</h2> <p>According to estimates from the SSA, about <a href="https://www.ssa.gov/planners/lifeexpectancy.html">one out of every four</a> 65-year-olds today will live past age 90, and one out of 10 will live past age 95. If you have a family history of longevity, consider delaying retirement until age 70.</p> <p>Individuals born 1943 or later receive an extra <a href="https://www.ssa.gov/planners/retire/delayret.html">2/3 of 1% increase</a> on their retirement benefits for every month that they delay retirement past full retirement age. If your full retirement age were 67, you would increase your retirement benefit to 132% by waiting until age 70. You can only gain delayed retirement credits until age 70.</p> <h2>5. Evaluate Spousal Benefits</h2> <p>Spouses can claim retirement benefits based on their own earnings record or receive up to 50% of the higher earner's benefit, whichever is higher. For example, if your own retirement benefit and your spouse's were $600 and $1,800, respectively, you would receive $900 (50% of $1,800).</p> <p>However, taking the spousal benefit as early as age 62 reduces your payout. A spousal benefit is reduced 25/36 of 1% for each month before full retirement age, up to 36 months. If the number of months exceeds 36, then the benefit is further reduced 5/12 of 1% per month. For those born 1960 or later, a $900 spousal benefit would be reduced to $585 when taking it at age 62.</p> <p>If you're divorced from a marriage <a href="https://www.ssa.gov/planners/retire/divspouse.html">lasting 10 years or longer</a>, remain unmarried, and have a retirement benefit smaller than the one you would receive from your ex-spouse, then you can receive spousal benefits on your ex-spouse's record even if he or she has remarried. However, you'll only be able to keep collecting benefits if you keep single. To learn more details about spousal benefits for divorced spouses, consult the SSA website.</p> <h2>6. Plan Ahead With Your Dependents</h2> <p>Talking about relationship updates later on in life, keep in mind that you can receive additional Social Security payments when you have dependent children <a href="https://www.ssa.gov/planners/retire/yourchildren.html">under age 19</a> living with you during retirement.</p> <p>As long as your biological child, adopted child, stepchild, or dependent grandchild is unmarried and under age 18, then he or she can receive up to one half of your monthly retirement benefit. The benefit can extend until graduation date or two months after the 19th birthday of a dependent who is a full-time student (no higher than grade 12), whichever is earlier.</p> <p>While each one of your qualifying dependent children can receive a benefit, generally the total amount you and your family can receive is about <a href="https://www.ssa.gov/planners/retire/yourchildren.html">150% to 180%</a> of your full retirement benefit. Depending on your child's age, you may find it advantageous to retire earlier than you originally planned to take advantage of a higher total family benefit.</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/6-smart-ways-to-boost-your-social-security-payout-before-retirement">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/stop-falling-for-these-6-social-security-myths">Stop Falling for These 6 Social Security Myths</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-american-cities-where-you-can-retire-on-just-social-security">5 American Cities Where You Can Retire On Just Social Security</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/13-crucial-social-security-terms-everyone-needs-to-know">13 Crucial Social Security Terms Everyone Needs to Know</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <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-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/can-your-spouse-be-a-dependent-on-your-taxes">Can Your Spouse be a Dependent on Your Taxes?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement benefits dependents full retirement age marriage payout social security spouses ssa Wed, 12 Oct 2016 09:00:06 +0000 Damian Davila 1810488 at http://www.wisebread.com 13 Crucial Social Security Terms Everyone Needs to Know http://www.wisebread.com/13-crucial-social-security-terms-everyone-needs-to-know <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/13-crucial-social-security-terms-everyone-needs-to-know" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/money_social_security_42928626.jpg" alt="Learning social security terms everyone needs to know" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>All Americans expect to receive Social Security benefits during their retirement years.</p> <p>According to the latest data from the Employee Benefits Research Institute, <a href="https://www.ebri.org/pdf/briefspdf/EBRI_IB_422.Mar16.RCS.pdf">91% of U.S. retirees</a> and 84% of U.S. workers expect Social Security to be a major or minor source of income during retirement. And since about a third of Americans have less than $1,000 saved for retirement, it's not surprising that many expect Social Security benefits to be their major source of income.</p> <p>That's why it's essential you understand these 13 important Social Security terms.</p> <h2>1. Full Retirement Age</h2> <p>Starting at age 62, you become eligible for Social Security benefits. However, you would take reduced benefits if you were to retire anytime before your full retirement age, which for most Americans is now 65 or older.</p> <p>For example, individuals born in 1960 or later have a full retirement age of 67. If a person with a full retirement age of 67 were to start taking benefits at age 62, she would receive a retirement benefit <a href="https://www.ssa.gov/planners/retire/1960.html">reduced to 70%</a>. For every month past age 62 that she waits, she earns about 0.4% more in retirement benefits until she reaches a full 100% at age 67.</p> <p>Depending on your year of birth, your full retirement age ranges from <a href="https://www.ssa.gov/planners/retire/retirechart.html">65 to 67</a>.</p> <h2>2. Delayed Retirement Credits</h2> <p>About 19% of Americans <a href="http://www.bloomberg.com/news/articles/2016-05-13/-i-ll-never-retire-americans-break-record-for-working-past-65">age 65 or older were working</a> during the first quarter of 2016. One possible reason is that working past age 65 to 67 can increase your retirement benefit from <a href="https://www.ssa.gov/planners/retire/delayret.html">5.5% to 8% per year</a>, depending on your year of birth. For every month past your full retirement age that you wait to start receiving your benefit check, you earn delayed retirement credits that boost your full retirement benefit beyond 100%. Going back to the example of the individual with full retirement at age 67, she would receive a monthly increase of two-thirds of 1% for every month that she delays retirement past age 67.</p> <h2>3. Age 64-3/4</h2> <p>Even though you may decide to wait until or past full retirement age to start taking your benefits, you can still apply for Medicare <a href="https://www.ssa.gov/planners/retire/justmedicare.html">within three months of age 65</a> (age 64-3/4) and apply for your retirement or spouse's benefits later.</p> <h2>Medicare Parts A, B, C, and D</h2> <p>People age 65 or older have access to the U.S. health insurance program known as Medicare. This program helps cover health care costs and has several parts.</p> <h3>4. Medicare Part A</h3> <p>This hospital insurance helps pay for inpatient care in a hospital or skilled nursing facility (following a hospital stay), some home health care, and hospice care.</p> <h3>5. Medicare Part B</h3> <p>Medical insurance that helps pay for doctor services and many other medical services and supplies not covered by Part A.</p> <h3>6. Medicare Part C</h3> <p>Also known as Medicare Advantage Plans, Part C plans are offered by private health carriers approved by Medicare and available to Americans enrolled in Part A and Part B with Medicare.</p> <h3>7. Medicare Part D</h3> <p>A drug coverage plan available to everyone with Medicare.</p> <p>While you have a seven-month window starting age 64-3/4 to sign up for Part A, you don't have to enroll in Part B. Depending on when you enroll for Part B and other factors, your coverage may be delayed and you may have to pay a higher monthly premium unless you qualify for a&hellip;</p> <h2>8. Special Enrollment Period (SEP)</h2> <p>Every year has an open enrollment period in which you can enroll in an insurance plan. There are certain life events that qualify you for a Special Enrollment Period. Qualifying events include losing job-based coverage and losing coverage through a family member. For the full list of life events that make you eligible for SEP, visit this section from <a href="https://www.healthcare.gov/coverage-outside-open-enrollment/special-enrollment-period/">HealthCare.gov</a>.</p> <h2>9. Social Security Credits</h2> <p>In 2016, you will earn <a href="https://www.ssa.gov/planners/disability/dqualify2.html">one Social Security work credit for each $1,260</a> of wages or self-employment income. You can earn up to four of these credits per year. The amount of money required to earn one credit goes up every year. Most Americans need to accumulate <a href="https://www.ssa.gov/pubs/EN-05-10024.pdf">40 credits</a> (about 10 years of work) to qualify for Social Security benefits. However, adults and children may require fewer credits to be eligible for other certain types of Social Security benefits, such as...</p> <h2>10. Disability Benefits</h2> <p>Those who can't work due to a qualifying medical condition that's expected to last at least one year or result in death can receive Social Security Disability Insurance (SSDI) benefits.</p> <p>Besides meeting the Social Security Administration's definition of disability, you must also have worked long enough and recently enough to qualify for Social Security disability benefits. Unless you're <a href="https://www.ssa.gov/planners/disability/dqualify8.html">blind or have low vision</a>, you must have earned <a href="https://www.ssa.gov/planners/credits.html">at least 20</a> of your required credits in the 10 years before you became disabled to qualify for disability benefits. For example, if you were born after 1929 and became disabled at age 50, you would require at least 28 credits to qualify for Social Security disability benefits.</p> <p>Certain family members, including your spouse if he or she is age 62 or older or an unmarried child, may qualify for benefits based on your work.</p> <h2>11. Supplemental Security Income Benefits</h2> <p>The Supplemental Security Income (SSI) program pays benefits to <a href="https://www.ssa.gov/pubs/EN-05-10026.pdf">disabled adults and children</a> who have limited income and resources. Qualifying recipients of Social Security disability or retirement benefits can receive SSI as long as they meet the requirements. The online <a href="https://ssabest.benefits.gov">Best Eligibility Screening Tool</a> can help you determine whether or not you or your child are eligible for SSI benefits.</p> <h2>12. Back Payments</h2> <p>Given that there are an <a href="http://www.pewresearch.org/fact-tank/2016/04/25/millennials-overtake-baby-boomers/">estimated 74.9 million Baby Boomers</a> (ages 51 to 69) in the U.S., you can expect that Social Security consistently receives a large number of enrollments. The more paperwork, the longer the time to process your application. So, you'll receive back payments from the Social Security Administration for the months between the date that you applied for benefits and the date you were approved for benefits.</p> <p>There is a mandatory <a href="https://faq.ssa.gov/link/portal/34011/34019/Article/3715/Is-there-a-waiting-period-for-Social-Security-disability-benefits">five-month waiting period</a> for SSDI benefits, so back payments only start once the waiting period ends.</p> <h2>13. Retroactive Benefits</h2> <p>Back payments are available for for both SSDI and SSI benefits, but retroactive benefits are only available for SSDI benefits. Retroactive benefits are the monies that you were already eligible for due to your disability onset date but didn't apply for earlier. Keep in mind that you'll receive no interest on any back payments for SSDI or SSI.</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/13-crucial-social-security-terms-everyone-needs-to-know">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-american-cities-where-you-can-retire-on-just-social-security">5 American Cities Where You Can Retire On Just Social Security</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-smart-ways-to-boost-your-social-security-payout-before-retirement">6 Smart Ways to Boost Your Social Security Payout Before Retirement</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/stop-falling-for-these-6-social-security-myths">Stop Falling for These 6 Social Security Myths</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-financial-moves-you-should-make-five-years-before-retirement">5 Financial Moves You Should Make Five Years Before Retirement</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-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 backpayments benefits credits income medicare retroactive social security terms Mon, 10 Oct 2016 10:30:09 +0000 Damian Davila 1808267 at http://www.wisebread.com 9 Threats to a Secure Retirement http://www.wisebread.com/9-threats-to-a-secure-retirement <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/9-threats-to-a-secure-retirement" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/couple_holding_hands_88407163.jpg" alt="Couple learning threats to a secure retirement" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Saving and investing for retirement isn't easy. There's a lot that can happen to take you off track, potentially leaving you less money than you hoped for.</p> <p>From poor financial planning to unexpected events and even nationwide economic woes, here are some of the things that could pose a threat to your secure retirement.</p> <h2>1. Not Investing Enough</h2> <p>It's never easy to figure out how much to invest. After all, you want to make sure you have enough money to deal with your current needs. It's common for people to invest too little, and this can hurt them in the long run.</p> <p>When saving for retirement, it's smart to contribute as close to the maximum each year into 401K and IRA plans. (That's $18,000 for the 401K and $5,500 for the IRA.) If you can't contribute quite that much, at least put enough in to get the company match on your 401K plan.</p> <p>Even a few extra dollars per month into retirement accounts can make a big difference. For example, let's say you have $50,000 in an account and contribute $500 per month for 25 years. Assuming a 7% return, your portfolio would amount to about $677,000. But what if you contributed $1,000 monthly? Then it would hit nearly $1.1 million.</p> <h2>2. Starting Too Late</h2> <p>When investing, time is your biggest friend. The more time you have to invest, the bigger your nest egg can grow. Thus, one of the biggest threats to a secure retirement is failing to contribute to your fund early in life. If you're past 40 years old, you may have only a couple of decades to invest before you wish to stop working, and that may not be long enough to amass the kind of wealth you'll need for a long and comfortable retirement.</p> <p>Let's say you invest $25,000 today and add $1,000 per month until you are 65. If you're currently 45 and get a 7% annual return, you'll have about $625,000 upon retirement. Not bad, but if you had started when you were 25, you'd have nearly $3 million.</p> <h2>3. Raiding Retirement Funds</h2> <p>Retirement accounts such as a 401K or IRA are designed to have money grow more or less untouched until you reach retirement age. You can withdraw money from them, but there's a cost.</p> <p>When you raid these retirement funds, you'll lose the money in penalties, but you'll also lose the potential earnings of the money you take out. Over time, this can cost an investor thousands of dollars.</p> <h2>4. Economic Growth</h2> <p>For decades following World War II, the annual growth rate of the American economy averaged more than 3%, with some years seeing double that. But in recent years, that annual rate has shrunk to barely 2%. In short, the American economy is not growing as fast as it once was, and that has implications for household income, corporate growth, and employment.</p> <h2>5. Possible Entitlement Cuts</h2> <p>Many lawmakers on Capitol Hill have been warning Americans of a looming crisis in entitlement funding. Observers of the federal budget note that unless there is serious reform, Social Security Trust Funds could be depleted within 20 years. This means that for the younger generation, there may not be as much left from the government upon retirement.</p> <p>It's important to note, however, that workers who want to live comfortably after they are done working should not be counting on Social Security to carry them through the end of their life. Someone who saves aggressively and invests wisely should be able to amass enough in a retirement fund to get by even if Social Security benefits are adjusted downward or even eliminated.</p> <h2>6. Declining Pensions</h2> <p>If you currently work for a company that offers a defined benefit plan, you are a rare breed. In recent years, companies have shifted from offering pensions to instead offering 401K plans, in which workers invest on their own. In most cases, they will also get a contribution from their employer, but that's not guaranteed. This doesn't necessarily mean you'll be destitute at retirement, but it does require employees to be much more engaged in their retirement planning.</p> <h2>7. Placing All Your Eggs in One Basket</h2> <p>Even if you are saving aggressively and investing every penny you can, it's possible to end up with less money than you need in retirement. It can happen when your portfolio is too heavily balanced toward a single investment. It's unwise to invest a high percentage of your savings in one company or even one industry or asset class, because one bad day could wipe out a large chunk of your savings. (Consider the plight of Enron employees who lost nearly everything had most of their savings in company stock.)</p> <p>To protect your retirement money, invest in a diverse mixture of stocks in various sizes and asset classes. Buy mutual funds instead of individual stocks, if at all possible.</p> <h2>8. Funding College Instead of Retirement</h2> <p>It's never a bad idea to save money to contribute to your children's education. There are several vehicles including 529 plans that allow you to invest money tax-free toward college. But many investors become so focused on saving for college that they fail to contribute enough to their own retirement fund.</p> <p>Remember that it's possible to <em>borrow </em>money for college, but you can't borrow money to fund your retirement if you find you're lacking in funds when you're done working. Ideally, you'll be able to amass enough money to fund college and your retirement comfortably. But if you have to make a choice, pay your future self first, then contribute to the college fund.</p> <h2>9. Being Poorly Insured</h2> <p>You may feel like nothing bad will ever happen to you. You are young and healthy. You're a safe driver and you live in a nice neighborhood. So you skimp on things like health, auto, and homeowner's insurance. You may think you're saving money, but you're at serious risk for big financial loss if you get seriously ill or have a serious accident.</p> <p>Being uninsured or underinsured can leave you struggling to make ends meet, placing retirement savings on the back burner. You may even have to raid your retirement accounts to pay the bills. It's wise to perform an insurance assessment to determine if you have the proper level of insurance to protect yourself financially.</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-threats-to-a-secure-retirement">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-signs-your-retirement-is-on-track">8 Signs Your Retirement Is on Track</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-tell-if-your-401k-is-a-good-or-a-bad-one">How to Tell if Your 401K Is a Good or a Bad One</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-best-online-brokerages-for-your-ira">5 Best Online Brokerages for Your IRA</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-american-cities-where-you-can-retire-on-just-social-security">5 American Cities Where You Can Retire On Just Social Security</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/12-money-moves-to-make-the-moment-you-decide-to-retire">12 Money Moves to Make the Moment You Decide to Retire</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement college Economy education funds income insurance investing late start pensions risk stocks threats Fri, 07 Oct 2016 09:00:06 +0000 Tim Lemke 1807026 at http://www.wisebread.com 7 Retirement Planning Steps Late Starters Must Make http://www.wisebread.com/7-retirement-planning-steps-late-starters-must-make <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/7-retirement-planning-steps-late-starters-must-make" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/couple_saving_retirement_33504544.jpg" alt="Couple making retirement planning steps late" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Most Americans aren't saving enough for retirement &mdash; and worse, many are off to a late start. Since 2011, the annual percentage of U.S. workers with less than $1,000 in savings and investments for retirement has ranged from <a href="https://www.ebri.org/pdf/briefspdf/EBRI_IB_422.Mar16.RCS.pdf">26% to 36%</a>.</p> <p>These low savings levels are taking a toll on nest eggs. One estimate puts the ideal retirement savings for an individual at <a href="http://www.fool.com/investing/general/2015/10/03/the-average-americans-retirement-savings-by-ageand.aspx">age 45 at $162,000</a> and calculates that, in reality, most Americans are about $100,000 short of that goal by the time they reach age 45. Let's review what late-starters should do to give their savings a necessary boost and learn some tips for those who are 15, 10, or five years away from retirement.</p> <h2>15 Years Away From Retirement</h2> <p>Assuming that your target retirement age is 65, you're now 50 years old and are likely to be part of the Generation X. About half of members of Generation X have <a href="http://time.com/money/4258451/retirement-savings-survey/">less than $10,000</a> in retirement savings.</p> <h3>Step 1: Take Advantage of Catch-Up Contributions</h3> <p>Starting at age 50, you're now legally allowed to start making annual catch-up contributions on top of the regular contribution limits to your qualifying retirement accounts. In 2016, individuals age 50 and over could contribute an extra:</p> <ul> <li><a href="https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-catch-up-contributions">$6,000</a> on top of the $18,000 limit to 401K (other than a SIMPLE 401K), 403b, SARSEP, and governmental 457b plans;<br /> &nbsp;</li> <li>$3,000 in catch-up contributions to SIMPLE IRA or SIMPLE 401K plans; and<br /> &nbsp;</li> <li>$1,000 on top of the $5,500 limit to traditional or Roth IRAs.</li> </ul> <p>Additionally, individuals with at least 15 years of employment can make additional contributions to their 403b plans on top of the regular $6,000 in catch-up contributions. For more details, review the <a href="https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-403b-contribution-limits">IRS rules for 403b contribution limits</a>.</p> <h3>Step 2: Chase Lower Investment Fees</h3> <p>When choosing funds for your 401K, you may think that there's little difference between a fund with an annual expense ratio of 0.16% and a fund with one of 0.25%. However, when you're 15 years away from retirement, those differences compound over time. A $30,000 investment would cost $48 per year on the first fund and $75 per year on the second fund.</p> <p>By investing in the fund with the higher annual expense ratio, and assuming that both funds have an annual return of 7%, you would miss out on an extra $703.94 in retirement savings by the time you reach age 65. Not to mention on the additional gains on those moneys that you would have during your retirement years.</p> <p>Several studies have shown that expense ratios are the only reliable predictor of future fund performance. For example, research from rating agency Morningstar has found that <a href="http://news.morningstar.com/articlenet/article.aspx?id=347327">low-cost funds consistently outperform high-cost funds</a>.</p> <h2>10 Years Away From Retirement</h2> <p>At this point, you're now 55 years old and you're supposed to be wiser. Still, about <a href="http://time.com/money/4258451/retirement-savings-survey/">33% of Americans</a> age 55 and over have no retirement savings and 26% have retirement accounts with balances under $50,000. On top of taking advantage of catch-up contributions and chasing lower-cost funds, here are some additional steps to give your retirement strategy a much-needed boost.</p> <h3>Step 3: Consider Cities Where You Can Retire on Just Social Security</h3> <p>It can be a humbling experience to have to tighten your belt after having worked so hard for many decades. If you're going to become part of the <a href="https://www.ebri.org/pdf/briefspdf/EBRI_IB_422.Mar16.RCS.pdf">62% of U.S. retirees</a> that expect Social Security to be a major source of income during retirement, start investigating what U.S. cities are better suited to live on your expected check from the Social Security Administration (SSA).</p> <p>Here are three list of cities to start your search:</p> <ul> <li><a href="http://www.wisebread.com/5-american-cities-where-you-can-retire-on-just-social-security">5 American Cities Where You Can Retire On Just Social Security <p> </a></li> <li><a href="http://www.wisebread.com/4-exciting-affordable-american-cities-to-retire-in">4 Exciting, Affordable American Cities to Retire In <p> </a></li> <li><a href="http://www.wisebread.com/4-more-exciting-affordable-american-cities-to-retire-in">4 More Exciting, Affordable American Cities to Retire In</a></li> </ul> <p>Thinking about your budget during your retirement years is a good idea so you can plan withdrawals from your retirement account, figure out your necessary contributions for the next decade, and figure out ways to rein in expenses.</p> <h3>Step 4: Dial Down Your Investment Risk</h3> <p>Desperate times often call for desperate measures. However, playing part-time stock trader with your retirement funds or allocating more moneys to investment vehicles promising higher returns &mdash; and more risk! &mdash; isn't a good idea. Remember that only <a href="http://us.spindices.com/documents/spiva/spiva-us-mid-year-2014.pdf">20% to 25%</a> of actively managed funds beat their benchmark.</p> <p>Talk with your plan administrator about income investing, which focuses on picking financial vehicles that provide a steady stream of income. While you may think that bonds are your only option, there many other securities to choose from. For example, there are stocks that consistently pay dividends.</p> <h2>5 Years Away From Retirement</h2> <p>It's the final countdown to retirement age and now you're age 60. With a retirement savings benchmark of $260,494, <a href="http://time.com/money/4258451/retirement-savings-survey/">about 74% of Americans</a> are behind on their retirement savings. Here are three additional planning steps.</p> <h3>Step 5: Accumulate Delayed Retirement Credits</h3> <p>It's time to get the most accurate picture of your expected retirement benefit from the SSA. To do this, you can use the <a href="https://www.ssa.gov/OACT/anypia/anypia.html">Social Security Detailed Calculator</a>, which lets you estimate your retirement benefit by accessing your actual earnings record through a secure interface. If you find that monthly benefit check to be too low, one way to boost is delaying your SSA benefit past your full retirement age.</p> <p>Depending on the year that you were born, your full retirement age will fall somewhere between <a href="https://www.ssa.gov/planners/retire/retirechart.html">age 65 and 67</a>. For every year that you delay your retirement benefit past your full retirement age, you can get <a href="https://www.ssa.gov/planners/retire/delayret.html">up to an 8% increase</a> on your total annual benefit. The benefit increase no longer applies when you reach age 70, even if you continue to delay taking benefits.</p> <h3>Step 6: Delay Required Minimum Distributions</h3> <p>Generally, holders of traditional and Roth 401K plans must start taking required minimum distributions (RMDs) once they reach age 70-1/2.&nbsp;</p> <p>However, there is one way to delay RMDs. If you were to take a part-time job offering a retirement plan that allows you to rollover your old 401K plan, then you can continue to contribute to the new plan and delay your first RMD until April 1st of the year after you retire.</p> <p>Keep in mind that:</p> <ul> <li>Your old traditional 401K must go into a new 401K;<br /> &nbsp;</li> <li>Your old Roth 401K must go into a new Roth IRA;<br /> &nbsp;</li> <li>Your new plan must accept rollovers; and<br /> &nbsp;</li> <li>You can't hold more than 5% of the company sponsoring the old plan to be able to do a rollover past age 70-1/2.</li> </ul> <p>Before you attempt a rollover past age 70-1/2, consult the plan administrator of your current retirement plan, the one from your potential new employer, and your tax accountant or financial planner, if you have one. This is one of those times that may warrant <a href="http://www.wisebread.com/who-to-hire-a-financial-planner-or-a-financial-adviser">hiring the right type of financial adviser</a> to prevent any tax penalties.</p> <h3>Step 7: Consider Retiring Abroad</h3> <p>Last but not least, one way to further stretch your nest egg is to retire in a city abroad to live better on a smaller budget, have access to generous tax breaks, and enjoy beautiful locales and ideal weather conditions.</p> <p>Several countries, including Costa Rica, Panama, and Nicaragua, offer retirement programs that provide U.S. retirees several benefits and require a minimum monthly SSA benefit ranging from $600 to $1,000 to qualify. (See also: <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>)</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-retirement-planning-steps-late-starters-must-make">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-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-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-signs-you-arent-saving-enough-for-retirement">10 Signs You Aren&#039;t Saving Enough for Retirement</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-ways-couples-are-shortchanging-their-retirement-savings">4 Ways Couples Are Shortchanging Their Retirement Savings</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/15-retirement-terms-every-new-investor-needs-to-know">15 Retirement Terms Every New Investor Needs to Know</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 403b catch contributions IRA retirement planning saving Tue, 04 Oct 2016 10:30:13 +0000 Damian Davila 1805038 at http://www.wisebread.com Best Money Tips: Avoid These Roadblocks to a Secure Retirement http://www.wisebread.com/best-money-tips-avoid-these-roadblocks-to-a-secure-retirement <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/best-money-tips-avoid-these-roadblocks-to-a-secure-retirement" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/couple_retirement_planning_93780197.jpg" alt="Couple avoiding roadblocks to secure retirement" 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 financial roadblocks to a secure retirement, things you should buy this month rather than waiting until Black Friday, and a surprise fee that you might find when you rent a car.</p> <h2>Top 5 Articles</h2> <p><a href="http://www.kiplinger.com/article/retirement/T037-C032-S014-5-financial-roadblocks-to-avoid-in-retirement.html">5 Financial Roadblocks to a Secure Retirement</a> &mdash; Over time, the value of your savings will diminish as the cost of goods and services increase. Remember to factor in the impact of inflation when planning your retirement. [Kiplinger]</p> <p><a href="http://www.csmonitor.com/Business/Saving-Money/2016/0930/Don-t-wait-until-Black-Friday-to-buy-these-nine-things">Don't wait until Black Friday to buy these nine things</a> &mdash; There&rsquo;s no need to put off these purchases because you think you'll get a better deal next month. October is actually the best time to buy these nine products! [The Monitor]</p> <p><a href="http://www.moneytalksnews.com/car-renters-beware-this-unpleasant-surprise-cost/">Renting a Car? Beware of This Unpleasant Surprise Cost</a> &mdash; Car-rental companies are collecting millions in toll fees. Learn what you can do to avoid this unwelcome surprise the next time you rent a car. [Money Talks News]</p> <p><a href="http://www.popsugar.com/career/Should-I-Send-Work-Email-Late-Night-16738190">6 Reasons Not to Send Professional Emails After Dark</a> &mdash; Many people tune out of work when they're at home. Odds are, your email won't be read or responded to until the next morning anyway. [PopSugar Smart Living]</p> <p><a href="http://www.dontmesswithtaxes.com/2016/10/4-and-more-tax-moves-to-make-this-october.html">4 (and more) tax moves to make this October</a> &mdash; Review your flexible spending account and schedule FSA-eligible treatments now. [Don't Mess With Taxes]</p> <h2>Other Essential Reading</h2> <p><a href="http://www.lifed.com/13-brain-hacks-to-fight-fatigue-and-give-you-more-energy">13 Brain Hacks To Fight Fatigue And Give You More Energy</a> &mdash; Picking up a sport will improve your concentration and sharpen your mental acuity. It also improves your ability to learn and make good judgments. [Life'd]</p> <p><a href="http://www.experian.com/blogs/news/about/debt-shame-anxiety/">Debt Shame: Ways to Deal with Guilt &amp; Anxiety Due to Debt</a> &mdash; Debt often causes feelings of guilt and anxiety, which makes it even harder to deal with your financial issues. Join Experian's #CreditChat tomorrow at 3 p.m. ET for a discussion on ways to handle debt shame. [Experian]</p> <p><a href="http://www.iwillteachyoutoberich.com/blog/how-to-give-advice-that-people-actually-take/">How to give advice that people actually take</a> &mdash; Don't launch into how simple or easy it is to do something. If it were simple or easy, they wouldn't be asking your advice. [I Will Teach You To Be Rich]</p> <p><a href="http://moneyminiblog.com/money-mistakes/young-people/">6 Financial Mistakes Young People Make</a> &mdash; Relying on your parents' generosity instead of saving up for emergencies is a terrible idea. [Money Mini Blog]</p> <p><a href="http://parentingsquad.com/its-national-dyslexia-awareness-month-do-you-know-the-signs">It's National Dyslexia Awareness Month: Do You Know the Signs?</a> &mdash; Dyslexia is a learning disability estimated to affect 10%-15% of the U.S. population. [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-avoid-these-roadblocks-to-a-secure-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-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-financial-moves-now-that-youll-regret-when-you-retire">5 Financial Moves Now That You&#039;ll Regret When You Retire</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-american-cities-where-you-can-retire-on-just-social-security">5 American Cities Where You Can Retire On Just Social Security</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-signs-you-arent-saving-enough-for-retirement">10 Signs You Aren&#039;t Saving Enough for Retirement</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-ways-couples-are-shortchanging-their-retirement-savings">4 Ways Couples Are Shortchanging Their Retirement Savings</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/15-retirement-terms-every-new-investor-needs-to-know">15 Retirement Terms Every New Investor Needs to Know</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement best money tips roadblocks Tue, 04 Oct 2016 09:30:45 +0000 Amy Lu 1805234 at http://www.wisebread.com 5 American Cities Where You Can Retire On Just Social Security http://www.wisebread.com/5-american-cities-where-you-can-retire-on-just-social-security <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-american-cities-where-you-can-retire-on-just-social-security" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/retired_old_couple_90300353.jpg" alt="Retired couple finding cities to retire in on social security" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>The statistics on how unprepared Americans are for retirement can be terrifying. The <a href="http://laborcenter.berkeley.edu/pdf/2015/RetirementSavingsCrisis.pdf">median retirement account balance</a> is $2,500 for all working-age households and $14,500 for near-retirement households, according to a 2015 study by the National Institute on Retirement Security.</p> <p>Two-thirds of working families fall short of conservative retirement savings targets for their age and income based on working until age 67, the report finds.</p> <p>With virtually no retirement savings for the average working household and 45% (nearly 40 million) of working households not having any retirement assets, their best hope for surviving after age 67 may be income from Social Security.</p> <h2>What Social Security Pays</h2> <p>The average monthly Social Security check as of June 2016 was $1,234, according to the Social Security Administration, or SSA. Where could you afford to live on such an income?</p> <p>There are some good options, but before we get to those, let's be a little more generous with the SSA income, based on the government's statistics.</p> <p>While the average monthly benefit was $1,234, 82% of beneficiaries receive a little more &mdash; $1,280 from &quot;Old-Age and Survivors Insurance&quot; SSA beneficiaries. The largest average monthly SSA benefit was $1,348 for retired workers, who made up 67% of the pool.</p> <p>Assuming you're a retired worker receiving the average $1,348 each month from SSA, that's still a low amount of money to live on each month, considering that a retirement planning rule of thumb is to plan on having 70%&ndash;80% percent of your pre-retirement income replaced with SSA, a retirement account, or other form of income in your old age.</p> <p>At 80%, that $1,348 would equate to a pre-retirement monthly income of $1,685, or $20,220 per year. If you were comfortable living on $20,220 per year before retirement, then living on 80% of it during retirement should be just as comfortable, the theory goes.</p> <p>For a couple who are both retired, their SSA income would double to $40,440 per year. But for our purposes, let's assume one retiree is living by themselves.</p> <p>So, where to live on the average SSA check of $1,348 per month for retired workers? In no particular order, here are five cities where it's affordable.</p> <h2>1. Buffalo, New York</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5171/buffalo_new_york_82224935.jpg" width="605" height="340" alt="" /></p> <p>Buffalo may come as a surprise for being a cheap place to live because it's in New York state. But the <a href="https://smartasset.com/mortgage/top-ten-cheapest-places-to-live">median monthly rent</a> in Buffalo is $512, making it the cheapest city in the U.S. to live in, according to a SmartAsset analysis. Buffalo also has the lowest cost of living at 79.34, meaning that the U.S. average is 100 and that $100 in groceries, for example, would cost $79.34 in Buffalo.</p> <h2>2. Johnstown, Pennsylvania</h2> <p>If you're looking for the cheapest rent in the country, this city of 20,576 residents has it with a gross median rent of $466 per month, according to data from the U.S. Census. Since housing is one of the biggest expenses in life, such low rent can make other expenses a lot more affordable.</p> <p>The <a href="http://places.findthehome.com/stories/10260/city-every-state-cheapest-affordable-rent#50-Pennsylvania-Johnstown">average per capita income</a> in Johnstown is $16,153, according to FindTheHome, putting the average SSA income in retirement above the average there. In this city, you'd be rich.</p> <h2>3. Memphis, Tennessee</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5171/graceland_memphis_91136155.jpg" width="605" height="340" alt="" /></p> <p>If you're looking for a large U.S. city that's affordable in retirement, Memphis is it. This city of 653,450 has low housing costs. The average apartment rent of $709 per month is 21% below the U.S. average, and the median home value of $98,300 is 46% below the U.S. average, according to Kiplinger.</p> <h2>4. Akron, Ohio</h2> <p>Living in the center of the country is usually cheaper than it is elsewhere, and Akron, Ohio proves that point by being one of the <a href="http://www.cbsnews.com/media/the-15-most-affordable-places-to-live-in-america/16/">most affordable places to live</a> in the country. Its median home price listing in August 2015 was $120,450, and the median household income was $45,628 &mdash; putting the average SSA income at just below the median. The amount of monthly income spent on housing, utilities, and commuting in Akron was 28.9%, allowing retirees to spend about 70% of their income on other things.</p> <h2>5. Indianapolis, Indiana</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5171/indianapolis_indiana_62568936_0.jpg" width="605" height="340" alt="" /></p> <p>Listed by Trulia as one of the best cities to move to for a high-paying job, Indianapolis has low home prices for <a href="http://www.nbcnews.com/business/consumer/millennials-meet-indianapolis-your-new-dream-city-n623021">Millennials looking for work</a> and for retirees, too. The median home price of $130,000 is $58,900 below the median home price in America. That allows about two of every five renters to be able to afford a typically priced home there. For retirees who sell their homes and have enough money to buy a home outright or put down a large down payment, then living with little or almost no housing costs can leave a lot of room in their budget for other things.</p> <p>The good news is that there are plenty more U.S. cities that are affordable for retirees who only have an income from Social Security. These are only five of them, and are a good start to investigate more when deciding on the cheapest places to retire.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/aaron-crowe">Aaron Crowe</a> of <a href="http://www.wisebread.com/5-american-cities-where-you-can-retire-on-just-social-security">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-financial-moves-you-should-make-five-years-before-retirement">5 Financial Moves You Should Make Five Years Before Retirement</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/13-crucial-social-security-terms-everyone-needs-to-know">13 Crucial Social Security Terms Everyone Needs to Know</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/heres-how-much-life-in-the-big-city-will-cost-you">Here&#039;s How Much Life in the Big City Will Cost You</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-smart-ways-to-boost-your-social-security-payout-before-retirement">6 Smart Ways to Boost Your Social Security Payout Before Retirement</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/stop-falling-for-these-6-social-security-myths">Stop Falling for These 6 Social Security Myths</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing Retirement America benefits cost of living income relocating social security u.s. cities Tue, 20 Sep 2016 10:30:05 +0000 Aaron Crowe 1795982 at http://www.wisebread.com