retirement planning http://www.wisebread.com/taxonomy/term/7381/all en-US 5 Ways to Invest Like a Pro — No Financial Adviser Required http://www.wisebread.com/5-ways-to-invest-like-a-pro-no-financial-adviser-required <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-ways-to-invest-like-a-pro-no-financial-adviser-required" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-500538951.jpg" alt="Man learning how to invest like a pro without a financial adviser" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Investing can be intimidating. There's a unique language, with expense ratios, ETFs, and dollar-cost averaging &mdash; oh my! And there's a lot at stake, like your retirement. (See also: <a href="http://www.wisebread.com/beginners-guide-to-reading-a-stock-table?ref=seealso" target="_blank">Beginner's Guide to Reading a Stock Table</a>)</p> <p>However, at the risk of sounding like a home repair store commercial, you can do this and we can help. With the following five keys, you'll be well on your way toward becoming a confident, successful, do-it-yourself investor.</p> <h2>1. Commit to the market</h2> <p>The stock market has been on a tear. Since bottoming out in March 2009, it nearly tripled in value by the end of 2016. And since the start of this year, it has only climbed higher. Unfortunately, for many people, it doesn't matter. According to a recent Gallup poll, about half U.S. adults are not investing in the market.</p> <p>Some waffle. They're in when it seems safe; they're out when trouble strikes. But pros don't waffle. They're in it for the long haul because they know that as a long-term investment, the U.S. stock market has delivered average annual returns of nearly 10 percent.</p> <h2>2. Know your goal</h2> <p>The most common investment goal is retirement. It that's your goal, make it as specific as possible. How much money do you want to have? By when? And how much do you need to invest each month in order to get there? These questions can feel overwhelming at times, but you need to answer them in order to get a clear picture of your path to a secure retirement. (See also: <a href="http://www.wisebread.com/how-much-should-you-have-saved-for-retirement-by-30-40-50?ref=seealso" target="_blank">How Much Should You Have Saved for Retirement by 30? 40? 50?</a>)</p> <h2>3. Determine your optimal asset allocation</h2> <p>While many of the headlines in the investment press are about which investments to choose, there's a different factor that'll have an even greater impact on your investing success. It's making sure you've determined your <a href="http://www.wisebread.com/the-surprising-truth-of-investing-mediocre-advice-is-best?ref=internal" target="_blank">optimal asset allocation</a>.</p> <p>Asset allocation refers to how you divvy up the money you invest between asset classes, with the two most important ones being stocks and bonds (preferably, stock and bond mutual funds, since mutual funds enable you to hold a diversified &quot;basket&quot; of stocks and bonds).</p> <p>Generally, when you're young, your portfolio should tilt more toward stocks. Yes, your portfolio will experience sharper ups and downs, but you should have the time to ride them out, and a higher-risk portfolio should lead you to higher returns. As you get older, you would be wise to reduce stock exposure and increase your allocation to bonds. (See also: <a href="http://www.wisebread.com/the-basics-of-asset-allocation?ref=seealso" target="_blank">The Basics of Asset Allocation</a>)</p> <h2>4. Choose an investment selection process</h2> <p>Pay no attention to headlines touting &quot;This Year's Top Mutual Funds&quot; or &quot;Why You Must Own Gold Now.&quot; And tune out all hot tips from your brother-in-law or coworker. What you need is a trustworthy investment selection <em>process</em>.</p> <p>You could keep it super easy by choosing a target-date mutual fund. These funds have years as part of their name, such as the Fidelity Freedom 2040 fund. Just choose the fund with the year closest to the year you intend to retire. Its stock/bond allocation will be what the mutual fund company thinks is the appropriate mix for someone with that much time until retirement, and that allocation is automatically made more conservative over time. Target-date funds aren't perfect, but they get a lot of the big picture decisions right.</p> <p>If you prefer a more hands-on approach, you could do your own research and choose <a href="http://www.wisebread.com/why-warren-buffett-says-you-should-invest-in-index-funds?ref=internal" target="_blank">index funds</a> to build a portfolio that reflects your optimal asset allocation.</p> <p>Or, you could subscribe to an investment newsletter, some of which cost far less than the fees charged by financial planners. Investment newsletters usually offer a number of different strategies and then tell you what to invest in. You're still a do-it-yourself investor. You maintain your own account and make your own trades, but you follow the investing process outlined by the newsletter. (See also: <a href="http://www.wisebread.com/should-you-trust-your-money-with-these-4-popular-financial-robo-advisers?ref=seealso" target="_blank">Should You Trust Your Money With These 4 Popular Financial Robo-Advisers?</a>)</p> <h2>5. Understand the terrain ahead</h2> <p>One of the most important roles a financial adviser plays is seen during market downturns. That's when the best become therapists, speaking calm words of wisdom into the lives of frightened clients. You could serve the same role for yourself with a little understanding of how the market works.</p> <p>If you hear that the market turned in a great performance in a certain year, it's easy to make the mistake of assuming this wonderful result came about through a smooth, yearlong, upward ride. It doesn't usually work that way.</p> <p>Expecting some turbulence can help calm your fears and keep you from selling when the market gets wobbly. (See also: <a href="http://www.wisebread.com/want-your-investments-to-do-better-stop-watching-the-news?ref=seealso" target="_blank">Want Your Investments to Do Better? Stop Watching the News</a>)</p> <p>Taking all of the steps above will get you headed in the right direction. You have a plan. Now put your plan into action and stay with it. The longer you invest, the more confidence you'll gain and the more comfortable you'll become at being a do-it-yourself investor. (See also: <a href="http://www.wisebread.com/the-only-4-things-you-need-to-do-to-start-investing?ref=seealso" target="_blank">The Only 4 Things You Need to Do to Start Investing</a>)</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/matt-bell">Matt Bell</a> of <a href="http://www.wisebread.com/5-ways-to-invest-like-a-pro-no-financial-adviser-required">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-one-mediocre-investor-prospered-after-the-market-crash">How One Mediocre Investor Prospered After the Market Crash</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/are-we-headed-toward-a-bull-or-bear-market">Are We Headed Toward a Bull or Bear Market?</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-basics-of-asset-allocation">The Basics of Asset Allocation</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/learn-how-to-invest-with-these-5-stock-market-games">Learn How to Invest With These 5 Stock Market Games</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/make-smarter-investments-by-mastering-this-simple-ratio">Make Smarter Investments by Mastering This Simple Ratio</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment asset allocation diy investor Do It Yourself goals investment selection retirement planning stock market Mon, 17 Apr 2017 09:00:09 +0000 Matt Bell 1928275 at http://www.wisebread.com 5 Countries That Welcome American Retirees http://www.wisebread.com/5-countries-that-welcome-american-retirees <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-countries-that-welcome-american-retirees" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-517458088.jpg" alt="" title="" class="imagecache imagecache-250w" width="250" height="141" /></a> </div> </div> </div> <p>Retiring abroad can be a great way to secure a fun and affordable lifestyle for years to come. Of course, you'll need to plan out some important logistics if you think retiring overseas might be right for you. It helps that some countries have very welcoming policies for U.S. retirees who are looking to relocate.</p> <p>Some things to consider when choosing a location include residency requirements, taxes, property ownership laws, and health care options. You'll also want to choose a place that allows you to do the activities you're interested in and offers you the quality of life you're looking for. (See also: <a href="http://www.wisebread.com/retire-for-half-the-cost-in-these-5-countries?ref=seealso" target="_blank">Retire for Half the Cost in These 5 Countries</a>)</p> <p>Here are five excellent countries for Americans to retire in.</p> <h2>1. Mexico</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5169/iStock-505646374%20%281%29.jpg" width="605" height="342" alt="" /></p> <p>Mexico has many advantages going for it, which might explain why there are already a million U.S. citizens retired there. In fact, it has the largest established American expat community of anywhere in the world.</p> <p>Its proximity to the United States makes it easy to visit home. There's no shortage of direct flights to the U.S., and airfare is generally affordable. You can enter the country on a tourist visa that lasts for six months and then later apply for a temporary or permanent retiree visa. You will have to meet certain income or asset requirements to get one of these visas.</p> <p>Mexico offers a vibrant culture, sun-soaked beaches, scenic highlands, delicious cuisine, and beautiful colonial architecture that all contribute to an enjoyable retirement here. Depending on what kind of community and lifestyle you choose, Mexico's cost of living can be a fraction of that north of the border.</p> <p>While relocating to Mexico is the perfect opportunity to brush up on your Spanish skills, you should also know that there are many English speakers that can help make your transition as smooth as possible.</p> <h2>2. Cambodia</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5169/iStock-512732376.jpg" width="605" height="339" alt="" /></p> <p>If you're trying to get the most bang for your buck, you may want to look to Cambodia, which has the best cost of living for U.S. expats, according to InternationalLiving.com. You can find a rental apartment for as little as $250 a month and eat out at a restaurant for under $5.</p> <p>The weather is warm year-round and there is an abundance of cultural sites to visit, such as the temples of Angkor Wat located on the site of the ancient capital of the Khmer Empire.</p> <p>Some challenges might include learning the local language, although there is a significant expat community and many locals speak English as well.</p> <p>And while buying a condo above the ground floor is much easier for expats these days, thanks to a 2010 law, foreigners looking to buy land will encounter more restrictions. If you specifically want to buy property abroad you might be better off looking elsewhere.</p> <h2>3. Spain</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5169/iStock-511515106.jpg" width="605" height="343" alt="" /></p> <p>If you want a European lifestyle without the hefty price tag, Spain may be the perfect option for you. With the greenback doing well, European destinations are becoming more affordable for retirees with dollars. Rent is variable but you can find a place for as little as $500, and a dollar can often buy you a beer at a local bar.</p> <p>Spain offers a temperate Mediterranean climate in the winter, although summer can be hot, with temperatures rising to over 100 degrees Fahrenheit.</p> <p>To move to Spain permanently, you'll need a residence visa for retirees, which requires you have a certain level of income, among other things. (See related: <a href="http://www.wisebread.com/dont-let-these-expenses-spoil-your-retirement-abroad?ref=seealso" target="_blank">Don't Let These Expenses Spoil Your Retirement Abroad</a>)</p> <h2>4. Colombia</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5169/iStock-472552712.jpg" width="605" height="340" alt="" /></p> <p>Colombia is an attractive place for retirees for a few reasons, including the warm climate and affordable high-quality health care.</p> <p>Plus, there are many direct flights to and from the U.S. for reasonable fares. For instance, you can find a round-trip ticket from Medellín to the states for as little as $350, which is less than some domestic tickets can cost.</p> <p>Medellin has changed dramatically since it was dubbed the most dangerous city on earth in the early 1990s. The colonial town is now charming, with parks, museums, and plenty of other cultural activities to keep retirees busy and entertained.</p> <p>See also: <a href="http://www.wisebread.com/x-exciting-world-cities-you-can-afford-to-retire-in?ref=seealso" target="_blank">4 Exciting World Cities You Can Afford to Retire In</a></p> <h2>5. South Africa</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5169/iStock-477451698.jpg" width="605" height="343" alt="" /></p> <p>South Africa is a country of stunning beauty and diversity for retirees, with both an expansive coast and mountainous landscape offering many opportunities for outdoor recreation. The country's crown jewel is Cape Town, but Johannesburg is also a cosmopolitan city with many cultural offerings.</p> <p>Rural areas offer ample opportunities to see exotic wildlife and experience diverse ecosystems. The temperate weather is another great draw for people who are considering moving here.</p> <p>The cost of living is attractive, too. According to <a href="https://www.numbeo.com/cost-of-living/compare_countries_result.jsp?country1=United+States&amp;country2=South+Africa" target="_blank">Numbeo</a>, consumer prices are 44% lower in South Africa than in the United States and rent is nearly 50% less expensive, so your retirement funds will go much further here.</p> <p>While crime is still high in the country, if you stick to the right neighborhoods and take precautions, you can stay safer. English is the language used for business, politics and the media, so it's easy enough for Americans to get around.</p> <p>There are two visa options: a retired person's permit, available on both a temporary (four-year) and permanent basis; and an independent financial person's permit. The main qualifying criteria for both of these options is that the applicant is able to support themselves financially.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <p>&nbsp;</p> <p style="text-align: center;"><a href="//www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F5-countries-that-welcome-american-retirees&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F5%20Countries%20That%20Welcome%20American%20Retirees.jpg&amp;description=5%20Countries%20That%20Welcome%20American%20Retirees" data-pin-do="buttonPin" data-pin-config="above" data-pin-color="red" data-pin-height="28"><img src="//assets.pinterest.com/images/pidgets/pinit_fg_en_rect_red_28.png" alt="" /></a> </p> <!-- Please call pinit.js only once per page --><!-- Please call pinit.js only once per page --><script type="text/javascript" async defer src="//assets.pinterest.com/js/pinit.js"></script></p> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/5%20Countries%20That%20Welcome%20American%20Retirees.jpg" alt="5 Countries That Welcome American Retirees" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/nick-wharton">Nick Wharton</a> of <a href="http://www.wisebread.com/5-countries-that-welcome-american-retirees">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-keys-to-an-early-retirement">4 Keys to an Early Retirement</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-incredible-places-to-retire-abroad-that-anyone-can-afford">5 Incredible Places to Retire Abroad That Anyone Can Afford</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-amazing-cheap-places-to-live-as-an-expat">5 Amazing, Cheap Places to Live as an Expat</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/top-5-travel-reward-credit-cards">The Best Travel Reward Credit Cards</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-save-frequent-flyer-miles-that-are-about-to-expire">How to Save Frequent Flyer Miles That Are About to Expire</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Travel expat expatriate retirees retire overseas retirement community retirement fund retirement planning Wed, 08 Feb 2017 11:00:15 +0000 Nick Wharton 1877414 at http://www.wisebread.com 4 Reasons People Don't Retire Early — and How You Can http://www.wisebread.com/4-reasons-people-dont-retire-early-and-how-you-can <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/4-reasons-people-dont-retire-early-and-how-you-can" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-503452702.jpg" alt="Woman learning reasons people don&#039;t retire early" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Retirement is undeniably a time of drastic change in most people's lives. Typically, people have spent at least four decades in the workplace by the time they accept their gold watch. The average retirement age is 62 to 65, depending on where you live, according to a survey by SmartAsset.</p> <p>While work can provide routine and stability, as the years go by it can also grow to feel burdensome and stale. When to retire is a very personal question, linked to lifestyle and finances. Here are a few of the common reasons people feel they're not ready for retirement. (See also: <a href="http://www.wisebread.com/4-reasons-early-retirement-might-be-financially-risky?ref=seealso" target="_blank">4 Reasons Early Retirement Might be Financially Risky</a>)</p> <h2>Worried About Having Enough Money</h2> <p>It's probably not a surprise that monetary reasons are number one on this list. Having a regular paycheck affords a lot of comfort that can be hard to walk away from.</p> <p>One of the most common reasons most individuals won't consider an early retirement is fear that their savings will be insufficient to provide the lifestyle they've been used to in their working years.</p> <p>However, if you're serious about wanting to retire now, there are ways you can make your savings go further, such as <a href="http://www.wisebread.com/5-american-cities-where-you-can-retire-on-just-social-security?ref=internal" target="_blank">retiring in a cheaper state</a>, or even a foreign country where the cost of living is lower. Also, using the <a href="http://www.wisebread.com/how-to-save-an-extra-109486-a-year?ref=internal" target="_blank">right credit card can save you thousands</a> of dollars a year.</p> <p>Alternatively, the <a href="http://www.wisebread.com/can-you-really-make-a-living-in-the-gig-economy?ref=internal" target="_blank">gig economy</a> affords a lot of ways for people who are officially retired to earn disposable income. For instance, you could <a href="http://www.wisebread.com/this-is-how-you-rent-your-place-on-airbnb-and-succeed?ref=internal" target="_blank">rent out a room on a site like Airbnb</a> to help pad your savings. Just make sure you check out local laws in your area for any restrictions on short-term rentals.</p> <h2>Hesitant to Lose Identity Tied to Work</h2> <p>In the Western world, one of the first questions we ask when meeting someone new is, &quot;What do you do?&quot; The meaning, of course, is what do you do for work. This question is a way of situating someone socioeconomically, understanding their background and education, and gaining a window into their lives.</p> <p>Of course, identity goes beyond what you do for work, and this is an important shift to be conscious of when considering retirement. Many individuals may feel that they are giving up a part of themselves when they decide to stop working.</p> <p>However, there are many other meaningful activities outside of work that have an equally important bearing on identity. These may include hobbies such as artwork, exercise, reading, writing, or travel.</p> <p>While a loss of identity is a common fear for people facing retirement, in reality, retirement can give you the time to explore other creative outlets that you wouldn't have been able to partake in with a busy work schedule.</p> <p>Instead of viewing the end of work as losing part of your identity, try to shift to viewing this as a time to explore different components of who you are. This will make early retirement meaningful, not boring.</p> <h2>Anxious Due to No Concrete Retirement Plan</h2> <p>According to a 2015 survey by the Deloitte Center for Financial Services, only 49% of consumers have a formal retirement plan. The problem of not having a plan for retirement is that it leaves fears and emotions to govern your decisions, as opposed to concrete numbers. Plus, by putting a plan in place, you can see very clearly what steps you need to follow to reach a certain goal, like retiring in five years, for example. (See also: <a href="http://www.wisebread.com/7-retirement-planning-steps-late-starters-must-make?ref=seealso" target="_blank">7 Retirement Planning Steps for Late Starters</a>)</p> <h2>Afraid of Being Bored and Restless</h2> <p>Some people simply put off retirement because they are worried about being bored with all the extra time on their hands once they're not going to the office every day.</p> <p>However, retirement doesn't mean that you have to stop working entirely. Some individuals use this time to move from a decades-long career they've grown tired of to more fulfilling employment, or even their own business.</p> <p>If your new pursuit is something that gives you the chance to vary your work schedule, that can be very stimulating, too. Additionally, some universities offer free classes to those over 65 years of age.</p> <p>You can also take up countless hobbies like yoga, dance, snorkeling, scuba diving, golfing, hiking, or biking. To stimulate the mind, you can throw yourself into an artistic endeavor or learn a new language, the ideal activity for those who choose to retire overseas.</p> <p>Retirement is not just the end of one chapter, but also the beginning of a new one. Often, the biggest roadblocks to retiring are fear-based. It can help to re-evaluate the situation by looking at the facts, instead of just relying on emotions.</p> <p>Of course, the decision to retire is a personal one, and the right age to retire is different for everyone.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/amanda-gokee">Amanda Gokee</a> of <a href="http://www.wisebread.com/4-reasons-people-dont-retire-early-and-how-you-can">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/7-retirement-planning-steps-late-starters-must-make">7 Retirement Planning Steps Late Starters Must Make</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-keys-to-an-early-retirement">4 Keys to an Early Retirement</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/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/14-ways-to-retire-early">14 Ways to Retire Early</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/heres-how-your-taxes-will-change-when-you-retire">Here&#039;s How Your Taxes Will Change When You Retire</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401k early retirement IRA retirement planning saving Tue, 07 Feb 2017 10:30:37 +0000 Amanda Gokee 1885695 at http://www.wisebread.com 4 Keys to an Early Retirement http://www.wisebread.com/4-keys-to-an-early-retirement <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/4-keys-to-an-early-retirement" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-623601680.jpg" alt="here&#039;s how to retire sooner" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Does it seem like retirement can't come soon enough? Are you tired of feeling like you're wasting time at a job you no longer enjoy, daydreaming about the day you won't have to come in anymore?</p> <p>The good news is there are several steps that you can take if retiring early is your goal. Retiring early will mean setting clear priorities and goals that you can meet, but it doesn't have to be out of reach. Consider these four tips to get there faster. (See also: <a href="http://www.wisebread.com/14-ways-to-retire-early?ref=seealso" target="_blank">9 Things People Who Retire Early Do</a>)</p> <h2>1. Slash Costs Now</h2> <p>It's easy to go on autopilot with monthly costs, but they can add up fast, especially if you're spending more than you should. By switching providers for home or car insurance, Internet, phone, and cable TV, you could save thousands a year. In fact, do you even need cable TV? What about that gym membership &mdash; are you using it enough to justify the cost?</p> <p>Could you trim expenses even further by downsizing your home or getting by with one car? Leave no monthly cost unexamined.</p> <p>While you're at it, look at the fees you're paying on your investments. Because of compounding, <a href="http://www.wisebread.com/4-sneaky-investment-fees-to-watch-for?ref=internal" target="_blank">investment fees</a> that seem small can eat a big chunk out of your retirement savings over time.</p> <p>All of these cost savings won't be enough on their own to ensure your early retirement, but over the course of a few years they can add up and enable you to retire comfortably earlier than you may have thought. (See also: <a href="http://www.wisebread.com/14-ways-to-retire-early?ref=seealso" target="_blank">14 Things to Do to Retire Early</a>)</p> <h2>2. Look for Tax Advantages</h2> <p>When planning for retirement, it's important to consider the taxes you will have to pay once you stop working. While you can contribute now to 401K or regular IRA accounts using pretax income, you'll have to pay taxes on the distributions once you start to draw down the accounts.</p> <p>On the other hand, you contribute to a <a href="http://www.wisebread.com/7-surprising-facts-about-roth-iras" target="_blank">Roth IRA</a> with money that's already been taxed, but then it grows tax-free and you'll pay no taxes when you withdraw the money. Often it's good to have a combination of both types of retirement accounts. A financial adviser can help you decide. But keep in mind that withdrawing from either of these accounts before you hit age 59-1/2 usually incurs a tax penalty.</p> <p>Taxes on Social Security are another expense to keep in mind for when you hit official retirement age. Social Security benefits may be taxed at the federal level, depending on what your total income is. But the IRS won't tax more than 85% of your benefits. Thirteen states tax Social Security benefits, while other states have <a href="http://www.wisebread.com/7-states-with-the-lowest-taxes-for-retirees?ref=seealso" target="_blank">low or no taxes for retirees</a>.</p> <h2>3. Retire Abroad Full Time</h2> <p>Retiring early means figuring out a way to live on what you save during a shortened working career. You can lower your needs drastically by changing your country code.</p> <p>If you've been working and saving in U.S. dollars, you can make that money go much further in a <a href="http://www.wisebread.com/x-exciting-world-cities-you-can-afford-to-retire-in" target="_blank">country where the cost of living is lower</a> than in the United States. Many destinations in Central and South America, as well as many parts of Asia and even Europe, are much less expensive for Americans to retire to &mdash; and if you're looking for a warmer climate, you can find that too.</p> <p>Of course, there are some logistics that you should take into consideration when retiring abroad.</p> <h3>Taxes</h3> <p>The U.S. taxes citizens or resident aliens living abroad on worldwide income, including Social Security, other retirement income and any earnings you may get from working in your new country. However, you may be eligible for the <a href="https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion" target="_blank">Foreign Earned Income Exclusion</a>, which allows you to exclude foreign earnings &mdash; up to a certain amount &mdash; from your taxable income. The exclusion is adjusted annually for inflation. For 2017 it is $102,100.</p> <p>You may also be subject to income taxes in the country where you retire, though many countries have treaties with the U.S. that make sure you are not double taxed. You'll need to research local tax laws to make sure you're in compliance.</p> <h3>Logistics</h3> <p>There are a lot of logistics involved in moving to a foreign country. You'll need to research the appropriate visa for the country you'll be living in. Many desirable locations for Americans have special visas for retirees. Generally, you'll need to show you have a certain amount of retirement income and you will not be allowed to work for a local employer on these visas.</p> <p>Think too about whether you want to sell your home in the U.S. You may want to get rid of furniture and other belongings as well, though retirement havens such as Panama and Nicaragua allow you to import a certain amount of household goods duty-free.</p> <p>Banking is another consideration. Many expats continue to hold a U.S. bank account and to transfer money between it and an account in the country where they live. If you've got a U.S. account it's also a good idea to have a U.S. travel credit card that charges <a href="http://www.wisebread.com/smarter-security-and-no-foreign-transaction-fees-the-best-credit-cards-to-use-while-on-vacation?ref=internal" target="_blank">no foreign transaction fees</a>. A U.S. card can help you purchase from U.S. websites more easily and comes in handy during trips back home.</p> <h3>Health</h3> <p>In some countries, quality health care is so cheap that expats choose to pay out of pocket for treatment and medications. In other cases, you will need to research local health insurance options or make sure your U.S. insurance covers care abroad. Medicare is not available for health care outside of the U.S.</p> <p>Other expats can be a great resource as you try to find doctors that speak English and have a good reputation.</p> <p>The U.S. State Department has more <a href="https://travel.state.gov/content/passports/en/abroad/events-and-records/retirement-abroad.html" target="_blank">resources for planning to retire abroad</a>.</p> <h2>4. Move Abroad Part Time</h2> <p>You can also considerably lower your retirement expenses just by spending a portion of the year abroad, without the commitment of leaving the U.S. entirely.</p> <p>Different people choose to set up this arrangement differently. Some will return to the same place every year, while others may prefer to try out somewhere new.</p> <h3>Taxes</h3> <p>As with moving abroad full time, you will still be responsible for paying U.S. income taxes on worldwide income, and you may be subject to local taxes as well. Many tax breaks in the U.S. and abroad are dependent on how many days per year you spend in the foreign country, so you'll need to research those requirements.</p> <h3>Logistics</h3> <p>The most important consideration when you'll be spending your time in multiple locations is your accommodations. Will you rent your home while you're away? Will you hire a property manager to make sure that everything is running smoothly in your absence?</p> <p>Consider home or apartment exchanges if you are going to be overseas for a shorter period of time.</p> <h3>Health</h3> <p>For health insurance, you may want to consider purchasing travel insurance for the part of the year that you'll be out of the country to supplement your plan back home.</p> <p>Early retirement doesn't have to be an unattainable goal. Focus on setting your priorities and using creative thinking to be able to retire when you want.</p> <p>See also: <a href="http://www.wisebread.com/12-money-moves-to-make-the-moment-you-decide-to-retire?ref=seealso" target="_blank">12 Money Moves to Make the Moment You Decide to Retire</a></p> <h2 style="text-align: center;">Like this article? Pin it!&nbsp;</h2> <p>&nbsp;</p> <p style="text-align: center;"><a href="//www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F4-keys-to-an-early-retirement&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F4%20Keys%20to%20an%20Early%20Retirement.jpg&amp;description=4%20Keys%20to%20an%20Early%20Retirement" data-pin-do="buttonPin" data-pin-config="above" data-pin-color="red" data-pin-height="28"><img src="//assets.pinterest.com/images/pidgets/pinit_fg_en_rect_red_28.png" alt="" /></a> </p> <!-- Please call pinit.js only once per page --><!-- Please call pinit.js only once per page --><script type="text/javascript" async defer src="//assets.pinterest.com/js/pinit.js"></script></p> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/4%20Keys%20to%20an%20Early%20Retirement.jpg" alt="4 Keys to an Early Retirement" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/nick-wharton">Nick Wharton</a> of <a href="http://www.wisebread.com/4-keys-to-an-early-retirement">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-reasons-people-dont-retire-early-and-how-you-can">4 Reasons People Don&#039;t Retire Early — and How You Can</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-retirement-planning-steps-late-starters-must-make">7 Retirement Planning Steps Late Starters Must Make</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-incredible-places-to-retire-abroad-that-anyone-can-afford">5 Incredible Places to Retire Abroad That Anyone Can Afford</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/x-exciting-world-cities-you-can-afford-to-retire-in">4 Exciting World Cities You Can Afford to Retire In</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-things-your-financial-planner-isnt-telling-you-about-retirement">5 Things Your Financial Planner Isn&#039;t Telling You About Retirement</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Career and Income Retirement 401k early retirement expat living abroad retirement planning travel Fri, 03 Feb 2017 10:00:09 +0000 Nick Wharton 1884232 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/how-are-people-retiring-in-their-30s">How Are People Retiring in Their 30s?!</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/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/the-10-worst-states-for-retirees">The 10 Worst States for Retirees</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/these-5-expenses-will-probably-cost-you-a-lot-less-in-retirement">These 5 Expenses Will Probably Cost You a Lot Less in Retirement</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/half-of-americans-are-wrong-about-their-retirement-savings">Half of Americans Are Wrong About Their Retirement Savings</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> 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 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> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F7-retirement-planning-steps-late-starters-must-make&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F7%2520Retirement%2520Planning%2520Steps%2520Late%2520Starters%2520Must%2520Make.jpg&amp;description=7%20Retirement%20Planning%20Steps%20Late%20Starters%20Must%20Make"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/7%20Retirement%20Planning%20Steps%20Late%20Starters%20Must%20Make.jpg" alt="7 Retirement Planning Steps Late Starters Must Make" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/damian-davila">Damian Davila</a> of <a href="http://www.wisebread.com/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-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/4-reasons-people-dont-retire-early-and-how-you-can">4 Reasons People Don&#039;t Retire Early — and How You Can</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-reasons-why-a-roth-ira-may-be-better-than-your-401k">4 Reasons Why a Roth IRA May be Better Than Your 401(k)</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/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/heres-how-your-taxes-will-change-when-you-retire">Here&#039;s How Your Taxes Will Change When You Retire</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-keys-to-an-early-retirement">4 Keys to an Early Retirement</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 5 Online Tools to Manage Your Money in Under 10 Minutes a Week http://www.wisebread.com/5-online-tools-to-manage-your-money-in-under-10-minutes-a-week <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-online-tools-to-manage-your-money-in-under-10-minutes-a-week" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_working_computer_000075714973.jpg" alt="Woman managing her money in under 10 minutes a week" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Innovative personal finance tools are revolutionizing the way we manage and keep track of our money. Not only can they help teach us how to make smarter decisions, but they put us in charge of our money, making the arduous tasks of budgeting, saving, debt management, and investing a thing of the past. Best of all, most of us can manage our money in under 10 minutes a week using these tools.</p> <h2>1. Mint</h2> <p><img width="605" height="270" alt="" src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5171/Screen%20Shot%202016-01-26%20at%209.32.27%20PM.png" /></p> <p><a href="https://www.mint.com/">Mint</a> was one of the first online financial management tools, laying the foundation for some of the other players we see today. The free tool offers a terrific snapshot of your overall finances. From a single dashboard, account holders can link their bank, loan, and brokerage accounts and monitor balances and track purchases in real time. With its financial planning tools, you can establish a monthly budget and monitor your spending patterns. It will alert you as you near your budget threshold, to make you cognizant of overspending.</p> <p>Mint lets you benchmark financial goals, gives an overview of open accounts and lines of credit, and now there's <a href="https://credit.mint.com/">Mint Credit Monitoring</a> to help you manage your credit score. It constantly tallies your outstanding debts versus assets to display your real net worth, which is something most people tend to forget about. (See also: <a href="http://www.wisebread.com/8-cool-mint-tools-for-manaing-your-money?ref=seealso">8 Cool Mint Tools for Managing Your Money</a>)</p> <h2>2. Investments and Retirement Planning Tools</h2> <p>By now, you've probably heard of robo-advisor sites such as <a rel="nofollow" href="http://track.flexlinks.com/a.ashx?foid=1029882.978749&amp;fot=1073&amp;foc=1&amp;foc2=941565" target="_blank">FutureAdvisor</a>, <a href="http://wealthfront.evyy.net/c/27771/172939/3104?ref=qchavaia-1646115">WealthFront</a>, and <a href="https://www.learnvest.com/">LearnVest</a>. They're computerized wealth management systems that cater to everyday investors for a fraction of the cost of human advisors. The companies generally target Millennials, a market segment still on the pathway to wealth with fewer assets than required at large private wealth management companies. But investors of any age or net worth can benefit from their free or low-cost portfolio management options, and the hands-off approach means you can keep track of your investments in just minutes.</p> <h2>3. Personal Capital</h2> <p><img width="605" height="282" alt="" src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5171/Screen%20Shot%202016-01-26%20at%209.31.27%20PM.png" /></p> <p>Founded in 2009, by former Intuit CEO Bill Harris, <a target="_blank" rel="nofollow" href="http://track.flexlinks.com/a.ashx?foid=1029882.216060&amp;fot=9999&amp;foc=1&amp;foc2=582907">Personal Capital</a> lays claim to being the first digital wealth management platform. Like most robo-investing platforms, Personal Capital takes assessment of your financial situation and goals starting with a free consultation scheduled with a licensed advisor who recommends a customized investment plan. Those investors with at least $25,000 under management receive ongoing access to a team of financial advisors.</p> <h2>4. Betterment</h2> <p><img width="605" height="285" alt="" src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5171/Screen%20Shot%202016-01-26%20at%209.31.15%20PM.png" /></p> <p>In 2010, <a target="_blank" rel="nofollow" href="http://track.flexlinks.com/a.ashx?foid=1029882.1538720&amp;fot=1073&amp;foc=1">Betterment</a> entered the game as another major robo-advisor option. Betterment's financial framework offers similar tools to help you reach your financial goals, plan for retirement, invest, and track your savings and investing goals. Once your account is funded ($100 minimum deposit and a fraction of a percent fee based on your balance), investment moves are made on your behalf. The platform keeps track of your progress and makes recommendations along the way. Their current investment management fees range from .35% for a portfolio of $0&ndash;$10,000, .25% for $10,000&ndash;$100,000, and .15% for portfolios of $100,000 or more.&nbsp;</p> <h2>5. QuickBooks Online</h2> <p><img width="605" height="368" alt="" src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5171/Screen%20Shot%202016-01-26%20at%209.31.01%20PM.png" /></p> <p>QuickBooks has taken its accounting software solutions online. With all of the same features and more as the computer installed version, <a href="http://www.anrdoezrs.net/click-2822544-10700722-1443052367000?sid=qchavaia-1646115" target="_top">QuickBooks Online</a> is an affordable solution for business owners and the self-employed. With QuickBooks Online you can manage your money on the go and access your account from multiple devices.</p> <p>Some of the features include the ability to grant access to multiple users, including creating an account for your accountant or CPA. It automatically tracks expenses, generates on-click reports, writes checks that you can print from anywhere, creates invoices, and most of all, it automatically downloads and aggregates data from bank and credit card accounts. It then categorizes that information and reconciles, which you should do once a month and have to do at tax time. For me, this has always been an excruciating week-long process &mdash; but that's a thing of the past now, thanks to QuickBooks Online.</p> <p><em>What online tools do you use to make money management easier?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/qiana-chavaia">Qiana Chavaia</a> of <a href="http://www.wisebread.com/5-online-tools-to-manage-your-money-in-under-10-minutes-a-week">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-5"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-simple-financial-upgrades-you-can-make-during-breakfast">6 Simple Financial Upgrades You Can Make During Breakfast</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-financial-moves-you-can-make-during-your-commute">10 Financial Moves You Can Make During Your Commute</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-the-economic-crisis-challenges-our-financial-beliefs">How The Economic Crisis Challenges Our Financial Beliefs</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/book-review-cash-rich-retirement">Book review: Cash-Rich 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/financial-tricks-to-master-for-a-happier-life">Financial Tricks to Master for a Happier Life</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Organization investing money management retirement planning robo-advisors websites Fri, 29 Jan 2016 14:00:08 +0000 Qiana Chavaia 1646115 at http://www.wisebread.com Invest Your Time in These 13 Things While You're in Your 20s http://www.wisebread.com/invest-your-time-in-these-13-things-while-youre-in-your-20s <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/invest-your-time-in-these-13-things-while-youre-in-your-20s" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/asian_student_000017738107.jpg" alt="Asian student studying" title="" class="imagecache imagecache-250w" width="250" height="141" /></a> </div> </div> </div> <p>Our 20s fly by before we know it, and we want to make sure we did the decade justice. Did we worry about the right things? Are we where we should be now? The best way to prepare for those questions and answer them to the best of our abilities, is to make sure we spend time on what really matters and what may help us in the future. We took a look at a <a href="http://www.quora.com/How-should-a-24-year-old-invest-time-1">Quora thread</a> that had great advice for people in their 20s who may be wondering what some of the important things to invest time in may be, and here is what we found.</p> <p>RELATED: <a href="http://www.popsugar.com/smart-living/Things-Happy-People-Do-34870691">15 Things Incredibly Happy People Do</a></p> <h2>1. Network</h2> <p>If you form a solid mainstay of people, you are exposed to more opportunities and potential for success in both your career and in your personal life. Build bridges, because you never know when you might be looking to cross them. As <a href="http://www.quora.com/Karan-Jaiswani">Karan Jaiswani</a> put it, &quot;the 20s are all about utilizing your today and structuring your future.&quot;</p> <h2>2. Read &mdash; A Lot</h2> <p>There is nothing more productive than taking the time to read. Read whatever you can get your hands on &mdash; current news, nonfiction, fiction, career advice, self-help books &mdash; anything! The more you know and understand about people around you, yourself and the world, the more easily and successfully you can navigate those very things.</p> <p>&quot;This will keep your mind stimulated and open to ideas. You will get a number of ideas for each author that you can implement in your life. You will also get opinions from across the globe,&quot; <a href="http://www.quora.com/Rizwan-Aseem">Rizwan Aseem</a> says.</p> <h2>3. Take Care of Your Body</h2> <p>Making time at night to wash your face, exercise, and remembering to apply (and reapply) sunscreen may not be on the top of your priority list, but it should be. General health care is something that, later in life, you will be glad you considered in your 20s. As <a href="http://www.quora.com/Rizwan-Aseem">Aseem</a> points out, &quot;No matter what you do in your life, you will do it in your body. You cannot replace it, get a new one, or trade it in. This is your body and you will live in it.&quot;</p> <h2>4. Use Your Time and Money on Education</h2> <p>Education is an invaluable resource that you are unlikely to ever regret having. Money is well spent when it is used to broaden your mind and pool of knowledge, especially when honing skills to be applied to your career path. <a href="http://www.quora.com/Anuj-Kumar-1">Anuj Kumar</a> advises you to &quot;try different things and find out where your passion lies&hellip; and then find ways to make a career doing that, adding that &quot;if you need further education, get it.&quot;</p> <h2>5. Pay Attention to Your Mental Health and Wellbeing</h2> <p>While your physical health is extremely important, investing time into taking care of your mind should not be forgotten. Stimulate it, challenge it, be conscious of what you're exposing it to daily, and take care of yourself. <a href="http://www.quora.com/Rizwan-Aseem">Aseem</a> makes the point that, &quot;The mind, like anything else, has the characteristics of a muscle. You use it, or lose it. And as long as you are using it, it will remain fit and healthy. The minutes you stop using it, it will decay and rust.&quot; So use it!</p> <h2>6. Learn New Skills (and Master Them)</h2> <p>While the advice to &quot;follow your passion&quot; can be good in the general sense, <a href="http://www.quora.com/John-J-Bowman-Jr">John. J. Bowman</a> urges those in their 20s to master and control a set of skills that can be used to benefit you within the field you are passionate about.</p> <h2>7. Create and Maintain Good Habits</h2> <p>The hardest part of creating good habits is getting started, but once you are able to master them, they will have an undeniably positive impact on your day-to-day as well as your future, because, as <a href="http://www.quora.com/Rizwan-Aseem">Rizwan</a> notes, &quot;once a habit is established it lasts for a life time.&quot;</p> <h2>8. Build Meaningful Relationships</h2> <p>Now is the time to drop the fair-weather friends and make time only for those who are really going to stick around and be positive forces in your life. As you mature, so should your relationships, so you don't have time to waste on people who will be harmful rather than helpful in your pursuit of your future goals.</p> <h2>9. Eat Well</h2> <p>Spend time planning meals, learning healthy recipes, and overall taking what you're eating into consideration regularly. Gone are the days when donuts, chips, and sodas can pass as a full day's meal. Even it if takes a little more time and effort, your future self will thank you when you find yourself maintaining your energy and healthy body as you age.</p> <h2>10. Establish a System for Handling Finances</h2> <p>Sit down and figure out how you are spending money, what you are spending it on, and what your ongoing expenses are. &quot;If you take care of your finances starting today they will take care of you when you most need them. When you are old, or sick, or sending your kids to school, or helping a parent through sickness. Your finances will help you,&quot; <a href="http://www.quora.com/Rizwan-Aseem">Aseem</a> says. Big pitfalls to avoid: bad business opportunities (if it seems to good to be true &mdash; it is), overuse of credit cards, and choosing not to save or put money aside for a rainy day.</p> <h2>11. Travel</h2> <p>In your 20s, you're full of enthusiasm and energy and usually have the mobility to indulge a bit of wanderlust. So indulge it. Experience new cultures, countries, and challenges. You will learn things that you can take with you and apply to your life back at home.</p> <h2>12. Communicate With Loved Ones</h2> <p>Make an effort to remember birthdays, holidays, and important events. Your family and close friends can act as your support system when you need it, but you should put the time in and return the favor. Small gestures that show you are thinking about the people who love you go a long way, so take the extra five minutes to write a nice card and stick it in the mail, or schedule that quick Skype call &mdash; you won't regret it.</p> <h2>13. Examine What You Really Want in Life</h2> <p>It's easy to get caught up in the everything going on throughout your 20s, and people often forget to actually sit down and contemplate what it is they really want. <a href="http://www.quora.com/Tonya-Turpin">Tonya Turpin</a>&nbsp;advised that you &quot;actively, and with intent, become aware of the world and everything it holds. Not just about the outside world, but also the one in your head. Spend time alone because it is the only true way to get to know yourself. Be curious and question everything.&quot; Make the time to figure out what you love, and map out a plan of how to get it.</p> <div class="field field-type-text field-field-blog-teaser"> <div class="field-items"> <div class="field-item odd"> When we&#039;re in our 20s we feel possibility ahead of us as nearly infinite. Grasp it by laying the foundation of your future when you&#039;re young, smart, and full of health. </div> </div> </div> <div class="field field-type-text field-field-guestpost-blurb"> <div class="field-label">Guest Post Blurb:&nbsp;</div> <div class="field-items"> <div class="field-item odd"> <p style="text-align:center;"><a style="border:none;" href="http://www.savvysugar.com"><img style="height:95px; width:300px" src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u921/POPSUGARrgb.jpg" alt="" /></a></p> <p><em>This is a guest contribution from our friends at </em><a href="http://www.savvysugar.com/"><em>POPSUGAR Smart Living</em></a><em>. Check out more useful articles from this partner:</em></p> <ul> <li><a href="http://www.popsugar.com/smart-living/Uses-Old-Books-23418154#photo-23418154">21 Uses For Old Books</a></li> <li><a href="http://www.popsugar.com/smart-living/Inspirational-Quotes-36634903#photo-36634903">46 Quotes From Reddit That Will Change Your Life For the Better</a></li> <li><a href="http://www.popsugar.com/smart-living/How-Shorten-Cleaning-Time-22498197">The Lazy Girl's Guide to a Clean Home</a></li> </ul> </div> </div> </div> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/popsugar-smart-living">POPSUGAR Smart Living</a> of <a href="http://www.wisebread.com/invest-your-time-in-these-13-things-while-youre-in-your-20s">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-6"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-reasons-alone-time-is-good-for-your-soul">9 Reasons Alone Time Is Good For Your Soul</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/16-ways-you-are-causing-road-rage">16 Ways You Are Causing Road Rage</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/financial-tricks-to-master-for-a-happier-life">Financial Tricks to Master for a Happier Life</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/will-that-thing-really-change-your-life">Will That Thing Really Change Your Life?</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/25-ways-to-feel-better-fast">25 Ways to Feel Better Fast</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> General Tips Lifestyle Personal Development 20s career retirement planning Fri, 27 Mar 2015 09:00:07 +0000 POPSUGAR Smart Living 1302679 at http://www.wisebread.com 4 Ways to Boost Your 401(k) Returns http://www.wisebread.com/4-ways-to-boost-your-401k-returns <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/4-ways-to-boost-your-401k-returns" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/businessmen-meeting-handshake-200402197-001-small.jpg" alt="businessmen meeting handshake" title="businessmen meeting handshake" class="imagecache imagecache-250w" width="250" height="141" /></a> </div> </div> </div> <p>Employer-sponsored 401(k) plans are powerful retirement vehicles. Beyond empowering you to take the first (and perhaps most important) step toward retirement savings, 401(k) contributions are also made using pre-tax income, meaning they can reduce your current income tax obligation, too. (See also: <a href="http://www.wisebread.com/if-you-want-your-401k-to-grow-stop-doing-these-6-things?ref=seealso">If You Want Your 401(k) to Grow, Stop Doing These 6 Things</a>)</p> <p>But the benefits of 401(k) plans don't end there &mdash; consider these additional ways to power charge your plan for maximum returns.</p> <h2>1. Get a Full Company Match</h2> <p>The most attractive benefit of 401(k)s is that most corporations match some percentage of your contributions, up to 6% of your salary. Let's say you earn $50,000 per year, and your company matches 100% of your contributions, up to 6% of your salary. That's a $3,000 per year match &mdash; or in other words, it's $3,000 in free money. Of course, not all companies offer such generous matches, but consider contributing as much as your company will match in order to maximize this source of free retirement money.</p> <h2>2. Choose Low-Fee Funds</h2> <p>The fees you pay on your investments can seriously erode your earnings. The SEC notes that even a 1% annual fee paid on a $100,000 portfolio will cost you $28,000 over 20 years. Yikes! That's why keeping your fees low &mdash; by choosing passively managed index funds or ETFs, where possible &mdash; is so important. Not only do you get to keep more of your money, but you also get to enjoy the extra growth on that money, thanks to the effect of compounding. All 401(k) plan offerings are required to disclose their fees; aim to select offerings with fees below 1%.</p> <p>Actively managed mutual funds often have the highest fees, so check the fine print.</p> <h2>3. Diversify</h2> <p>401(k) plans offer hassle-free strategic investing, including the ability to diversify your investments in order to help reduce risk. Often, a major investment firm like TD Ameritrade, Vanguard, or T.Rowe Price manages the plan and has worked with your employer to offer a variety of options which enable you to diversify your investments. But it's up to you to make use of them.</p> <p>If you don't feel comfortable creating your own diversified set of selections, consider choosing a broad index fund or Target-Date Fund. The latter selects investments based on your expected retirement date, automatically adjusting for risk and return profiles over time. This enables you to capture many of the benefits of diversification, without actively selecting several funds.</p> <h2>4. Rollover 401(k) Plans When You Change Employers</h2> <p>Most of us change jobs (and even careers) throughout our lives, but frequent job-switching shouldn't prevent you from participating in a 401(k). And if and when you leave a job, you can rollover your plan's assets into your new company's 401(k). If you're moving to a role that doesn't offer a 401(k) (such as a small company, or self-employment), avoid paying huge early withdrawal fees by rolling over to an IRA within 60-days of cashing out.</p> <p>If you're considering job offers, take into account a company's benefits package. It is one of the most important things to consider next to compensation. Seek an employer that offers a 401(k), and preferably one that offers matched contributions. Without a strong retirement plan, you're likely just extending the number of years you'll need to work, so proceed accordingly.</p> <p><em>What are you doing to supercharge your 401(k)?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/qiana-chavaia">Qiana Chavaia</a> of <a href="http://www.wisebread.com/4-ways-to-boost-your-401k-returns">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-7"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-ways-to-keep-your-retirement-funds-from-disappearing">7 Ways to Keep Your Retirement Funds From Disappearing</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/half-of-americans-are-wrong-about-their-retirement-savings">Half of Americans Are Wrong About Their Retirement Savings</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/choosing-a-retirement-account-whats-available-and-what-s-best-for-you">Choosing a Retirement Account: What&#039;s Available, and What’s Best for You?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-simple-ways-to-boost-an-underperforming-401k">5 Simple Ways to Boost an Underperforming 401(k)</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/this-is-why-you-cant-postpone-planning-for-your-retirement-and-how-to-start">This Is Why You Can&#039;t Postpone Planning for Your Retirement (And How to Start)</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401(k) investing retirement planning Thu, 04 Dec 2014 15:00:21 +0000 Qiana Chavaia 1263266 at http://www.wisebread.com The Five Types of People Who Never Retire (Are You One of Them?) http://www.wisebread.com/the-five-types-of-people-who-never-retire-are-you-one-of-them <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/the-five-types-of-people-who-never-retire-are-you-one-of-them" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/man-busy-office-166114539-small.jpg" alt="man busy office" title="man busy office" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p style="margin-left: 40px;">&quot;I actually think the whole concept of retirement is a bit stupid, so yes, I do want to do something else. There is this strange thing that just because chronologically on a Friday night you have reached a certain age&hellip; with all that experience, how can it be that on a Monday morning, you are useless?&quot; &mdash; Stuart Rose</p> <p>What springs to mind when you think about retirement? I wistfully think about sleeping in, and not using a time clock (which I despise). But for other people, the word &quot;retirement&quot; causes shudders. (See also: <a href="http://www.wisebread.com/will-you-ever-be-able-to-retire?ref=seealso">Will You Ever Be Able to Retire?</a>)</p> <p>Consider these five categories of people who will never retire. Are you among them?</p> <h2>1. The Broke Non-Retiree</h2> <p>Personally, I find this the most unsettling scenario. Whether due to poor financial planning or heavier-than-anticipated financial needs, more and more older workers continue to find themselves in the labor pool. According to the Center for Public Affairs Research, a 2013 survey revealed that a startling 47% now <a href="http://www.apnorc.org/PDFs/Working%20Longer/NORC-AP-NORC-Working-longer.pdf">plan to retire at a later age</a> than they expected when they were 40. The survey also found that 39% of workers age 50 and older report having $100,000 or less saved for retirement, not including pensions or homes; 24% have less than 10,000.</p> <p>Maybe it's time to take stock of your financial future by <a href="http://moneyover55.about.com/od/preretirementplanning/a/estimate_expenses_in_retirement.htm">estimating your retirement expenses</a>.</p> <h2>2. The Workaholic</h2> <p>There is a difference between the person who enjoys work, and does so with enthusiasm, and the person whose life is out of balance and cannot stop working. Perhaps you have run across some of these in your work, too. As the Wall Street Journal explains, workaholics have<a href="http://online.wsj.com/articles/for-some-retirement-brings-grief-1414886644?mod=e2tw"> difficulty transitioning from work to retirement life</a>, because so much of their identity, social network, and purpose is tied to their career. They can feel adrift in retirement without the structure work provides.</p> <p>When working is almost an addiction, it can be devastating to face retirement. One of my former co-workers springs to mind. Although qualified to retire for years, she fought it tooth and nail, taking work home and working weekends. Even when finally convinced by management that it was time for her to step down, she would find excuses to drop by the office, or call people to have lunch. If you recognize yourself in this description, there is help available. Consider support groups, such as <a href="http://www.workaholics-anonymous.org/page.php?page=home">Workaholics Anonymous</a>, which aim to help workaholics develop coping skills and the ability to relax during downtime.</p> <h2>3. The Successful Investor</h2> <p>You may know some people in this category. They bought rentals, years ago, and now are landlords. Or perhaps they bought silver or gold, or learned how to effectively invest in the stock market. There is a common thread here: They got moving, educated themselves, and by their 50s, were enjoying a leisurely lifestyle. But that doesn't mean they want to (or can) stop. Many keep at it, repairing their rentals, or checking their investments every day. They've made being a successful investor their life's work, and they have no need to &quot;retire&quot; from it.</p> <h2>4. The Life Re-Inventor</h2> <p>Starting a new career later in life can be an invigorating way to re-invent yourself. My friend Nancy, a former school art teacher, began working with the mentally ill, eventually started teaching classes, and is now co-authoring a book about art therapy. She finds it tremendously rewarding and has learned a lot of new things. Her husband, an engineer, always wanted to be a teacher, so he started volunteering at a school. He was so successful at tutoring, he was shortly offered a paying position.</p> <p>For my friends, the career switch was fairly easy. However, you certainly wouldn't want to quit your present job and jump into something new without doing some research and soul-searching. Will your new career help fulfill life ambitions? Will it offer a large enough paycheck to make the switch and time investment worthwhile? (See also: <a href="http://www.wisebread.com/6-ways-to-avoid-running-out-of-money-in-retirement?ref=seealso">6 Ways to Avoid Running Out of Money in Retirement</a>)</p> <h2>5. The Mega-Successful Lifers</h2> <p>Consider the lives of the truly, astoundingly successful. For a mega-successful CEO or famous actor, the demand for their talents are so high, that there's less incentive to quit working. According to a study by Merrill Lynch and Age Wave, the <a href="http://nbr.com/2014/07/22/millionaires-never-retire/">desire to keep working</a> until the last day is common to over 60% of the wealthy. But you don't have to be filthy rich or famous for this to be true of you, too. Evidence also suggests that many people who are successful in more realistic endeavors &mdash; such as artists, small business owners or physicians &mdash; also feel the incentive to continue using their talents until the very last day. Will you?</p> <p><em>What are your retirement plans? Do you see yourself in one of these categories? Please share in comments!</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/marla-walters">Marla Walters</a> of <a href="http://www.wisebread.com/the-five-types-of-people-who-never-retire-are-you-one-of-them">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-8"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/book-review-cash-rich-retirement">Book review: Cash-Rich 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/book-review-retire-on-less-than-you-think">Book review: Retire on Less Than You Think</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-retirement-planning-steps-late-starters-must-make">7 Retirement Planning Steps Late Starters Must Make</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-ways-to-avoid-running-out-of-money-in-retirement">6 Ways to Avoid Running Out of Money in Retirement</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-keys-to-an-early-retirement">4 Keys to an Early Retirement</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement retire retirement planning Wed, 26 Nov 2014 16:30:17 +0000 Marla Walters 1260444 at http://www.wisebread.com 7 Ways to Keep Your Retirement Funds From Disappearing http://www.wisebread.com/7-ways-to-keep-your-retirement-funds-from-disappearing <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/7-ways-to-keep-your-retirement-funds-from-disappearing" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/mature-couple-finances-488124131-small.jpg" alt="mature couple finances" title="mature couple finances" class="imagecache imagecache-250w" width="250" height="124" /></a> </div> </div> </div> <p>More than one-third of Americans have <a href="http://www.cbsnews.com/news/shocking-number-of-americans-have-no-retirement-savings/">no retirement savings</a>.</p> <p>This shocking figure should provide a wake up call and set you on your course to better prepare for retirement. Even if you haven't started yet, it's never too late. (See also: <a href="http://www.wisebread.com/this-is-the-basic-intro-to-having-a-retirement-fund-that-everyone-needs-to-read?ref=seealso">This Is the Basic Intro to Having a Retirement Fund That Everyone Needs to Read</a>).</p> <p>No matter the size of your retirement account, here are seven effective strategies to help you keep your retirement account from disappearing.</p> <h2>1. Borrow as Little as Possible From a Retirement Fund</h2> <p>Sometimes finding good financing options can be difficult. That's when you may start eyeing your 401(k) for a loan. While you may think that it is easy to pay those funds back, statistics show that's not the case. Every year Americans default on about <a href="http://money.cnn.com/2012/07/17/retirement/401k-loan-defaults/">$37 billion in 401(k) loans</a>.</p> <p>If you are unable to pay back your 401(k) loan within five years, you're hit with a double whammy:</p> <ul> <li>The unpaid balance becomes an early withdrawal from your 401(k), receives a 10% early distribution tax penalty from the IRS, and becomes taxable income as well.<br /> &nbsp;</li> <li>You cannot make up for those contributions to your retirement account. Every year you have a contribution limit, and if you don't use it, you lose it!</li> </ul> <p>There are very, very few instances in which you should borrow from your retirement fund. One of those few instances is when you need a down payment for a home purchase. (See also: <a href="http://www.wisebread.com/this-is-when-you-should-borrow-from-your-retirement-account?ref=seealso">This Is When You Should Borrow From Your Retirement Account</a>)</p> <h2>2. Set Up an Emergency Fund</h2> <p>26% of Americans have <a href="http://blogs.wsj.com/numbers/one-in-four-americans-has-no-emergency-savings-1467/">no emergency savings</a>.</p> <p>This is a major reason retirement disappears. You need to plan ahead and have enough saved up to cover your income for at least six months. In 2014, only 40% of Americans are able to save enough to cover at least three months. Don't become part of that statistic and start saving today towards a rainy day.</p> <p>Having an emergency fund does away with the need to tap your retirement accounts. Your nest egg should be your very last resort for money before retirement. However, don't just stop with maintaining an emergency fund: Create a detailed plan of action for when disaster strikes. (See also: <a href="http://www.wisebread.com/emergency-plan-better-than-an-emergency-fund?ref=seealso">Emergency Plan: Better Than an Emergency Fund</a>)</p> <h2>3. Avoid Early Withdrawal Penalties</h2> <p>In 2010, penalized 401(k) withdrawals hit a <a href="http://business.time.com/2013/01/23/cash-leaking-out-of-401k-plans-at-alarming-rate/">record high of almost $60 billion</a>. Taking early withdrawals (also known as distributions) puts a heavy toll on your nest egg. Not only are you responsible for the applicable income taxes, but also you have to pay the 10% additional early distribution tax.</p> <p>Fortunately, the IRS does provide some <a href="http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics&mdash;-Tax-on-Early-Distributions">exceptions to the 10% additional tax on early distributions</a>. For example, you can withdraw early without penalty:</p> <ul> <li>From eligible IRA, SEP, Simple IRA, and SARSEP plans for qualifying higher education expenses for your spouse or immediate family members;<br /> &nbsp;</li> <li>From eligible retirement plans, including 401(k) plans, for unreimbursed medical expenses exceeding 10% of your income; and<br /> &nbsp;</li> <li>Up to $10,000 from eligible traditional IRA plans for <a href="http://money.usnews.com/money/blogs/my-money/2013/10/28/using-your-ira-for-a-downpayment">first-time home purchases or substantial home improvements</a>.</li> </ul> <p>While there exceptions to the 10% additional tax, there are no exceptions to applicable income taxes, including capital gains. Consult your financial advisor before attempting any early withdrawals from your retirement accounts.</p> <h2>4. Minimize Management Fees</h2> <p>Talking about retirement plan managers, you need to check how much you are paying in plan management fees. According to an <a href="http://assets.aarp.org/rgcenter/econ/401k-fees-awareness-11.pdf">AARP study on 401(k) participants</a>, about three in five Americans are unaware of how much they are paying in fees for their retirement accounts, and almost one in three is unsure of the impact of fees in their retirement savings.</p> <p>A good rule of thumb is that your total expense ratio should be no more than 1%. For example, if you have $30,000 in retirement savings, your total management expense should be no more than $300. If you're getting charged more than that, it is time to dump that plan and look for more reasonable alternatives.</p> <p>If you have several retirement accounts from previous employers, evaluate if it makes sense to roll over all those balances into your retirement account with the smallest management fees. Before initiating the rollover, review all applicable fees and eligibility rules.</p> <h2>5. Stop Playing the Market</h2> <p>When you hear about &quot;a hot stock tip,&quot; you should walk away. Like Benjamin Franklin said, the only sure things in life are death and taxes. Nearly half of 401(k) plan owners don't know what their <a href="http://money.msn.com/investing/why-workers-are-botching-their-401k-investments">best investment options</a> are.</p> <p>There are several problems with playing the market on your own.</p> <ul> <li>Most retirement plans charge fees for every transaction that you make. Remember that you want to <em>minimize </em>fees.<br /> &nbsp;</li> <li>Trying to juggle your day job and the stock market may cause a lot of unneeded stress.<br /> &nbsp;</li> <li>The average actively managed mutual fund returns <a href="http://www.fool.com/School/MutualFunds/Performance/Record.htm">approximately 2% less per year than the stock market</a>. And these are the pros that do it for a living!</li> </ul> <p>Keep in mind at all times that getting to your retirement goal isn't a sprint; it's a marathon.</p> <h2>6. Participate in Employer-Sponsored Plans</h2> <p>If you have the option of signing up for an employer-sponsored retirement program, do it. Nine in 10 Americans participating in <a href="http://www.ebri.org/publications/ib/index.cfm?fa=ibDisp&amp;content_id=5362">employer-sponsored retirement plans</a> actually save for retirement. Trying to save on your own is much harder and requires a lot of self-discipline. This is why only two in 10 Americans are able to have a nest egg without an employer-sponsored plan.</p> <p>There are two additional benefits to participating in employer-sponsored plans. First, some of them match your contributions. The <a href="http://www.americanbenefitscouncil.org/documents2013/401k_stats.pdf">average employer match is 4.5% of pay</a> to a retirement account. Don't leave free money on the table. Second, <a href="http://www.shrm.org/research/surveyfindings/articles/documents/13-0245%202013_empbenefits_fnl.pdf">more than half of companies offer some type of investment advice</a>. This is valuable and free information to make more informed decisions about your retirement strategy.</p> <h2>7. Consider Annuities</h2> <p>Why?</p> <ul> <li>Some types of annuities guarantee a steady stream of income.<br /> &nbsp;</li> <li>Like retirement plans, annuities allow you to defer taxes until retirement.<br /> &nbsp;</li> <li>Unlike retirement plans, annuities have no contribution limits.<br /> &nbsp;</li> <li>Some annuities offer upside income potential, while guaranteeing your original investment or a minimum return on your investment to your beneficiaries in case of your death.<br /> &nbsp;</li> <li>Annuities allow older individuals to make additional catchup contributions.</li> </ul> <p>There are different types of annuities, so make sure to review and understand the applicable rules, such as required initial investments and applicable fees. Talk with your financial advisor about whether or not annuities make sense with your retirement planning strategy. (See also: <a href="http://www.wisebread.com/dont-know-what-annuities-are-you-might-be-missing-out?ref=seealso">Don't Know What Annuities Are? You Might Be Missing Out</a>)</p> <p><em>What are other useful strategies to avoid a disappearing retirement? Please share in comments below!</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/damian-davila">Damian Davila</a> of <a href="http://www.wisebread.com/7-ways-to-keep-your-retirement-funds-from-disappearing">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-9"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-ways-to-boost-your-401k-returns">4 Ways to Boost Your 401(k) Returns</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/half-of-americans-are-wrong-about-their-retirement-savings">Half of Americans Are Wrong About Their Retirement Savings</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/choosing-a-retirement-account-whats-available-and-what-s-best-for-you">Choosing a Retirement Account: What&#039;s Available, and What’s Best for You?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-simple-ways-to-boost-an-underperforming-401k">5 Simple Ways to Boost an Underperforming 401(k)</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/this-is-why-you-cant-postpone-planning-for-your-retirement-and-how-to-start">This Is Why You Can&#039;t Postpone Planning for Your Retirement (And How to Start)</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement 401(k) annuity investing retirement planning Mon, 20 Oct 2014 13:00:06 +0000 Damian Davila 1237800 at http://www.wisebread.com 6 Thoughts Everyone Has Their First Day of Retirement http://www.wisebread.com/6-thoughts-everyone-has-their-first-day-of-retirement <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-thoughts-everyone-has-their-first-day-of-retirement" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/retirement-thinking-177547670-small.jpg" alt="man thinking" title="man thinking" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>It's a major milestone in anyone's life: retirement. You spend so many hours dreaming about just what you'll do with the time, that when it happens, you often aren't prepared for the reality of it. Retirement isn't always the answer to the unfulfilled life that many expect it to be, however, and some even struggle with the new way of life. (See also: <a href="http://www.wisebread.com/12-things-you-didnt-know-about-retirement?ref=seealso">12 Things You Don't Know About Retirement</a>)</p> <p>Getting a handle on the new feelings can take time. Here are a few of the initial reactions to the new season, along with some tips for keeping everything in perspective.</p> <h2>1. What Will I Do With All the Time?</h2> <p>Going from a full-time career to no job at all can be a jarring experience, one that can even feel like a loss to some. In addition, &quot;Many new retirees are concerned about how they will fill up their new found free time after retiring,&quot; says Hank Coleman, publisher of the popular site, <a href="http://moneyqanda.com/">Money Q&amp;A</a>. &quot;It can be beneficial for new retirees to take retirement for a test drive. You may want to consider a mini-retirement for a few months before you take the plunge full-time. Maybe you have a hobby or a side business that you want to pursue. Use some of your vacation days before retiring to try out what you'll be doing when you finally cut the work cord for good.&quot;</p> <h2>2. How Can I Stay On Track With My Nest Egg?</h2> <p>Outliving your retirement savings is a legitimate concern for many, and it's one that shouldn't be overlooked. Even if you've done the math and are confident that you can make your savings last, it's best to continue using a budget and assess your progress at least every six months. Check in with your accounts at the end of each year, and see how tax changes, new Medicare laws, or other legislation could positively or negatively affect your monthly living expenses. Make adjustments as needed.</p> <h2>3. Should I Stay or Should I Go?</h2> <p>If your retirement plans included getting away, or possibly even moving, it may be tempting to do so right away. Like any expensive or life-changing decision, however, it's always good to go into it informed. And while plenty of websites are always stating their opinions on the top locations to retire, the logistics of uprooting your home in your retirement years can be stressful. Things to consider &mdash; in addition to cost of living or climate &mdash; should include proximity to the family that may care for you in your older years. (See also: <a href="http://www.wisebread.com/5-incredible-places-to-retire-abroad-that-anyone-can-afford?ref=seealso">5 Incredible Places to Retire Abroad That Anyone Can Afford</a>)</p> <h2>4. Who Am I Now?</h2> <p>If you took pride in your career, or simply identified with your occupation for so long that you don't have a world outside of it, it may be tempting to consider yourself as &quot;just a retiree.&quot; It's not necessary to consider yourself so closely tied to your profession &mdash; or lack of. Start to take inventory of your gifts, skills, and character traits outside of your 9-to-5; you may be surprised to find that you can have an identity built on the kind of person you are, despite having just considered yourself the sum of our working years.</p> <h2>5. How Will This Affect My Relationships?</h2> <p>&quot;When a man retires, his wife gets twice the husband but only half the income.&quot; &mdash; Chi Chi Rodriguez&quot;</p> <p>This vintage joke never gets old, and it couldn't be truer. One of the toughest adjustments to retirement happens when couples find they instantly have more hours in their day to spend together. For the entrepreneur or couple who works with their significant other already, it's not as dramatic as the office worker who now gets to see their partner for an additional 50 or 60 hours a week. Don't feel that you have to spend it all together, however; many couples find that having separate hobbies well into their retirement is the key to a happy rest of their lives together.</p> <h2>6. Is This It?</h2> <p>Retirement should be celebrated, but for many, it also gets them thinking about death. The final years of life &mdash; whether they be just a few, or more than 30 &mdash; can be met with anxiety and uncertainty. (See also: <a href="http://www.wisebread.com/dont-let-poor-health-kill-your-retirement-fund?ref=seealso">Don't Let Poor Health Kill Your Retirement Fund</a>)</p> <p>One way to combat the tensions and worry that some new retirees face is to made a proactive plan toward preventative health care and finding hobbies that can prolong life. Activities around exercise, healthy foods, or relieving stress can be enjoyable well into old age, and they are just the sort of things that can help make the later years vibrant, too. Look for other retirees to share these experiences with; signing up for a seniors cooking class, for example, can give life skills for meeting upcoming health challenges and can introduce you to new faces to spend those work-free days with.</p> <p><em>Are you retired? What did you think on your first days of retirement?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/linsey-knerl">Linsey Knerl</a> of <a href="http://www.wisebread.com/6-thoughts-everyone-has-their-first-day-of-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-19"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-much-should-you-have-saved-for-retirement-by-30-40-50">How Much Should You Have Saved for Retirement by 30? 40? 50?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-things-people-who-retire-early-do">9 Things People Who Retire Early Do</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-five-types-of-people-who-never-retire-are-you-one-of-them">The Five Types of People Who Never Retire (Are You One of Them?)</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-retirement-planning-steps-late-starters-must-make">7 Retirement Planning Steps Late Starters Must Make</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-ways-to-avoid-running-out-of-money-in-retirement">6 Ways to Avoid Running Out of Money in Retirement</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement retirement planning retiring where to retire Wed, 08 Oct 2014 13:00:04 +0000 Linsey Knerl 1227988 at http://www.wisebread.com The Only 4 Things You Need to Do to Start Investing http://www.wisebread.com/the-only-4-things-you-need-to-do-to-start-investing <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/the-only-4-things-you-need-to-do-to-start-investing" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/cash-466310089.jpg" alt="stacks of coins" title="stacks of coins" class="imagecache imagecache-250w" width="250" height="141" /></a> </div> </div> </div> <p>Do you want to get rich through investing one day? Do you think it's even possible? Well, it is. And the best part about investing is that it's simple.</p> <p>It's not a get-rich-quick scheme, and it's also not rocket science.</p> <p>I'm going to show you four simple and actionable steps you can take. After reading this article, you'll be able to just follow the directions and start investing right away. Really, there are just four steps.</p> <p>Let's begin.</p> <h2>1. Choose an Investment Company</h2> <p>Before you can invest, you need to choose an investment company to invest with. There are tons of options out there, including Fidelity, Schwab, and T. Rowe Price. But I'm going to recommend the company that I think is the best. And that company is Vanguard.</p> <p>Why are they the best? Because the company is owned by its investors, which means that the company's interests are aligned with those of their clients.</p> <p>One specific way they show this alignment is by sharing their profits with their investors, using the profits to lower the fund fees for them (fund fees are expenses you pay no matter where you invest). So the benefit to you as a client is that you get to invest in funds that are some of the lowest cost in the industry. (See also: <a href="http://www.wisebread.com/a-guide-to-online-brokers-for-investing-newbies-and-beyond?ref=seealso">Online Brokers for Newbies</a>)</p> <h2>2. Open an Account</h2> <p>Now that you have a company to invest with, you need to <a href="https://personal.vanguard.com/us/openaccount?CompLocation=Home&amp;Component=OpenAccntLnk">open an account</a>. Here, you have a few options.</p> <p>If you meet the <a href="http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Amount-of-Roth-IRA-Contributions-That-You-Can-Make-for-2014">income requirements</a>, you can open a Roth IRA, which is a retirement account that comes with some unique tax benefits. You can also open a traditional IRA or general savings account.</p> <p>To open an account, all you need is to enter some basic personal information, and it only takes about 10 minutes. If you want to speak to someone and have them walk you through the process, the bigger brokerages such as Vanguard have efficient customer service departments.</p> <h2>3. Pick an Investment</h2> <p>After you've opened an account, the next step is to choose your investment. And just as there are many investment companies to choose from, there are many types of investments to choose from as well.</p> <p>But again, I'm going to recommend what I think is the best option for most beginning investors. And that is a <a href="https://investor.vanguard.com/mutual-funds/target-retirement/#/">Target Retirement Fund</a>.</p> <p>Why? Because they follow all the rules of effective investing. The details behind these rules are beyond the scope of this article, but they include:</p> <ul> <li> <p>choosing an asset allocation,</p> </li> <li> <p>diversification,</p> </li> <li> <p>regular rebalancing; and</p> </li> <li> <p>low cost.</p> </li> </ul> <p>All you need to do is choose the fund with the year closest to the time you expect to retire. For instance, if you're 32 years old and expect to retire in about 31 years, you'd choose the Target Retirement 2045 Fund.</p> <h2>4. Invest Regularly and Often</h2> <p>Lastly, after you've chosen your investment, you need to add money to it. And the sooner you start, the more you'll have later. (See also: <a href="http://www.wisebread.com/dollar-cost-averaging-my-path-to-becoming-a-not-so-nervous-investor?ref=seealso">Dollar-Cost Averaging Is One Path to Confident Investing</a>)</p> <p>For instance, let's say you start at age 35 and invest $5,000 every year for 30 years. If your investments grow 8% each year, by the time you're age 65 you'll have just under $612,000.</p> <p>That's not bad. But check this out.</p> <p>Let's say you start 10 years earlier &mdash; at age 25 &mdash; and invest $5,000 every year for just 20 years &ndash; 10 years less than our example above. And again, let's say your investments grow 8% each year. Even though you stopped adding money at age 45, by the time you're 65 you'll have over a million dollars.</p> <p>In other words, by starting just 10 years earlier, you can invest $50,000 less, and still end up with over $540,000 more than the person who started later.</p> <p>So the key to getting rich is investing as much as you can, as early as you can, and as often as you can. And to make this easy for you, you can set up your account to have money automatically invested from your checking account. That way, you make money regularly, without any effort on your part.</p> <p>Check out <a href="http://www.bankrate.com/calculators/savings/compound-savings-calculator-tool.aspx">this calculator</a>, where you can play with different numbers to see just how much money you can end up with.</p> <p>Now you know the simple steps to begin investing. Get started now, and you'll be making money in no time.</p> <p><em>Have you set up a basic investment account with one of the big brokerages like Vanguard? Share your experience in comments!</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/darren-wu">Darren Wu</a> of <a href="http://www.wisebread.com/the-only-4-things-you-need-to-do-to-start-investing">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-10"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-ways-to-invest-like-a-pro-no-financial-adviser-required">5 Ways to Invest Like a Pro — No Financial Adviser Required</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-ways-to-avoid-running-out-of-money-in-retirement">6 Ways to Avoid Running Out of Money in Retirement</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/invest-your-time-in-these-13-things-while-youre-in-your-20s">Invest Your Time in These 13 Things While You&#039;re in Your 20s</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-essential-truths-for-a-successful-retirement">7 Essential Truths for a Successful 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/the-real-value-of-forever-stamps">The Real Value of Forever Stamps</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> General Tips Investment investment accounts mutual fund investing retirement planning simple investing Tue, 06 May 2014 08:24:19 +0000 Darren Wu 1137943 at http://www.wisebread.com Just Saving Isn't Enough: How Cash Flow Allocation Helps You Retire http://www.wisebread.com/just-saving-isnt-enough-how-cash-flow-allocation-helps-you-retire <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/just-saving-isnt-enough-how-cash-flow-allocation-helps-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/cash-417690-small.jpg" alt="cash" title="cash" class="imagecache imagecache-250w" width="250" height="144" /></a> </div> </div> </div> <p>You&#39;ve probably heard the term &quot;asset allocation&quot; in discussions about retirement accounts and investing strategies. It&#39;s an important concept to understand and apply to your own finances. But don&#39;t be intimidated by the term or the complex definitions &mdash; the principle is a fairly simple one. (See also: <a href="http://www.wisebread.com/the-basics-of-asset-allocation">The Basics of Asset Allocation</a>)</p> <p>At its heart, asset allocation is about reducing your risk by not putting all your eggs in one basket. And that&#39;s achieved by diversifying &mdash; or spreading out &mdash; the number and types of your investments.</p> <h2>Define &quot;Assets,&quot; Please</h2> <p>OK, but what assets are we talking about, and what&#39;s the &quot;cash flow&quot; connection?</p> <p>The assets typically associated with asset allocation are stocks, bonds, and cash equivalents such as money market funds. These are the ones commonly included in professionally managed mutual fund retirement accounts like a 401(k) or 403(b). So the thinking is, if you effectively diversify within and across each of these three asset categories, you will reduce your investment risk and achieve a balance that matches your risk tolerance.</p> <p>And you will&hellip;at least among those assets.</p> <p>But do these three assets alone make for a comprehensive retirement strategy? Nope.</p> <p>For one thing, there are many other types of assets besides stocks, bonds, and cash that can &mdash; and should &mdash; contribute to your retirement plan. Which ones? Here&#39;s where the cash flow connection comes in. (See also: <a href="http://www.wisebread.com/boost-your-retirement-savings-fast-with-this-6-step-plan">6-Step Plan to Boost Your Retirement Savings Fast</a>)</p> <h2>Will Your Assets Pay the Bills?</h2> <p>If you think about it, your mutual fund retirement account will generate only one income stream during your retirement. From a cash flow perspective this stock/bond/money market mix essentially represents only one egg. And as we now know, relying on only one source &mdash; in this case only one cash flow source &mdash; is a risky strategy. Better to allocate across multiple sources.</p> <p>To see this more clearly let&#39;s step back and look at the bigger picture. A good place to start is with a definition of your ultimate retirement goal. The goal for most is financial independence, and that&#39;s measured by monthly income or cash flow. You will need enough non-salary monthly cash flow to pay your living expenses in retirement. The more &mdash; and the more diverse &mdash; your sources of cash flow, the more secure will be your retirement. (See also: <a href="http://www.wisebread.com/7-essential-truths-for-a-successful-retirement">7 Truths for a Successful Retirement</a>)</p> <p>Your 401(k), 403(b), IRA, or mutual fund retirement account portfolio of stocks, bonds, and cash equivalents gives you a good start. After you stop working you can use these assets to generate monthly cash flow in a number of ways:</p> <ul> <li>You can convert it to an annuity that pays you monthly for life.<br /> &nbsp;</li> <li>You can convert it to a savings account or CD and draw down a certain percentage of the account balance on a regular basis until it&#39;s exhausted.<br /> &nbsp;</li> <li>Or, if your cash flow needs are mostly met by other assets, you can keep the principal intact and just draw from the stock dividends and bond interest income.</li> </ul> <h2>Other Cash Flow Generating Assets</h2> <p>What other assets generate cash flow?</p> <p><strong>Company Pension</strong></p> <p>This usually takes the form of a monthly payment for life, but in some cases companies offer the option of a single lump sum payout. Your &quot;lump sum to cash&quot; conversion options are similar to those listed above for a traditional retirement account.</p> <p><strong>Rental Income From Real Estate</strong></p> <p>Unlike a company pension, you own this asset and can sell it at any time for a lump sum amount. But if it provides a steady stream of positive cash flow, you might want to keep it &mdash; for it&#39;s that rare asset that appreciates in value AND whose monthly income (from rents) can also grow to keep pace with inflation. (See also: <a href="http://www.wisebread.com/should-you-become-a-landlord-instead-of-selling-your-home">Should You Become a Landlord?</a>)</p> <p><strong>Business Income</strong></p> <p>Owning a rental property is essentially like owning a business. So owning all or part of a business provides similar options: sell your stake for a lump sum or retain an ownership interest that can provide a regular income stream (plus the added bonus of possible tax advantages).</p> <p><strong>Social Security</strong></p> <p>Like a company pension, you don&#39;t own this asset; your only choice is a guaranteed lifetime stream of monthly cash flow.</p> <h2>Plan Ahead to Create Multiple Cash Flow Streams</h2> <p>Some of these cash flow sources might not be available to you. Traditional company pensions, for example, are becoming a thing of the past. But all of the others are under your control, and it&#39;s not too late to include some in your retirement plans.</p> <p><strong>Seven Streams Into Our House</strong></p> <p>Our household&#39;s retirement goal, for example, is to include seven cash flow sources. My wife and I were fortunate enough to work for employers who offered traditional defined benefit pension programs. They will represent those sources of monthly income. We also have a 401(k) and IRA retirement account portfolio (#3), positive cash flow from a rental property (#4), two future Social Security payments (#s 5 and 6), and a business (#7). &nbsp;</p> <p>Looking ahead, I&#39;d also like to buy or share in the ownership of another rental property, which would raise our number to eight. So our goal, like yours, should be flexible and open to change. The important part is to set a goal &mdash; set your cash flow number &mdash; so you can start making plans to achieve it.</p> <p>And remember &mdash; as you move ahead with your plans that having multiple cash flow-generating assets is preferable to relying on only one or two, because it diversifies or lessens your risk. You can more easily absorb the loss of one out of seven sources of retirement income than the loss of one out of two. So seek opportunities to earn or acquire multiple sources of positive cash flow.</p> <p>Yes, practice asset allocation; but also practice cash flow allocation.</p> <p><em>Have you considered cash flow allocation in your retirement planning? Will you?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/keith-whelan">Keith Whelan</a> of <a href="http://www.wisebread.com/just-saving-isnt-enough-how-cash-flow-allocation-helps-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-5"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-one-third-of-americans-havent-saved-for-retirement">Why One-Third of Americans Haven&#039;t Saved for 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/5-ways-to-invest-like-a-pro-no-financial-adviser-required">5 Ways to Invest Like a Pro — No Financial Adviser Required</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-retirement-planning-steps-late-starters-must-make">7 Retirement Planning Steps Late Starters Must Make</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-five-types-of-people-who-never-retire-are-you-one-of-them">The Five Types of People Who Never Retire (Are You One of Them?)</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/dont-know-what-annuities-are-you-might-be-missing-out">Don&#039;t Know What Annuities Are? You Might Be Missing Out</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement asset allocation cash flow retirement retirement planning Tue, 22 Oct 2013 09:36:03 +0000 Keith Whelan 1028389 at http://www.wisebread.com Canada and U.S. Retirement Showdown: Which Offers More for Retirees? http://www.wisebread.com/canada-and-us-retirement-showdown-which-offers-more-for-retirees <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/canada-and-us-retirement-showdown-which-offers-more-for-retirees" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/4397782529_2a9bafc1fb_z.jpg" alt="painted faces" title="painted faces" class="imagecache imagecache-250w" width="250" height="141" /></a> </div> </div> </div> <p>Let&rsquo;s just say this &mdash; in all-out ground war between Canada and the U.S., Canada just can&rsquo;t compete. After all, Canada&rsquo;s defended by a few notoriously out-of-date military aircraft, and for some time, the country&rsquo;s largest fleet of submarines was making a tour around a pirate ship in a shopping mall.</p> <p>Of course, aside from a hard-fought game between the Boston Bruins and the Vancouver Canucks, there isn&rsquo;t much animosity between the two countries. After all, we have a lot in common. We share an official language, we have access to the same media and, in many cases, we share a lot of the same values. And here&rsquo;s another thing we have in common &mdash; in January 2012, LIMRA, an association of insurance companies, released <a href="http://insurancenewsnet.com/article.aspx?id=370016&amp;type=exclusiveinn#.UTe5nhyc5FY" target="_blank">a survey of pre-retirees in both countries</a> and found that about half in each said they weren&rsquo;t confident they could maintain their desired lifestyle during retirement. It&rsquo;s an interesting statistic because planning for retirement is quite different in the U.S. as compared to Canada.</p> <p>So, in the spirit of friendly cross border competition, I decided to put Canada and the U.S. head-to-head. Which country is best for retirees? Let&rsquo;s take a look at a few key factors. (See also:&nbsp;<a href="http://www.wisebread.com/choosing-a-retirement-account-whats-available-and-what-s-best-for-you">Choosing a Retirement Account:&nbsp;What's Available, and What's Best for You?</a>)</p> <h2>Retirement Plans</h2> <p>Let's start with the biggie. Which nation offers its residents the better retirement planning options?</p> <p><strong>The U.S.</strong></p> <p>In the U.S., people can opt to save for retirement using a number of different vehicles, including the Traditional IRA, Roth IRA, SEP IRA, SIMPLE IRA, a qualified plan (including the 401(k) and profit-sharing plans), the 403(b) or some combination of these plans (<em>whew!</em>).</p> <p>Of course, not all of these programs are available to everyone &mdash; and many aren&rsquo;t suitable for everyone:</p> <ul> <li>With a Traditional IRA, you get a tax deduction for your contributions but are taxed when you withdraw the funds in retirement.</li> <li>With a <a href="http://www.wisebread.com/7-surprising-facts-about-roth-iras">Roth IRA</a> there&rsquo;s no tax deduction, but qualified withdrawals are tax-free.</li> <li>Employer-sponsored plans like 401(k)s and 403(b)s offer all sorts of other options.</li> </ul> <p>In a word, finding the right retirement plan &mdash; and following the rules &mdash; is notoriously complicated in the U.S. On the other hand, the number of choices available makes it easier for people to find just the right fit for their financial situation.</p> <p><strong>Canada</strong></p> <p>Besides the few remaining employer sponsored retirement plans, Canadians rely on the one, the only retirement saving tool available to them &mdash; the Registered Retirement Savings Plan (RRSP).</p> <p>In a nutshell, this plan allows working Canadians to contribute 18% of their earned income up to a maximum of $23,820 in 2013, and to deduct that contribution from their taxable income. The money isn&rsquo;t taxed until it is withdrawn during retirement. And compared to U.S. plans, RRSPs are subject to few rules and restrictions. It&rsquo;s basically a type of investment account, so people can invest in whatever they like and park that money in whatever bank they choose. As long as they stay within the contribution limits and avoid making early withdrawals, they won&rsquo;t run into any fees or red tape.</p> <p><strong>The Verdict: </strong>The U.S. is known as the land of opportunity and when it comes to retirement plans, it&rsquo;s got just about every option anyone could need. The problem is that with all the different plans and all their various rules about contributions, withdrawals and &quot;qualified distributions,&quot; things can get more than a little confusing. And all of this can serve to deter people from doing what really matters &mdash; saving their money.</p> <p>The RRSP is simple and the tax deduction encourages Canadians to save. I&rsquo;m going to give Canada the point on this one.</p> <h2>Government Sponsored Retirement Programs</h2> <p>In both nations, private retirement accounts are back-stopped by government support. Which is tops?</p> <p><strong>The U.S.</strong></p> <p>There are two government sponsored retirement programs in the U.S.: Supplemental Security Income (SSI) and Federal Old Age, Survivor and Disability Insurance (OASDI). The former provides benefit payments for very low income or disabled individuals. The latter, known as Social Security, has people contribute when they're employed and then provides retirement benefits later in life. In 2012, the maximum OASDI benefit is $2,513 per month at full retirement age, which is 67 as of 2012. During their careers, employees contribute 6.2% of their earnings to Social Security, a number that&rsquo;s matched by employers.</p> <p><strong>Canada</strong></p> <p>In Canada, the government sponsored retirement model has three pillars:</p> <ul> <li>Old Age Security (OAS), which provides a flat benefit to all qualifying Canadians but includes a clawback formula depending on retirement income.</li> <li>The Guaranteed Income Supplement (GIS), which provides additional benefits for low income retirees.</li> <li>The Canada Pension Plan (CPP) (or QPP in Quebec), which, like Social Security, provides benefits to Canadians based on their employment contributions.</li> </ul> <p>The big difference is the maximum benefit. For Canadians, CPP tops out at $987 per month at full retirement age, which is 65 years. OAS adds up to another $540 per month. In other words, most Canadians stand to get <em>a lot</em> less from the government when they retire. To be fair, Canadians also contribute less &mdash; 4.9% of earned income, which is also matched by their employer.</p> <p><strong>The Verdict:</strong> It&rsquo;s hard to argue that getting more money from the government is a sweet deal, but that money has to come from somewhere. That&rsquo;s part of the reason why Social Security may be unsustainable by 2033, <a href="http://www.cbo.gov/publication/43649" target="_blank">according to the Congressional Budget Office</a>, while (at least so far) <a href="http://www.cbc.ca/news/business/taxseason/story/2012/12/21/f-rrsp-2013-cpp-portfolio.html" target="_blank">CPP is well-funded</a> and sound enough to be around for future generations of Canadians.</p> <p>Who wins out on this one? It&rsquo;s a toss-up. Government-sponsored income is what keeps many people afloat, but although many people in Canada complain that the CPP doesn&rsquo;t go far enough, a higher payout comes at a cost. Plus, although in theory the low CPP payout should encourage Canadians to max out their RRSPs, many don&rsquo;t.</p> <h2>Health Care</h2> <p>Canada, with its government-funded health care system, would seem to be the clear winner here. Is it?</p> <p><strong>The U.S.</strong></p> <p>If there&rsquo;s one huge difference between retiring in Canada compared to retiring in the U.S.,and it&rsquo;s health care, says Dale Walters, a Certified Financial Planner and author of &quot;<a href="http://www.self-counsel.com/default/taxation-of-canadians-in-america.html" target="_blank">Taxation of Canadians in America</a>.&quot;</p> <p>&quot;Medicare, as a government-subsidized plan, is similar to the provincial health care in Canada, but there&rsquo;s a large portion that comes out of the retirees&rsquo; own pockets. So Americans have those ever-increasing health care costs to deal with,&quot; Walters said.</p> <p>A 2012 <a href="http://www.eurekalert.org/pub_releases/2012-09/ssm-hch090412.php">report</a> by the &quot;Journal of General Internal Medicine&quot; found that 75% of Americans who were eligible for Medicare paid at least $10,000 per year out of pocket for health care expenses, and that health care costs put seniors under major strain.</p> <p><strong>Canada</strong></p> <p>In Canada, basic health care is mostly funded by the federal government and the provinces. So, for the most part, visiting the doctor and being treating in hospital comes free of charge. And while additional costs such as prescription drugs and other medical supplies and products may have to be purchased by retirees or are only covered on a limited basis, you&rsquo;d be hard pressed to run up a five-figure health care bill in Canada, no matter how sick you got.</p> <p><strong>The Verdict:</strong> Whether the cost of health care is a real issue for a retiree in the U.S. depends on personal circumstances, but it&rsquo;s hard to deny that these costs can be dangerously high for some American seniors. That puts Canada on top here. But there&rsquo;s one big exception. If you need a hip replacement, an MRI or even just a trip to the emergency room, in Canada, <a href="http://www.nber.org/bah/fall07/w13429.html">you&rsquo;ll probably be in for a wait</a> &mdash; often a long one.</p> <h2>Taxes</h2> <p>Because retirees in both countries are earning less than in their working years, tax burden is relatively low. Where is it lower?</p> <p><strong>The U.S.</strong></p> <p>At a glance, the tax rates for Canada and the U.S. appear to be similar, but Walters says the marginal tax rate in the U.S. puts a smaller burden on those in the <a href="http://www.wisebread.com/tax-brackets-explained">highest income brackets</a> and provides more opportunity for tax breaks. The result? Significantly lower taxes.</p> <p>&quot;In the U.S., there is a big difference between gross income and taxable income. In Canada, those are pretty close together. That can mean paying about 30% less tax in the U.S. compared to Canada,&quot; Walters said.</p> <p><strong>Canada</strong></p> <p>Canadians hit the highest tax bracket (29%) at just over $130,000 in income, compared to nearly $400,000 to hit the maximum 35% tax rate in the U.S. For Canadians, that means higher taxes during their working years and, because of the relative lack of deductions, possibly in retirement as well. According to a 2012 <a href="http://www.cbsnews.com/8301-505144_162-57474364/canadas-favorite-tax-haven-the-u.s.a/">report</a> by CBS, Canada also tends to have higher sales tax. That&rsquo;s why the U.S. is increasingly being touted as a tax haven for Canadian retirees!</p> <p><strong>The Verdict:</strong> Canadians pay more taxes, which can make it harder to save for retirement and pay for what they need once they get there. In a straight comparison, the U.S. comes out on top here. I&rsquo;ll leave it to others to argue about who gets more for their money.</p> <h2>Cost of Living</h2> <p>It won't matter how much you've socked away for retirement if the stuff you need to buy costs too much.</p> <p>A bigger market means lower prices. So, thanks to a population that&rsquo;s nearly 10 times that of its neighbor to the north, the U.S. enjoys lower prices on just about everything. According to <a href="http://www.numbeo.com/cost-of-living/compare_countries_result.jsp?country1=Canada&amp;country2=United+States" target="_blank">Numbeo.com</a>, consumer prices are more than 16% lower in the United States than in Canada. And, of course, as a result of the recent crash in the real estate market, buying a home in a retirement-friendly Southern state is cheaper than ever.</p> <p><strong>The Verdict:</strong> The cost of living in the U.S. is considerably lower than it is in Canada. For American retirees, (and Canadian snowbirds) this is a good thing. The U.S. definitely scores a point over Canada here.</p> <h2>Climate</h2> <p>If there&rsquo;s one last thing that matters to a lot of retirees, it&rsquo;s climate. Unless you&rsquo;re one of the hardy few who love the icy winter wind that seems to be inescapable in most Canadian cities, the U.S. has Canada beat hands down on this one. According to Herschel Gavsie, an immigration attorney at Greenspoon Marder in Miami, this has lead to an increase in the number of &quot;endvestors,&quot; a term used to describe the growing ranks of real estate investors who&rsquo;ve been snapping up properties in the U.S., especially in warm, coastal states like Florida.</p> <p><strong>The Verdict: </strong>Many people envision living out their final days on a warm, sunny beach; just try finding one of those in Canada. Point for the U.S.</p> <p><strong>And the Winner Is...</strong></p> <p>This is hardly a scientific analysis, but I&rsquo;m going to give the win to Canada for one simple reason. According to Walters, Canadians tend to have more retirement savings and better financial knowledge than their aging American peers. Why is that a win? Because whether you&rsquo;re retiring in the United States or the Great White North, both systems have the resources to help you <a href="http://www.wisebread.com/6-ways-to-avoid-running-out-of-money-in-retirement">pave the way for a comfortable retirement</a>. The key is to learn about the programs and benefits available where you live and work to use them to your advantage.</p> <p>Oh, and if you feel like you&rsquo;re getting the short end of the stick, you can always take a hike to the closest border crossing. But be forewarned. You know what they say about the color of the grass on the other side of the fence.</p> <p><em>What do you think? Is the U.S. or Canada a better place for retirees? Share your insight and experience in comments!</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tara-struyk">Tara Struyk</a> of <a href="http://www.wisebread.com/canada-and-us-retirement-showdown-which-offers-more-for-retirees">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-11"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/choosing-a-retirement-account-whats-available-and-what-s-best-for-you">Choosing a Retirement Account: What&#039;s Available, and What’s Best for You?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-ways-travel-in-retirement-keeps-you-young">6 Ways Travel in Retirement Keeps You Young</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-five-types-of-people-who-never-retire-are-you-one-of-them">The Five Types of People Who Never Retire (Are You One of Them?)</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-retirement-planning-steps-late-starters-must-make">7 Retirement Planning Steps Late Starters Must Make</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-ways-to-avoid-running-out-of-money-in-retirement">6 Ways to Avoid Running Out of Money in Retirement</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement Canada health care IRAs retirement planning Fri, 15 Mar 2013 11:24:37 +0000 Tara Struyk 969768 at http://www.wisebread.com