Archive for the ‘Retirement’ Category
Tuesday, April 30th, 2013
Tuesday, January 29th, 2013
According to the article titled “You’re never too young for retirement planning”, written by Ed Arnold and published in the Washington Business Journal, no matter what the economy is like, it is important for everyone to start to plan for his/her retirement early. “The high cost of health care later in life is one of the single biggest busters of retirement savings, and even though many retirees save enough to afford living expenses through retirement, a long-term unexpected illness can wipe away years of savings in just a few months.” The potential and likely high cost of health care later in life is one significant reason it is extremely important to start to plan for your retirement as early as possible. A recent insurance offering, that some insurers offer, are policies that transition from disability insurance to long-term care insurance upon retirement.
Retirement may be here before you know it, so start planning, and saving, for your retirement as soon as you can!
Monday, April 30th, 2012
According to the article titled “Plan ahead for three stages of retirement”, written by Jill Schlesinger and published in the Washington Beacon, retirement is not one event. Instead, retirement should be viewed in the following three stages or phases:
- Phase 1 (65 years of age to 72 years of age) – family, friends, and familiarity:
- During early retirement, many are content with either staying in their own homes or downsizing within their current communities. This is where their family and friends are and they are familiar with their surroundings. This is also the phase where the most travel occurs, while always returning to their familiar home.
- Phase 2 (72 years of age to 85 years of age) – engagement, activity, and accessibility:
- Many people during this phase will move to a retirement community or location where there “are activities geared toward retirees”. In fact, AARP’s “10 Affordable Cities for Retirement” is a great resource for this phase.
- Phase 3 (86 years of age plus) – companionship, care, and convenience:
- While energy levels may not be quite as high during this phase that they are during the other phases, many people still want companionship and the availability of social activities during this phase. This may mean assisted living facilities or the like, but remember each phase will depend on the individual’s wants and needs.
Tuesday, April 24th, 2012
Michelle Singletary’s article titled “The numbers don’t add up? How to fix errors in your Social Security benefits”, published in The Washington Post, explains how to go about fixing your Social Security benefits in your Social Security statements. In April 2011, the Social Security Administration stopped mailing annual statements to all individuals for budget reasons. However, for fiscal 2012, the Social Security Administration will resume mailing annual Social Security statements, but to individuals who are 60 years and older. For everyone else, the Social Security Administration is going to be looking into sending them online statements. Regardless, one may be able to estimate his/her Social Security benefits at www.ssa.gov and searching for “Retirement Estimator.”
Everyone should look at his/her Social Security statements. If you find any errors, you should contact the Social Security Administration. “One of the reasons your record could be incorrect is that you got married or divorced and changed your name but never reported the change to Social Security.” If you discover income errors, you will need to provide proof of income to the Social Security Administration. Such proof may be W-2s, old tax returns, or pay stubs.
Monday, March 26th, 2012
The article titled “How to Make Your Retirement Plan Work Harder”, written by Brett Arends and published in The Wall Street Journal, provides individuals with tips on making their retirement plans work harder for them. That’s what we all want to hear, right?! Individuals with 401(k)s should follow the five steps below:
1. Take control.
- Look and see what all of your available investment choices are through your 401(k). It is extremely important to know what options are available for you and which are best for you.
2. Cut your costs.
- “Many 401(k) plan providers stock their plans with high-fee mutual funds.” A fund that charges you an extra 1% a year may not be worth it as it may end up costing you most of your tax benefits.
3. Lighten up on U.S. stocks.
- “U.S. equities start 2012 looking relatively expensive.” Lighten up U.S. stocks in your 401(k) as they seem to be mediocre, at best.
4. Look internationally.
- If your 401(k) plan offers international options, it may be worthwhile to take advantage of such offers. For example, “Western European markets fell nearly 30% from last year’s peak.”
5. Review your bond funds.
- “As a general rule, your 401(k) and other tax shelters are where to hold the bond portion of your portfolio. That’s because bonds are much more vulnerable to taxes than stocks.”
Monday, March 19th, 2012
According to The Wall Street Journal’s article titled “How to Catch Up With Retirement Savings”, written by Tom Lauricella, [i]t may not be easy for late starters to catch up on retirement savings, but it’s not a lost cause.” Everyone must not lose sight of the end goal and the reality of such goal: to have as much money as possible upon retirement. The higher the risk, the potential for higher return, but such strategy may not be worth it considering that one is trying to catch up. “Instead, the most effective way to build a retirement cushion after a late start is a combination of being aggressive about saving money, putting off retirement and taking Social Security as late as possible.” Being disciplined about budgeting and saving is extremely important; every penny counts. Additionally, by putting off Social Security, one has “more time to save, more time for those savings to grow, and fewer years of retirement to cover with savings.”
To read the article in its entirety, which provides numerical examples, please click here.
Tuesday, March 6th, 2012
The article titled “Don’t Let Grown Kids Ruin Your Future”, written by Ruthie Ackerman and published in The Wall Street Journal, provides parents with tips with their futures with regard to their grown children. Because of the current economy, many grown children are moving back in with their parents and/or relying on their parents for financial support. “The crux of the matter: The kids are out of work, out of money, and maxed out. But so are Mom and Dad, who have seen their own retirement nest eggs cracked, their retirement incomes shrunk, and even the value of their nests—the family home—fall.” Nevertheless, parents are financially supporting their grown children.
Financial advisors stress that parents should not jeopardize their own futures for the benefit of their grown children. Tips that parents should follow, who find themselves in this position, are the following:
1. Don’t write a blank check.
- Make sure that your bills are paid before paying for your grown children’s bills.
2. Set limits.
- Tell your children what you do/not feel comfortable paying for and when you will cease all support.
3. Be the grown-up.
- Be honest with your children and explain to them that you are jeopardizing your savings.
4. Reassess your goals.
- Develop a new plan to get yourself back on your financial and savings track.
5. Insist they grow up.
- Hold your children accountable, otherwise, they will never learn.
Tuesday, August 30th, 2011
The article titled “Tapping Into Retirement Funds: When and how you should do it?”, written by Karen Finucan Clarkson and published the Gazette Seniors, provides individuals with helpful tips regarding retirement funds. With today’s average life expectancy for both men and women high, “‘[r]etirement could end up being a third of your life, or half as long as you’ve already lived’”. It all depends on when you retire and how much money you have saved. Once you retire, it is likely that you will have to support yourself financially for 20 to 30 years.
According to Jim Ruth, a certified financial planner and founder of Potomac Financial Group in Gaithersburg, “‘[t]he biggest mistake people make in retirement is not doing Social Security right’”. For most, it makes the most financial sense to delay filing for Social Security benefits until the age of 70. In actuality, “[g]ender, health, and marital status play a role in deciding when to begin receiving Social Security.” Mr. Ruth’s general advice for single women is to take Social Security as late as possible unless they are in poor health and have a family history of females dying young. Mr. Ruth’s general advice for single men is to take Social Security earlier than single women, sometime between 66 and 67 years of age, as men do not live as long as women.
Couples need to strategize when it comes to when to taking out Social Security. According to Mr. Ruth, “[u]nder File and Suspend, the higher-earning spouse, upon reaching full retirement age, files for Social Security benefits and then immediately suspends them. The act of filing opens the door for the lower-earning spouse to begin receiving spousal benefits at retirement age, which comes to 50 percent of his or her spouse’s benefit. The higher-earning spouse can then continue to work or draw on income from an IRA, allowing Social Security benefits to accrue. Then, at age 70, each spouse can begin collecting maximum retirement benefits. The delay in tapping into the higher-earning spouse’s benefits also could result in a larger survivor benefit for the lower-earning spouse.”
If you need any assistance with your estate planning, please contact Caryn Siegel Wetmore, Esq. and Lynn Caudle Boynton, Esq. at 301-294-3333. If you need a referral to a local financial planner, please contact us for that as well. We would be happy to help.
To read the article in its entirety, please click here.
Tuesday, July 26th, 2011
According to the article titled “Social Security: Fears vs. Facts”, written by Liz Weston and published in AARP The Magazine, there are three myths that need to be addressed and put to rest.
Myth #1: “By the time I retire, Social Security will be broke.”
“It’s true that Social Security’s finances need work, because over the long term there will not be enough money to fully cover promised benefits. But radical changes aren’t needed. In 2010 a number of different proposals were put forward that, taken in combination, would put the program back on firm financial ground for the future, including changes such as raising the amount of wages subject to the payroll tax (now capped at $106,800) and benefit changes based on longer life expectancy.”
Myth #2: “The Social Security trust fund assets are worthless.”
Any surplus Social Security trust fund assets are used to purchase interest-paying Treasury bonds. In other words, this surplus has been loaned to the federal government for its general use. Treasury will soon need to pay back these bonds.
Without any changes, “Social Security can continue paying full benefits through 2037. After that, the revenue from payroll taxes will still cover about 75% of promised benefits.”
Myth #3: “I could invest better on my own.”
“Maybe you could, and maybe you couldn’t. But the point of Social Security isn’t to maximize the return on the payroll taxes you’ve contributed. Social Security is designed to be the one guaranteed part of your retirement income that can’t be outlived or lost in the stock market.”
Monday, June 27th, 2011
You own a house. You want to plan for your retirement. What are your options? According to Jane Bryant Quinn, author of “Picking the Right Options” which was published in the May 2011 edition of AARP Bulletin, there are many options. These options are the following:
- Prepay your mortgage: If you prepay your mortgage, it will cut your living expenses in retirement should you suddenly need money or your housing plans change.
- Refinance: If you have trouble paying your monthly mortgage expenses, you can try to refinance your house by taking out a new 30-year loan.
- Sell and buy something smaller: If your house is too big or too expensive to upkeep, then you may want to sell your house and buy a smaller house. You should put the remainder of the sale proceeds into investments.
- Sell and rent: If your house is too big, too expensive, or if you no longer want to own a house, then you may want to sell your house and rent a house or an apartment. This option may give you more financial freedom because there are also no home upkeep costs.
- Stay put and take a reverse mortgage: “Here, you borrow against your home equity and don’t have to repay until your home is sold. If it sells for less than the loan against it, the lender swallows the loss. Lenders have slashed upfront costs. For further information about reverse mortgage loans, go to aarp.org/revmort. Jane Bryant Quinn suggest that you have a better shot at retaining some equity in your home if you take the loan in the form of a credit line, and borrow only what you need each month. Jane Bryant Quinn also suggests that you should not take a reverse mortgage out in your 60s; you should save a reverse mortgage as a last resort and in your older years.
- Walk away: If you can no longer afford your house and cannot sell your house to pay back your mortgage, you may want to walk away from your house and rent. Discuss your options with a bankruptcy attorney.
- Go RV-ing: Sell your house, buy an RV, and travel the United States in your RV.
- Retire near friends: “This is especially important for single people—widows, widowers, the never-married. You lose your ‘work family’ when you retire. You’ll need long-time friends to keep you company in older age.”
- Retire separately but together: If you and your spouse have different ideas of retirement (i.e., you want a rustic cabin in the woods and your spouse wants an urban high rise), you can do both. “Yes, you can do it and reunite—in cabin or city—in the end.”
According to the article titled “Booming boomer population strains ‘burbs”, written by Liz Farmer and published in The Washington Examiner, “[b]aby boomers and retirees make up the fastest-growing populations in the Washington suburbs.” This group of individuals (those ages 55 to 64), who make up the fastest-growing population group, are “growing anywhere from two to five times the average growth rate over the last decade, according to Census Bureau data….”
As baby boomers enter retirement and begin collecting pensions and Social Security, there are concerns that government funding for such programs will be in trouble. According to Richard Johnson, director of the Urban Institute’s Program on Retirement Policy, “…there’s not enough savings to pay out these benefits once people start collecting. It will force governments to cut on services or raise taxes.” Currently, Maryland’s pension fund is underfunded by $33 billion and Virginia’s pension fund is underfunded by close to $18 billion.
There is a silver lining to this, however. “[T]hanks to its urban environment, the Washington region isn’t aging as quickly as the rest of the country.”
To read the article in its entirety, please click here.