Several factors come into play when you plan for your retirement. Your age, longevity, and the returns that you will earn from your retirement portfolio are just a few. In some form or fashion, all of those can play into your target retirement age.
But one frequently overlooked factor is the day that you will stop working. You may think that you will keep working until you are 70. Nevertheless, this is often an overestimation of how long you will stay in the workforce.
The fact is that you will probably not continue to work for as long as you think you will. That might be due either to health factors or the need to care for parents (or maybe other elderly family members).
This factor can substantially impact your retirement plans by either forcing you to forego retirement goals such as traveling and hobbies or live a significantly diminished lifestyle. Read More
As you gear up for retirement, you may have heard of “safe money solutions.” Are they right for you? It’s an important question, especially since retirement planning is more difficult than it’s ever been in history.
Past generations could count on company pensions that would pay them every month without fail until they died. But the disappearance of these pensions, coupled with the increase in longevity for retirees, has left many people with more questions than answers.
While Social Security will cover at least some of their expenses, most retirees will have to rely on income from their own investments and savings to make up the difference.
However, what many call a bewildering amount of financial choices in today’s market can leave people feeling frustrated.
According to the Investment Company Institute, nearly 120,000 regulated investment funds are available to retirement savers today. And what about other options? There are more annuities than hedge funds available, which doesn’t even begin to cover the universe of countless other instruments that can be tapped for retirement goals. Read More
As you gear up for crucial retirement decisions such as Social Security, you may have heard of “full retirement age.” The Social Security Administration refers to full retirement age as “normal” retirement age. This is the age at which you will receive 100% of your monthly retirement benefit.
But full retirement age isn’t the same for everyone. For those born before 1943, this is age 65. For those born after that year, full retirement age can range from 66 to 67 years old.
This matters for eligible recipients because choosing when they begin receiving benefits is one of the most important retirement decisions that they might make. Making the right choice can make a difference of tens, or even hundreds of thousands of dollars, in the lifetime benefits they are paid.
You can start taking Social Security benefits once you turn 62, but your benefit will be permanently reduced by 30% or more. You will have to wait until you reach your full retirement age to get your full benefit.
And if you delay collecting benefits until after your full retirement age? Then you can increase the amount you receive by about 8% per year until age 70. Waiting to take your benefits at 70 will increase your monthly benefit about one-third more than your regular full benefit. Read More
On October 10, the Social Security Administration officially released the amount of their cost-of-living adjustment for 2020. Almost 70 million Americans will see their Social Security benefits rise by 1.6% next year.
While this raise is less than the 2.8% cost-of-living-adjustment for 2019, it’s still higher than the 1.4% average COLA that participants have received over the past decade. The Senior Citizens League was also spot on with its projection for Social Security next year. Read More
The high cost of healthcare looms as a major factor for retirees to deal with after they stop working. But a recent online survey revealed that things may actually be even worse than what retirees are predicting.
Sponsored by Nationwide Life Insurance Company, the survey was conducted from March through April of 2019. The 1,462 people who were polled were at least 50 years old. This group was a mix of pre-retirees, current retirees, and folks who had been retired for at least 10 years. An additional 516 caregivers were also polled.
The findings? Most of the retirees greatly underestimated their retirement healthcare costs. The majority predicted they would need to spend roughly $7,000 a year on healthcare in retirement. Nationwide estimated the real cost would be closer to $10,739 for the average retiree.
The insurer’s health cost estimate was based on the Summary of National Health Expenditures, with reported spending data from the 1960s to 2017. Read More
Once a corporate giant, General Electric Corporation has found itself in a downward spiral in recent years. The former staple of American business has been working to clear some substantial debt off its books.
One of the company’s latest big moves? To reduce debt by freezing its employee pension assets. This means that benefits will not continue to accrue for its employees, even though they continue to work there.
But while this is obviously better than pension termination, where the pension plan is simply dissolved, it marks the latest casualty in the pension landscape in corporate America. Read More
While the exact details are still under wraps, Social Security recipients will be pleased to know that their benefits will be receiving a boost in 2020.
Every October, the Social Security Administration releases information regarding Cost-of-Living Adjustments to benefits. This year is no exception. On October 10th, the SSA will be releasing official details regarding the Cost-of-Living Adjustment that applies to 2020 Social Security payouts.
Expect a Social Security Benefits Boost of 1.6%
According to The Senior Citizen League, a nonpartisan group focused on senior issues, Social Security recipients will likely receive a 1.6% boost to their payouts, starting in 2020.
The league tracks data relating to how the SSA calculates its Cost-of-Living Adjustments. It bases their estimate on quarterly movements in the consumer price index for urban wage earners and clerical workers (CPI-W).
Mary Johnson, TSCL’s Social Security policy analyst, mentions that this increase will be smaller than prior raises. She said that it “would raise an average retiree benefit by about $23.40 per month, a big drop from the $40.90 that people with that level of benefits received this year.” Read More
When it comes to taxes, you can be sure that Uncle Sam will want his share. Retirement tax planning can help you make the most of your money. Tax-wise strategies let you maximize your income and keep more of what you have accumulated over a lifetime of hard work.
But while Uncle Sam’s tax collections are a certainty, what is less than clear for millions of retirees is their own tax bills. Many don’t know whether they are paying too much in taxes or not – and how, in turn, that affects their retirement income streams.
Fortunately, there are several ways that you can reduce your tax bill after you stop working through the proper use of annuities and IRAs.
The order in which you withdraw your assets can also substantially impact the amount of tax that you will have to pay. Studies have shown that a properly-structured withdrawal schedule can extend the life of an investment portfolio by as many as 6 years in some cases. Read More
Nobel prize winner William Sharpe calls it the “nastiest, hardest problem in finance.” What is that? Decumulation, or the process of building a dependable lifelong income stream from your retirement savings.
It’s no wonder millions of Americans are asking if they will have enough money to retire comfortably. Between rising health costs, multiplying risks, and the real possibility of “lifelong” referring to what can be a very long time, there are multiple priorities to juggle as you build a personal retirement strategy.
Many Americans worry about whether their life savings and income will last for the rest of their lives, as a recent survey found.
In the poll of 3,119 adults, aged 25-74, the majority of retired individuals (71%) felt confident that their savings and income would last. Meanwhile, just 42% of working-age Americans said they had that confidence.
The survey findings were published by the Alliance for Lifetime Income, a non-profit funded by life insurance carriers and asset managers to educate the public on annuities. Read More
As an annuity owner, you take comfort in knowing that you have planned for an uninterrupted lifelong retirement income stream. Working alongside other income sources from your nest egg, it will pay out, like clockwork, to fund the retirement you have always imagined.
But have you considered whether your income streams are as “efficient” as possible? Whatever retirement strategy you choose — income and all — needs to be “tax-efficient” to ensure you get the most mileage out of your money.
This is just one more piece in the retirement planning puzzle that each of us must solve. When we don’t plan for retirement, we run the risk of underspending or overspending our retirement dollars.
What if underspending doesn’t seem like a problem, but rather like an advantage? Consider what events and opportunities to which you may say “no.” And simply because underspending pressures you to have a scarcity mentality, or when you don’t really know if you can afford them.
Perhaps you might pass on an important family event or skip that overseas vacation you always expected to be a highlight of your retirement years. All because you didn’t have a true picture of your anticipated income compared to your expenses. Read More
