Ways to Possibly Produce More Retirement Income
Your income determines your level of financial comfort in retirement more than any other factor. Some mid-life financial moves may help to boost it. One important move is to max out retirement accounts. Yearly contributions of $5,500 to an IRA starting at age 45 will grow to $214,460 by age 65 at a 6% annual return. At an 8% annual return, that becomes $271,826.
A Retirement Plan… or a College Plan?
Some parents feel they should pay for all or part of their children’s college education. They make it a financial priority and put saving for retirement further down on their to-do list. If their kids can graduate without any student loan debt, the thinking goes, they will be better positioned to provide financial support to mom and dad one day.
Retirement Calculators May Not Add in Everything
You may turn to an online retirement calculator for a simple snapshot of your retirement income needs and your retirement savings progress. These calculators are everywhere and so easy to use – but just how realistic are their projections?
Address These Retirement Planning Priorities After 50
When you turn 50, you start to think practically about the steps of your retirement transition. A to-do list emerges of tasks to try and accomplish, as well as things to consider.
When Baby Boomers Become Elders, Will Their Kids Provide Care?
Right now, millions of baby boomers provide informal, unpaid eldercare to parents in their eighties and nineties. This obligation has led some boomers to retire earlier. The Center for Retirement Research at Boston College says that men who play these caregiving roles are 2.4% less likely to stay in the workforce than their peers. Women are more likely to leave the office under such stress, and the CRR estimates that those who do balance a career and eldercare work 3-10 hours less a week and earn an average of 3% less than other working women.
Can Your Life Insurance Policy Help You Out in Retirement?
Under certain circumstances, it can play a crucial financial role. Besides a death benefit, a permanent life insurance policy can accrue cash value over time (provided the premiums are paid). That cash value could prove useful in or near retirement. If you need to, you could withdraw some of it to pay for medical procedures, home improvements, long-term care, or a child’s college education. It could even provide you with additional retirement income. Moreover, distributions from a permanent life insurance policy are tax free as opposed to distributions from traditional IRAs (and some other retirement plans), which are taxed at regular rates.
Is Social Security Coming Up Short for Retirees?
The non-partisan Senior Citizens League says yes, charging that the wrong metric is being used to determine cost of living adjustments (COLAs) to retiree benefits. The federal government uses the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) to figure various COLAs. Younger, employed people usually have lower medical expenses than older people; they also spend more money on gasoline and transportation than retirees do. Senior advocates argue that the Consumer Price Index for the Elderly (CPI-E) should be used instead of the CPI-W, especially since medical costs have risen quickly in recent years, while gasoline prices and transportation costs have fallen.
Why You Might Not Want a Lump-Sum Retirement Payout
Do you have the option of receiving your retirement money as a lump sum? You may want to turn that choice down. A new MetLife study, Paycheck or Pot of Gold, warns of the “lottery effect” that can occur when all that money makes its way into a household at once. Surveying more than 1,050 retirement plan participants who had taken lump-sum payouts, MetLife found that 21% had already used up 100% of that money; on average, it had disappeared in less than six years.
How Much of Your Retirement Savings Should You Withdraw Each Year?
When Fidelity Investments asked more than 1,000 pre-retirees to guess the percentage that retirement planners would recommend, 19% said 7-9% a year. (A typical recommendation might be 4%.) Additionally, another 19% of pre-retirees responding to the investment company’s Retirement IQ survey thought they could safely draw down their retirement funds at a rate of 10-15% a year. At that pace, they could risk outliving their money by their mid-seventies.1
Retiring with an Age Difference
If you are 10 or 15 years older than your spouse or partner, to what degree should that age gap influence your retirement planning? You will want to consider this question, for it may affect many aspects of your financial future – such as your planned retirement dates, how you decide to claim Social Security, and how you choose to invest.
Can You Work Your Way into Retirement?
As 2016 ended, the 17th Annual Transamerica Retirement Survey appeared and noted a preference for a phased retirement among a majority (53%) of workers polled by the insurance and investment company’s Center for Retirement Studies. In fact, 48% of the pre-retirees surveyed felt that their current employer would allow them to continue working in some capacity after age 65.
Teamwork Counts for Couples Close to Retirement.
Talking about a few lifestyle and financial matters in the years immediately before your retirement transition may help you and your spouse find more happiness in your “second act.”
Could Some Simple Moves Help You Reduce Your Taxes?
Quite possibly. Elaborate tax management strategies aside, you might find ways to cut your tax bill for 2016 and beyond through a few, straightforward steps.
Most baby boomers know that their Social Security benefits can be reduced if they earn too much in retirement. While 76% of baby boomer respondents to a 2015 AARP survey understood this fact, 57% also thought they would never recoup those surrendered benefits. That is incorrect.