retirement-pensions-income

Why you should Check your Social Security Earnings Record Regularly

Not nearly enough individuals are aware that they should be checking their Social Security earnings record at least once a year after reaching the age of 50. It’s crucial to check this information to ensure that it doesn’t contain any errors that could have a negative effect on your benefit payments when the time comes to withdraw them. Even the smallest error could have a tremendous impact on your retirement

What is your Social Security Earnings Record?

Your Social Security Earnings Record is a timeline of any income you’ve received during the years that you’ve been working, and the benefits you eventually receive will be based off of the 35 years in which you earned the most money. If one of those years is mistakenly listed as a zero earning year, this will affect your benefit calculations and this will in turn cause you to receive smaller benefit checks than you should. 

A simple error like this could result in you receiving as much as $100 a month less than you’re actually entitled to – and this can make the difference between barely surviving or at least being able to cover your expenses comfortably during retirement. 

When you should Start Checking

In reality, it’s never too early to start checking your Social Security earnings report – so you can even start keeping records as soon as you start earning an income. However, individuals who haven’t yet checked their report should at least start doing so when reaching the age of 50. This will provide enough time to address and correct any errors that may crop up. 

It’s possible to inspect your earnings report online by visiting www.socialsecurity.gov/myaccount. You will need to create an account if you don’t already have one set up and you’ll be able to log in at any time after doing this. 

Keep in mind that a statute of limitations is in place with regards to the amount of time that can pass before any errors on your Social Security earnings report can be amended, and this is currently three years, three months and 15 days. Some exceptions to this ruling include deliberately fraudulent entries, clerical and/or mechanical errors. 

What to do if Errors are Detected

If you discover any incorrect information, you will need to inform the Social Security Administration (SSA) immediately, and the best way to do this is by submitting a form referred to as the, “Request for Correction of Earnings Record.” 

When filling this form out, you will be required to provide relevant evidence with regards to the wages that you’ve earned. Examples of paperwork that you may be asked to provide can include:

  • Wage verification from an SSA-approved business or company
  • Tax return documents
  • Employee-issued or original pay stubs – these will need to include your full name, gross earnings, social security number and the timeframe covered
  • W-2 paperwork
  • Written and or/verbal statement from the relevant employer or company

It’s essential that you respond as promptly as possible to any correspondence that the SSA may send to you regarding errors that have been detected. This will help ensure that they are rectified as quickly as possible. Although an amount of $100 may not seem like a lot right now, it could make all the difference between being able to cover living expenses or not during retirement. 

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retirement challenge

How Retirement is Becoming More Challenging for Older Employees

Over the past few years, it has become more challenging than ever before for employees over the age of 55 to secure positions that are within their normal pay ranges – regardless of how experienced or qualified they may be. Some of the most common remarks these individuals hear include the fact that they are overqualified for the position being applied for or that businesses cannot afford to pay them the wages they are used to earning. 

Forced to Accept Smaller Paychecks

The sad reality is that older employees are usually among the first to be laid off from the very companies where they have invested many years of their working careers. When they are searching for a new job, it often takes several months or even a year or two before they’re able to find any company that will be willing to employ them – but in the meantime, bills still need to be paid regularly. 

Skipped mortgage payments, overdue utility bills and depleted retirement savings cause a number of these experienced and often highly qualified employees to grab at any position that comes available – just so they can continue providing for their families. 

By the time they’ve reached 55, several employees have not only become accustomed to a specific lifestyle; many people forget that these individuals often still have children living at home as well. 

More Older Employees Now than Ever Before

More individuals than ever before that are over 55 are employed these days, and the average jobless rate for them is just over 3% in comparison to almost 4% of the rest of the working population. However, upon finding themselves suddenly jobless, older workers end up remaining unemployed for longer than their younger counterparts. 

Upon reaching 60 and older, employees also have to deal with steadily declining wages – and pay rates continue declining regardless of the amount of experience or education these valuable employees have. 

Why Individuals are Working Longer

People are living a lot longer and staying healthier than ever before, and the rate of standard pension plans is also phasing out quickly. This means that there is less chance of them receiving guaranteed income when the time comes for them to retire – resulting in many older persons wanting to continue working for as long as possible. 

This could fill the large gap in the economy in that the continual labor shortage could be virtually eliminated by hiring older employees. However, not many companies seem willing to hire these valuable employees because they tend to think that productivity rates will decrease when they reach a certain age. However, this is not always the case – there have been many instances where older employees have far outperformed those that are even half their age. 

Employers often forget that older workers possess extensive experience and this can prove to be extremely valuable in a number of situations – especially when younger employees simply don’t possess the knowledge or experience to resolve a specific issue. 

If you would like to find out how you can do everything possible to provide a livable income during your retirement, get in touch with us today.

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retirement income

Convert your Retirement Funds to Workable Income

Although virtually everyone is aware of how important it is to save money towards your retirement years, very few individuals know where to start, how much they will need to save each month and how to ensure that what they are saving will be enough to let them enjoy their golden years without worrying about finances any more than what’s totally necessary. 

Pensions – No Longer as Popular as Before

In years gone by, many individuals relied almost entirely on pension schemes to see them through after retiring. If you were fortunate enough to land a decent job, remained in the same position for 20 to 30 years and then retired from that company, you would have been able to enjoy receiving monthly pension payments that were usually sufficient to cover virtually all of your living expenses. 

Good pension plans allowed employees to invest small sums of money into Certificates of Deposit (CDs) and bonds so that they could even enjoy a few extra luxuries as well. 

Sadly, most companies no longer offer pension scheme benefits to their employees anymore. This means that retirees must now rely on alternative income sources – and not just Social Security benefits either anymore. 

Start Saving as Early as Possible

The sooner you implement a savings plan for retirement, the better. Financial experts usually recommend that you should start investing in a diversified portfolio at least 15 years before your planned retirement date. However, if you’re able to do this earlier, you’ll be able to take advantage of compounding interest over a longer period of time. 

Develop a Workable Plan

It’s essential to have a plan set up that details the amount of money which will be withdrawn from your nest egg each month – also keep in mind that there may be some months where expenses will be higher than others, like at Christmas time. As such, you’ll need to determine your monthly living expense requirements and plan on withdrawing 4% or less of your retirement savings annually. 

Diversification is Crucial

Although stocks and other investments can increase substantially in value, they can also take a sudden dive when least expected. As such, it’s essential that your retirement portfolio be diversified so that it includes annuities, bonds, CDs and stocks.

Social Security as a Supplement to your Income

While Social Security payments will currently provide a steady form of monthly income, it’s recommended that you only start claiming these funds well after the age of 65 – otherwise you could lose as much as 20% of what your payments could actually be. 

At present, the minimum age for retirement is 62. However, most individuals won’t qualify for their full Social Security amount until reaching between 66 and 70 years of age. If you’re not keen to wait this long before retiring, you may either have to continue working until this time or ensure that you can receive income from alternative sources until reaching the right age to claim from Social Security.

If you would like to ensure that your retirement is as financially stress free as possible, get in touch with our team today. We’ll be happy to assist you with setting up a realistic savings and investment plan.

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retirement-lasting-longer

Retirement may Last Longer than you Realize

By 2050, it’s estimated that close to 100 million Americans will be over the age of 65 – this is close to double the amount of older folk that are currently around. This will have severe implications on almost everything – from the amount of food that’s available to find skilled labor to allocating sufficient funds to provide a realistic level of healthcare for an aging population. 

A Social Shift has Taken Place

Doctors who were practicing in the 19th Century recommended that as individuals got older, it was necessary for them to slow down so that they could conserve their energy. However, several people started to live a lot longer after 1900, resulting in an increase in senior citizens overall. 

Over time, this caused business, industry, and government agencies to look for ways to justify removing older individuals from the workforce so that younger employees could be accommodated. Even though individuals are now healthier and living to older ages than ever, society, in general, appears to be doing everything possible to write off up to a quarter of the lifespan of anyone who is over the age of 65. 

A Prospective Goldmine for Marketers

A number of lawmakers and have voiced concern with regards to the fact that having higher numbers of senior citizens obtaining public benefits would negatively affect the economy. However, new research has suggested that the number of people that are now living to older ages than ever could actually present the economy with a potential marketing goldmine – in fact, goods and services that have been specifically tailored for the senior market are now worth more than $9 trillion a year. 

Planning Accordingly is Crucial

While several older people do have a definite plan in place with regards to how they would like to spend their golden years, it’s essential to remember that you will need a reasonable amount of money to live on – regardless of what those plans may involve. Continually rising inflation and the overall cost of living means that you will not be able to rely entirely on Social Security benefits upon retirement. 

If you’re fortunate enough to still be in your 20s, 30s or 40s, you may think there’s still ‘more than enough time’ to start saving, investing or setting funds aside that will help you survive during retirement. While time may still be on your side, starting to save money as soon as possible will allow you to set aside a smaller amount each month because of compounding interest

Our experienced and accredited financial planners can provide you with a lot of information about saving and investing in such a way that you’ll be able to enjoy your retirement and not have to worry about finances along the way. If you’d like to establish a savings plan that will cater for your needs during retirement, contact us to set up an appointment with one of our financial planners today. We look forward to helping you secure your financial future.

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Plan Ahead to Avoid Overspending this Festive Season

Various polls that were recently undertaken have revealed that the majority of Americans intend spending between $800 and $900 when purchasing Christmas gifts this year. With Christmas being the largest of the gift-giving holidays, it makes sense that more than 20% of retailer’s sales are made during November and December. 

When January rolls around, more than half of the shoppers surveyed noted that they had regrets about spending so much during December. However, this need not be the case if you plan ahead with regards to the financial side of your festive season shopping. Below are a few ways in which you can do this. 

  1. Determine how much you can Afford to Spend

Before setting foot in the mall or browsing any online shopping websites, establish a realistic budget for purchasing gifts and spending on other holiday-related products and services such as food, decorations, travel expenses if you’re visiting relatives and even gift wrap. 

Divide your budget into various categories to see whether you’ll have enough money available to pay for everything – without resorting to your credit card. If the numbers don’t add up, cuts may need to be made to some categories in your spending plan. 

  1. Establish Expectations Quickly

If your holiday budget is smaller than it has been in previous years, you’ll need to either cut down on the amount of gifts being purchased or spend less on each recipient’s gift – but it’s crucial that you make your intentions in this regard known as early as possible. For instance, if you usually purchase costly gifts for nieces and nephews, let your siblings and in-laws know that your gifts may not be as lavish as they have been in previous years. This will help prevent any ill feelings when the time comes to open gifts. 

  1. Don’t Fall Prey to Retail Tricks

Even the savviest shoppers are known to overspend during the holidays – especially when so-called special offers are being pushed at the end of every aisle. 

Although some retailers may have genuinely good offers on items you’re considering purchasing, many of them mark the items down that have been slow movers during the year. This allows them to make way for new stock when January rolls around. 

Offers such as Buy One get One Free (BOGOF), buy three and pay for two and xx% discount when spending more than a predetermined amount can all cause you to spend more than you’d initially budgeted. Always ensure that you shop with a list, and only purchase the items you’d initially intended adding to your cart in the first place. 

Once you’ve created your shopping list, ensure that you search online for any discounts or coupons that could help reduce the cost of your spending as well.

Although budgeting for the festive season can seem boring and overwhelming, you’ll be glad that you did so – especially when the New Year rolls around and you don’t have to spend the next few months paying off your Christmas debt. 

 

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new-years

Make those Financial New Year’s Resolutions Now

Regardless of whether you’ve started to put a dedicated financial plan into place or not, it’s possible to get on track with this at virtually any age while you and your spouse are still earning an income. Below are a few financial New Year’s resolutions that you should consider making – and sticking to – when 2021 rolls around. 

  1. Set up an Appointment with a Financial Planner

If you’ve never worked with a financial planner yet, enlisting the help of one who is reputable should be your first priority as soon as the New Year starts – the sooner you can make that first appointment and keep it, the better. 

Getting your financial affairs in order can be daunting, especially if you have no idea where to start. You’ll need the services of a professional, especially where taxes, investing and other forms of saving are concerned. While it may seem like an unnecessary expense at first, you’ll certainly be glad you hired a professional – especially if you’ve never dealt with these aspects before.

  1. Set Up Retirement Savings Accounts

If you don’t have an IRA or 401(k) set up with your employer, now is the time to gather everything you’ll need to do so – your financial planner will be more than happy to assist you here. 

A 401(k) and/or IRA are among the best and easiest ways to start saving for your retirement, and the sooner these are set up, the better. Keep in mind that contributions to these accounts are pre-tax, so you probably won’t notice the small deduction being made from your wages at the time. However, you’ll certainly notice the lump sum of money that has accumulated by the time you’re ready to retire though.

  1. Pay Debts Off

One of your ultimate goals should be to remain free from consumer debt as far as possible. 

Many individuals don’t prioritize repaying consumer debts because they think they’ll still have a good few years left to do so. However, the quicker consumer debts are repaid, the more money you’ll save on interest and finance charges as the years go by – money that can rather be put into some form of savings instead.

  1. Look for Ways to Save Extra Cash

After setting up retirement, savings and/or investment accounts, many individuals quickly discover that they aren’t setting aside as much money as they’d hoped. If you find that this applies to you, it’s time to start looking for practical ways to trim your budget or increase your income as soon as possible. 

Some options for cutting spending can include switching to more affordable internet service providers, cell service companies and even eliminating physical newspaper subscription services – many news sites offer greatly reduced options for viewing their content online instead. 

While everyone dreams of becoming financially secure, this will only happen if you take the necessary steps to start saving and investing as soon as possible. If you’d like to learn more about making your money work for you, contact us today. 

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adult kids retirement

Don’t Let Adult Kids Destroy your Retirement

Research has revealed that nearly 70% of parents older than 50 have provided their adult kids with some form of financial assistance over the past few years, with amounts for this assistance totaling an average of just over $7,000 per year. If invested or saved in a tax-deferred account that provides an annual return of just 6%, this could amount to as much as $100,000 extra that these parents could have saved for their retirement years. 

Here are a few practical ways in which parents can offer help and support to their kids:

Ensure that they Trim their Budgets

If there’s a genuine reason for your adult kids to not be fully supporting themselves financially yet, lending a hand to cover aspects such as utility bills or rent is quite acceptable – for example, if your adult kids are doing everything they can, but still aren’t able to make ends meet due to a low paying job.

Funding a lavish lifestyle, paying rent on a costly apartment or condo or enabling your adult kids to pay for fancy restaurant meals will not help them learn to support themselves over time.

Establish a Practical System

More than 65% of parents have provided financial assistance to their adult kids at some point to help cover the cost of a utility bill or an unexpected emergency expense. However, an alternative approach is also recommended.

Start by determining ahead of time how much your adult child will require to supplement his or her existing income and then set up automatic transfers to them totaling the amount needed. After a few months, it’s recommended that you review this arrangement and consider reducing the amount systematically until you reach a mutually agreed upon timeline for stopping your financial support. 

Establishing an arrangement like this will mimic the situation of receiving a steady paycheck. However, there may still be instances where genuine emergencies will arise, such as dealing with unexpected vehicle repairs. If cases like this occur, don’t feel bad about stepping in and providing your adult child with the amount of financial assistance you can comfortably afford. 

Become your Child’s Financial Advisor instead of their Provider

When it’s time to stop providing your adult child with financial help, it doesn’t mean that you should stop giving them appropriate financial advice. Information you should provide them with can involve teaching them how to budget effectively, how to choose the right healthcare plan to suit their finances and how to opt into the best 401(k) plan to prepare for retirement. 

Another option you can use to provide adult kids with financial guidance and advice is to introduce them to the numerous budgeting apps that are available these days, such as Mint and Digit. It’s also recommended that they be informed about the various financial blogs that can be accessed, as this will provide them with valuable information regarding financial responsibility and security. 

If you would like to learn more about securing your retirement nest egg and preventing it from being eroded by your adult kids over time, contact our financial advisors today. 

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Kids and Money

Why your Kids should be Included in your Budget Planning

Several of today’s adults grew up in households where financial matters were never discussed with the kids. However, research has shown that kids who were raised in homes where finances were discussed openly went on to become adults who mastered their money from a young age. 

While you may not want to share all aspects of your finances with your kids (unless you think they’re old enough to understand), it is important to give them an idea of how money is earned and how household expenses are covered from month to month. 

  1. Start with a Family Meeting

The first step to getting your kids involved in your family’s finances is to hold a family meeting, and this time should be used to discuss the various expenses that your budget covers each month. During this time, give each child a pen and paper and ask them to write down how much they think each line item in your budget costs, such a groceries, rent or mortgage, insurance, vehicle-related costs, entertainment expenses and any other item you pay for on a monthly basis.

  1. Teach Kids that they will sometimes go without

It’s crucial for kids to learn that they will never be able to have absolutely everything their little hearts desire – and the best way to do this is to be open with them about how much it costs to live from day to day. Show them that money is by no means an infinite resource, so it will be necessary for them to sometimes save up for a specific item they want. 

  1. Provide an Allowance from an Early Age

One of the best ways to teach children how to allocate any money they receive is to set up an allowance system – preferably one that is linked to some form of work having to be done in order to earn these funds. 

For younger children, a simple system of saving a small portion of their money and being allowed to spend the rest is sufficient. However, as your kids get older and obtain a better understanding of money, they can be taught how to have a basic savings account, a little something for investing, a small portion for donating to a charity or cause of their choice and the remainder for spending however they like. 

  1. They will Learn how to become Financially Independent

Once your kids know how money is earned and how to budget appropriately, they will usually go on to become adults who budget efficiently, avoid debt as much as possible and invest wisely over time. However, in order for them to do this successfully, they will need to see you putting these principles into practice as well – it’s no use telling them to budget and save if you aren’t doing so yourself. 

If you would like to learn more about teaching your kids how to manage their finances and make the best investment choices possible, contact our team today. 

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financial advisor

Why a Financial Advisor should Help you Plan for Retirement

Although financial advisors are often thought of as ‘costly money grabbers,’ the truth is that they possess the knowledge needed to help you plan ahead for your long-term financial goals. These specialists can analyze your current financial status and provide the information needed to plan for almost any life event such a buying a home or retiring. Below are some reasons why you should work with a financial advisor when planning for your retirement. 

  1. The Economy will Change

You may decide over time that you’d like to retire with an amount of $200,000 in savings. This is quite a reasonable goal for most individuals to achieve, but it will be necessary to take economic changes into account over time. 

For instance, you may pay $3.50 for a gallon of milk at the moment, but how much will this price have increased by the time you’re ready to retire? The initial amount you had in mind for retirement may not last as long as you’d planned, which is why a financial advisor should be consulted when setting up a savings plan. 

  1. Anything can Happen

You may currently be in your late 20s or early 30s, have a good amount of money saved in a 401(k) and be working your dream job. While everything may be going well at the moment, anything can happen over time – you could get laid off (think COVID19 – no one expected to lose their jobs because of a pandemic during 2020) and end up needing money in a hurry. 

Although it can be tempting to dip into your 401(k) account, this will not only cost you money in the form of early withdrawal penalties; you’ll be robbing yourself of potential retirement savings as well. A qualified financial advisor will be able to help you set up a practical savings plan to help deal with unexpected events like job loss or illness.

  1. Health can Change Unexpectedly

While most individuals set up a concrete savings plan for retirement, it’s important to remember that a health crisis can occur at any time – leaving you in a financial bind. A professional financial advisor will be able to work with you to help allocate money for various needs, such as long-term health conditions. Even in the event of you not being able to work for an extended period of time, a reputable advisor will help you make the most of the money you already have. 

  1. Money Pits may need to be Identified

Several individuals earn enough to save and invest in retirement accounts, but tend to struggle with actually doing so. A financial advisor will be able to help you establish a practical budget to ensure that there’s enough money to invest each month.

For example, you may be eating out twice a week when it’s possible to prepare tastier meals at home. Although everyone deserves a treat once in a while, the bulk of what’s being spent on restaurant dining can be invested instead – even $100 extra that you save per month can make a substantial difference over the course of 20 years. 

If you’re concerned about not having enough money to retire in the near future, get in touch with our advisors today. We look forward to getting your money work for you.

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social security savings

Stretching your Social Security and Pension Funds to make them Last

A large number of retirees are extremely concerned because they feel that their pension funds won’t be sufficient to last them for the rest of their lives – especially if current inflation trends are taken into consideration. However, there are a few steps you can take to ensure that your retirement funds will be able to last for as long as possible. 

  1. Consider Taking on Part-time Employment

If you’re still physically active and healthy, it might be worth considering taking a part-time job when you reach retirement age – instead of stopping work completely. This will not only help to reduce the amount of money that needs to be withdrawn from your retirement funds; it will allow you to keep busy for at least a few days a week as well – several older folk often find themselves becoming bored quickly when they stop working altogether. 

  1. Check Withdrawal Rates at Least Annually

Your withdrawal rates should be checked at least once a year to determine if you’re living off the interest from your retirement accounts or whether you’re dipping into the capital itself. If it’s discovered that you’re dipping into the capital, it’s a good idea to sit down with a financial advisor and see what can be done to preserve your fund. In most cases, it’s recommended that withdrawal rates don’t exceed 4% of the account’s balance over a 12-month period.

  1. Examine your Budget

Unfortunately, not everyone will be able to continue working after reaching retirement age. If you will be one of the individuals who have to stop working, it’s crucial that you start examining your monthly budget and reducing expenses wherever reasonably possible. 

Some of the quickest ways to reduce spending can include downsizing to one vehicle, moving into a smaller home or a property that’s in a more affordable part of town and even asking for senior discounts whenever making purchases – it never hurts to ask. 

  1. Avoid Taking on Debt

If you still have to pay for vehicle financing or cover the cost of credit card installments each month after retiring, your Social Security and pension benefits will not last nearly as long as they should – especially when taking the high interest rates that are charged on these payments into consideration as well. 

Before you can even think about retiring, it’s crucial to ensure that all outstanding debts are repaid in full. This will allow you to free up funds to cover your essential expenses such as taxes, utilities, potential medical expenses, groceries and hopefully a few fun purchases along the way. 

Preserving as much of your pension fund and Social Security benefit as possible by being reasonably frugal will allow you to rest assured that there will be enough money for you to live on once you’ve stopped working. If you would like to obtain a little guidance with regards to stretching your retirement funds as effectively as possible, get in touch with our professional advisors today. 

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