Retirement

Approaching Retirement on a Budget? How you can Keep Home Maintenance Costs Affordable

When questioned about where they want to live, a significant amount of those aged 65 and older state that they would prefer to stay in their own homes for as long as possible. This allows them to still remain a part of the activities in their communities that they have become accustomed to over the years.

However, living in your own home during your golden years can present some challenges, especially where property maintenance is concerned. You may be finding it difficult to climb ladders and change bulbs, clean gutters and perform other repairs – while also struggling to find reliable and reputable tradespeople or businesses to get the job done for you. 

Below are some available options for getting various types of maintenance performed in and around your home – allowing you to remain independent for as long as possible:

Seek Out Community Organizations

These days, many communities are served by various nonprofit organizations that can enable retirees to have home maintenance performed at extremely affordable rates – or even free of charge in some cases. Although organizations that offer these services will differ depending on the area you live in, one of the easiest ways to find out if any assistance is available is to visit your local senior center. Some libraries may have information in this regard as well.

Don’t Overlook Home Healthcare Providers

Many seniors already benefit from helpers or aides who come to their homes and assist with basic cleaning tasks such as vacuuming, dusting and general tidying up. Although these individuals usually won’t perform home repairs or general maintenance, there’s a strong chance that they will know of someone reliable and affordable that will be able to perform any repairs that may be needed.

Ask Family and Friends for Assistance

When any type of help is needed around the house, one of the best options for retirees is to consider asking friends and family if they will be able to help or whether they know of anyone else that can provide the assistance that’s needed. 

If you’re part of a religious community, you may find that youth groups and other volunteers will be more than willing to perform home repairs and other types of upkeep such as raking leaves, watering plants, trimming trees and shrubs or even applying a coat of paint in some cases. 

Retirees can also benefit from speaking with neighbors about any home maintenance needs they may have. Although the neighbors may not be able to perform the required tasks, they may know of reliable contractors who will be able to offer the best possible rates. 

While it may become more difficult for you to perform DIY and general home maintenance projects, help is often available out there. Most importantly, you should never be afraid to ask for help when it comes to taking care of your home – a number of individuals and organizations will usually be more willing to assist than you realize. 

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impulse shopping

Avoiding Impulse Purchases while Shopping

One of your budget’s biggest enemies is that of impulse purchases. Despite going into Target to ‘only get a few things,’ you end up leaving the store with new décor items, some bath towels and new kitchen glassware as well. If you find that you’re falling prey to impulse shopping more and more often, the tips below will help get you back on track and beating the urge to purchase unnecessary items.

Don’t go to the Mall Unnecessarily

You’ll only get the urge to purchase something if you’ve seen it while browsing, so stay out of malls and other shopping areas unless you truly need to be there. While at the mall, only go to the stores you have to be at as well – this will prevent you from seeing anything else that ‘would be nice to have,’ but that wasn’t even a consideration before you’d actually seen it.

Edit your Junk Mail

 The main reason why companies send out junk mail is to encourage consumers to purchase more of their products and services – regardless of whether they’re needed or not. Items you purchase as a result of ‘seeing them in a junk mail advert’ are classified as impulse buys – again, you wouldn’t have bought the items previously because you hadn’t seen it before.

Start by getting your name off of as many mailing lists as possible – online and offline. A non-profit organization called 41pounds.org can be a big help regarding getting your details removed from physical junk mailing lists, while the ‘unsubscribe’ button on shopping emails can become your best friend at a time like this as well.

Pay with Cash

Several studies have shown that when shoppers pay cash instead of whipping out the debit or credit card, they will usually spend a lot less because it’s physiologically more difficult to part with physical money. Individuals who pay cash for their purchases end up spending as much as 50% less than if they had used a card to pay for the goods.

De-clutter before Buying Anything New

Before allowing anything new to be brought into your home, implement a rule that sees one old item being sold or given away first. This will not only prevent your home from becoming too cluttered over time; it will also remind you of the items you already have – chances are that you may already have something similar at home to the item you’re looking at in the store window.

Ask yourself some Questions

Before picking up that new item, ask yourself if it will improve your life in any way, if it will help you achieve one of your life goals or whether it will make your life easier or not. Answering these questions will help you evaluate whether it will be beneficial to purchase the item or not.

Resisting impulse purchases will not only help ensure that your home remains as clutter-free as possible; over time, your bank account will also thank you because you’ll be able to save more money – that can be used at a later time to purchase something that you may have been wanting for a long time.

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medical costs

Keeping Medical Costs as Affordable as Possible during Retirement

Many individuals are horrified to discover that healthcare will one of the largest expenses that they will have to take into consideration during what are supposed to be their golden years. Information provided by Fidelity Investments has revealed that a couple that retired in 2017 can expect to spend approximately $275,000 on healthcare-related expenses during retirement. 

Below are some strategies that could help minimize healthcare costs throughout this period in your life:

Prevention is Better than Cure

One of the best ways to avoid as many potential future costs, seek out ways to start improving your health and reducing the risk of disease now. Use spare time to exercise, get a good amount of sleep and ensure that you eat good quality food. Taking advantage of preventative healthcare services such as vaccines and free screenings that are offered from time to time will go a long way in helping to detect issues as early as possible.

Reduce Dental Expenses

A number of seniors are disappointed after learning that Medicare won’t cover the cost of most forms of dental care and procedures – which will be costly if dentures, bridges, crowns or implants are needed at any time. 

A great way to help reduce this expense is to see if you live near a dental school. Although students would be performing the procedures at these institutions, they will be under the close watch of qualified dental surgeons and using these services could slash your dental costs by as much as 50% to 60%.

Find Ways to Reduce the Cost of prescription Medications

Even retirees who have a Medicare Part D prescription drug plan will find themselves having to cover part or even all of the cost of some of the more expensive prescription medications out of their pockets. Sometimes, these plans have deductibles that will need to be met before the cost of prescriptions will be covered as well. 

Wherever possible, find out from your healthcare provider whether any generic alternatives are available for any costly medications that you’re using. In many cases, generic medications can cost up to 70% less than the originals.

Manage Existing Chronic Conditions

If you already have any chronic conditions such as diabetes, arthritis or asthma, now is the time to seek out ways to be proactive with regards to managing them. This can be done by learning as much as possible about each condition and doing everything you can to help prevent them from worsening over time. Your doctor or even a local senior center will often be able to provide the resources you need to get started with this. 

Although taking as many preventative measures as possible before retirement won’t guarantee that your medical expenses will remain low during this time of your life, it will certainly help knowing that you’re being as proactive as possible with regards to staying fit and healthy – especially if you commit to remaining physically and mentally active.

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debt free

How Being Debt Free will Benefit your Financial Future

Up to 75% of American families are carrying some form of consumer debt these days, making it fairly easy to think that this way of living is quite normal. While many households simply shrug off the fact that they owe money on multiple credit and/or store cards, the truth is that this behavior does have an effect on stress levels. 

Although it is possible for several families to adopt a debt-free lifestyle, it does require a high degree of self-control and financial discipline. Below are some ways in which living a debt-free life will benefit your finances now and in the future.

Less Stress

Knowing that you owe money on one or more store or credit cards and a vehicle causes untold amounts of anxiety in most people, which in turn can negatively affect your health over time. If you’re suddenly unable to make a payment on your vehicle, you stand a strong chance of losing it – along with all the money you’ve already paid towards its loan. 

Eliminating just your credit card debt and vehicle loans will go a long way in helping you to feel a tremendous sense of relief in knowing that your car cannot be repossessed due to non-payment, for instance.

Enjoy Increased Savings

Living debt-free not only relieves stress levels; it makes it easier for your household to save money as well. Money that would have initially been spent on credit or store card interest can be placed in a savings account instead, which can be used to build a decently sized emergency fund over time. If you already have an emergency fund, additional savings can be put towards other activities such as a vacation – or even starting to fund your retirement.

Have Funds to Invest

One of the biggest advantages of being debt free is that it will provide you with the ability to start investing money for your future. 

The earlier you can start investing towards your future, the more time compounding interest will have to help your money grow exponentially over time. This could even enable you to consider the option of early retirement in some cases.

Enjoy Financial Security

A lifestyle that’s free of consumer debt will go a long way in helping to increase your level of overall financial security. It means that you won’t have to constantly worry about debt hanging over you if you or your spouse unexpectedly loses a job or have work hours cut. If the worst happens and you become ill, having backup finances available will allow you to focus on recovery instead of finances as well. 

If you’re struggling to make ends meet because of having a lot of consumer debt, or you’d like to find out more about how you can manage your finances in such a way that you’d be able to save towards retirement, get in touch with our team today. We look forward to helping you create the most secure financial future possible. 

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christmas gifts

Don’t Bust your Budget this Christmas

Although Christmas gift giving has been the norm for many years, this activity can drain your finances far quicker than you realize – especially when family and friends have come to expect certain standards in this regard. 

If you’d still like to ensure that your family and friends get to enjoy this time of year as much as possible without having to worry about how long it will take you to pay off those gifts, the tips below will help you get started.

Set your Budget

Festive season spending can go overboard very quickly if you fail to formulate your shopping list according to your budget. Before committing to purchasing any gifts, food, decorations or other Christmas supplies, determine the amount that you’ll genuinely be able to afford to spend on these items. Once you’ve done this, you can sit down and start making a list of gifts and other supplies that need to be purchased.

Track your Spending

Many individuals spend wildly throughout December, thinking that they’ll be able to deal with the aftermath in January. However, your finances will be far better off if you track your expenses as you make purchases because it will prevent you from overspending or having to put Christmas gift purchases on your credit card.

Prioritize Gift Giving

Although you may be used to purchasing gifts for several family members and friends, you may need to prioritize whom to buy for if you intend sticking to a budget. Consider focusing on the people you spend the most physical time with – don’t feel obligated to purchase costly gifts for relatives you seldom see. Chances are that they may also be feeling the financial pinch and will be relieved to not have to reciprocate.

Shop Around

These days, consumers are beyond spoiled for choice when it comes to doing Christmas shopping in-store and online. As such, taking a little extra time to shop around instead of grabbing the first offer you come across could enable you to save a lot of money on gifts. 

Many stores offer discount codes when spending over a specified amount or if you’re purchasing specific items. Before clicking on that ‘place order’ button, be sure to spend a few minutes searching online and on the store’s website to see if you can shave a few dollars off your order cost.

Ditch the Random Gift Exchanges

When questioned, most individuals state that they absolutely dread having to take part in any form of random gift exchanges, such as those that are often hosted at workplaces or social clubs that they may belong to – Christmas tends to be costly enough without having to deal with the added stress of purchasing a gift for someone you hardly know as well. If asked to participate, simply mention that your budget has been allocated elsewhere for this year. 

The saying of, “It’s the thought that counts,” certainly applies to gift giving this time of the year. If you simply cannot afford to purchase multiple gifts, most family members and genuine friends will still appreciate the time that you’ll be able to spend with them during the Christmas season.

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Disadvantages of Continuing to Work After Retirement

More individuals than ever are choosing to delay their retirement and continue working after turning 65 and current statistics have revealed that up to 20% of men and women over this age are either still actively employed or seeking a position. 

While there are advantages to remaining employed during this time of your life, there are also a number of disadvantages that must be taken into consideration.

Working after Retirement can Affect Social Security Benefits

First and foremost, it’s crucial to keep in mind that working after turning 65 will usually have a negative effect on your Social Security and Medicare benefits. For instance, both of these benefits can be affected by the amount of income you earn after you’ve officially retired. 

If you’re receiving Social Security payments during 2021, you haven’t yet reached full retirement age and income from your post-retirement job exceeds $18,960, your benefit will be reduced by $1 for every $2 earned over this limit. However, once you officially reach full retirement age, you’ll be able to work without having your Social Security benefits reduced.

It’s Not a Guaranteed Solution for a Shortfall in Savings

Although continuing to work after officially retiring – even part-time – provides a good way to supplement any personal savings you may have, keep in mind that you won’t always be able to control your employment situation. For instance, if you become ill or are injured, you may have to stop working completely – regardless of whether you can afford to or not. As such, it’s crucial to prioritize retirement savings while you’re still young and healthy.

You’ll Have Less Time to do the Things you Enjoy

The most obvious disadvantage of continuing to work after turning 65 is that you will be left with less time than ever to do the things you enjoy – which is usually the main objective of retiring. However, this may not always be a serious issue if you happen to find a position that you enjoy.

You Could Experience Additional Stress

As most individuals become older, they look for ways to reduce the amount of stress in their lives – and going back to work will certainly not be the way to do this. This will be the time to consider the real reason why you’re returning to work – are you bored sitting at home day after day or do you truly need the extra money to cover unexpected medical bills? If you don’t really need to extra money, it may not be worthwhile to subject yourself to the unnecessary stress of going back to work. 

Although many new retirees feel compelled to remain as active as possible, it’s important to remember that this is the time of your life when you should seriously consider slowing down a little to enjoy your golden years as much as possible. If you truly are bored being at home day after day, consider donating some of your free time to a charity or other worthy cause that you feel strongly about. 

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keeping busy retirement

Why it’s Crucial to Keep Busy after Retiring

The idea of no longer having to wake up to an alarm every weekday morning and being able to choose how they want to occupy their days is an idea that’s highly appealing to most working people – especially after having spent 40 or more years in the workforce. 

However, many of these individuals suddenly find themselves at a loose end because of not knowing what to do with all the free time they now have – which can result in them experiencing severe bouts of depression.

Below are some reasons why you should keep as busy as possible after retiring:

Ease the Boredom

Although most people literally count down the years until they’ll be able to retire, many of them end up being caught off-guard when they are left with endless amounts of free time. Many jobs also provide a level of mental stimulation, which also comes to a sudden stop they day that the office job comes to an end. 

While some people will take on new hobbies or interests after retiring, others may find that this alone doesn’t provide the mental stimulation they need. As such, taking on a part-time job could be highly beneficial for them – not just to alleviate boredom, but also to supplement income.

Keep up with Social Engagement

If you’re a person who doesn’t enjoy being aloe, chances are that you’ll miss the daily bustle and routine at your workplace after retiring. 

Many older individuals have worked with the same colleagues for a number of years, meaning that many of them will have become friends during this time. Opting to continue working part-time will help ensure that these relationships can continue to thrive. In cases where your part-time position is at a different company to that where you worked previously, it will provide an opportunity to make new connections and friends.

Keep those Cognitive Skills Sharp

Getting involved in various activities after retiring will not only help ensure that you have a good amount of company during this time of your life; research has shown that individuals who continually interact with others will possess cognitive skills that are far better than those who decide to isolate. Although poor cognitive skills will not render an individual incapable, they do make it more difficult for a person to successfully interact with others.

Supplement Income

Many retirees discover too late that the funds they had set aside for this time of their lives will not be sufficient for them to make ends meet. Taking on a part-time position can help supplement existing retirement income to the point where you may even have a little cash left over at the end of the month to treat yourself after covering essential expenses. 

Although the thought of literally being able to sit and do nothing all day seems highly appealing – especially to individuals who have had fast-paced careers, the truth is that most people won’t be happy doing this for long. If you would like to learn more about building a sizeable retirement fund, contact us today. 

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credit-score

Just How Important is your Credit Score?

In general, society has become increasingly dependent on the use of credit to make purchases and provide information to various lending institutions regarding financial decisions that need to be made. These days, a good credit score is needed for far more than just obtaining a credit card – it also demonstrates your history of repaying debts to any entities that you’ve borrowed money from. 

Here are some reasons why it’s crucial to maintain the highest possible credit score:

It will affect where you Live

Before you’ll be able to obtain a mortgage, lends will want confirmation that you’ll be able to repay them. If your credit score is low, many lenders will decline a loan application because you’ll be considered as a high risk for defaulting on payments. 

If you’re approved for a mortgage, your credit score will affect the interest rate on it as well – the higher your score, the lower your interest rate will be. Landlords now also take a person’s credit score into account to determine whether you’ll be a suitable tenant or not.

It will affect the Car you Drive

Most individuals simply don’t have the financial means to cover the cost of buying a vehicle outright and still paying rent or mortgage installments, meaning that they’ll apply for an auto loan at some point. Your credit score will affect whether you’ll qualify for an auto loan, the amount you are eligible to borrow and the interest rate you’ll pay on installments. 

A low credit score will not only make it more difficult to obtain an auto loan; being charged a higher interest rate on your loan also means that it will cost you far more to repay over time.

It Affects Living Expenses

Believe it or not, a good credit score will also be required when the time comes to establish utility services in your home. Electric companies for instance will state that you’re effectively borrowing your first month of electricity, so they will check your credit score to determine whether you’re a low or high risk customer. The same principle will often also apply to phone, water, internet and cell service providers nowadays. 

Tips to Manage your Credit Score

  1. Pay on Time

Your payment record has a major influence on your credit score – even paying one credit card installment a few days late will pull your score down. 

  1. Reduce the Amount you owe

Use your credit report to see how much debt you have and arrange them from smallest to largest amounts, or alternatively, according to interest rates that are being charged on them. Work through your list by paying off those with the smallest balances or highest interest rates first. 

Ensuring that you keep your credit score as high as possible will help ensure that you’ll be able to obtain the best possible interest rates if the need ever arises to apply for a mortgage or auto loan, or move into a better neighborhood. 

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retiring early

To FIRE or Not to FIRE? That is the Question

Over the past few years, more and more individuals have entertained the idea of retiring at younger ages than ever before – resulting in the start of the FIRE (Financial Independence, Retire Early) movement. This concept has become especially attractive among high-earning individuals in their 20s, 30s and 40s and it involves living frugally and saving as much as possible during the early years.

Advantages of FIRE

Don’t be Stuck in a Job you Dislike

The main appealing factor of FIRE is the freedom you’ll have in that you get to choose how to spend your time. If you don’t have to go to work each day, you can generally do whatever you like. In fact, many FIRE retirees live in a state of almost-permanent vacation by traveling, playing their favorite sports and doing exactly as they please while they’re still young enough to be able to enjoy activities like these to the fullest.

You’re Saving more than You’re Spending

Although there aren’t many hard and fast rules regarding good financial planning, the aspect of saving more than you’re spending certainly is one of them. 

This rule is the main cornerstone of FIRE as well in that the path to achieving it involves highly disciplined spending and saving habits. Many FIRE retirees are known for saving as much as 50% of their disposable income, with some even saving 70% to 75%. Many of these individuals invest in index funds and/or purchase properties that will provide them with passive income after they’ve stopped working. 

Disadvantages of FIRE

Extreme Frugality isn’t for Everyone

Saving 50% or more of your income can become extremely restrictive on your budget, especially if you’re paying for a mortgage or have kids in college. Many individuals who tried the FIRE strategy have admitted to feeling miserable because of having such limited funds available to spend. 

Before taking the leap into the FIRE lifestyle, keep in mind that the extreme frugality that’s usually required to make it work can become mentally and physically exhausting.

It can become Lonely

Although you may be able to FIRE and think that you’ll be able to enjoy spending more time with friends, this may not always be the case – because most of them will still be working at their jobs. As such, you’ll still have to wait until they can get time off so that they can join you for vacations or other fun activities.

Tax Structures may Change over Time

A number of individuals plan their FIRE strategy around the fact that they will be able to rely on potential Social Security payouts and Medicare to help cover medical expenses at a later stage of their lives. However, it’s crucial to keep in mind that Social Security may not be available forever and Medicare costs could rise to higher levels than initially imagined – putting a huge damper on potential FIRE plans.

Although joining the FIRE movement can be tempting, you’ll need to ensure that the funds you’ve set aside will be able to carry you through several decades. Contact us today if you’d like to learn more about setting up a good retirement investment portfolio.

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financial mistakes

Avoid Making These Financial Mistakes

Managing and controlling your personal finances is no easy task because it involves careful planning, experience and continual learning to reach the point where you finally feel at ease about the direction your financial future is taking. As such, it’s inevitable that you’ll make at least one or two money-related mistakes along the way. 

Below are some common financial mistakes that can be avoided:

Excessive Spending

It has been said that great fortunes are often lost one dollar at a time. It might not seem like a big deal when you splurge on eating out or buying that coffee every morning, but in reality, every penny you spend will add up over time. 

Spending $30 on that restaurant meal once a week will cost almost $1,600 per year, an amount that could make a sizeable dent in an auto loan or mortgage balance over time. Although you may feel that you deserve this weekly splurge, you should only give in to it if you know that it won’t affect your long-term financial goals.

Not Having an Emergency Fund

More than half of working Americans have admitted that they would have to pay for a $400 emergency by using a credit card because they have no savings set aside. This behavior will not only cause debt to accumulate quicker than you realize; over time, that $400 emergency could end up costing you double that amount because of accumulated interest and finance charges. 

It’s recommended to have an emergency fund that can cover a minimum of three months of regular expenses – this will become a literal financial lifesaver over time.

Making Minimum Payments on Credit Cards

Although many individuals think credit cards are helpful and provide them with reward points, the hard truth is that they become dangerous where financial responsibilities are concerned – especially when you only make the minimum required payments on outstanding amounts each month. 

If you have to use a credit card for any reason, ensure that either the full amount is repaid as quickly as possible or that you repay a fair bit more than the minimum required payment. This will reduce the amount of interest that is being charged over time.

Failing to Save for Retirement

Several Americans delay starting retirement funds because they think ‘there’s still lots of time to do this.’ However, this time of your life will arrive before you even realize it.

Starting a retirement fund in your 20s or 30s will not only mean that you’ll need to set aside smaller amounts each month; the power of compounding interest over a few decades will help ensure that your money grows by a sizeable amount – giving you enough to retire on when the time comes. 

It can seem overwhelming to try and compile a budget, establish an emergency fund and save for retirement at the same time. However, taking one step at a time will help you achieve these goals and provide you with the peace of mind you deserve where your financial future is concerned. 

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