Tag Archives: retirement funds

Being Smart with your Savings and Retirement Funds during this Difficult Time

At present, large parts of the world are on lockdown status due to the rapid spread of Coronavirus. While it may be little more than an inconvenience for some individuals in that they cannot leave their homes as often as they like at the moment, for others, it spells financial disaster because of the fact that a number of them are unable to go to work to earn a living. 

As such, it has become more crucial now than ever before to ensure that you work as wisely as possible with any money you may have available to you at the moment. Below are a few ways in which you can stretch each dollar as much as possible.

 

Consider Filing for Unemployment

Although the rules to qualify for receiving unemployment benefits tend to vary from one state to another, many have become somewhat more lenient with regards to providing financial assistance to families where breadwinners have been laid off or had their hours cut substantially as a result of Coronavirus. 

In many cases, applications to file for unemployment can now be completed online, which can save a lot of time and effort. 

 

Avoid Dipping into Retirement Accounts

When times get tough, many individuals turn to their retirement accounts as a convenient way of borrowing money. However, this is not recommended because you will be penalized in two ways. Firstly, you will lose out on any interest that would have accumulated on the amount of money you’ve borrowed, and secondly, you will highly likely be taxed on the amount of money that has been borrowed from a retirement fund as well. 

In fact, many financial experts only recommend dipping into your retirement funds if you are facing immediate foreclosure on your primary residence. 

 

Only Purchase Essentials

When funds are as tight as they are because of shortened working hours or layoffs, it’s not the time to consider purchasing a new flat screen TV or another pair of fashion shoes. Instead, restrict all purchases at this time to genuine essential items such as food, rent or mortgage, transport and utility bills.

In situations where you’ve been granted a reprieve for paying any of the above-mentioned bills, keep in mind that once the lockdown period has ended, all outstanding amounts may become due with immediate effect. As such, it’s strongly recommended that you continue paying as much as you possibly can on rent, mortgage, utilities and car notes. 

With regards to groceries, you can save up to 30% on your bill if you’re willing to opt for store brand items, plan weekly meals around sale items and reduce the amount of non-essentials that you put in your cart such as crisps, soda and other luxury items. 

Although the next few months may be extremely tight financially for several families, keeping the above-mentioned tips in mind can go a long way to help get the most out of every dollar wherever possible. 

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Dealing with Unexpected Medical Costs during Retirement

While you should be able to relax and enjoy your retirement years as much as possible, a possibility always exists that could result in you having to cover the cost of large and unexpected medical bills. If you’re unfortunate enough to land in this financial position, there are some steps you can take to try and reduce the effect that it will have on your retirement funds as much as possible. 

 

Never Rely Entirely on Medicare

Several older individuals are under the impression that Medicare will be able to handle all of their health-related costs after they reach the age of 65. However, this doesn’t always work according to plan, which is why it’s important to think about purchasing a Medigap policy from a private insurer and/or a Part D prescription medicine plan. 

Keep in mind that it will only be possible to purchase Medigap cover if you already have Medicare Part A (hospital services) and Medicare Part B (standard doctor services) sorted out. This alone will help you cover as many potential medical emergencies as possible that could occur after you’ve retired. 

 

Find out if there are any Alternative Options

If you’ve had the same prescription for more than a few years, you may have just been having it refilled – often without thinking about the out of pocket costs it incurs. However, once you’re no longer working, you’ll need to do everything you can to keep your out of pocket medical expenses as affordable as possible. One of the easiest ways to do this is to inquire about the possibility of generic medications

Using generic medications can help reduce your monthly prescription expenses by as much as 75%. Another way that you could reduce these costs is by changing to preferred healthcare providers or asking whether any prescription discount cards are available for your medicines. 

 

Find out about Potential Assistance Programs

When it comes to being able to obtain your prescription medicines at affordable prices each month during retirement, you should never be too shy or afraid to inquire about the possibility of there being any assistance available that could help shoulder the cost. 

Several organizations are available that can provide you with assistance if you’re struggling to cover the cost of your medications. For instance, if you require new prescription glasses, associations such as the Rotarians will often be able to assist you – along with providing an eye exam. The AARP will also be able to provide you with a host of information in this regard as well.

When it comes to keeping your medical expenses as low as possible during your golden years, the saying, “prevention is better than cure,” certainly applies. As such, you should do your part as much as possible by remaining active and consuming a healthy diet. This will help ensure that you’re able to make the most of these precious years without having to worry about trying to cover a multitude of health-related expenses. 

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Practical Tips for Downsizing after Retirement

For most individuals, images of retirement tend to involve world travel, spending copious amounts of time with grandkids or other family members or even being able to enter gardening contests all year round. However, one of the best ways to ensure that you’ll be able to make the most of your golden years is to downsize various aspects of your life once you stop working. The advice below will not only help you to lessen your current responsibilities; it can help stretch your retirement funds as much as possible at the same time. 

 

Think about Moving House

Many individuals who have had kids still live in fairly large homes – even after the youngest may have flown the coop. This means that you may be spending more on property taxes, utility bills and general maintenance than you need to, which will in turn erode your retirement funds. Moving to a smaller house, apartment or condo will not only enable you to save a lot of money over the long term; it will also enable you to enjoy more free time because of having far less maintenance and cleaning to deal with.

 

Don’t be Too Extreme

While most individuals usually need to downsize their homes once they’ve stopped working, it’s important to not be too extreme. For instance, if you’ve lived in a 2,500 sq. ft. home, chances are that you won’t be happy resorting to tiny house living (think 600 sq. ft. or less). When downsizing, you should also take your interests and hobbies and those of your spouse into account so that each of you will still have enough space to enjoy these activities without getting underfoot of each other. 

 

Assess your Current forms of Transportation

While still employed, many couples find that differing work schedules render it absolutely necessary to each own a vehicle. Once retired though, you and your spouse may no longer need to pay for repairs and maintenance on two vehicles because your schedules will be far less stressful. Selling your second vehicle will not only reduce your monthly maintenance bill; you will be able to reduce the burden of additional vehicle payments as well.

 

Don’t Cut Friends and Family Off

Although it’s usually necessary to downsize after you retire, there’s no need to always move out of town or cross-country. Many retirees find that they can even relocate within their current neighborhood or relatively close to it, enabling to keep in easy contact with close friends and family. Relocating to a smaller property in your neighborhood also means that you won’t have to give up any regular activities you might be taking part in, such as gym classes, book clubs and other community events.

If you plan accordingly, you and your spouse won’t need to be living miserably in a tiny, cramped apartment. In fact, many retirees who have downsized in a practical way have said that it has allowed them to take advantage of some of the best years of their lives. Contact us today if you’d like to learn more about practical retirement planning.

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Are your Retirement Funds Dealing with a Fluctuating Market?

 

Over the past twelve months, the stock market has become especially volatile. A stock market correction followed by massive selloffs of stock have left many people feeling uncertain about their investments. This is especially true for those investing in stocks as part of their retirement strategy. Should you reevaluate your investment strategy now or simply wait for the market to realign itself? Here’s what some leading investment experts are saying.

 

Increase in People Seeking Advice

Retirement planners everywhere have recently noticed a groundswell of people looking to reevaluate their investment plans. It seems the market’s uncertainty has many wondering whether or not they are on the right track.

Naturally, those who are closer to retirement age or have stock-heavy portfolios are more concerned than others. However, the fact that the stock market has been especially volatile as of late does not necessarily mandate a change in retirement planning. Most retirement planners advise against making emotional decisions, and instead recommend looking at a variety of factors first.

 

Number of years before retirement.

Workers who are very close to retirement may not want to assume as much risk as those who are younger. That’s because there is less time available in which to recover losses.

On the other hand, you could need to assume slightly more risk if you are not quite where you need to be. That doesn’t necessarily mean choosing high-risk investments, but it could require you to diversify your portfolio a bit.

 

Risk tolerance

This refers to the amount of risk you are comfortable with, and varies from person to person. If you are operating outside your comfort zone, chances are that the recent fluctuations in the stock market could be causing you a great deal of anxiety. No amount of future earnings is worth losing sleep over at night. If the stock market has caused you undue stress, it could be time to make some changes.

 

Retirement goals

Perhaps it has been awhile since you began investing. If so, your goals may be far different now than they were in the beginning. Recent life changes could also have impacted your goals, meaning that revamping your investment plan is now in order.

 

Plans after retirement

You might not have thought about it, but the way you plan to live after you retire can greatly impact how much money you need. When reevaluating your retirement plan, consider whether you will need to make other changes such as downsizing your home or continuing to work at least part time. Think about ways to cut expenses and stretch the dollars you do have as much as possible.

The stock market will always fluctuate, though more so at certain times than at others. Even so, market changes do not always mean your retirement plan is always in jeopardy. A stock market can be the right time to reevaluate your plan to ensure it still fits your needs. Make changes based on the totality of the circumstances rather than emotion to achieve the best possible results for you.

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Will Recent Market Fluctuations Affect your Retirement Funds?

 

 

Recently, dramatic dips in the stock market have caused many people to worry about their economic future, particularly as it deals with their retirement funds. Are significant drops in the Dow Jones enough to spoil your retirement dreams? Many economists don’t think so, and here is some practical advice they would like you to consider.

 

Opportunities Related to Stock Market Correction

A stock market correction occurs whenever stocks drop more than ten percent from their peak sales price. Corrections occur quite frequently, but rarely turn into a “bear market”, which happens when stock prices drop more than 20 percent.

According to economic author and Forbes contributor John Wasik, a stock market correction provides the perfect opportunity to save for retirement. You can purchase a greater number of shares without investing a great deal of money, and are better able to fine-tune your plan and diversify your portfolio.

Times when you have little money to put back is also when you can focus most on low-cost funds that have very little costs associated with them. For many, this is an easy way to begin investing toward retirement.

 

Revamping your Retirement Plan

A stock market correction often serves as a reminder that markets are volatile. Accordingly, many people elect to revamp their retirement plans anytime there is a drastic fluctuation in stocks. Look at your portfolio to determine how much you have invested in stocks, bonds, and other interests.

If your portfolio is very stock heavy and you are close to retirement age, now may be the time to diversify. On the other hand, if you have more than 20 years to go, you have more than enough time to make up any losses you have incurred, and may therefore wish to leave things alone.

Even if you are nearing retirement, a sudden drop in stock prices doesn’t have to spell disaster. Money magazine recommends ramping up your savings, particularly if you are already stashing away less cash than you should be. An added benefit is the fact that you won’t have to worry about unnecessary fees and commissions eating up your earnings.

 

An Opportunity to Rebalance

U.S. News and World Report advises rebalancing or adjusting your holdings at least semi-annually. You may also need to rebalance whenever certain assets fluctuate by more than five percent. This is something that often occurs following a stock market correction such as the one we saw recently.

Rebalancing keeps your portfolio in line with your desired goals as well as your risk threshold. It also makes you more aware of buying opportunities due to lower market prices. If you are not rebalancing your portfolio on a regular basis, you may be subjecting yourself to unnecessary risk, and may also notice stagnant or little growth over time.

Recent downturns in the stock market are not necessarily cause for alarm, but that doesn’t necessarily mean you should ignore them. Take advantage of the opportunity to reevaluate your retirement plan and invest more and you will be better off for it in the long run.

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Don’t Make This Rollover Mistake with Retirement Funds

 

 

One of the best things about retirement savings is its status as a nontaxable fund. You’re always hearing about mistakes like withdrawing from 401ks and social security early, forcing Americans to pay heavy taxes on their retirement money. Because retirement and funding are complicated processes, there are a few mistakes you can make that will make your money taxed higher than you’d expect.

Individuals who are investing in their retirement often decide to rollover their accounts in order to invest differently, when they are changing their retirement plan, or when they start working at a new company. Individual retirement accounts (IRAs) are heavily regulated to prevent fraud, but because of this, you could easily make mistakes while rolling over your accounts.

According to a recent article by CNBC, you should keep in mind these three things when rolling over your IRA.

First, “When rolling over an individual retirement account, you want to try to do a trustee-to-trustee or bank-to-bank transfer,” says Ed Slott, an IRA expert at Ed Slott & Co. Second, “The other way to rollover an IRA is through a 60-day rollover, whereby you receive a check and must deposit it into a new retirement account [within the 60-day time period].” And third, “You can only do one 60-day rollover per year. If you do more than one, your retirement funds become taxable.”

You also have the option of using a direct rollover. According to the IRS website, “If you’re getting a distribution from a retirement plan, you can ask your plan administrator to make the payment directly to another retirement plan or to an IRA. Contact your plan administrator for instructions. The administrator may issue your distribution in the form of a check made payable to your new account. No taxes will be withheld from your transfer amount.”

When approaching the 60-day rollover, many individuals either neglect to deposit their checks within the time period. However, the greatest cause for concern is the once per year rule because many Americans are not aware of it, so they don’t even realize their funds are becoming taxable when they decide to rollover.

The 60-day rollover approach is particularly risky because it is the only form of rollover with the once per year rule. All other forms of rollover are exempt.

The penalty for a second rollover is fatal as you no longer have your money in the IRA, so you face the heavy taxes on this money as if you withdrew completely. When making adjustments to your IRA and other retirement accounts, you need to know all of the facts before you take action.

You should always be proactive about organizing your IRA and retirement plans. Play it safe and always consult a professional financial planner before committing to major changes with your savings. Remember that the decisions you make today can build you up toward a happy and comfortable retirement in the future.

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