Tag Archives: retirement

early retirement

Points to Consider before Taking Early Retirement

While some individuals are forced to take early retirement due to job losses, deteriorating health, or unexpected family responsibilities, others may choose to retire early so that they can spend more time engaging in activities that they enjoy such as traveling, volunteering, or spending time with friends and family. Regardless of why you may be considering retiring early, it’s essential to consider the following pros and cons before pulling the plug on your job. 

Pros of Early Retirement

  1. It can be Beneficial for your Health

When you no longer have to rush to work each day, you’ll be able to get the sleep you truly need, spend more time out in the fresh air and sunshine than before and generally enjoy a more relaxed pace of life. 

  1. You’ll have Time to Travel

Having more time on your hands will also mean that you’ll be able to travel more – no more limitations due to only having a few vacation days per year at your corporate job. The earlier you’re able to retire, the more time you’ll have to see as many places as possible before age-related health issues arise. 

  1. You Have the Chance to Embark on a New Career

If you’ve been considering changing careers, doing so sooner rather than later will allow you to stand more chance of being noticed by potential employers. You may even be considering starting your own business, and the earlier you can do this, the more chance you’ll have of making a success of it. Launching your own business at age 55 could provide you with intellectual stimulation for at least another 15 to 20 years.

Cons of Early Retirement

  1. A Smaller Social Security Benefit

The earlier you take Social Security, the smaller your payments will be. For example, if you were born in 1960 or later and you start taking benefits at age 62 (the earliest age you’ll be eligible to do so), you will receive payments that are 30% lower than if you had to wait until age 67. For every year that you don’t take Social Security from age 67 to 70, your payments would be 8% higher each month. 

  1. Retirement Savings will have to Last Longer

If you retire at 50 or 55 and live to age 90, your IRAs and other retirement accounts will need to have sufficient balances in them to support you for 35 to 40 years. However, if you retire at 70 or 75, these funds will only have to last for between 15 and 20 years. 

  1. You’ll have to Foot the Bill for Health Insurance

In many cases, you’ll have to cover the cost of health insurance yourself until you become eligible for Medicare when you turn 65 – and premiums can be double or even triple of what you were paying while working.

Deciding when you should retire is not just a matter of making up your mind and handing your notice into your boss. If you would like to learn more about making the most of retirement, contact us today. 

 

Continue reading
retirement healthy

Keep your Body and Mind Healthy after Retirement

Although retirement sounds like a dream come true for several individuals, the end of what has often been a lifelong career path is usually accompanied by a sudden decline in mental stimulation – which can result in the development of many different health issues. As such, it’s essential that you keep your mind and body as active as possible once you’ve stopped working and the tips below can help you achieve this. 

  1. Learn a New Hobby or Skill

Do you have interests that you simply didn’t have time for while you were working? If so, now may be the ideal time to pick up on them. Don’t be afraid to sign up for those ballroom dancing classes, art classes, or even sewing classes. Now could even be the right time to learn how to play a musical instrument.

Studies have revealed that seniors who actively engage in one or more creative activities on a regular basis were at a far lower risk of developing conditions such as Alzheimer’s as they aged. 

  1. Remain Physically Active

Regardless of whether you enjoy tacking challenging hiking trails, taking a slow bicycle ride through your neighborhood or playing in the yard with your grandchildren, you will be stimulating your body and mind simultaneously. 

Engaging in physical activity on at least three days per week will help keep bones strong, reduce your risk of developing high blood pressure and/or heart disease and even lower cholesterol levels over time. If you haven’t been overly active until now, it’s recommended that you schedule a physical exam with your healthcare provider before rushing into any form of exercise. 

  1. Calm your Mind

Many individuals think that their stress will miraculously disappear once they’ve stopped working. However, daily family life and even financial concerns can negatively affect your mental clarity. 

Some of the best ways to keep your mind clear and sharp are to become involved with yoga or meditation and to avoid unnecessary stressful situations wherever possible. It’s also a good idea to severely limit the amount of time you spend with people who are constantly exuding negativity. 

  1. Eat a Balanced Diet

Although no one is expected to live only on healthy foods day in and day out, you should do everything possible to ensure that the bulk of your food choices are as healthy as possible. 

A balanced diet is one that should include a wide variety of fresh fruit and vegetables, a selection of nuts, meat, fish and chicken (if you aren’t vegetarian or vegan) and a variety of healthy fats. In some cases, you may need to supplement your diet with fish oil capsules and a good multivitamin. 

Retiring from the workforce certainly doesn’t mean that you’ll have to give up everything else as well. The more active you keep your mind and body after you have stopped working, the healthier you will be. Making your mental and physical health a priority during retirement will ensure that you’ll be able to feel fit and healthy for as long as possible. 

Continue reading
covid 19

How COVID-19 Could Affect your Retirement Savings

COVID-19 has not only affected the way in which millions of individuals live and work each day; economists have noted that it could have disastrous effects on retirement savings as well – with some even being wiped out completely. Below are a few ways in which the current pandemic could have a negative effect on your retirement funding and plans.

  1. Retirement Savings worth Trillions of Dollars could Vanish

During 2008, the Russell 3000 index that reflects the performance of the whole US stock market lost almost 40% in value. This resulted in the value of several US retirement accounts such as 401(k)s and numerous private retirement accounts falling by approximately 25% – effectively erasing as much as $2 trillion in retirement savings. 

So far in 2020, the Russell 3000 Index fell by 25%, and this has decimated as much as $3.8 trillion in retirement savings funds and accounts.

  1. Some Employers may Cut matching Contributions for 401(k) Accounts

More than 10 million employees have filed claims for unemployment benefits in the past few weeks, and those that have been laid off are also no longer able to contribute to their 401(k) plans. 

Virtually all employers that provide 401(k) plans for employees offer to match contributions up to predetermined amounts, and these matches usually average up to 5% of an employee’s earnings. However, as the economy takes a nosedive, several employers are cutting costs wherever possible – with these matching contributions often being the first in line to be reduced or even eliminated. 

  1. Employees may have to Dip into Retirement Accounts

When financial emergencies arise – such as having income eliminated during the current pandemic – several individuals have no other option but to dip into their retirement accounts just to put food on the table or avoid being evicted from their homes. 

If the funds withdrawn from these retirement accounts are not repaid, this will result in many employees not having sufficient capital to see them through retirement. 

  1. Some Employees may have to Retire Earlier than Planned

Many older employees who have been laid off as a result of the pandemic may be forced to take early retirement if their places of work don’t reopen or staff numbers are reduced upon opening. In many cases, older employees are among the first to be laid off when companies have to cut expenses. 

Although Social Security provides a financial lifeline to unemployed individuals who are over the age of 62, beneficiaries who start collecting as soon as they reach 62 will receive up to 30% less funding than if they had been able to hold out until reaching age 66 and 8 months.

It’s clear that the pandemic will have a negative effect on the value of retirement accounts for the foreseeable future. However, this doesn’t mean that all is lost where your savings are concerned. If you would like to find out how you can get your retirement savings back on track or you’d like to start planning safor this time of your life, contact our advisers today.

Continue reading
pandemic savings

Dealing with Financial Uncertainty during a Pandemic

Coronavirus has significantly impacted the daily lives of millions of individuals all over the world, with several countries implementing stringent lockdown procedures to curb the spread. Not only has this affected the way people live in general; many businesses have had to close as well, leaving scores of individuals with any way to earn an income. If you’re currently struggling with financial uncertainty, the tips below can help you through this challenging time. 

  1. Put Large Purchases on Hold

The last thing you want to do when your finances are severely limited or worse, non-existent is commit to making any large purchases – especially if they will require monthly repayment. For instance, you may have been planning on replacing your vehicle or doing home upgrades while your finances were more stable, but now is certainly not the time to spend any money unnecessarily. Hold off until such time as your income is more stable.

  1. Cut General Expenses wherever Possible

At a time when your next paycheck is not a certainty, you’ll also want to keep your general spending to an absolute minimum. This is the ideal time to go through each line item in your budget and determine whether it’s a genuine necessity or not. Items such as Netflix or other monthly subscription services may be nice to have but should be eliminated until such time as you’re more financially stable. 

When planning your grocery list, snack items may sometimes need to be reduced or even eliminated to cut costs. Sugary cereals can be replaced with oatmeal for example, which will provide far more value for money over time. Although it may initially be difficult to eliminate fancier foods, it’s important to remember that maintaining financial stability is far more important over time than a bag of crisps.

  1. Don’t be too Proud to Apply for Assistance

Although many individuals think that applying for and obtaining government assistance is only for ‘poor folk.’ However, various stimulus packages and other forms of financial assistance have been made available in each state to specifically address shortfalls that members of the public are experiencing as a result of not being able to work at the moment. 

While it may seem like there’s a tedious amount of paperwork to fill in when applying for this assistance, it will certainly go a long way in helping you to put food on the table or even pay your rent while you aren’t able to earn an income as usual. Most recipients who have applied for assistance have received direct deposits into their bank accounts within a few days at the most. 

The most important aspect to remember when dealing with any form of financial uncertainty is to limit spending wherever possible – and until such time as you’re able to work again. If you’re unsure of how to compile a realistic budget or you need assistance with regards to seeing where some of your expenses can be trimmed or even eliminated, get in touch with our financial team today. We will be more than willing to assist you. 

Continue reading

Can you Save for Retirement and Pay for your Kids’ College Simultaneously?

While there’s nothing wrong with parents who focus on their kids’ goals with regards to college, research has indicated that more and more parents are now doing this at the detriment of their own retirement. Although it’s OK to provide support to your kids while they’re in college, it can be extremely difficult to balance that along with your own plans to retire in a decade or two. 

Firstly, it’s crucial to determine how much you will be able to comfortably set aside for your own retirement as well as your kid’s college costs. All of these expenses must be considered in conjunction with each other so that you can see where changes might need to be made to one or both of them. 

Here are some questions that require honest and direct answers because they will help you determine what your financial limitations are:

 

Covering College Expenses

  • Are you going to pay for all or part of your child’s college journey?
  • How many years are left before your child starts college?
  • Will they attend public or private college?
  • Do you think your kids will qualify for any form of financial aid?
  • Will grandparents or any other family members be contributing towards college costs or not?
  • If your kids have specific academic, artistic or athletic abilities, id there a chance that they would be able to qualify for any scholarships?

 

Covering Retirement Savings

  • How do you want to live after you’ve retired? Do you want to simplify your life or would you like to travel more?
  • Does your current employer offer any form of retirement or pension plan where matching contributions are provided?
  • How many more working years do you have left before reaching retirement?
  • Will you or your spouse still work part-time after officially retiring or not?
  • Have you already got a Roth IRA or other form of IRA in place?
  • Are you going to need Social Security benefits to assist with your retirement? If so, it’s essential that you check online to see the amount you’ll qualify to receive
  • What sort of income are you expecting form your existing retirement account balance?

 

What you can do if it’s not Possible to Pay for College and Retirement

In cases where it’s just not possible to pay for college and secure your retirement financially, you might need to ask:

  • Will you be content with delaying retirement by a few years in an effort to boost savings balances?
  • Are you willing to cut back on living expenses now or after retirement? You may be able to reduce expenses right away in order to have enough money later on or you can think about reducing spending once you’ve retired
  • Are you willing to keep working into your retirement years?
  • Will you be willing to make investments that are more aggressive? (This might not always be a good idea)
  • Will you be willing to have your kids attend more affordable colleges or contribute towards their college costs?

It’s essential that you not wait until your kids have finished college before you start saving for retirement because it will be almost impossible to save enough money to live on. If you require more information about being able to retire comfortably and still contribute towards your kids’ college education, get in touch with us today. 

Continue reading

Why you Need to Think about Retirement Today

Although several individuals spend a lot of time waiting for the day they can retire and pack away their briefcases for good, they often find the prospect of not working any longer scarier and more stressful than they initially thought. Retiring from the workforce is an alarming prospect for many people for numerous reasons.

 

Fear of not being Able to Afford to Live

Professionals who are earning a good living often dread the thought of having to retire because they think that they will no longer have enough money to live the lifestyle they have become accustomed to. 

In most cases, retirees have to live on a strictly fixed income – but this doesn’t always mean that expenses reduce as their income increases. Unfortunately, many senior citizens experience a sharp increase in their healthcare expenses and/or insurance premiums and this result in them having difficulty in paying their other regular bills. 

The prospect of not having a sufficient amount of money to live on is especially daunting to individuals who have little to no savings set aside as well. Many pensioners who are still fit and healthy also experience the stress of wondering what will happen to them if they outlive their retirement savings, especially if they don’t have any family close by.

 

No Longer being Independent

Getting out of bed to go to the office (or production line) requires people to stay independent. This means that many retirees worry that they won’t feel at ease to drive or perform other daily duties like they used to. Often, they will also express concern regarding the fact that their health could decline if they are no longer as physically active and mentally busy as they were before. 

 

Depression and Loneliness

Senior citizens who may already have lost a spouse or been divorced in previous years often look forward to being able to go to work and spend time with their colleagues during the day. 

After their kids have moved out of the house, many of these individuals find that they don’t want to be home on their own for extended periods of time as well – and this applies especially to senior citizens who haven’t made the effort to get out and socialize by joining community groups or taking part in church gatherings. 

Research has also shown that older people who spend a lot of time alone are far more prone to experiencing bouts of depression, and it’s been suggested that this could play a part in the fact that as many as 20 adults over the age of 65 take their own lives on a daily basis. 

Many people fear retiring for several different reasons. If you are close to retirement age, now is the right time to start thinking about the above-mentioned aspects as well as ways to remedy them before you leave your office and coworkers for the last time. This will help ensure that you’re able to make the most of your golden years, regardless of how you choose to spend them.

Continue reading

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.

Continue reading

How Younger Generations can Find Extra Cash to Save towards Retirement

When questioned about why they have not started saving towards their retirement years, many of the younger generation state that there is not enough money left over after paying off student loans and covering living expenses. However, many individuals discover that they are able to find additional cash to save for retirement when they are willing to put in a little extra effort. The advice below can help get you started towards achieving your financial goals for retirement. 

 

Carefully Inspect Bank Statements

Some of the biggest ways in which individuals lose money each month are repeated small purchases and non-cancelled subscriptions. Start by printing out a bank statement that covers your expenses for the past two to three months because this will allow you to see if there are expenses that can be reduced or even eliminated. For instance, consider making fewer trips to your local coffee shop and ensure that any unused subscriptions or membership fees are cancelled as soon as possible. 

Any money saved by taking these actions can then be put towards your retirement fund.

 

Consider Taking on a Second Job

If you currently work regular hours and cannot seem to find extra money to put towards retirement, taking on a second job (even temporarily) may be an option. Options such as driving for Uber or Lyft, or even delivering pizzas and other fast food in your spare time can help bring in a fair amount of additional cash. Although it may seem like you aren’t earning a lot from a part-time position, every dollar helps when it comes to investing towards your golden years. 

 

Avoid Taking on Unnecessary Debt

Although it’s sometimes necessary to take on debt – such as when you purchase a car or home – unnecessary debt can be classified as store credit cards and any other type of expenditure that isn’t absolutely necessary. 

If you do currently carry balances on store cards, credit cards and anywhere else for items such as clothing, gadgets and other non-essential items, consider paying these off as quickly as possible. Once this has been done, you can take the amount you were paying towards these and apply them to your new retirement savings plan instead.

 

Save those Raises and Bonuses

When receiving a raise or bonus at work, it can be tempting to let these funds simply be absorbed into your regular spending. However, even saving a portion of these instead of spending everything can make the difference between retiring and retiring comfortably. If you still have debt, funds from your raises and bonuses can be applied towards it so that it can be repaid quicker. After your debt has been repaid, you can channel these amounts to your 401(k), IRA or other investment funds you may have.

If you’re unsure of where you can make changes in your existing budget and spending habits, why not contact one of our team members today? They will be most willing to assist you so that you can achieve your goal of being able to retire comfortably.

 

Take advantage of your employer’s 401(k) and company match.

Here’s the simple breakdown of where your investing should start. First, look into your employer’s 401(k). If you have this and you’re able to, max out the amount of contributions you can put into this fund, which is $18,500 a year of your own money.

That $18,500 doesn’t include your company match. If your employer offers thisthen use it with a grateful heart. A company match of any percentage is a great employee benefit to get you even closer to your retirement goals. Remember though, that match isn’t part of the 15% you’re investing. It’s just a lovely little bonus.

After you hit the $18,500 mark, you’ll call in reinforcements such as the Roth IRA, which allows up to $5,500 a year. If you need help working through all this, or you’re ready to invest beyond those two levels, you should talk to an investing pro.

 

Rein in your spending.

It’s time to get real. With yourself. Review your money habits to see where you can rein in your spending. That gum-buying routine, drive-thru coffee habit, or comical T-shirt obsession could be costing you some serious money that would be way better used toward investing in retirement.

Be honest with yourself about places you overspend or budget lines that could be easily lowered. Here’s one simple solution as an example: Meal planning can save you around $200 a month. That would give an awesome jolt to your retirement savings right there—without a huge sacrifice other than some time being intentional with your grocery planning and shopping.

Continue reading

Benefits of Starting Retirement Saving in your 20s

Although retirement may seem like it will never arrive when you’re in your 20s, the truth is that your working years will pass you by quicker than you could imagine. Once you reach your late 30s or even early 40s, it can become increasingly difficult to start saving for retirement due to family and financial commitments. Below are some benefits you will enjoy by starting to save for your retirement years in your 20s.

 

You can Take Advantage of Compounding Interest

Compounding interest is by far one of the biggest benefits you will get to enjoy when you start saving for retirement as early as possible. It is a lot easier to let your money work for you over a timeframe of 40 to 50 years than over 15 to 20 years, meaning that you will be able to set aside a smaller amount of money each month when you’re younger as opposed to when you reach your late 30s or even 40s. Research has shown that individuals who start saving for retirement in their 20s can end up with as much as four times more money over time than those who delay their plans.

 

You will Have Freedom of Choice

Another distinct benefit you will have when starting retirement saving as early as possible is that you will have the freedom to choose how you will spend your time once you have exited the workforce. Are you keen to take a world cruise? Would you like to spend more time with your children and/or grandchildren? Do you want to do volunteer work for a charity that you love? Having sufficient retirement funds on hand will enable you to enjoy your golden years to the fullest. 

 

You won’t need to Rely Solely on Social Security

Although social security benefits are intended for retired persons to live on once they have stopped working, the harsh reality is that the payouts received will not even cover many basic items in full such as rent, food, clothing and transport. However, if you are prudent and start to save a minimum of 15% of your income in your 20s, you will not need to worry about how you will cover living expenses when reaching your 60s and 70s. 

 

Most People will be able to Take Advantage of Employer 401(k) Matches

Many employers still offer to match employee’s contributions when they are being made to a 401(k). Not only does this technically equate to free money in your retirement account; it will help your fund grow substantially faster over time – in many cases, up to 50% faster than other traditional forms of savings. 

While the topic of retirement saving may seem overwhelming, this need not be the case when you hire the services of a qualified and experienced financial planner. If you would like to learn more about planning for your golden years or you have any questions regarding investments, contact our friendly team today. 

Continue reading

5 Tips to Make Your Nest Egg Last Decades Longer

You’ve stashed money away for your retirement for decades. You carefully planned out how much you’d save and stuck to your plan. Now that you’ve finally reached the retirement you worked so hard for, all your careful planning is done. Right? Wrong.

People are now living longer than ever, and with an extended lifespan comes a longer time that your nest egg will have to last you. This means you’ll want to take steps towards making your nest egg last decades longer than you originally thought it would. How can you do that? Check out these five great ways below to get started.

 

1: Downsize

Downsizing your life isn’t only practical for financial reasons, but it can alleviate a lot of stress, too. That four-bedroom home you raised your family in was perfect, but now it’s probably much too large. You can either sell that home and use the funds to purchase a smaller home – stashing the excess away, of course. Or, you could choose to rent out your spare bedrooms or the whole house while purchasing a smaller place.

 

2: Pay Off Large Debts ASAP

Ideally, any large debts will have been paid off before you retire. This includes your mortgage and (if applicable) car loans. If they weren’t already paid off, however, aim to do that as quickly as possible – even if it means nixing any extra activities for the first year or two of retirement. Once those debts are paid off, you’ll have hundreds – or even thousands – of extra dollars each year.

 

3: Create a Residual Income

Creating a residual income means having an income that comes in each month, without you having to actually work. One of the most popular ways to do this is through real estate, which we discussed above. You could also consider something like selling stock photos online, which would be particularly great if you enjoyed photography.

 

4: Consider Freelancing

People who draw on their social security can create a certain amount of supplemental income each month. Just make sure you check what the limits are, so you don’t go over. Then, freelance from home a few hours each week to bring in a little extra spending cash. There are plenty of jobs you can do from home, including telemarketing, digital marketing, writing, or even tutoring.

 

5: Plan Your Withdrawals Carefully

If you want your nest egg to last at all, you need to be smart with your money. Don’t just withdraw funds from your savings accounts whenever you feel like it. Instead, plan out how much you will need each month and stick to that. You can plan ahead for things like Christmas, when you may need to spend a little extra. The point is to stick to your plan, no matter what.

If you implement a few of the above tips, you can help your nest egg last decades longer than you originally planned. Not only that, but you can still have the comfortable retirement you deserve.

Continue reading