Finance

10 Biggest Financial Regrets of Retirees

by Benjamin Roussey|Posted on | 4 minute read | Advertiser notice
Financial Regrets of Retirees

Retirement is widely recognized as the golden period of life, a time to relax and enjoy the fruits of decades of labor. With that said, for many retirees, financial regrets can cast a shadow over this otherwise idyllic phase. Despite careful planning and saving, unforeseen circumstances or uninformed decisions can lead to regrets that may have a lasting impact on one’s retirement years.

Insufficient Retirement Savings

A common regret among retirees is not saving enough for retirement. Inadequate savings can result in a lower standard of living, restricted leisure activities, and even financial dependence on others. Factors contributing to this regret include underestimating retirement expenses, relying too heavily on Social Security benefits, and not starting to save early enough. 

To avoid this regret, financial advisors recommend setting clear retirement goals, regularly reviewing savings plans, and maximizing contributions to retirement accounts like 401(k)s and IRAs.

Market Losses and Poor Investment Decisions

Market volatility can significantly impact retirement portfolios, leaving retirees with less than anticipated funds. Many retirees regret not adopting a diversified investment strategy or succumbing to emotional decisions during market downturns. 

Overexposure to risky assets, such as stocks, without considering one’s risk tolerance and time horizon, can amplify these regrets. To mitigate such risks, retirees should diversify their investment portfolios, rebalance regularly, and seek professional advice when making investment decisions which is vital during times of inflation.

Underestimating Healthcare Costs

Healthcare expenses often escalate during retirement, catching many retirees off guard. From medical procedures to long-term care, these costs can quickly deplete retirement savings and lead to financial stress. Retirees commonly regret not factoring in healthcare expenses when planning for retirement or underestimating the impact of inflation on healthcare costs.

To address this, retirees should incorporate healthcare expenses into their retirement budget, explore Medicare options, and consider purchasing supplemental insurance coverage.

Inadequate Estate Planning

Failing to plan for the distribution of assets upon death is another regret shared by many retirees. Without a comprehensive estate plan, assets may be subject to probate, resulting in delays, legal fees, and potential disputes among heirs. Many retirees regret not having a will, trust, or power of attorney in place, leaving their estate vulnerable to uncertainty and mismanagement. 

To avoid this regret, retirees should consult with estate planning professionals to create a personalized plan that aligns with their wishes and protects their assets for future generations.

Overspending in Early Retirement

The newfound freedom of retirement can tempt some individuals to overspend during the early years, leading to financial strain later on. Retirees may regret not adhering to a sustainable spending plan or failing to adjust their lifestyle to match their retirement income. 

Impulsive purchases, extravagant vacations, or supporting adult children financially can all contribute to this regret. To prevent overspending, retirees should create a realistic budget, prioritize essential expenses, and resist the temptation to withdraw large sums from retirement accounts prematurely which is hard to do when food prices are super high and when things aren’t going well.

Delaying Retirement Planning

Procrastination can be a costly mistake when it comes to retirement planning. Many retirees regret not starting to plan and save for retirement earlier in their careers, thereby missing out on the benefits of compounding interest and long-term investment growth. 

Waiting too long to begin retirement planning can result in having to play catch-up later in life, leading to higher savings targets and increased financial stress. To avoid this regret, individuals should start saving for retirement as early as possible, even if it means starting with small contributions, and consistently increase savings over time.

Ignoring Longevity Risk

With increasing life expectancies, retirees face the risk of outliving their retirement savings, commonly referred to as longevity risk. Underestimating how long retirement funds need to last can leave retirees in a precarious financial situation later in life. 

Many regret not accounting for longevity risk when determining their retirement income needs or failing to incorporate strategies such as annuities or guaranteed income streams to provide lifelong financial security. To address this, retirees should consider their life expectancy, health status, and lifestyle factors when planning for retirement income, and explore options for mitigating longevity risk.

Overlooking Tax Planning Opportunities

Taxes can significantly impact retirement income and asset preservation, yet many retirees regret not incorporating tax planning into their overall retirement strategy. Failing to optimize tax-efficient withdrawal strategies, overlooking tax-saving investment vehicles, or neglecting to consider the tax implications of Social Security benefits can result in paying more taxes than necessary in retirement. 

To minimize tax-related regrets, retirees should educate themselves on tax-efficient retirement planning strategies, such as Roth conversions, strategic asset location, and charitable giving, and work with tax professionals to maximize tax savings opportunities.

Neglecting to Adapt to Changing Circumstances

Retirement planning is not a one-time event but an ongoing process that requires adaptability to changing circumstances. Retirees may regret not adjusting their financial plans in response to life events such as economic downturns, health crises, or changes in personal circumstances. 

Failing to reassess retirement goals, update investment strategies, or revise spending habits in light of changing needs and priorities can lead to financial regrets later in life. To avoid this, retirees should regularly review their financial plans, monitor progress towards their goals, and be prepared to make adjustments as needed to stay on track for a secure and fulfilling retirement.

Not Seeking Professional Financial Advice

Some retirees regret not seeking guidance from financial advisors or professionals earlier in their retirement planning journey. Attempting to navigate complex financial decisions alone can lead to missed opportunities, suboptimal investment strategies, and inadequate risk management. 

Retirees may regret not leveraging the expertise of professionals to help them develop personalized financial plans, optimize investment portfolios, and navigate tax implications effectively. To avoid this regret, retirees should consider working with certified financial planners or advisors who can provide unbiased advice tailored to their individual circumstances and goals.

It’s Time to Prepare for a Rewarding Retirement

Retirement should be a time of fulfillment and relaxation, free from the burden of financial regrets. By understanding the common pitfalls that retirees face and taking proactive measures to address them, individuals can enhance their financial security and enjoy a more fulfilling retirement experience. Remember, it is never too late to take control of your financial future and make informed decisions that pave the way for a rewarding retirement journey.

Finance, Money

15 Strategies to Catch Up if You Are Behind on Retirement Savings

by Benjamin Roussey|Posted on | 3 minute read | Advertiser notice
Retirement Savings

Planning for retirement is a critical aspect of financial well-being, but life’s uncertainties can sometimes lead individuals to fall behind on their retirement savings. Whether it is due to unexpected expenses, career setbacks, or other financial challenges, catching up on retirement savings is a common concern. In this article, we will discuss various strategies and practical tips to help you bridge the gap and get back on track with their retirement savings.

Assess Your Current Situation

Before devising a plan, it is essential to have a clear understanding of your current financial status. Calculate your net worth, evaluate your existing retirement accounts, and identify any outstanding debts. This assessment will serve as a foundation for creating a realistic and achievable plan.

Set Realistic Retirement Goals

Establishing clear retirement goals is important. Define the lifestyle you envision during retirement and estimate the expenses associated with it. With a realistic understanding of your needs, you can better determine how much money you need to save and identify areas where adjustments can be made which is critical during these recessionary times.

Maximize Retirement Contributions

Take advantage of tax-advantaged retirement accounts such as 401(k)s, IRAs, or similar plans. Maximize your contributions to these accounts, especially if your employer offers a matching contribution. The compounding effect over time can significantly boost your retirement savings.

Utilize Catch-Up Contributions

Individuals aged 50 and older are eligible for catch-up contributions to retirement accounts. For example, in the United States, the IRS allows an additional catch-up contribution to 401(k) plans and IRAs. Taking advantage of these catch-up provisions can substantially accelerate your retirement savings.

Reevaluate Insurance Policies

Review your insurance policies, including health, life, and property insurance. By optimizing your coverage and possibly bundling policies, you may find opportunities to reduce insurance costs, freeing up more funds for retirement savings.

Take Advantage of Employer Benefits

Explore all the benefits offered by your employer, beyond the retirement plan. Some companies provide additional perks like employee stock purchase plans, health savings accounts (HSAs), or financial education resources. Taking full advantage of these benefits can enhance your overall financial well-being.

Educate Yourself on Tax-Efficient Withdrawal Strategies

Gain an understanding of tax-efficient withdrawal strategies during retirement. By strategically withdrawing funds from different types of accounts (e.g., taxable, tax-deferred, and tax-free), you can minimize tax implications and maximize the longevity of your retirement savings.

Optimize Investments

Review and adjust your investment portfolio to align with your risk tolerance and retirement timeline. Consider diversifying your investments to potentially enhance returns while managing risk which is fundamental during economic uncertainty which is certainly the case now. Consult with a financial advisor to ensure your investment strategy aligns with your retirement goals.

Invest in Your Skills

Invest in education and skill development to enhance your earning potential. Acquiring new skills or certifications may open up opportunities for career advancement or a higher-paying job, contributing to increased income for retirement savings which can help offset those higher gas prices and so on.

Delay Retirement or Work Part-Time

If feasible, consider delaying your retirement age or exploring part-time work options. Working a few more years can increase your overall income and provide additional time to contribute to your retirement savings, reducing the financial strain on your nest egg.

Cut Unnecessary Expenses

Evaluate your current spending habits and identify areas where you can cut unnecessary expenses. Redirect the saved funds towards your retirement savings. Creating a budget and sticking to it can free up additional money for your retirement fund.

Automate Savings

Set up automatic transfers from your paycheck to your retirement accounts. Automation ensures consistency in savings and removes the temptation to spend the money elsewhere. Many employers offer automated payroll deductions for retirement contributions.

Downsize Your Lifestyle

Consider downsizing your home or making other lifestyle adjustments to reduce living expenses. A smaller residence or simplified lifestyle can lead to substantial cost savings, allowing you to allocate more funds towards retirement.

Explore Additional Income Streams

Look for opportunities to generate additional income, such as freelancing, consulting, or starting a side business. Supplementing your primary income can provide extra funds for retirement savings.

Review Social Security Strategies

Understand the implications of when you choose to start receiving Social Security benefits. Delaying the start of benefits can lead to higher monthly payments, providing a valuable source of income during retirement.

It is Never Too Late to Focus on Retirement Savings

Catching up on retirement savings requires a combination of disciplined financial management, strategic planning, and sometimes lifestyle adjustments. By implementing these proven strategies, you can take meaningful steps towards securing a comfortable retirement. Remember, it’s never too late to start, and with dedication and the right approach, you can significantly improve your financial outlook in the years leading up to retirement.

Money

12 Easy Ways To Earn Money After Retirement

by Benjamin Roussey|Posted on | 3 minute read | Advertiser notice
Earn Money After Retirement

Retirement does not have to mean that you stop earning money even if you are fit enough to work. If spending endless hours staring out from the porch doesn’t sound like something you want to do in your retirement, then here are some proven and easy ways to make money after your retire. 

1. Host People

You can rent out your extra space and host people from around the world through Airbnb. There are over 192 countries listed on the platform. You can rent your entire home or a room by the night, week, or month. The best way to make money by hosting people is to cash in when there is a big event happening in your city. 

2. Try “Rent a Grandma”

You can share your love and wisdom while making some money by uploading your profile on Rent a Grandma. You can accept jobs from families for eldercare, childcare, being a personal assistant, tutoring, and more. You can directly negotiate with the families about payment and job responsibilities. You can also think of starting your own franchise. 

3. International House Sitting

There are a growing number of people that are looking for house sitters. You can try international house-sitting websites to spend a few weeks taking care of someone else’s house. Consider signing up with Nomador, Mind My House, or Trusted Housesitters. 

4. Handmade Products

The microbusiness movement is taking the world by storm. You can create a store on Etsy and use it for selling products. Creative people across the country are selling handmade products on Etsy and other stores as a side hustle. You may just earn more money retired than you did as part of the workforce. 

5. Freelance Tutoring

International students are usually in need of mentoring on specific topics and subjects. Freelance tutors help them through online or virtual sessions. With that said, you should be a subject matter expert. While you don’t necessarily need to have a degree, it’s always appreciated. 

6. Try Blogging

A lot of people make staggering sums of money from blogging. In fact, for many, it is their sole income stream. Stemming from this, blogging is a time-intensive opportunity. You won’t be able to make money overnight. You will need to devote consistent dedication. Make things easier by choosing a subject that you really love talking about and know a lot about as well. 

7. Mystery Shopping

There are many companies out there that pay people to shop at their client’s businesses. The motive here is to get honest feedback. Business owners use the undercover service as a quality check for customer service. There are several legitimate muster shopping companies across the world. It’s best that you work with a company associated with Mystery Shopper Providers Association. 

8. Pet Sitting

There is nothing better than getting paid for doing something you love. You can easily transform your love of animals into earning some extra cash which is great during a recession. You can either sign up with a pet-sitting company or venture out on your own. If confused, you can start by posting flyers advertising your services in the neighborhood. 

9. Go Online

It has never been easier to sell your skills online to make some quick cash. Fiverr is a high-energy website that can help you get connected with people that need your services. Things don’t need to be technical. For instance, you can easily make $5 by making a video rant, overreacting, singing happy birthday, or promoting a business wearing a leprechaun suit. 

10. Earn Money a Local Guide

Combine your knowledge of the neighborhood and community with your unique perceptions to earn money as a local guide. You can make the tour thematic by digging for hidden gems or showcasing a “best of” tour.

11. Rent Your Parking Space

There is no better way to earn some extra money than by converting dead space into an income stream. Spot Hero and other websites help people do just that. Maybe you have a side driveway, a two-car garage with only one car, or an empty parking pad. Rent out that space online. Spot Hero allows for listing the parking space for free. In fact, they take care of everything else. Spot Hero will keep a small portion of the rental fee and send the rest to you which can help you deal with these high energy costs. 

12. National Parks Gigs

There are several outdoor opportunities for earning money while helping people attain a greater appreciation of the environment. National Parks provide guides and other helpers to visitors to make their stays more comfortable. Check out nearby opportunities on Older and Bolder. National Parks gigs will allow you to commune with nature while educating the next generation.

Finance, Money

5 Retirement Saving Strategies If You Don’t Have A 401(K)

by Benjamin Roussey|Posted on | 3 minute read | Advertiser notice
Retirement Saving Strategies

More than 42 million Americans don’t have 401(k) or another similar retirement plan. According to federal data, 14% of small-sized businesses don’t offer retirement accounts. While it is difficult to beat the employer contributions (free money) in a 401(k), you can use these tips to build a retirement nest egg.

1. Create your own 401(k)

You should consider setting up a one-participant 401(k) or solo 401(k) through an online brokerage. Make sure your boss changes your status so that the income gets reported on a 1099 form instead of a W-2 tax form. This way you can be categorized as an independent contractor and set up your own 401(k).

Solo 401(k) has the same rules as an employer-sponsored 401(k). You will have contribution limits depending on your age. With that said, you are both an employer and an employee as a self-employed business owner. You can make contributions as per individual guidelines, which will eventually increase the overall limits.

Your spouse is the only other additional employee you can hire and cover through this arrangement.

2. Get solid investment advice

You need pros for financial advice even if you are among the most conscientious savers. There are a few things that only professional financial advisors can grasp. Financial planners can have a look at your income and savings and help you organize your finances. They will carefully review your existing financial affairs to let you know where you stand. Financial pros will also offer recommendations to help you get where you want to be.

Financial planners have the necessary experience and training to make educated projections about the future. This insight allows them to offer solid advice on investments, savings goals, life insurance, mortgages, taxes, and retirement and wills. The best financial planners will take your aspirations and financial goals into account. They won’t try to hold you back from spending your money. But, will ensure that you spend wisely.

3. Consider an IRA

Individual retirement accounts (IRAs) are a traditional yet flexible tax-advantaged instrument. There are several benefits to opening an IRA depending on your income bracket. Any money you stash will grow on a tax-deferred basis, which means you don’t need to pay taxes on your earnings until it’s time for withdrawal.

In addition, your tax rate and gross income get reduced by IRA contributions which is helpful even more during a recession. You may become eligible for certain deductions, including medical costs by having a smaller adjusted gross income. If you expect to be in a higher income tax bracket on retirement, you may want to consider opening a Roth IRA. It’s easy to open an IRA account if you use an automated investing service.

4. Get a health savings account

Health Savings Account or HSA can help you save enough for retirement if your existing health insurance plan has a high deductible. The money in your account can be accessed anytime to pay for copayments, deductibles, and other qualified medical expenses. Moreover, you cannot use it to pay for insurance premiums.

If you don’t use the money, you can always invest it. HSA balance can be carried to the next year and grows tax-free. You can have a nice golden nest egg if you combine your HSA with an IRA. HSA is one of the better retirement savings strategies since any contributions you make are tax deductible. You should ask your insurance provider or banker about opening an HSA.

5. Persuade your employer

If you don’t have a 401(k), you should try to speak to your employer. It never hurts in asking. Moreover, make sure you do your research first. There are several plans available depending on the size and type of business. You may want to zero down on a few plans that are a right fit for you and the business. Make sure you find plans that don’t require a lot of paperwork or time and effort.

You may also want to rally a few coworkers since there is always strength in numbers. Your employer may not readily agree to a plan. But, over a period of time they may come to realize that a retirement plan is important to their workforce. Don’t forget to harp on the employer benefits of contributing to a 401(k). There are tax incentives for employers that sponsor plans which is great during high inflationary times.

Even if you don’t get anywhere with wheedling your employer – it’s worth a shot. Don’t push the issue too hard though in the times of layoffs. You may have to wait until times are better.

Finance, Money

7 Tips to Ensure Financial Stability During Retirement

by Benjamin Roussey|Posted on | 3 minute read | Advertiser notice
Financial Stability During Retirement

How will I afford my expenses in the post-retirement years? That is the one question that crosses everyone’s mind at some point in their lives. A large number of people do not have a plan for their retirement. Having insufficient retirement funds is one of the biggest financial worries of more than 50% of the population. 

But it is never too late to start. Even if you are in your 50s, you still have 10-15 years to ‘tighten the reins’ and save for your retirement. It will give you much-needed peace of mind and keep you from all the hassles during any emergency.

If you want to be financially stable during retirement, here are some valuable tips: 

Start saving as soon as you can 

The earlier you start, the more benefits you have. It is true for every investment. You need to start saving as soon as possible because each penny saved will add significantly to your retirement savings pool. Moreover, the power of compounding will start working to boost your savings exponentially with the passage of time.

Remember that around 30 percent of working adults say they have no savings for retirement funds. But this number declines as they move towards their retirement age. The cue here is to get started whenever you think it is feasible and not keep delaying your decision. 

Be debt free

A debt at any stage of life can be harsh on savings. It is when you are close to your retirement age. When your savings are scarce, having debt can be a substantial financial strain. The interest burden on the debts can hit your ability to save. As you approach your retirement age, ensure that you do not have any outstanding debts. If any, whether that is vehicle loans, credit cards, private loans, etc., make a special and aggressive effort to pay off the debts before you retire.

Diversify your portfolio

The age-old adage tells us that we should not put all our eggs in one basket. It holds for saving for retirement as well. You should not put all your savings into one account. Having only one form of investment increases the risk of losing all your savings in an emergency. It is advised that you invest in a diversified portfolio.

Asset allocation plays a crucial role while planning your retirement. You should also have some liquid cash handy when you need it. You should consider your risk tolerance and years in retirement before finalizing an investment.

Consider potential retirement costs

Life after retirement can be full of surprises – there could be runaway inflation and high gas prices, for instance. You may have to incur costs that you may not have planned for. As a result, it is always better to keep a certain buffer amount to cover your expenses. You should also consider the potential expenses in old age, including dental and other medical costs, long-term care charges, income tax, etc. Proper financial planning allows you the freedom to lead a peaceful post-retirement life.

Plan your expenses

It is good to reassess your financial profile and savings and make adjustments if required. Consider downsizing or relocating to a city with a lower cost of living. For instance, while traveling the world can be an enrapturing idea post-retirement, going on vacation during the off-season can save you a significant amount of money.

Keep earning during retirement

A report by Provision Living states that more than 20% of the retired population continues to work – probably even more so when the cost of goods are so high. It adds that it is not due to a shortage of money but because they enjoy their work. Post-retirement, you can take up work you always wanted to take up. It can be either a part-time or full-time job as per your preference.

Retirement time is a golden opportunity to leverage the skills, talents, or hobbies you have always wanted to try out. It can be anything ranging from teaching music to church work on Sundays. In addition to having a purposeful time, it will also add up to your savings.

Work with a financial planner

You can always benefit from expert advice. Financial planners are aware of the unique challenges that retirees face. They can chalk out your investments and expenses and suggest ways to optimize them. Also, if you are not experienced in financial planning, you can always consider working with professionals. They can guide you in choosing your retirement plans customized to your needs.

Money

Long-Term Strategies To Amplify Your Retirement Savings

by Benjamin Roussey|Posted on | 3 minute read | Advertiser notice
Retirement Savings

In order to plan for retirement, it is always better to start saving early on so that you can maximize the benefits of wealth compounding over time and help combat the tough environment all Americans are living in now via supply chain, inflation, high energy costs, and so forth.

However, even though you might have started saving later on in your business or professional career, it might be reassuring to know that there are plenty of folks out there in the same boat as you. The fact is, it is never too late to get started and there are certain steps that you can take to enhance your retirement savings.

The following tips are worth considering, regardless of your present stage in life, so that you can improve your savings for when you need them most – at the time of retirement.

Start Your Savings Mission Today

This is especially important if you have decided to start putting money aside for retirement. If you can start saving as much as possible now, you can leverage the power of compounding in your favor. The earnings flowing from the financial assets created from your savings, using compound interest, can be reinvested in order to generate even more earnings.

However, as experts say, it’s critical to start saving right away once your mind is made up. At the time of retirement, the strength of your financial position is directly related to how early on in life you began saving.

401(k) Contribution

In case you qualify for a traditional 401(k) plan that your employer offers, it might permit you to contribute pre-tax money, which could be a distinct advantage. Suppose that you fall in the 12% tax bracket and have decided on contributing $100 per month (assuming that your pay period is monthly).

Since your contribution comes from your paycheck prior to federal income taxes being assessed, your take-home pay is reduced by only $88 (subject, of course, to further deduction by way of applicable local and state income taxes as also Medicare tax and Social Security). This implies you can invest more of your income without feeling the pinch as much in your monthly budget.

Take Full Advantage Of Your Employer’s Match

If your employer is willing to match your contributions towards your 401(k) plan, make sure that your contribution is sufficient to give you full advantage of the match. For instance, an employer might offer to match 50% of the contributions of employees subject to a limit of 5% of salary. What that essentially means is if your earning is $50,000 annually and your contribution towards your retirement plan is $2,500, your employer is obliged to pitch in an extra $1,250. Basically, that is free money which should not be ignored which is awesome in this inflationary and high energy cost environment.

Reduce Your Spending

Take a good look at your budget. You may want to negotiate a reduced rate for your car insurance or bring lunch to work instead of visiting a restaurant. The idea is that you should explore avenues to reduce spending without adversely impacting your personal or family’s well-being. The money thus saved can then be set aside to enhance your retirement savings.

Set Your Goal

Determining how much money you need to have available when it is time to retire can not only be revealing but also rewarding. Such an exercise can help you better appreciate why you are saving and the ultimate goal towards which you are progressing. As you continue with your savings discipline, you should be able to feel a sense of satisfaction that you are well on your way to a financially secure life of retirement.

Put Away Extra Money

Have you unexpectedly come across some extra money? Be sure not to spend it or spend as little of it as possible. Each time you get a raise, take your contribution percentage a notch higher. Set aside at least a half of the extra money for your retirement plan. And although you may be tempted to use that salary bonus or tax refund to splurge on a smartphone or a vacation, resist that urge and instead make do with small pleasures that will leave most of the fund intact. You can then use the new money to take bolder steps for improving your retirement savings.

Go Slow On Social Security As You Approach Retirement

This is a very crucial step. Each year that you are able to delay receiving a payment from Social Security, prior to reaching the age of 70, the amount that you receive in future will be higher accordingly. Hence, if you go slow on Social Security, the monthly benefits will accrue quickly and lead to a much better income as retirement approaches.

Finance, Uncategorized

7 Strategies to Clean Up Your Finances in The New Year

by Benjamin Roussey|Posted on | 3 minute read | Advertiser notice
Your Finances

The year is almost gone and whew, what a year it has been! Like most people, you’ve probably also been a busy bee – saving, spending, collecting rewards points, paying off bills, and dealing with inflation and high gas prices – problems we have not had since the late 1970s. So, with the New Year just around the corner, now is a great time to de-clutter your finances and start taking steps towards a better financial future.

In this post, we have compiled a list of 7 strategies you can implement today to clean up your paperwork and accounts and make the most of your money. 

Make Retirement Planning A Priority

When it comes to getting your finances in order, most people tend to neglect their retirement planning especially if they are in their 20s or 30s. It is crucial, however, to remember that the sooner you start saving for your golden years, the more moolah you’ll have, thanks to the miraculous phenomenon known as compound interest. 

Calculate how much money you’ll need to save for a comfortable retirement, then create a realistic plan to put away the necessary amount each month. Better yet, automate the retirement savings transfer so you won’t even have to think about it. 

Sort Through All the Paperwork

This is also an excellent time to get your financial documents organized and filed properly, so they will easy to access when you need them during the tax season. If you don’t have enough space to organize all of the paperwork, you can scan the documents like expense reports and receipts, and store them digitally. Please make sure that you create backups of those digital files, in case your computer/hard drive crashes.

Clear Out the Debt

If you have a high amount of debt or high-interest rates, create a plan to pay it all off as soon as you can. You can start with debt with the highest interest, and then start applying more each month to it until you are in the clear.

This may sound like easier said than done but with a good plan, it’s very much possible. Find a way to double down on your payments – this can mean reducing your expenses, asking for a promotion at work, or starting a side hustle or taking another, part-time job. Working is good, it’s healthy, and all the facts indicate this.

Save For A Rainy Day

The last couple of years have shown us that life is unpredictable and you never know when you might need to face a financial difficulty. Make sure you are always prepared for such a situation without having to fall behind on your mortgage/rent payments or take on more debt. Your goal should be to have at least 3 to 6 months of expenses saved up. Calculate an amount that you can set aside each month and automate that deduction. 

Check Your Credit Report

A sunny credit score is that Holy Grail that can allow you to borrow money when you need it and get it lower interest rates. Take a thorough look at your full, yearly credit report to check if it has any errors. According to Federal Trade Commission, 5% of people have major errors on their credit report that can lead to loan application rejection, and 25% of people have some sort of minor errors. 

Evaluate Your Monthly Budget

Take a good look at your spending habits of the last few months and make note of your spending habits. Have you been spending too much money for one category (say, dining out) and not enough for another (say, saving)? Where can you cut back?

If you want to save more or reduce your expenses in one area, create a realistic plan to make it happen. For example, use only cash for all of your spending needs; no checks, debit, or credit cards are allowed. And when you are planning for a vacation or a birthday party, come up with a budget for it and plan ahead, so you don’t overspend.

Evaluate Your W-4 (Employee’s Withholding Certificate)

Look at your W-4; you may want to withhold less taxes. If you generally receive a tax refund, it’s wise to consider having less tax withheld. Think about it – this money has been essentially handled by the government all year long when you could have invested it or used it to launch a business or added it to your emergency fund. 

Use the IRS Tax Withholding Calculator to see if you can claim more allowances and have more money with each paycheck to save for emergencies. However, be careful, if you fail to withhold enough money, you will owe to the IRS which is never a perspicacious idea.

Lifestyle

6 Signs That You Are Ready For Early Retirement

by Benjamin Roussey|Posted on | 3 minute read | Advertiser notice
Early Retirement

People work because they like to work or because they have no choice. Some of them find work that they love, and at best, they may ease off on their workload because of other interests or commitments. Others work to earn money and build a nest egg for their later years. In either case, you can always pursue your dream of early retirement if you have prudently planned your finances. 

How Do You Make Early Retirement A Reality?

How do we know when we have enough money to live on? This requires determining a reasonable estimate of how much money we will need after retirement, after adjusting for cost inflation, and the foreseeable future trends of the economy. While the economy and inflation are factors that can be uncertain, we can have greater control over our basic needs and even build a cushion for the extras. 

We can start by understanding our present financial standing and then make a plan for early retirement. Ask yourself the below questions, and the answers should help you make a detailed plan to turn your dream of early retirement a reality.

Are You Debt-free?

Being debt-free means you have no future payments to account for in your budget. Therefore, ensuring that your debts are cleared has to come first. Your monthly expenses may need to be cut down drastically while you are still working so you can pay off your debts that much faster. 

Have You Saved Enough? 

Saving money towards retirement from the time you start working may sound a little restrictive. But, it is a sound step towards building enough savings to retire on. It’s an added incentive if you plan to retire early and pursue other interests. Whether you have saved adequately can depend on your financial needs post-retirement. Retiring before social security kicks in could mean that your savings should cover the expenses that would have otherwise been covered through your social security. 

Is Your Healthcare Covered?

Healthcare is one of the most significant expenses and can make a deep dent in your savings unexpectedly as many people know since the ACA law went into effect driving up health care costs and limiting choices. Retiring earlier than the age when you become eligible for Medicare means having a backup for health insurance. There are two ways to achieve this. You can either go on your partner’s health insurance plan or get coverage through private health insurance. Starting a Health Savings Account (HSA) earlier would be helpful.

Can You Stick To Your Budget?

Retirees have to live on a fixed income, and it is usually lower than they had when they were employed. So, creating a reduced monthly budget and sticking to it is imperative. You may want to start this plan a few months before you retire to get into the habit. To be safe, have two lists drawn up: one that covers only the basic expenses that you can’t do without, and the other a slightly relaxed budget to include a few you don’t need but would like to have. 

Some of us may manage to save substantially with a basic budget bringing the retirement age even closer. Others may desire a slightly relaxed lifestyle and may plan a later retirement. Regardless of the plan, a healthy financial lifestyle is one where you have a budget, and you cultivate the habit of staying within that budget. 

Have You Made The Right Investments?

Fixed income post-retirement suggests that you aim to maintain rather than grow your income. This means that you must plan for lower-risk investments. While the returns may be lower, they are also less risky investments. Talking to a financial planner when you are still working and can make a few investments to help you later would be wise. 

Do You Have A Plan For Unexpected Expenses?

If nothing else, the COVID-19 or Wuhan virus pandemic has taught us that life is unpredictable. Unexpected expenses may crop up post-retirement. It’s smarter to have a backup plan by either accumulating a few assets that can be sold for better returns or building them into your savings plan. You may still have to prepare yourself for taking up some part-time work that can tide you over.  

Key Takeaway

Retirement brings about a profound change in our lives, no matter whether it happens early or late. It would be wise to think beyond financial security and include other retirement aspects such as the free time now that you are not working. Perhaps, a plan to occupy yourself with something you have always wanted to do but never could is in order? Having a backup plan for happy times post-retirement could be a poignant incentive to make you work towards early retirement.

Finance

7 Tips to Protect Yourself Financially After a Forced Retirement

by Benjamin Roussey|Posted on | 3 minute read | Advertiser notice
Early Retirement

As the economy continues to grapple with the effects of Covid-19 or the Wuhan virus, many American workers are being forced to retire early. Early retirement can lead to financial struggle and you may find it hard to meet your living expenses. Here are seven useful tips that will help you and your family in this difficult situation.

Reduce Your Expenses

The first step after an unexpected early retirement should be to cut down your spending. Focus only the essential purchases, and make changes to your lifestyle so that you have sufficient monthly funds available to pay for the critical outgoing expenses such as insurance and mortgage payments.

Avoid the Temptation of Using Your Retirement Money

Your first instinct may be to dip into your 401k account, but that is almost always a bad idea in a forced early retirement. The first reason is that you may not have crossed the age of 59½, which means you will face a 10 percent penalty on the amount withdrawn.

Secondly, cash withdrawals that occur earlier than planned will hurt the compounding effect of your savings, and your overall retirement income will considerably reduce.

Move 401k Funds to a Rollover IRA

Rather than withdraw money from your 401k, it may be better to start a rollover IRA with your broker or bank and move your 401k funds into this account. You will receive all the tax benefits, which are greater because of the 2017 tax cuts, of 401k with a rollover IRA, and the early withdrawal limitations are also the same. 

However, a key difference is that a rollover IRA will open a plethora of investment options for you. Depending on the prevailing market opportunities, you may invest in stocks, mutual funds, bonds, ETFs, REITs, or other securities to multiply your money.

Utilize State Sponsored and Employer Benefits

Employers often provide insurance coverage, which also covers the spouse. If your spouse’s employer is offering this coverage, utilize it to the maximum. If your forced retirement occurred because a disability, you could be eligible to receive social security disability payments. 

If you have been laid off from your current job, but you want to continue working, you should apply for unemployment benefits while you search for a new job and there is going to be tens of thousands of jobs returning from China by the end of this year.

Buyout Package

Employers sometimes offer a voluntary retirement buyout package, which typically includes a severance pay, lifetime annuities, paid insurance, and some other benefits.

If your employer has offered you such a package, you may consider accepting it, if you believe that a layoff may still eventually happen if you don’t accept the offer. The money you receive through this package can be invested in a debt mutual fund or annuity in order to create a monthly income.

Evaluate Your Pension

If you are eligible for a pension, you should evaluate whether receiving it in monthly installments or as a lump sum would suit your interests more. If you have a trusted financial advisor by your side, or you are sufficiently experienced in making direct market investments, you may benefit more from a lump sum payment.

You can strengthen your financial asset base with smart investments. On the other hand, if you prefer a more consistent monthly income, you may choose to accept the installments option. In any case, you should be aware that if even partial funding of your pension was done using pre-tax dollars, your pension income will be partially taxable.

Keep this point in mind as you try to make withdrawals from multiple accounts while minimizing your tax liability.

Assess How Long Your Savings will Last

Make an objective estimate of all your available funds and income to understand how long your money will sustain based on your current budget and expenses. This will give you an idea of where you need to moderate your expenses and how it will impact your lifestyle.

First look at the major expenses, such as healthcare and housing. Thereafter, move on to assess other expense items, such as utilities, food, clothing, personal care, and entertainment. Compare the monthly household costs to the total amount you may be drawing from your retirement accounts and social security.

With this comparison in place, factor in your life expectancy to estimate how long your funds are going to last at your planned withdrawal rate. If you worry that you may come up short, you will need to review your current expenses or look at additional ways to generate income. You could create a new income either through part-time work or through income or dividend producing investments.