Are You Ready for “The Future of Retirement?”

August 23, 2012

In her blog post last week, Linda Robertson wrote about her experience at this year’s ISCEBS Employee Benefits Symposium and in particular, a presentation by former U.S. Comptroller General David Walker about “The Future of Retirement.” Walker spoke about the growing national debt and the impending insolvency of the Social Security, Medicare, and Medicaid programs. He then argued that it will take a combination of both tax increases and benefit cuts to dig our way out of the hole. To the degree that we don’t take these steps, we could see higher inflation by either the government trying to print money to cover the debt and/or investors dumping the U.S. dollar in anticipation of or reaction to a devaluation of the US dollar. So what does this all mean for us? Continue reading “Are You Ready for “The Future of Retirement?””

Should You “Ditch Your Retirement Plan?”

July 19, 2012

I’ve written before about the Early Retirement Extreme concept, in which people save as much as 75% of their after-tax income in order to become financially independent in as little as 5 years. I recently came across a post in Forbes called Why You Need to Ditch Your Retirement Plan that was surprisingly written by another financial planner who argues essentially the opposite: that people should stop worrying about saving for retirement and enjoy life now. That could mean taking a lower paying job that you like more or working fewer hours, even if it means saving less and retiring later. He points out that working longer wouldn’t be so bad if you love what you’re doing. Continue reading “Should You “Ditch Your Retirement Plan?””

Top 4 Ways to Begin Investing for Retirement Today

July 04, 2012

If you haven’t been saving for retirement, putting even a little away on a monthly basis can have a huge impact on your future quality of life – especially if you invest in a tax-advantaged retirement account like your employer’s 401k plan or an IRA. This is because of compound interest: If you don’t have to pay taxes on the interest your account earns, that interest stays invested and earns yet even more interest – and the longer you’re invested, the more money you can make. For example, a mere $50 invested every month for 30 years will turn into almost $75,000 if it earns 8% annually – even though your total investment was only $18,000. Continue reading “Top 4 Ways to Begin Investing for Retirement Today”

One Radical Way to Reduce Your Cost of Living in Retirement

June 15, 2012

I am always looking for interesting ideas and stories about people who choose a different path financially. I haven’t always done things the standard way; I lived on my boat for 3 years, which made people think I was either crazy or cool. Either way, it was definitely out of the realm of the “normal” path. Continue reading “One Radical Way to Reduce Your Cost of Living in Retirement”

What’s Scarier Than Monsters??? Numbers…!

May 18, 2012

When I was growing up, I was surrounded by numbers and I actually liked that. (Yes, I’m admitting that I’m a geek from way back.) My friends and I could tell you the batting average of almost any member of baseball’s Hall Of Fame and the stats of major NFL players, compute a pitcher’s ERA in our heads or talk about the winning percentage of various great teams throughout history. Numbers were fun! Numbers were cool! (To us, at least…) Numbers were all that was right with the world back then…Last week, I read an article about the cost of healthcare during retirement and those numbers scared me! Continue reading “What’s Scarier Than Monsters??? Numbers…!”

You Can Retire at 60!

April 23, 2012

She proved me wrong. When my first appointment of the day for a work site personal financial planning session came in, I was skeptical because the first thing she said was that she wanted to retire in six months and she was sixty years old. I raised an eyebrow and told her, “It’s not easy to retire at sixty – in fact it is really tough. Not many people do it these days.” Continue reading “You Can Retire at 60!”

Your Advisor Told You What?

March 28, 2012

I told you last week about a caller who was still unsure about her financial capacity to retire despite having $1.5 million in her nest egg. The purpose of her call was to get a second opinion on how her retirement nest egg should be invested. A financial advisor wanted her to roll the money over to an IRA and invest it in a moderate balanced portfolio so that she would not run out of money but she wasn’t sure if that was the right thing to do. I’m glad she called because we discovered a few interesting facts during our conversation: Continue reading “Your Advisor Told You What?”

Are You Sure You’re Ready to Retire?

March 21, 2012

Last week I received a call from Ann who could not decide if she was ready to retire. Based on the lifestyle she’d like to have in retirement, she needs about $70,000 a year in income. If she retires right now, she will receive $52,000 in pension benefits, $11,000 in Social Security benefits, 80% of her retiree health benefits paid by the company, and have $1,500,000 in savings. Hmm…sounds pretty good, so why on earth is Ann so torn over making this decision? The truth is there are a lot more things to consider than just finances when it comes to retirement. Continue reading “Are You Sure You’re Ready to Retire?”

7 Ways to Reduce the Single Biggest Expense for Retirees

February 27, 2012

Housing costs and related household expenses make up the single largest spending category for Americans over fifty, a recent study by Employee Benefit Research Institute reports. This has many pre-retirees concerned because for most retirees’, their income declines or is fixed but certainly doesn’t grow. At the same time, expenses just keep on coming. While household expenses eventually decline with age as Americans reach their mid–eighties, health care costs increase substantially for that age group, wiping out any advantage of the cost savings. Continue reading “7 Ways to Reduce the Single Biggest Expense for Retirees”

Rental Property in an IRA?

February 22, 2012

The second week of April is Spring Break for our kids so this year we planned a family vacation to Amelia Island, Florida. We’ve never been there before so after perusing several possible forms of accommodations, we settled on a condominium close to the beach. As expected, the owners of the rental property requested one half of the rent up front and then the remainder at the time of occupancy. What made this particular request a little different was who, or in this case what, we made the check payable to. Usually you make a check out to a person or to a rental management agency but in this instance we made our check payable to the property owner’s individual retirement account (IRA). Huh? Continue reading “Rental Property in an IRA?”

Using Your 401(k) in Retirement

February 09, 2012

We recently received this question on the Ask a Question to a Financial Planner section of our blog:

“I have $35k in bank card debt+$30k in retail credit debt. Bank interest range 13/23%, retail 18/29%. I’m 63, and have $40k in a 401acct where I work. I want to retire this year with two company pensions ($1750/month) and early SS($2400/month, both wife and me). I need to get rid of some monthly payments of debt, where should I use my 401 money toward this goal. All my debt is unsecured, my home is paid off, health is good. I’m ready to go fishing.” Continue reading “Using Your 401(k) in Retirement”

How to Plan for an Extreme Early Retirement

February 02, 2012

My most popular blog post (and the most popular one on our whole blog) called “How to Be Financially Independent in 5 Years (No Matter What Age You Are)” was about a concept called “Early Retirement Extreme” in which people save very large percentages of their income to be financially independent before they even turn 40. For example, if you save 75% of your take-home pay and earn a 5% real rate of return, you would have enough savings in just 5 years to maintain that standard of living for the rest of your life (assuming a standard 4% safe withdrawal rate of your initial savings amount and adjusted each year for inflation). While this would probably not be realistic for most people, the more you can save, the sooner you can be financially independent to use your time as you see fit. (The author of the blog that inspired my post actually ended up going back to work but out of enjoyment rather than financial necessity.) But in addition to the challenge of living on much less income than we’re used to, there are some other considerations facing anyone looking to retire extremely early: Continue reading “How to Plan for an Extreme Early Retirement”

Unconventional Wisdom: Confessions of a Financial Professional

January 18, 2012

When it comes to topics to write about in this blog, I usually look through the news or around the home, but this week’s topic actually comes from another reader, not because they asked me to write on a particular topic—although I welcome your suggestions—but rather because the reader gave me a new way to look at an old subject. I’ve written many times already on the topic of Roth IRAs, and each time I’ve taken the position that the Roth was somehow sacred, and that everyone in America should have one, but my new online friend gave me some compelling arguments as to why I shouldn’t be so down on traditional retirement accounts. Rather than try to recap the conversation, I welcome you to scroll through the dialogue that is found in the comments section of my June 8, 2011 blog titled To Roth, or Not to Roth. Continue reading “Unconventional Wisdom: Confessions of a Financial Professional”

Important Changes to be Aware of in the New Year

January 04, 2012

As a financial planner at Financial Finesse, one of my responsibilities is to make sure our content library is up to date when things change. Now that I’ve had a chance to review all of the changes that will take place in 2012, I thought it would be helpful to list what I consider some of the more relevant ones, and what you should do to take advantage of them. Continue reading “Important Changes to be Aware of in the New Year”

Workforce Retirement Readiness: “Stepping Up” to the Challenge

December 27, 2011

I met with Lauren recently, a mid-career employee in her thirties who wanted to know if she was on track for retirement. I asked her how much she was contributing and she told me 6%, which is the minimum to capture the full match from her employer, and the default deferral that she was auto enrolled with when she got hired two years ago. However, when she handed me her latest retirement account statement, her actual salary deferral was at 8%. Continue reading “Workforce Retirement Readiness: “Stepping Up” to the Challenge”

How You Unknowingly Sabotage Your Finances

December 19, 2011

My husband and I are simplifying our lives – we went from a 5 bedroom 3 bath house to a two bedroom condo. We gave our kids the extra furniture and other possessions we don’t need, and what they didn’t want went to charity. Instead of keeping china and crystal in a hutch (or in the closet) to sit and gather dust, except for twice a year for a holiday celebration, we are using it every day now. Otherwise, it will be passed on to our children who might not ever use it either! Life is slower and our pot roast and potatoes are displayed much more elegantly. Continue reading “How You Unknowingly Sabotage Your Finances”

How Risky is Your Income?

December 15, 2011

In his book “Are You a Stock or a Bond,” finance professor, Moshe Milevsky argues that how we invest should be based on the nature of our job. For example, if you have a safe job with a steady income like a tenured professor, then you are like a bond and you can afford to be more aggressive with your investment portfolio. On the other hand, if you work in an unstable industry or if you have an unstable income like a real estate agent or business owner, then you are like a stock and should be more conservative with your investments. Continue reading “How Risky is Your Income?”

The Roth 401(k) – Where’s a Crystal Ball When You Need One?

December 13, 2011

Will you be in a higher or lower tax bracket when you retire? This is the typical question asked of employees when they are faced with the decision to choose between a pre-tax or Roth 401(k) option, sponsored by their employer.

For a younger worker just starting their career, Continue reading “The Roth 401(k) – Where’s a Crystal Ball When You Need One?”

The Little Financial Engine That Could (But Only If You Use It)

November 17, 2011

I’ll let you in on a little secret from my days as a financial adviser. When you sit down with an adviser, they treat you really well, laugh at all your jokes (even if they’re not very funny), and ask you some questions about your current financial situation and goals for the future. Then they put all that information into a software program that calculates some projections, and may even make some recommendations. Guess what they do with that information? They charge you a fee for it or use it to sell you something. Continue reading “The Little Financial Engine That Could (But Only If You Use It)”