A Pre Retirement Checklist

September 18th, 2014  |  Published in Retirement  |  Comments Off on A Pre Retirement Checklist

Retiring is a big step for many people. Usually, there is a whirlwind of confusion, chaos and concern before retirement, followed by a slight breeze of boredom and longing. In order to keep everything under control, here is a list of 20 things to do before retirement, in order to make the time after retirement less overwhelming.

– Prepare an updated balance sheet of income and expense.
– Use up your company paid vacation.
– Get rid of debt.
– Make a list of things you’d like to do – a “bucket list.”
– Play a small prank on your boss and co-workers.
– Get your car inspected for any upcoming services.
– If you have a will, make sure it is updated.
– If you don’t have a will, get one, and then make sure it stays updated.
– Home inspection – check and replace any worn out items like doorknobs, faucets, light fixtures, etc.
– Begin the paperwork to file for social security.
– Make sure you have transitional insurance in place, and are applying for other forms of insurance.
– Consider moving to a smaller home or apartment for the sake of ease in maintanence.
– Consider moving to a single story home for ease of movement in the future.
– Assess life insurance needs.
– Play another prank on your boss or co-workers (this is just getting to be too much fun.)
– Talk to your financial advisor about making changes to your portfolio to help support your needs and wants after retirement.
– Check into long-term care insurance.
– Assign a power of attorney in the event of an emergency.
– Have an attorney draw up an advanced medical directive to make sure everyone knows your health care and end of life wishes.
– Play a practical joke on your boss – AND coworkers just to have a good laugh.

Now that you have all of that out of the way, you can sit back, relax, and enjoy the rest of your retirement celebrations. Don’t forget to count down the number of days on a large, easy-to-read wall hanging that can be seen clear across the room. On your last day, run around making funny faces, playing practical jokes, and generally having a grand time.

Mix a bit of silliness in with the serious business of preparing to retire. Pay attention to your current investments as well as your estate and any insurance you wish to keep after retiring. Also, make sure your basic needs are covered and you have some wiggle room in your finances for at least three months after you retire.

This extra cushion will allow you to get settled into your new life, finding your “groove” so to speak, and start taking advantage of all the things you were planning on doing. Plus, you will have time to reminisce on those practical jokes you played on your boss and coworkers. Retirement is a fun time and should be enjoyed. Just make sure you have all of the work done before you go off and play.

How Many Installment Loans Should I Have

August 14th, 2014  |  Published in Guest Post  |  Comments Off on How Many Installment Loans Should I Have

Installment loans are a typical part of every adult’s life. Even if there is enough cash to go around, to pay upfront for everything you need in life, installment loans still happen. These do help to build credit but at the same time, can be detrimental to your credit score should you default on the loan. These types of loans do have interest attached to them, which varies depending on your credit score at the time of the loan being taken out.

Traditional Installment Loans

Any time that you purchase a home, vehicle or take out an equity loan, these are installment loans. Even a quick cash title loan is an installment loan. This means that based upon your credit score and your income level, a creditor can extend a loan in a specific amount of money to be paid off over time.

These payments are setup on a monthly basis and have a minimum amount due. Paying the minimum only does help to show that regular payments are being made, but it doesn’t help speed up repayment. Consider paying more than the minimum amount due to pay down the loan faster. In terms of how many to have, a house payment and a car payment are sufficient. Some consumers can handle an equity loan, mortgage and vehicle payment.

Revolving Credit Installment Loans

Revolving credit is another name for a credit card. These are a type of installment loan that gets consumers into a lot of trouble.  In regards to this type of installment loan, one, perhaps two is beyond sufficient. The more plastic you have in your wallet, the more debt you accumulate. This type of credit replenishes itself as long as you are able to continue paying on the cards, there really are no limits on the number of credit cards that you can have. It is important to not cross your own financial thresholds.

Installment loans are created in a variety of ways. The more you have, the thinner your household budget gets. Keep installment loans to a minimum where possible, outside of the necessary mortgage and car payment loan types. Living outside of your means is a recipe for financial disaster. It is up to you to be keeping track of what payments are going out and what each totals. Paying on time or early is a must. Only borrow what you can comfortably pay back is the general rule.

Rolling Over a 401k or IRA to a Betterment IRA

March 13th, 2014  |  Published in Investing  |  Comments Off on Rolling Over a 401k or IRA to a Betterment IRA

If you are thinking about rolling over your old 401k to a Betterment IRA to take advantage of their low investment fees the process is pretty simple. They use the direct rollover method to transfer the old 401k to the IRA. For a 401k the first thing you need to do is create an IRA at Betterment if you do not already have an IRA at Betterment.  After you have created your IRA you just need to click on the “Rollover money from an IRA/401k” tab under the gear button on the IRA summary page. Once you click on that you will be prompted to answer a couple of questions and then you will be sent an email with further personalized instructions.

If you want to rollover an existing IRA into your Betterment IRA the process is different, but still pretty simple.  For IRA rollovers, Betterment uses the indirect rollover process rather than the direct rollover process they use for the 401k.  The first thing you need to do is ask your current IRA provider for an early distribution with no withholding.  That way no tax will be withheld from the distribution.  The next thing you need to do is deposit the money from the early distribution in your Betterment IRA within 60 days in order to avoid tax penalties.  To do that you log in, go to the transfer tab, and select “IRA rollover” as the contribution type.  Note that a traditional IRA can only be transferred to a traditional IRA and a Roth IRA can only be transferred to a Roth IRA.  If you have used the indirect rollover process in the previous 12 months you may not be able to use it again to make the transfer to Betterment.  There are a few other special situations to be aware of that you can read about at Betterment before transferring your IRA.

If you would like to open an account with Betterment, be it an IRA account or just a normal investment account, please consider using my referral link.  You will get a $25 bonus for using my link and I’ll get $10 to boot. That is a win-win. Let me know in the comments if you have any questions about Betterment.

Betterment Referral Link

Buying a New Life: How Much Do I Need to Retire?

December 19th, 2013  |  Published in early retirement  |  Comments Off on Buying a New Life: How Much Do I Need to Retire?

If you’re not counting down the days until you can retire, you’re surely counting down the dollars. Most people spend the majority of their working lives stacking one dollar atop the next, hoping that their efforts will one day guarantee them a stable future in which they do not have to wake up before 10 a.m.. Yes, retirement is the distant goal of many a worker, but few people know exactly how much money they will need before they can finally punch out of work for the last time.

The reason there is so little information in the way of hard numbers is that there are too many variables for a rigid formula to apply to everyone. Everyone’s needs and lifestyle are different, and often the further you are from your actual retirement, the harder it can be to predict a concrete goal. Spending does typically decrease after retirement, so you should be able to live on approximately the same amount you currently do if not slightly less. You can click on this link to find out more.

However, the unknown is a constant hindrance to extrapolation. Factors such as health and financial commitments made on the road to retirement have a marked effect on the target amount. For instance, you may need much less income to finance your day to day activities after retirement, but a move to a nursing home or an unexpected maintenance expense on your home, property or hobbies could quickly drain your retirement stash and negate your years of careful planning. You could also live for days or decades after you retire, so a definite answer to your question is difficult if not impossible to come by.

Therefore, the amount you need for your retirement is less of a number and more of a formula. Since we have already established that your current salary is enough for you to live on, it should serve as a base for your calculations. Ideally, you should save at least the equivalent of a full year’s salary every three years to keep on track for retirement.

For example, a 30 year old worker earning an average of $50,000/yr with a target retirement age of 65 can save well over $600,000 just in principal using this strategy if he starts right now. This type of gradual process allows room for potential changes in pay rate and employer while still maintaining a workable strategy that will ensure you do not outlive your savings.

A growing concern is the availability of Social Security for distant retirees. While the system initially supplemented the pensions, savings and other income of retired senior citizens, the program is rapidly exhausting its funding and its future is highly uncertain.

While previous generations of retirees could factor Social Security income into their retirement strategy, younger workers will likely not be so lucky and have to fund their retirement without outside assistance, greatly increasing the amount necessary to retire.

Personal choice is another determining factor in the required sum of a viable retirement fund. Some choose to lead quiet, homebound lives after retiring from the working world while some dedicate their golden years to adventure and expensive leisure. Obviously, you will need to save more if you plan on traveling the world after you retire as opposed to spending your retirement years knitting.

Nailing down a definite goal for your retirement savings can be an intimidating prospect. The uncertain and constantly changing nature of life makes peering decades into the future an inexact science at best. However, there are some guidelines and best practices than can help you get at least some idea of how much you will need to retire comfortably.

Can Investing be the Key to an Early Retirement?

December 19th, 2013  |  Published in early retirement  |  Comments Off on Can Investing be the Key to an Early Retirement?

An early retirement is something that we all crave. Saving for an early retirement, however, is much harder than you’d originally imagine and with the cost of living rising, it is becoming harder than ever to secure an early retirement that will see you through the rest of your life. For this reason, many people have started to look for alternate ways of investing their money and transforming their savings.

The financial crash back in 2008 made people completely reconsider how they would save money for their retirement. Beforehand, when it was generally assumed that starting a savings account and contributing regularly was the best way, the landscape has now changed. With thousands losing all of their saving and thousands more losing at least part of them, people have left banks because they offer little to no interest. Now is the perfect time to move your savings elsewhere and reinvest to gain an early retirement.

Why Do You Need a Retirement Nest?

Before you start investing your money and coming up with alternative investment strategies, you need to fully understand the reasons why you’re creating a nest egg.

  1. To keep up with the rate of inflation.

  2. Retirement nests allow you to balance the uncertainty of the future by utilising your income to protect you against any sudden costs that may arise.

  3. You can use it to plan your estate and your will just in case the worst case scenario arises.

As a direct result of the financial crash and the speculative nature of pension pots, people like to diversify their assets to protect them and hopefully maximise their income so that they can retire early. Due to this, currency markets have become much more popular with investors as they look towards new opportunities.

Could Forex Markets Help You Retire Early?

Forex markets give you a greater degree of control over your finances than you’d imagine. By diversifying your asset portfolio and investing strategically, you have a great opportunity to minimise your losses and maximise any gains. Spreading risk and diversifying your asset portfolio is key to successful retirement planning and the more effectively you do it, the greater your chances of retiring early. So, exactly why has forex become so popular with people seeking an early retirement?

  • Hedging: You can split your assets between bonds and equities. When you convert assets into the local currency, this makes it easier to turn a profit.

  • Leverage: Most forex brokers allow you to trade on the margin. Depending on your account type, you only place a fraction of the trade but you gain the maximum possible profit (or losses).

  • Anywhere, Any Time: The size and scale of forex markets means that you can trade from anywhere in the world 24 hours a day, 5 days a week. As well as this, mobile trading apps and trading robots have made trading easier than ever.

To conclude, alternative investing strategies such as forex trading have become prominent after the 2008 financial crisis. Because bank accounts are relatively stagnant, alternate investment strategies have become essential for people seeking an early retirement.

Three Reasons Young People Should Care About Social Security

September 11th, 2013  |  Published in Social Security  |  Comments Off on Three Reasons Young People Should Care About Social Security

There are millions of high school and college students that are searching for jobs.  Whether a new worker is beginning the career of a lifetime or just earning some extra money for the school year to come, there is one question that is likely to be on each new worker’s mind when they see their first pay stub: Where’s the rest of my money?

Generally, employers are required to withhold Social Security and Medicare tax from a worker’s paycheck. The amounts you pay in Social Security and Medicare taxes are matched by your employer. Usually the money that is withheld is referred to as “Social Security taxes” on the employee’s payroll statement. Sometimes the deduction is labeled as “FICA taxes,” which stands for Federal Insurance Contributions Act. This post will tell you how that money is being used, and what’s in it for you.

The taxes paid now translate to a lifetime of protection, when you eventually retire or if you become disabled. In the event that you die young, your dependent children and spouse may be able to receive survivors benefits based on your work. Today you probably have family members — grandparents, for example — who already enjoy Social Security benefits that your Social Security taxes help provide.

You may be a long way from retirement now, so you may find it hard to appreciate the value of benefits that could be 40 or 50 years away. But consider that your Social Security taxes could pay off sooner than you think. Social Security provides valuable disability benefits — and studies show that a 20-year-old has about a three in 10 chance of becoming disabled sometime before reaching retirement age.

Another bit of helpful advice for young workers: be wary if you’re offered a job “under the table” or “off the books.” If you work for any employer who pays you only in cash, understand that you’re likely not getting Social Security credit for the work you’re doing.

If you want to find out more about Social Security then you should go to the source.  The Social Security Administration has lots of helpful information available at SocialSecurity.gov.

Ruling Affects Retirement Benefits for Married Gay Couples

July 1st, 2013  |  Published in Retirement, Social Security  |  Comments Off on Ruling Affects Retirement Benefits for Married Gay Couples

Married gay couples should take a closer look at their Social Security benefits and their Individual Retirement Accounts. Last Wednesday, the Supreme Court ruled the Defense of Marriage act unconstitutional. Now that the Act denying federal benefits to legally married same-sex couples has been struck down the retirement benefits of married same-sex couples will be affected.

The Social Security benefits of married gay couples will be affected due to the ruling. Surviving spouses should now be able to claim the Social Security benefits of their deceased spouse. In general, married gay couples have the same options to collect their Social Security benefits in the same way heterosexual couples do.

Another change is that if an IRA is rolled over from a deceased same-sex spouse to the surviving gay spouse the individual retirement account would not be taxed. Pensions could also be left to a surviving same-sex spouse. These are just a couple of the changes that will affect same-sex couple financially. Changes affecting retirement plans are just a small part of the changes that will be made overall. Same-sex married couples should now receive the same tax treatment as heterosexual married couples at the federal level. It is not yet clear when the changes will actually be put into effect but couples should be on the lookout for an announcement of when the changes go into effect so they can make changes to their retirement plans.

If you want a more detailed breakdown of the possible changes due to the court ruling check out this summary article at Lambda Legal.

The 7 Deadly Retirement Sins

June 25th, 2013  |  Published in Retirement  |  1 Comment

I was provided with a free copy of the book, The 7 Deadly Retirement Sins to review. Since the book is about retirement and this a blog about retirement the book seemed like a good fit and after reading the book I can say it will be of interest to many of the readers of this blog.

Many financial books, especially ones about retirement, can be dry and difficult to read. The author avoids that by making the book a story about a young journalist who is interviewing retirees about the mistakes they made in retirement. Looking at these mistakes, one can see which of the seven deadly retirement sins caused the retirees problems in their retirement.

I won’t give away all of the retirement sins, but some of them are retiring too early or living above your means, improper investment allocation, and collecting Social Security at the wrong time. The author, Ryan Zacharczyk, is a certified financial planner and that experience is reflected in his investment advice. The story takes up the first two thirds of the book and the last third is financial advice from the author based on the stories shared in the first part of the book. This method makes retirement planning advice more interesting than it normally would be. This book would be a good pick for those who have trouble staying interested in more typical retirement books.

Two Free Retirement Books

June 3rd, 2013  |  Published in General  |  2 Comments

Mike Piper of Oblivious Investor, is offering the Kindle version of his book, Can I Retire? , for free until Wednesday. If you want the paper edition the cost will be $5. This is a new edition of the book. He states that if you already own the book you don’t really need to get the new edition. But if you can get the new one for free it doesn’t hurt anything to update.

The Kindle version, of the book, Retiring Sooner: How to Accelerate Your Financial Independence, is also free until Wednesday. The paper edition is on sale for $5 until Wednesday. The book is by Darrow Kirkpatrick of CanIRetireYet.com. I haven’t read his blog or book yet so I’m looking forward to reading this.

My “Stretch IRA” post was included in this week’s Carnival of Financial Independence at Reach Financial Independence.