Category Archives for Finance

A minimalist approach to your retirement spending

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Sometimes you need a budget. If you’re saving for a significant purchase or investment in the future, a budget is useful to keep track of how much you’re putting away. Take the amount you will need, divide by the number of months until you will need it, and you know how much to put aside each month.

Many people also track their overall spending, especially in retirement. The conventional budgeting process says to devote a certain percentage of your income to essential expenses like bills and insurance, a certain percentage to discretionary expenses like dining out and vacations, and a certain percentage to investing for future needs. If that’s you, then that’s great – more power to you. But if you’re not like that, there is another way to go.Continue reading

4 retirement money wasters to avoid

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Many retirees are concerned whether their savings will last through retirement. Prudent investing can certainly help, so that your money will grow, but the other important element is to manage your spending and avoid unnecessary expenses. Here are some common retirement money wasters that could make the bottom fall out of your retirement nest egg.Continue reading

Will your expenses really decrease in retirement?

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How will your expenses really change in retirement? This is a question of crucial concern to many retirees, who are looking at significant shortfalls in savings needed to maintain their current lifestyles. Some articles point out that many of your expenses will decrease or disappear completely in retirement, and therefore you can live comfortably on less than you think.

But it’s tough to make predictions, especially about the future, as Yogi Berra supposedly said. The Bureau of Labor Statistics recently released a report about spending by current retirees. While their situations are different from yours, this information can provide some insight into what your own experience might be.Continue reading

Retiring unexpectedly? Here are 7 things to do

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It’s nice to be able to leave the working world at a time of your choosing. Unfortunately, not all of us have that privilege. When you have to make the jump to retirement unexpectedly, you have to make some sudden adjustments. Here are some tips to help you along.Continue reading

How to prepare for a longer retirement than you might think

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How long will your retirement last? No one can know, although there are calculators such as the Social Security life-expectancy calculator that can help give you an estimate. But people are living longer than before. After retirement, you may live for another 20 years or more. Are you prepared for a retirement that could last for decades? Here are some things to consider.Continue reading

Is a state-run IRA right for you?

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For years, much publicity and press have been focused on the retirement savings gap. Some 45 percent of working-age households, or 38 million, have no retirement account assets, according to the National Institute on Retirement Security. The average working household has virtually no retirement savings.Continue reading

The 2016 retirement confidence survey and the changing state of retirement

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Be prepared to retire earlier than you currently expect. Open a retirement account, such as a 401(k), IRA, or defined contribution plan, and contribute to it regularly. Create a realistic retirement plan, for both your retirement finances and your lifestyle. Work with a financial advisor.

These are some of the takeaways from the newly released 2016 Retirement Confidence Survey prepared by the Employee Benefit Research Institute (EBRI) and Greenwald and Associates. The survey, now in its 26th year, is the longest-running annual retirement survey of its kind in the nation. It never fails to hold useful insights for retirees and pre-retirees of various ages.
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7 reasons your credit score still matters in retirement

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You might think your credit score no longer matters after you’ve retired. In a few cases, that’s true. After all, you’re probably not buying a home, or taking out a business loan. In retirement you’ve left all that behind in favor of European vacations, trips to the park, or rounds of golf. But there are several good reasons why you should keep paying attention to your credit record in retirement.Continue reading

8 ways to make your retirement savings go farther

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Many retirees welcome hearing about ways to stretch their savings and improve their finances.

You can upgrade your finances in two basic ways: either reduce your expenses or increase your income. There are many opportunities nowadays to do either.

One of the easiest ways to cut back on your expenses is to find ways to save on things that you buy. You may not gain much with each change, but by taking small steps your savings can add up big over time. Here are some ideas for lowering your monthly cash outflow.Continue reading

7 ways to run out of money in retirement

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Like many retirees, you may be concerned about going broke in retirement. This could leave you in a bind. There are no “retirement loans” you can take out, and at that point you may not want or be able to go back to work in a job that could make a meaningful difference in paying your living expenses.

That’s why it’s crucial to plan ahead of time and be careful how you manage your savings, possibly with the help of a reliable financial advisor. No matter how well you plan, sometimes life throws unexpected curves, and there’s no avoiding them. But at least you can arrange your finances to make the best of whatever comes.

Here are some ways you could end up broke in retirement.Continue reading

8 things you could sell for cash (while decluttering your home)

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After several decades of working and maybe a couple of decades raising kids, you probably have a lot of extra stuff. Many people have a lot of extra items around their home. Clothes you never wear, old electronics that have replaced by newer models, unused furniture, books you’re never going to read again, decorations, children’s toys, and more.

Why not unload some of this extra stuff? Besides decluttering your home, ridding yourself of unused stuff can help bring in extra cash. So there’s a double benefit.

There are many items around your home that you may be able to sell.Continue reading

Why the 4% withdrawal rate may not apply to you

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Like many retirees, you may be concerned about your retirement savings lasting for your entire retirement. You want to create an income stream to meet your retirement expenses, but how much can you safely withdraw each year without danger of outliving your savings? What’s a safe withdrawal rate?

The common answer is that you can withdraw 4% of your savings annually, inflation-adjusted. This figure is based on analysis of historical stock market returns by various financial researchers.

But it turns out that your asset allocation, i.e. which types of stocks you invest in, and what percentage are in other investments such as bonds, can make a significant difference in how much you can safely withdraw.Continue reading

11 ideas if you can’t pay your taxes

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It’s a sinking feeling when you discover you can’t pay your taxes. It can leave you feeling stressed, anxious, depressed, angry, and a host of other emotions. Falling behind on your taxes can also impact your financial life. The IRS can seize your assets. Unpaid taxes can lead to fines and penalties, interest, and can lower your credit rating. A credit downgrade will lead to higher interest rates or even being denied if you should need a loan later.

There are many reasons why you may be unable to pay taxes. An unexpected expense may have come up, such as a medical bill. Or you could have recently lost a job you had or taken a pay cut.

Whatever the reason, there are things you can do to get out from under. Here are some things to do when you can’t pay your tax bill.Continue reading

7 habits of highly effective retirees

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We’ve often been told that effective people cultivate and practice effective habits. That while everyone’s situation is different, certain consistent patterns of behavior increase one’s chances of success. This applies to individuals, families, and companies; hence we have the seven habits of highly effective people, teens, families, and entrepreneurs.

The same holds true of retirement. Although everyone’s retirement is different, there are some habits that retirees can cultivate to increase the odds that their golden years will be many and fulfilling. Below we propose seven habits of highly effective retirees.Continue reading

Taking retirement for a test drive

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Many people approach retirement with a feeling of uncertainty. Uncertainty that they have enough savings. Uncertainty about what they’ll do with their time. Uncertainty that they can deal with the loss of regular social interaction and sense of purpose they get from work. Uncertainty, in general, that retirement is right for them at this time.

If that describes you, then maybe a retirement ‘test drive’ might work. This increasingly popular arrangement is called phased retirement, in which employers reduce the working hours and provide partial retirement benefits to some of their older workers for a period of time. This is often a win-win: it gives workers a preview of their retirement and allows them to continue bringing in income, and it allows employers to keep their more experienced workers for a bit longer at reduced cost to mentor younger workers.Continue reading