Taking IRA distributions early without penalty

We’ve all heard the common rule that you can’t access your IRA funds until age 59 ½ without incurring a 10% penalty. Less commonly known is a provision in the tax code that allows you to take distributions earlier, without any penalty. This provision has restrictions however, and is only suitable for certain individuals.Continue reading

Your credit score may reveal more than your spending habits

credit card

Credit score requests have become quite commonplace in today’s society. Your bank uses your credit score to decide how much interest to charge on your loan; your life insurer uses it to set your premiums; prospective employers even use it when making hiring decisions.

A credit score encapsulates a host of prior financial decisions, which many believe reflects attributes that are harder to measure such as trustworthiness and personal responsibility. Now research has shown that credit scores are correlated with physical health.Continue reading

Considering your retirement options

Retirement, for most people, is the time to finally do what they want, on their schedule and terms, with no pressure or need to be tied to a paycheck. While many simply want to unwind and relax after a long and stressful career, others are eager to explore new horizons, pastimes, or even new careers. Here are some ideas for creating the perfect retirement.Continue reading

The new retirement

The traditional model of retirement – working at the same career, even the same company, for decades and taking a gold watch at age 65 – has gone the way of the horse and buggy for many folks. It’s been replaced by a new retirement, which requires major adjustment but also presents new opportunities.

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The retirement expense you may not be thinking about

dollar sign

Although not everyone will need professional long-term care in their lifetimes, a significant portion will, and few people are thinking about it. According to Boston College’s Center for Retirement Research, 58 percent of women and 44 percent of men will need nursing home care sometime in their lives. The average duration of such care is estimated at 0.88 years for men and 1.37 years for women.

The average cost for a nursing home in 2012 was $81,030 per year, and the average cost for home health care was $21 per hour. But only 13 percent of people buy long-term care insurance.

Long-term care includes the necessities of daily living, such as eating, dressing, showering, and taking medications. Therefore it is not covered under most medical insurance policies or Medicare. However some health insurance policies cover minimal assistance, and Medicare Part A covers full or partial costs for up to 100 days in a skilled nursing facility following a hospital stay.

One reason cited for why many don’t buy long-term care insurance, is that Medicaid programs cover long-term care for indigent residents. Medicaid’s programs are operated by the states and require that most of a person’s financial assets first be exhausted.

The CRR estimates show that, although only 13 percent of people actually buy long-term care insurance, 19 percent of men and 31 percent would be willing to pay for it. Considering the relatively large percentage of people who will actually need long-term care, it’s prudent for everyone to consider how they would defray the costs should they need them. Some options are:

  1. Purchase long-term care insurance
  2. Reserve a portion of personal savings or home equity to pay the costs
  3. Live close to relatives or grown children who could take care of you
  4. Hope you stay healthy and never need it

Regarding option #3, you also have to consider whether your relatives are able and willing to do this. Many grown children become personally and financially burdened by the cost and stress of taking care of elderly parents.

Option #4 seems to be favored by many people. But it’s wise to make plans for contingencies, even if they’re never needed.

Managing your retirement savings strategically

bill dominoes

Are you concerned that your retirement savings won’t last? You’re certainly not alone. A 2013 survey of people age 50-70 found that on average their savings were $250,000 short of what they’d need for the type of retirement they envisioned.

Fortunately, there are ways to s-t-r-e-t-c-h your savings so they have a better chance of always being there when you need them. Here are a few suggestions.

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Your mortgage: To pay off or not to pay off?


Paying off debt, such as your mortgage, can seem like it should be a top financial priority. After all, sending thousands of dollars to the lender each month can become burdensome and pointless. Best to be rid of that payment as soon as possible, right?

Not so fast, say many financial experts. While paying off your mortgage can be satisfying and should be a priority for some people, for others there are things that should be taken care of first. Here is a short list.
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Watch out for taxes in retirement


Although many people will see their taxes go down after they enter retirement, a lot of folks are surprised that many of their retirement income sources are subject to taxation. Taxes are something you definitely should take into account when figuring your retirement finances.Continue reading

Four things to do when preparing for retirement


Are you planning to retire in the next few years? If so, congratulations! Get ready for a well-earned exit from the daily grind. It’s time to do what you want for a change.

To help ensure your golden years are everything you envisioned, you need to do some basic planning. You’ve been planning your retirement for a long time; now’s not the time to let your diligent planning habits slide. Here are four things you might consider starting to take care of now.Continue reading

Student loans – A threat to many retirement plans


“Retirement” and “student loans” are two terms you might not hear often in the same sentence. But in fact, student loans are growing rapidly among people in or approaching retirement age. Education loans held by people 50 and over have increased 30% since 2005, according to the Federal Reserve Bank of New York, and now constitute 17% of $1.2 trillion in outstanding student loan debt.Continue reading

Making early retirement a reality


Retiring early is a dream for many people in their fifties or early sixties. People want to retire early because they’d prefer to do something else than work at their jobs. Maybe they find their jobs boring, too stressful, or just unpleasant, or maybe there’s a hobby, volunteer position, or even another career they’d rather pursue instead.

Can early retirement be more than just a dream? Here are some things to consider before you make the jump.Continue reading

Think you need a million dollars to retire? Think again

money-us-dollarsMore than 70% of retirees have less than a million dollars in net worth. This will come as comforting news to many people who fear they are behind in their retirement savings. Furthermore, two-thirds have less than $100,000 in annual income, and four-fifths have Social Security retirement benefits, averaging $1,294 per month, as their main source of income.
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