Retirement is a time for relaxation and enjoyment, but it’s also crucial to maintain a solid financial foundation, especially during the active go-go years. Here’s how you can balance living life to the fullest while ensuring financial stability.

Understanding the Go-Go Years

The go-go years span the early phase of retirement, typically from the late 50s to early 70s. During this time, retirees are generally healthy and active, allowing them to engage in travel, hobbies, and social activities. Proper financial planning is key to making the most of these years without compromising future security.

1. Budgeting for Activities:

• Travel: Allocate a specific budget for travel each year. Consider using a portion of your savings or investment returns to fund these adventures. Use travel reward programs and senior discounts to stretch your budget further.
• Hobbies and Interests: Identify hobbies that bring joy and determine their costs. Some activities, like gardening or crafting, may have minimal expenses, while others, like golfing or sailing, can be more costly. Plan accordingly to ensure these activities fit within your budget.

2. Managing Healthcare Costs:

• Health Insurance: Ensure you have comprehensive health insurance coverage. Medicare typically starts at age 65, so plan for private insurance if you retire earlier. Consider supplemental insurance policies to cover gaps.
• Health Savings Account (HSA): If you have an HSA, continue contributing to it until you’re eligible for Medicare. The funds can be used tax-free for qualified medical expenses.

3. Investment Strategies:

• Diversified Portfolio: Maintain a diversified investment portfolio to balance growth and security. A mix of stocks, bonds, and other assets can help mitigate risks.
• Withdrawal Strategy: The traditional 4% rule may no longer suffice for many retirees. Consider a dynamic withdrawal strategy, which adjusts your annual withdrawal rate based on market performance and personal circumstances. This method provides flexibility and can help ensure your savings last throughout retirement.

4. Generating Steady Income:

• Social Security: Decide when to start taking Social Security benefits. Delaying benefits until age 70 can result in higher monthly payments.
• Pensions and Annuities: If you have a pension, understand your payout options. Annuities can provide a steady income stream and can be a valuable part of your retirement plan.

Tax Planning

• Tax-Advantaged Accounts: Continue to take advantage of tax-advantaged accounts such as IRAs and 401(k)s. Roth IRAs are particularly beneficial, as qualified withdrawals are tax-free.
• Required Minimum Distributions (RMDs): Understand RMD rules for traditional retirement accounts to avoid penalties. Plan your withdrawals to minimize tax impact.

Estate Planning

• Wills and Trusts: Ensure your will is up to date. Consider setting up trusts to manage your assets and reduce estate taxes.
• Beneficiary Designations: Review and update beneficiary designations on retirement accounts and insurance policies.
• Power of Attorney and Healthcare Directives: Establish a power of attorney and healthcare directives to ensure your wishes are followed in case of incapacity.

Financial Peace of Mind Through Asset Allocation and Bucket Planning

1. Asset Allocation: Diversifying your assets is crucial in mitigating risks and ensuring steady returns. A well-balanced portfolio tailored to your risk tolerance and retirement goals can provide financial peace of mind. Consider consulting a financial advisor to optimize your asset allocation, balancing stocks, bonds, and other investments to protect against market volatility.
2. Bucket Planning: This strategy involves dividing your retirement savings into different “buckets” based on your time horizon and financial needs. Typically, you’ll have:

• • Short-Term Bucket: Contains funds needed for immediate expenses (1-5 years). This should be in low-risk investments like cash or short-term bonds.
  • Medium-Term Bucket: Holds funds for expenses expected in the next 5-10 years. This might include a mix of bonds and dividend-paying stocks.
  • Long-Term Bucket: Invested for growth, intended for expenses 10+ years down the line. This bucket can be more aggressive, with a higher allocation to stocks and real estate.

This approach ensures that you have readily available funds for short-term needs while allowing other investments to grow over time.

Enjoying the Go-Go Years Responsibly

• Travel Smartly: Look for budget-friendly travel options such as house swaps, senior discounts, and travel during off-peak seasons.
• Stay Active and Healthy: Invest in your health through regular exercise, a balanced diet, and preventive healthcare. Staying healthy reduces medical costs and enhances your quality of life.
• Engage Socially: Maintain strong social connections through community activities, clubs, and volunteer work. These engagements can provide emotional support and enrichment.

Conclusion

The go-go years of retirement are a unique opportunity to enjoy life while you are still active and healthy. By implementing strategic financial planning, you can ensure that your early retirement years are filled with joy and adventure without jeopardizing your long-term financial security. Embrace this phase with a balanced approach to spending, saving, and investing, and make the most of the vibrant years ahead.

For more insights and personalized advice on planning your retirement, spend more time on SafeMoney.com and discover how we can support your journey to a fulfilling and secure retirement.

Authored by Brent Meyer, founder and president of SafeMoney.com, with over 20 years of experience in retirement planning and annuities. Learn more about my extensive background and expertise here

The post Living It Up in the Go-Go Years first appeared on SafeMoney.com.

Retirement is a significant phase in life, often marked by mixed emotions: excitement for the years ahead and uncertainty about financial security. Many people have some form of retirement plan in place, whether through personal savings, an employer-sponsored plan, or a combination of both. But with changing market conditions, evolving retirement needs, and increasing lifespans, it’s critical to ensure your retirement plan is robust and aligned with your long-term goals. Seeking a second opinion on your retirement plan can be a prudent step to ensure you’re on the right track.

Common Retirement Planning Challenges

Retirement planning can be complicated, and even the most carefully considered strategies can have blind spots. Here are some common challenges:

• • Underestimating Longevity: Many people outlive their life expectancy predictions, and not having enough savings can lead to financial difficulties.
  • Healthcare Costs: Healthcare expenses tend to rise with age. Not accounting for unexpected medical bills can put a strain on your savings.
  • Inflation: A plan that doesn’t consider inflation might leave you with significantly less purchasing power.
  • Market Risks: Investment risks, particularly with volatile markets, can impact portfolios and retirement income.
  • Estate Planning: Many overlook estate planning, potentially leaving loved ones with complex and expensive inheritance issues.

Benefits of a Second Opinion

Getting a second opinion on your retirement plan offers numerous advantages:

• Uncovering Gaps: A different financial advisor can identify potential gaps or weaknesses in your current plan that you might have missed.
• Fresh Perspective: A second advisor may offer fresh ideas and strategies to optimize your savings, reduce risks, or take advantage of tax-saving opportunities.
• Validation: If you’re confident in your plan, a second opinion can provide validation that you’re on the right track.
• Enhancing Strategy: Recommendations from a new advisor might complement or enhance your existing strategy, ensuring better financial health.

When to Seek a Second Opinion

It’s a good idea to consider a second opinion in the following scenarios:

• Significant Life Changes: Major life events, like downsizing your home, starting a new business, or making a substantial investment, should prompt a review.
• Uncertain Recommendations: If your advisor’s suggestions seem unclear or inconsistent with your goals, it might be time to consult another professional.
• Lack of Confidence: If you’re not fully confident in your plan, a second opinion can provide reassurance or adjustments.

What to Expect from a Second Opinion

A second opinion typically involves a thorough review of your financial situation and retirement goals:

• Assessment Process: The advisor will evaluate your income streams, portfolio risk, insurance policies, estate plans, and other assets to identify gaps or risks.
• Personalized Recommendations: Based on the assessment, the advisor will recommend adjustments that better align your plan with your objectives.
• Actionable Strategies: The advisor may suggest specific strategies, like diversifying your investments or optimizing Social Security benefits.
• Risk Mitigation: They’ll help mitigate risks, such as market volatility or long-term care costs, that could affect your retirement.

Choosing the Right Financial Advisor for a Second Opinion

Selecting the right financial advisor is crucial. Here’s how to find one who aligns with your needs:

• Credentials and Experience: Verify the advisor’s credentials, ensuring they’re certified and experienced in retirement planning.
• Potential Conflicts of Interest: Advisors who don’t adhere to a fiduciary standard may not be obligated to prioritize your interests above their own. Look for advisors who are legally required to provide unbiased, client-focused advice.
• Transparent Fees: Understand their fee structure to avoid hidden costs that could eat into your savings.
• Communication Style: The advisor should communicate clearly and listen to your needs, providing personalized advice rather than one-size-fits-all solutions.

Conclusion
Seeking a second opinion on your retirement plan can be a game-changer in securing your financial future. With the complexities of retirement planning and the challenges that arise over time, a fresh perspective can uncover blind spots, validate your existing plan, or enhance it with new strategies. Make sure to choose a trustworthy advisor who will carefully analyze your financial situation and provide personalized guidance. Taking this proactive step can offer peace of mind and ensure a comfortable and secure retirement ahead.

If you’re seeking tailored guidance, consider consulting a financial professional. Visit our “Find a Financial Professional” section to connect directly. For a personal referral to an independent, licensed advisor, call us at 877.476.9723 or contact us here to book your first appointment.

Authored by Brent Meyer, founder and president of SafeMoney.com, with over 20 years of experience in retirement planning and annuities. Learn more about my extensive background and expertise here

The post Get a Second Opinion on Your Retirement Plan first appeared on SafeMoney.com.

In 2010, the U.S. Census Bureau found 53,364 centenarians – or those fabled few who have attained age 100 and up – were living in the United States. A later study by the CDC estimated that the “100 and up” crowd had grown over 40 percent, or to 72,197 centenarians, in 2014.

Over the past few years, numerous studies have revealed that, in general, we are likely to live longer than previous generations did. In turn, that is changing people’s expectations of the golden years. 

Apparently, we have gotten the message that we are likely to have many more years to enjoy than we may have previously expected. A newly released study from the Transamerica Center for Retirement Studies reveals that today’s workers are already thinking in terms of longer lives.

Their 2017 survey of more than 6,000 workers across the United States asked: “What age are you planning to live to?” Those who provided an answer to the question are planning to live to age 90 (median). Another 14 percent plan to live to age 100 or older, a finding which is even higher among millennials (18 percent).

Pocket Watches Give Way to Fitness Trackers

Clearly the days of expecting to receive an engraved pocket watch at 65 and then golf-carting into the sunset are gone. This has major implications for anyone approaching or planning for retirement.

People are projecting a meaningful balance of work and lifestyle. As Catherine Collinson, CEO and president of Transamerica Center for Retirement Studies and a retirement and market trends expert, says, “Our survey finds that many workers are envisioning retirement as a chapter in life that includes both work and leisure. Many are expecting to work beyond age 65 out of financial necessity and for healthy aging-related reasons such as to ‘be active’ and ‘keep my brain alert.'”

Transitioning into a work-life balance before full retirement involves change, Collison adds. This could be reducing work hours or working in a different capacity that is either less demanding or more personally satisfying before someone fully retires, she explains.

Longer Lives Means More Planning

In the U.S. Census data, there were 1.3 centenarians for every 10,000 people. Worldwide, the centenarian population is projected to grow rapidly, with the United Nations estimating around 3.68 million centenarians by 2050.

Taking this into account as we think about our own retirement longevity can be instructive. In fact, according to the Social Security Administration, a man reaching age 65 today can expect to live, on average, until age 84.3. And a woman turning age 65 today can expect to live, on average, until age 86.6. Keep in mind that those are just averages, too. 

If you are nearing retirement or beginning to develop your retirement plan, it would be wise to ask these questions:

• What are my later years, which can stretch into decades thanks to healthier lifestyles and advanced medical care, going to look like now?
• How will I plan so that I’ll have the financial resources to fund my longer-term, reimagined retirement?
• What actions can I take now to face down retirement risks that are more likely to crop up the longer I live?
• How will I fare if health issues prevent me from working, and therefore earning, as long as I had planned?

Abraham Lincoln famously said: “Give me six hours to chop down a tree and I will spend the first four sharpening the axe.” 

Right now, as you prepare for retirement, think of it as sharpening your axe. You have more tools and strategies at your disposal than your parents or their parents ever did. And you will need them to serve you well over your longer planning horizon.

What Should You Plan for?

While this is by no means an exhaustive list, here’s a starting point of factors to consider. The uncertainty of these variables can exercise a heavy hand especially as retirement stretches out for potentially many decades.

1. Rising inflation, which reduces everyone’s purchasing power, is a threat to many retirement plans. You may be projecting your spending in retirement and your lifestyle-based income needs. It’s also important to heed how personal expectations will by affected by rising prices for everything, including the most basic of human necessities: food.

Let’s consider the effects of inflation in some content below. Here is historical data of different goods over time, based on U.S. city averages for pricing. Some of these goods effectively doubled in price from 1980 to 2018.

2. Healthcare needs and long-term care costs are other potential derailments for those planning a longer, more income-producing work life. According to Collinson of Transamerica, “Our survey asked workers what steps they are taking to help ensure they can continue working past age 65 and the findings were surprising. Only 62 percent say they are staying healthy…”

In a white paper from HealthView Services, data indicates healthcare costs will exert a heavy hand on the retirement landscape. A healthy couple retiring at age 65 this year will require a little over $266,000 to pay for the costs of Medicare Parts B and B and supplemental insurance for their lifetime. Likewise, for a healthy couple that is 55 years old and retiring 10 years from now, those costs will shoot up to roughly $320,000.

That’s without factoring in all healthcare costs, too. Again, for a healthy couple retiring at 65 this year, total healthcare costs will be sizable. When you factor in dental care, vision care, co-pays, and out-of-pocket expenses, the couple’s total healthcare costs for their lifetime goes up to almost $395,000.

Some annual total healthcare cost projections, in 5-year spans, at select age benchmarks can be seen in the table below, courtesy of HealthView Services.

3. Declining work options are the elephant in the retirement planning room. Will you really have the opportunity to work as long as you think you will? That Transamerica study found that, just as not all those planning to work longer were staying healthy, only 56 percent are focused on performing well at their current job and even fewer, 46 percent, are keeping their job skills up to date.

As Collinson noted in a Forbes column by Richard Eisenberg, looking at data trends such as the labor force participation rate show a step-off in employment after age 65. Less than 20 percent of workers in the labor force in 2016 were age 65 and older, while less than 10 percent were age 75 and older.

And, compared to workers in younger age groups, workers who are 65 and older have a longer average length of unemployment. Whereas a 20s-something had an average unemployment span of around 19-21 weeks in 2017, a worker aged 65 or beyond had an average duration of nearly 40 weeks.

Steps to Take Now

One tool that has remained a go-to for generations is insurance. Luckily, as those planning for retirement face many new and evolving income challenges, they have at in their toolbox innovative products and strategies to help them plan for and manage healthcare and long-term costs.

Another smart move is to be mindful of when you take Social Security and start taking withdrawals. What will your precise “withdrawal” strategy be? According to experts, an across-the-board 4 percent withdrawal rate most likely won’t cut it for planning. And, depending on your risk tolerance, income level, and lifestyle expectations, your income strategy may need some guarantees and flexibility.

Working with a retirement-focused financial professional helps you plan proactively for your work vision and other retirement goals. They will help you plan for your retirement income streams, get those in place, determine what liquidity you need for emergency situations, and evaluate your complete financial picture. Overall, it’s about getting you ready to enjoy your retirement with confidence.

Ready for Personal Financial Guidance?

As you make decisions about your work expectations, a financial professional at SafeMoney.com can help you efficiently plan the rest of your retirement financial puzzle.

Get in touch with someone directly by using our “Find a Financial Professional” section. If you need a personal referral, call us at 877.476.9723.

The post Living to 100 — What It Means for Your Retirement, Work Life, and Money Matters first appeared on SafeMoney.com.

In the study, 56% of workers said they expect to work at least part-time past age 65. Among Baby Boomers, 6 in 10 (65%) expect to or already working past the traditional retirement age. More than half of Gen Xers (56%) also planned on at least part-time employment during retirement.

However, that vision may be out of reach, as few workers seem to be taking steps to make it happen. Less than half of workers (46%) are keeping their skills up-to-date, a finding that held for Baby Boomers and Gen Xers alike. And only 18% are scoping out the job market and opportunities available, with 15% of Baby Boomers and of Gen Xers alike reporting an active lookout.

Overall, a number of workers seemed to believe their employers would let them stay on part-time — which well could not happen due to present employment market conditions and practices. Meanwhile, the findings don’t bode well for expectations of working past 65. That’s even as 83% cited financial reasons as why they plan to continue doing so.

Why Work Opportunities in Retirement May be Limited

Even though a majority of workers said their current employers support working past 65, employment statistics may show otherwise. As Catherine Collinson, president of Transamerica, noted in a Forbes column by Richard Eisenberg — looking at data trends such as the labor force participation rate shows a step-off in employment after age 65.

This decline in employment after age 65 can be seen in the graph below, which shows participation rates by age group over a three-decade spread.

Another point of interest is duration of unemployment by age group. Compared to workers in younger age groups, workers who are 65 years and older have a longer average length of unemployment. Whereas a 20s-something had an average unemployment span of around 19-21 weeks in 2017, a worker aged 65 or beyond had an average duration of nearly 40 weeks.

Why This Matters for Retirement Planning

Retirement is the sum of many moving parts: lifestyle, social engagement, physical and mental well-being, financial security, personal recreation, spirituality. People have different visions for how they will spend their retirement years. For many, work will be just as much a vehicle for staying engaged as a source of income.

Many workers told Transamerica that they envision a post-retirement lifestyle balance of part-time work with other activities. 3 in 10 cited paid work as a retirement dream, with pursuing an encore career, starting a business, or continuing to work in the same field being top-mentioned goals.

From a financial planning perspective, retirement work expectations affect a lot of areas:

• People behind in retirement savings may view continuing employment as a long-term post-retirement source of income.
• However, many people find themselves retiring earlier than they planned, with many surveys reporting health as the deciding factor.
• Workers planning to stay with their current employer may believe they will have benefits in part-time work.
• In the Transamerica survey, 3 in 5 workers (60%) indicated they believed they would keep the same level of benefits, but many employers don’t offer benefits to part-timers.
• Changes in workplace benefits can affect retirement saving goals.
• Perks that came with full-time employment, such as tax-advantaged employer retirement savings plans, might not be available with part-time work.
• That can shrink the amount of savings vehicles available to workers, and if they are already behind on saving, they will need to adjust their retirement savings strategy accordingly.
• Reductions or loss of benefits that provided cost relief, such as health benefits, may mean that a shift to part-time work means more healthcare and other personal costs to shoulder.

These survey findings suggest that U.S. workers should start thinking more realistically about working in retirement, particularly the ways they wish to. Whether working at a current employer or someplace else, find out if you will be eligible for benefits. That includes whether contributions to an employer-sponsored retirement plan, like a 401(k), will be an option, and whether health benefits will continue to be available.

Preparing for the Future

There are other ways in which you can prepare to work during retirement in the way you envision. If a current employer is attractive, as Eisenberg notes, when nearing the departure date from full-time work, you could discuss with your supervisor your options. That may be serving as a part-time, paid mentor to new hires or promoted persons.

Of course, it’s also important to diversify your post-retirement job prospects. Networking, training for new skills, and researching employment opportunities in your preferred area to retire are ways to plan ahead. Even so, just 4% of Baby Boomers and 10% of Gen Xers report “going back to school and learning new skills” to stay ahead with in-retirement job opportunities.

And if part-time work will be a source of income for you in retirement, it’s important to ensure you have other income sources in place, too. Changes in health could prompt work interruptions or even an outright workplace departure, which could drastically change your income picture.

Working with a retirement-focused financial professional helps you plan proactively for your work vision and other retirement goals. They will help you plan for other income streams, get those in place, determine what liquidity you need for emergency situations, evaluate your complete financial picture. Overall, it’s about getting you ready to enjoy your retirement with confidence.

Ready for Personal Financial Guidance?

As you make decisions about your work expectations, a financial professional at SafeMoney.com can help you efficiently plan the rest of your retirement financial puzzle.

Get in touch with someone directly by using our “Find a Financial Professional” section. If you need a personal referral, call us at 877.476.9723.

The post Working in Retirement: Wishful Thinking or Within Reach? first appeared on SafeMoney.com.

To some people, supplemental insurance might seem a little redundant. After all, insurance can be considered a ‘just-in-case’ type of financial arrangement, and to augment this precaution with another provisional measure in the form of supplemental insurance might not immediately make sense.

However, it is necessary to delve into common insurance policies and how supplemental insurance packages can help you rest easier. With that in mind, this article discusses the basics of what supplemental insurance is, particularly with regard to life and health insurance, and when it is necessary to purchase one.

What is It?

Supplemental insurance is a broad term for insurance policies and packages that are undertaken on top of existing or insurance policies. These are used to cover expenses that your primary insurance doesn’t, with benefits that pay directly to you and not to medical providers or other insurance partners.

AOL explains that supplemental insurance provides coverage where traditional insurance policies typically fall short, a potentially life-saving tool particularly when it comes to health insurance. This is because typical health insurance policies have broad coverage which, while useful for general financial precaution, might not be enough for specific illnesses or medical procedures. In this case, contract limits under traditional insurance packages would mean that not all potential costs would be covered. 

In addition to covering these previously unaddressed expenses, The Balance details several other things covered by supplemental health insurance, such as lost wages and other financial needs that arise from illnesses or injuries. These can include everything from out-of-network providers, travel costs, and lodging to housekeeping, childcare, and groceries.

Supplemental life insurance works the same way. It fills in the large gaps left by more common and affordable term life insurance, while giving the protection benefit of whole life insurance packages without a considerable financial commitment. SafeMoney.com previously explained that term life insurance has the advantages of fixed premiums, lower cost, and straightforward benefits. However, term insurance does not have a cash value in the policy, any return benefit, nor any death benefits to be provided upon the term’s expiration.

Such arrangements are typically given by employers, and may not always be sufficient to cover the needs of your loved ones if you pass away. This is where supplemental life insurance comes in, as the more comprehensive option of whole life insurance may be too expensive for some families.

When Do You Need It?

Before deciding whether or not to get supplemental insurance, it is important to review the terms and coverage of your existing insurance contract. When it comes to supplemental health insurance, Reader’s Digest points out that it’s highly likely that your coverage isn’t enough.

Medicare packages in the United States typically only cover up to 64% of annual healthcare costs. This translates to as much as $250,000 a year, leading around 90% of Medicare beneficiaries to acquire some form of supplemental health insurance.

When choosing among packages, be sure to ask about coverage for pre-existing conditions, hospital indemnities, and critical illnesses, as well as the limits of the contract. This is to ensure that what you’re getting is worth it, in case the unthinkable happens.

Meanwhile, life insurance policies are often provided by organizations as part of their employee benefits package. However, Health IQ points out that these insurance policies are often lacking, especially for employees with families, whose members will be more financially at risk.

It is advisable to supplement your basic coverage at work with additional private insurance, which also gives you the benefit of being covered even when you change jobs. In other words, supplemental life insurance gives you the benefit of both portability and peace of mind.

Supplemental insurance may seem like an additional burden, especially for the financially constrained. However, when it comes down to it, these supplements ease the burden on individuals and their families if and when they most need them.

The post Supplemental Insurance: What is It and When do You Need It? first appeared on SafeMoney.com.

While there’s no such thing as a fail-safe strategy, it definitely helps to have a retirement financial plan for ever-evolving economic conditions. Knowing what to do to plan is certainly part of that. But it’s just as important to understand what not to do. Otherwise inferior decisions could negatively affect your retirement lifestyle for many years to come.

Here are five potential missteps you should strive to avoid as you look ahead to retirement.

5 Common Pre-Retirement Mistakes

1. Drawing on retirement savings early.  It can tempting to make withdrawals from your retirement accounts before you retire. This is especially true when money is tight in other areas. But taking money from your IRA or 401(k) may prove costly in a number of ways.

If you are younger than age 59.5, not only might you have to pay income taxes on any retirement account withdrawals — you may be looking at an additional 10% penalty as well. Some 401(k) plans come with hardship provisions for withdrawals, but not all employers permit them. 

Even if you are past 59.5, taking money now will diminish the funds you can use for income later on. Just like for other Americans, it’s likely that your retirement accounts will serve as a major faucet of your future income streams. This trade-off involves more than just losing current savings, too. Every withdrawal takes investment dollars out of your retirement accounts that could otherwise grow with rising markets.

So, you may want to think about leaving aside early withdrawals as much as possible. This is important especially as increasing lifespans elevate the risk of outliving retirement money.

2. Not discussing retirement goals and expectations with your partner. Ask 100 financial professionals about the most common retirement mistakes they see with couples. Chances are they will mention a lack of dialogue about retirement expectations. Everyone likes to spend their time in different ways, and committed partners aren’t any different. Even so, it’s not unusual for one partner to assume their lifestyle expectations match those of their partner when they don’t.

This is an important issue for many financial reasons, including budgeting, income, and tax purposes. A few areas where partners’ retirement visions may diverge include:

• Having different patterns of spending
• The timing of when individual spouses actually prefer to retire
• Personal hobbies or activities they enjoy doing
• Future housing expectations
• Ideas of where they will live
• Goals for traveling and how they might do so
• Competing financial goals: Paying off debt, keeping living expenses low, helping loved ones with college or expenses, etc.
• Having different attitudes toward budgeting
• Overall lifestyle preferences and expectations

One spouse may prefer to work part-time while the other wants a break from work. Couples can also differ in travel plans. One of them may want to travel nationwide in an RV and the other desires to visit far-flung destinations overseas. These are just a handful of ways people may hold different lifestyle goals. It’s important for them to be on the same page, especially as physical challenges arise with aging. 

Framing lifestyle expectations will then help you to frame your retirement income needs and how you will cover them. There may be tax implications to your retirement visions, too. Different workplace retirement dates can mean one of you will start drawing on your retirement accounts. Those withdrawals will be taxed as ordinary income, and Social Security benefits may be tax-affected too. This shows the importance of having an open, honest conversation about your retirement lifestyle views.

3. Not thinking through a careful Social Security claiming strategy. Sure, you can take Social Security benefits starting at age 62. But doing so may mean that your benefit payments will be permanently slashed. Financial professionals say that, generally speaking, the breakeven age for claiming Social Security at later ages, versus 62, is in the early 80s. Should you have a family history and other indicators of a potentially long life, it may make sense to hold off on claiming benefits until later on. Waiting past full retirement age builds up “delayed credits,” which simply means your benefits accrue in value.

For people with partners, the Social Security question can be even more complex. Before the repeal of “file and suspend,” couples had well over 500 potential claiming strategies. Claiming benefits at the wrong time could potentially lead to tens of thousands of dollars in lost benefit payments. It’s prudent to work with a financial professional who can help you identify claiming strategies that are right for you.

4. Assuming your current advisor is the best guide for you in retirement planning. Up until this point, you may have worked with a financial advisor for your wealth-building and accumulation goals. They may have helped you build a nice nest egg. Because of their long-standing business relationship and history, it’s not uncommon for investors to believe their current financial professional should be their retirement guide.

However, retirement planning is different from other financial planning. For one, it concerns distribution and related issues: making decisions about retirement account withdrawals, monthly spending and income needs, and month-to-month cash-flow resources. If a bulk of your retirement money is coming from tax-deferred accounts, now you’ll be paying taxes on the backend. A financial professional specializing in the accumulation phase of financial life may not be the best qualified to balance and plan for all these post-retirement challenges.

As you enter this stage, you may want to consider financial firms with a retirement planning focus. With a distinct background in retirement planning issues, they can help you make the most of your money for your lifestyle goals.

5. Not having a survivorship plan in place. It’s an uncomfortable topic, but near-retirement couples should have a survivorship plan in place. After all, unexpected things can happen at any point, and what could happen if one partner passed away? It’s also not unusual for one partner to handle the bulk of household finances, which makes having a survivorship plan all the more important. 

An experienced financial professional can help you and your significant other develop survivorship contingency plans. That includes strategies for the surviving partner to have as efficient a financial transition as possible, to cover their income needs, and to prepare for when their money management abilities decline with aging. From the perspective of being practical, it’s better to start preparing now than later.  

Final Thoughts

Avoiding pre-retirement missteps like these begins with careful planning. You may find it helpful to seek guidance from someone who understands pre-retirement needs, goals, and can help you prepare for a retirement transition. If you are ready for personal guidance, financial professionals at SafeMoney.com are ready to help you.

Use our “Find a Financial Professional” section to connect with someone directly. And if you need a personal referral, call us at 877.476.9723.

The post 5 Pre-Retirement Blunders Even Retirement-Savvy Investors Make first appeared on SafeMoney.com.

What was the reason for the retirement humbug? Financial issues, mostly. Among the 28% of unhappy retirees, 78% pointed to income as a reason while 76% blamed the cost of living.

The Nationwide Retirement Institute also noted other findings that are instructive for income and retirement planning. Let’s dive into some more of those takeaways now.

Other Important Retirement Findings

According to Nationwide, many Americans held expectations that wouldn’t match up with their financial reality in retirement. Much of this expectations-to-reality gap was attributable to retirees overestimating their Social Security benefit payments and underestimating how much healthcare costs would be.

For instance:

• Over half of future retirees (53%) and recent retirees (59%) expected Social Security to cover half or more of their expenses in retirement
• Among current retirees, nearly a quarter said their Social Security payments are less or much less than expected (25% of recent retirees and 23% of retirees retired for 10+ years)
• 1 in 3 retirees (34%) reported health issues are disrupting their retirement
• 24% of retirees with health issues noted that expenses of healthcare keeps them from living the retirement they want
• Among those with health issues, three-quarters of retirees (75%) reported that health problems arose sooner than they expected
• Nearly two-thirds (65%) of those with earlier-than-expected health issues said the health problems arose more than five years earlier than they expected

However, Social Security is designed to replace around 40% of the average wage earner’s income in retirement, according to the Social Security Administration. Healthcare costs themselves can be hard to pinpoint, as they will vary among retirees based upon family history, physical condition, and other factors.

However, Fidelity has estimated that a 65-year-old couple retiring in 2017 may pay up to $275,000 in retirement healthcare costs. Going even further, consulting firm HealthView Services pegs total lifetime healthcare costs for a 65-year-old couple today at $404,253 (or $606,662 in future dollars). That figure includes total Medicare payments as well as costs not covered by Medicare, including co-pays, out-of-pocket expenses, expenditures for dental and eye care, and more.

The Social Security Dilemma

As a source of guaranteed income, Social Security benefits tend to play an important role in covering monthly retirement living expenses.

But Nationwide reports that older Americans don’t understand some basic facts of Social Security. In the survey, 91% of older retirees didn’t know what factors determine the maximum benefits they could receive.

The survey also found that retirees were more likely to overestimate their Social Security benefit payments overall than they were to underestimate them.

Among recently retired persons and individuals retired for 10+ years, about three-quarters wouldn’t change the age at which they had taken their benefits. 78% of recent retirees wouldn’t change their claiming age. Likewise, 73% of 10+ year retired retirees said they wouldn’t change their claiming age, either.

A notable finding for retirement confidence was relating to guidance from financial professionals. The survey found retirees working with a financial advisor in 2017 were more likely to say they wouldn’t change their claiming age, if they could, than in 2016. The proportions of retirees saying this was 85% in 2017 versus 73% in 2016.

On the whole, though, just 17% of the surveyed retirees had received advice relating to Social Security from a financial professional. For retirement investors as a whole, this underscores the importance of hiring the right retirement planning company to help you plan for your future.

Preparing for a Secure Retirement Future 

These survey findings highlight that a comfortable retirement lifestyle doesn’t happen by accident. Rather, it’s the result of careful planning, preparation, and strategy. Other studies suggest that working with a financial professional specializing in retirement planning can yield powerful outcomes. The Insured Retirement Institute reports in one survey, 75% of Americans working with a financial professional have at least $100,000 saved for retirement. Comparably, less than one-half of those without a financial professional have at least $100,000 in retirement savings.

So, a retirement-focused financial professional can help you avoid costly retirement and income risks. They can also help you achieve more confidence in your retirement and prepare you to enoy the lifestyle you have worked hard for. When you are ready for personal guidance, financial professionals at SafeMoney.com stand ready to assist you, starting with a no-obligation consultation.

Use our “Find a Financial Professional” section to connect with someone directly. Should you need a personal referral, call us at 877.476.9723.

The post Nearly 3 in 10 Americans Have a Discouraged Retirement Outlook first appeared on SafeMoney.com.

An article on NextAvenue.org talks about why this might be case. Part of the trouble is baby boomers have a lot of emotional hopes and dreams tied up in their retirement. They also have goals they want to accomplish before they retire, which may lead to delays in retirement decisions. As for estate planning, many older Americans simply don’t feel a strong urge to deal with estate matters yet.

As you approach retirement, it’s time for discussions. You should have frank conversations with your partner about retirement, what you want it to be, and how you will pay for it. This is a crucial step in being able to enjoy a secure and comfortable future. Let’s go over some important steps to take.

What Do We Want Our Lifestyle to be Like?

First, you and your spouse need to talk about your retirement vision. Do you want to maintain your family home? Do you want to move to be closer to family or somewhere with more appealing weather? Do you want to travel extensively? Do you want to work at all? How will you spend your days?

These are important things to talk about. For one, they help create a more complete framework around which to have discussions of retirement money matters. Some couples struggle at retirement with so much time together, because they don’t have a clear plan for how they’ll spend their time and, subsequently, their money.

How Much Money Will We Need?

This is a very important question to answer. The answer is it depends. Up until this point, you and your partner have had a certain lifestyle and used a certain amount of income per year to maintain it. Will your lifestyle continue as it is in retirement, with just some changes? Or like some people, have you made sacrifices during the working years and look forward to higher-end living in your post-work years? This is just one reason why discussion of lifestyle expectations is critical.

Now, let’s cover some baseline information on this question. Say you wanted an income of $40,000 per year in retirement. With systematic, basic withdrawal rates, and assuming a 25-year period, basic math says to have $1 million saved for retirement.

Of course, this is without discussion of the sources from which the money would come, their tax implications, and Social Security income. It also doesn’t account for whether the income sources may be “permanent” sources (sources providing assured income streams like those from pensions or annuities) or “maybe” sources (sources of money that can fluctuate in value with market activity). So $1 million in retirement savings definitely doesn’t apply as an answer for everyone — it really depends on your spending expectations, expected costs of living, and other monthly income benchmarks.

If you want more income during retirement than you have now, you will want to consider the sources of income you will be pulling money from. This may include having more income streams than you have at present, as many Americans rely upon salaried employment for household income. Alternatively, to meet certain future spending goals you could pare down your retirement expectations or living costs.

How Much Money Have You Already Saved?

Once you and your spouse determine what you want during retirement and how much income you will need to fund your lifestyle, the next step is to determine how much money you actually have saved. You may have 401(k)s, IRAs, investment portfolios, and other personal savings. You may also want to determine your expected Social Security income.

According to a recent article in Forbes magazine, over 50% of American households with people aged 55+ have nothing saved for retirement. If you’re reading this article, you are probably saving already. But don’t be surprised if the balance of your savings isn’t quite what you need it to be. With that said, as we said earlier, be sure to include monthly Social Security income along with retirement money you’ve saved up in your annual income estimates.

First, don’t panic, you can take steps now to increase your retirement savings. Second, let’s talk about what you can do today to make sure that you have the money you need for the retirement you want.

As you look over your nest egg, remember, it’s important to conceive of your retirement needs in terms of monthly income needs, not the value of your retirement accounts. Remember, retirement is a period of decumulation, not accumulation.

How can We Increase Our Retirement Savings?

Of course, saving more and earlier is the best strategy for ensuring a well-financed retirement.

However, if that ship has sailed, you can take action now to build your “money stockpile.” If you are approaching retirement, you may be in an even better place to save more than you were even five years ago. So, what can you do?

Ramp up Your Savings Rate.

This sounds like common sense, but it’s more practically applicable that you might have thought.

First, you may be in a better financial place than ever before. Your children may have grown and set up their own households. You may have paid off your mortgage. You may be thinking about downsizing your living arrangement. If you had any student loans, either for yourself or for your children, they were hopefully paid off some time ago. You may have become accustomed to having the extra money. But if you can muster up the willpower to save an additional 15-20% during your last 10-15 years before retirement, you can make significant increases to your nest egg.

You can also take advantage of opportunities to boost your contributions to savings plans, like 401(k)s and IRAs. That way make up for previous years when you may not have been able to contribute as much. People over the age of 50 can make an additional $6,000 in contributions to 401(k) programs. Investors aged 50+ can also add an extra $1,000 to the maximum contributions for IRAs, increasing that annual total to $6,500.

If you’re in your fifties, start looking for ways to preserve the wealth you have worked hard to attain. Wealth protection strategies are good to start looking into. If they make sense for your retirement future, annuities and life insurance, with their contractual guarantees, offer a strong financial safety net for preserving wealth.

Delay Retiring by a Couple Years, Or Work Part-Time.

Americans are living longer lives than before. If you choose to work for a few extra years, you will not only delay any draws on your retirement savings, which increases their value over time. You will also have a few more years to save and increase your retirement pot.

Alternatively, if you ease out of work by transitioning to part-time work before you completely retire, you can limit your draw on your retirement savings by maintaining some employment income. For example, if you can reduce your retirement draws by the same amount you earn from part-time work, even if that income is only $20,000 annually, you’ll increase the overall value of your retirement fund by $116,000.

Another benefit of delaying retirement is that you will also be able to delay drawing on Social Security. For every year you wait to draw on your Social Security retirement benefit – past full retirement age – your benefits go up by 8%.

Whatever your retirement plans are, you will need to discuss the details with your spouse. Identifying shared goals and expectations as well as sharing the financial responsibilities that will enable you to live the life you want are essential. Start today, and you will be well on your way to preparing for a fulfilling retirement.

Ready for Personal Guidance?

Ready to start preparing for your financial future? You may want to begin evaluating strategies to preserve your wealth and turn it into reliable, lifelong income streams in the future. If you and your partner are ready for personal guidance with preparing an income strategy you can count on, financial professionals at SafeMoney.com can help you.

Connect with a financial professional in our “Find a Financial Professional” section, or call us at 877.476.9723 for a personal referral.

The post What to Think About When Discussing Retirement with Your Spouse or Partner first appeared on SafeMoney.com.

Let’s assume you and your partner have talked about your retirement expectations and know how much you will need, how much you have, and a plan for reaching those financial goals. Then you can take these final years before retirement to prepare and ensure that you are able to enjoy retirement.

Let’s get into some of the issues you and your partner should be thinking about as you approach your post-work years.

The Softer Side of Preparing

This article focuses on being financially prepared. But you should also think about what you are going to do with your time.

Years of working toward the goal of retirement may leave you looking forward to not having demands on your time.

However, as life expectancies have increased, you may have 30 or more years. That is a long time to have at your leisure. If you have spent 40 years with a career that helped to frame your identity, you may want to think about what you’re going to do to find fulfillment.

If you have your plan and have selected your retirement date, you might start to feel like you are in limbo. Or it may be a grueling exercise, just counting down the years, months, and days until freedom.

There are some practical steps you can take in the meantime to ensure that you are financially prepared to enjoy the retirement you’ve been working toward for so long.

The Dark Side of Preparing for Retirement

Avoiding estate planning is a common habit. No one wants to confront their own mortality and prepare a will and testament.

However, as Hank Coleman recommends in his article “Top 5 Reasons Why You Need a Last Will and Testament,” on the website MoneyQandA.com, there are many reasons to prepare your will in advance.

This includes taking control of what you want to happen after you pass, instead of leaving it up to the courts to decide.

Pay Off Debt

While you are still earning a full salary, pay off your debts.

When you retire, in most cases, your income will be lower. Any regular debts such as your mortgage, car loans, credit cards, or other loans will take up a larger percentage of your income than they do now.

So if you can, eliminate these expenses before you retire. Then you have more freedom to make your money work for you, including deciding which income sources will pay for your retirement lifestyle.

Convert Assets to Savings

You may also want to consider transferring assets into savings. For example, do you have retirement assets which are potentially exposed to market risk? It may be worthwhile to consider ways to preserve your money so you can rely upon it for retirement income.

Other asset-related decisions may concern simplifying your lifestyle or cutting expenses. For example, you could downsize your home.

While many people would prefer to stay in their family home for as long as possible, there are financial benefits to downsizing to a smaller home that costs less to run and insure.

You may be able to downsize and not have to take a mortgage. Not only that, you can transfer any additional funds into your retirement savings or different financial vehicles to increase your retirement nest egg.

This may also be the time to liquidate any assets that you aren’t using or enjoying. By all means, keep the RV if you and your spouse are planning your great American retirement road trip.

Keep the condo in Florida if you are planning to either move there full-time or make good use of it. However, if you have property that isn’t working for you, you may consider selling it to pad your retirement savings or convert it into more income.

Create a Social Security Strategy

You and your spouse or partner will be eligible for Social Security. But you don’t have to start to draw immediately.

You can strategize the most effective times to start your draw to maximize your income. First, the longer you delay your draw, the more monthly income you will be able to draw.

Also, consider when you and your spouse intend to retire. Will it be at the same time or will one of you retire before the other?

Based on whether you retire at the same time, or one before the other, you may be able to manage your draw for even longer while you still have a household income.

Find the Right Time to Convert Your Portfolio

One mistake that many people approaching retirement make is to convert their 401(k), IRA, and other accounts too late. Yes, it’s good to make the best possible choices for your retirement money. But if you convert too late, you may be taking on unnecessary or excessive exposure to market volatility risk.

Of course, everyone’s appetite for risk is different. But then retirement is the point when you are drawing on your nest egg for income. You are no longer relying upon your career to earn income and cover your monthly living expenses.

So, it’s important to have frank conversations with your financial professional about your goals, expectations, and concerns.

If you haven’t started planning for your retirement income, or a shift to a more conservative retirement wealth strategy may be in order, the financial professionals listed on SafeMoney.com stand ready to help you.

Test-Drive Your Budget

Your pre-retirement years are also an opportunity to test if you can live on your projected budget. If you know that your income is going to reduce when you retire, as it does for most people, this is your chance to practice.

Start practicing paring down your living expenses to see if the income you are expecting in retirement will be sufficient for your plans. This practice not only gives you a chance to see if your expectations are realistic. It also lets you put even more of your income into your savings while you are trying to live on less.

Whatever you choose to do during your pre-retirement years, making plans and saving are critical steps. While others may procrastinate about their retirement, you are researching ways to prepare to make the most of the fruits of your life’s work.

While you are preparing financially, make sure to have honest conversations with your partner about your retirement goals. Also, discuss your plans with your family to make sure that your expectations are aligned or that compromises are set.

Ready to Prepare for Your Retirement Future?

If you have questions about planning for retirement, and how to either make the most of your remaining years in the workforce or how to prepare for an early retirement, contact a financial professional at SafeMoney.com.

They can help you develop a powerful income management strategy to make the most of what you’ll do in retirement. Please visit our Locate a Licensed Advisor or call us at 877.476.9723 for a personal referral to get started.

The post How to Live Your Pre-Retirement Life in Preparation for Retirement first appeared on SafeMoney.com.

Unfortunately, surveys continue to show Americans have strong anxiety about their retirement. A recent PricewaterhouseCoopers survey report offers insights into current levels of retirement confidence. In the 2015 Employee Financial Wellness Survey, retirement confidence was stronger than last year’s survey. 57% said they weren’t confident they’d be able to retire when they wanted to – down from 60% in 2014 and 65% in 2013.

The data resonate with insights gathered from other surveys. As previously discussed, running out of money in retirement continues to be a primary concern of American workers and retirees alike.

What about Other Insights?

Other measures also provided insights into Americans’ retirement concerns. Among other changing dynamics, defined-benefit pension plans are on the decline in the American workplace. As a result, people understand their retirement now falls more squarely on their shoulders.

In the PwC report, over 70% said they should hold primary responsibility for retirement funding. Likewise, 17% said it should be their employer and 13% reported it should fall to the government. Despite those trends, it was clear most of the employees were uncomfortable with undertaking this obligation as their own. Just 51% reported they would be open to losing a portion of their future compensation for guaranteed retirement income.

Many of the surveyed parties also indicated their belief they would have to continue employment in retirement. Of all surveyed employees, 54% would consider part-time work if their employer offered it to them. Furthermore, 35% said it was likely they would have to draw from their retirement money to pay for non-retirement expenses – another factor which could impact future income resources.

What about Your Retirement Confidence?

So we have covered some dynamics of retirement confidence in America. But what about you? Are you confident you have everything you need to enjoy a secure, peaceful retirement?

Here are some questions to consider:

• Do you have a retirement plan in place?
• What standard of living will you and your partner desire in retirement?
• What sources of income will you be drawing from?
• Does your “retirement number” account for future living costs?
• Does it account for healthcare costs? Long-term care costs?
• What is your current health status? Your partner’s status?
• Do you or your partner have a chronic medical condition?
• What is your “Safe Money” amount – or how much you can’t afford to lose?
• How much will Social Security be offering you as an income source?
• When do you plan to file for Social Security? Your partner?
• Will you be giving money to loved ones for additional factors like college savings?
• How much of your retirement funds is allocated in market-based investments?
• What are your plans for leaving an estate?
• What’s your effective tax rate likely to be in retirement?

These are just a few dimensions to consider within your unique needs. Everyone has different goals, objectives, and requirements. It’s important that your retirement plan be tailored to you and your partner’s own specifications. As time elapses in retirement, we believe your plan also shouldn’t rely too heavily on investments with high market risk as income sources.

Need Help?

If you’re ready for personal guidance, SafeMoney.com can help you. Use our Find a Licensed Advisor section to connect directly with an independent financial professional, and to request a personal strategy session to discuss your needs and goals. And should you have any questions or concerns, call 877.476.9723.

The post What is Your Retirement Confidence? first appeared on SafeMoney.com.