Showing posts with label financial planning. Show all posts
Showing posts with label financial planning. Show all posts

Tuesday, March 5, 2019

Shocking Financial Facts about Retirement

How financially prepared are you for retirement?  Are you doing as well as the average aging Baby Boomer or are you falling short?  Have you thought about all the issues which could affect your financial situation?  Many people wonder how much it will cost them to retire, how long they need to be able to support themselves after they stop working, and what financial issues they need to consider when they reach retirement age.

Below are some shocking statistics about how people are doing in preparing for retirement in the United States.  These statistics may reassure you, because you have planned well, or help you see where you could make some improvements.  Either way, they should help you have fewer surprises when you retire.

If this information alarms you, you may want to read a helpful retirement guide such as The Five Years Before You Retire.  It is a great way to get your financial planning on track and help you avoid some of the pitfalls mentioned below. 

Scary Retirement Statistics for American Baby Boomers

You may need to work after retirement.  About 9,000,000 senior citizens are still working, according to 2017 statistics.  This number has climbed dramatically over the past few decades, especially since the last recession, which was a serious setback to many Baby Boomers.

You should probably save more money before you stop working.  Approximately 21 percent of retirees have less than $1000 in retirement savings, according to the 2017 Retirement Confidence Survey.  More than a third of retirees have less than $50,000.

You need to be prepared to live for two or three more decades.  Retirees are living longer than ever and many can expect to live 20 or 30 years after they retire.  It is estimated that one quarter of all 65 year olds will live past the age of 90.  One in ten 65 year olds will live past the age of 95.  A significant number will live past the age of 100.  Unfortunately, it is likely that many of those people will run out of money long before the end of their lives.

If it isn't too late, you should probably start saving money at a younger age.  Three-fourths of retirees are concerned that they do not have enough money saved for retirement.  Most of them regret they did not save more and/or that they did not start saving when they were younger.  This is helpful information for those people who are still years away from retirement.  However, even if you are close to retirement, it is not too late to begin to save more now so your retirement years will be more comfortable.

You may not work as long as you expect to.  Inadequate savings is a particularly serious problem because nearly one-half of retirees report they left the work force younger than they expected to, either because of health problems or a layoff at their job.  Some left their jobs before they expected to because of other issues, such as the need to care for another person in their family. 

You may find it hard to survive on your Social Security benefits.  Small amounts of money in retirement savings accounts might not be such a serious issue, if the majority of people received substantial Social Security benefits.  Unfortunately, while only one-third of Americans expected Social Security to be their major source of retirement income before they retired, the reality is that two-thirds of retirees discovered Social Security actually turned out to be their major source of income.  This is a serious problem for those who only receive the average amount of Social Security, which is about $1461 a month in 2019.  Remember that millions of people receive even less than the average benefit.

In addition, most people do not receive the full amount of their promised benefit.  Medicare premiums are subtracted from Social Security benefits, reducing those benefits by $135 a month, or more.  If you purchase a Medicare Supplement, prescription drug coverage, dental and vision plans, etc., your Social Security benefits may be substantially decreased before you begin to pay for food, housing, utilities, out-of-pocket medical costs and other bills.

Over time, you will also have to pay for occasional large expenses, such as the deductible on a hospitalization, purchasing a new car (or making repairs on an old one), replacing items in your home, etc.  This is why it is essential to have as much savings as possible before you retire. 

Fortunately, some retirees will have higher than average Social Security benefits. This is good news for people who were successful both during their careers and in preparing for retirement.  If you had a high income during your working years and postponed your retirement until age 67 to 70, then your Social Security benefits may be in the range of $2,700 to $3,700 a month.  However, those people are also the ones who are likely to have the most savings.  The average retiree does not fall into this category.

Social Security and Medicare are in financial trouble.  The government continues to postpone dealing with the problem that both the Social Security and Medicare trust funds are running out of money.  Although there will always be money from current workers which can be used to pay a significant portion of the promised benefits, future retirees may see their Social Security benefits cut and their Medicare premiums rise. The only way an individual can protect himself from this potential disaster is to have savings set aside.

The long-term Social Security income for retirees tends to fall behind the inflation rate.  Over the past few years, cost-of-living increases have been non-existent or very small and have often been offset by increases in Medicare premiums.  As a result, many retirees have found it increasingly difficult to cover their housing and medical expenses. Look back at your own life.  How much have prices for cars, homes, utilities and food increased in the past 30 years?  If you live another 30 years, you can expect the cost-of-living to increase just as much, but your Social Security benefits may increase very little during the same period of time.  You need a plan for how you will cover your expenses in another 20 or 30 years.

Old student loans may derail your retirement plans.  A lack of savings is not the only financial burden for retirees.  Student loan debt for people over the age of 60 has increased between 20 and 45 percent over the past five or six years.  A significant number of senior citizens are retiring while still paying off the student loans they took out to help get their children through college.  This can be a significant financial burden, especially when they may also still have a mortgage, credit card debt, auto loans or similar expenses at the time they retire.

Many senior citizens help their adult children financially.  Whether you make their student loan payments, their car payment, or help pay for your grandchildren's college education, a significant number of senior citizens have discovered that they continue to help their adult children financially for years after retirement.  This can cause retirees to deplete their savings even faster than they expected.

A divorce could be a major financial setback.  Our children and our debts are not the only causes of financial stress during retirement.  Approximately one-fourth of divorced retirees report they are financially worse off than they would have been if they had not divorced.

You could be shocked by the high cost of medical care as you age.  One financial issue which surprised roughly 44 percent of retirees was that their medical expenses were as much as 27 percent higher than they expected them to be. In fact, the average 65 year old couple can expect to spend $280,000 for out-of-pocket healthcare costs over the remainder of their lifetimes.

Readers of this blog may want to use the tabs or pull-down menu at the top of the page to find links to a number of articles on the Medicare / Social Security tab to learn how to obtain their medical care for the lowest cost.  In particular, they may want to consider a Medicare Supplement which is an HMO, or they may want to check out a Medicare Advantage plan.  Do your research, so you are not surprised by this potentially huge expense during retirement.

Sources:  The Motley Fool compiled many of these statistics from various government and insurance company sources.  You can find more details at:  https://www.fool.com/retirement/2018/08/15/20-jaw-dropping-stats-about-retirement.aspx

Other information was based on government records and the experiences of the author and her retired friends.

If you are interested in learning more about Social Security, Medicare, finance, where to retire, common medical problems, travel and more, use the tabs or pull-down menu at the top of the page to find links to hundreds of additional helpful articles.

You are reading from the blog:  http://www.baby-boomer-retirement.com

Photo credit:  morguefile.com

Wednesday, September 13, 2017

Financial Solutions for Retirement Problems

The best laid retirement plans can sometimes be derailed by a variety of financial challenges. Sometimes you simply may not have planned well.  You may have over-estimated your future income and underestimated your future expenses.  However, even if you have planned carefully and spent years trying to put something aside for retirement, a recession, high medical bills or a family emergency can result in a major setback.

The good news is that no matter what the reason for your financial problems, there are actions you can take to salvage your retirement. The most important thing you can do is face the issue head on and take action as soon as you realize you have a problem.  Below are a few common challenges which could hurt your retirement, along with possible financial solutions.

Not Enough Money in Your Retirement Savings Accounts

According to an article titled "Money Missteps" in the April 2017 AARP Bulletin, as recently as 2013 almost 30 percent of U.S. households headed by someone over the age of 55 did not have a retirement savings account or a future pension.  No money saved at all for retirement.

The sooner you recognize and deal with your financial shortfall, the better off you will be.  As frequently mentioned in other posts in this blog, you have a number of choices:  Continue working until age 70 before you start to collect your Social Security benefits, supplement your Social Security with a part-time job, downsize your home, move to a less expensive area, or get a reverse mortgage (assuming you have equity in a home.)  Most importantly, you want to avoid building up debt in order to finance your retirement.  Eventually, that will only make your situation worse.

You Have Retirement Savings But It is Dropping in Value

As we all discovered during the Recession of 2009, sometimes our retirement savings accounts can lose money faster than we ever expected.

Depending on your situation, you may want to talk to a financial planner to discuss your overall retirement plan and investment portfolio.  They could recommend moving your savings into a different mutual fund or into a safer, less volatile investment.  In addition, they may suggest you reinvest all the income from your retirement savings and add more money until you are able to re-build the value.   This could delay your retirement plans, but will probably be worth it in the long run.

You Have No Equity in Your Home

Some people hope they will be able to take out a reverse mortgage against their home equity to finance their retirement.  However, what can you do if your home has lost value and you now owe more than it is worth?

If you can afford the house payments and the house is in good repair, you may want to continue making payments until inflation and your payments rebuild your home equity.  It could take a few years, but might be worth it in the long-run.  If it is not an option for you to keep making the payments, you may be able to refinance your home through the Federal Home Affordable Refinance Program at harp.gov.  If you do not qualify, you could try to get your bank to agree to a short sale.  That is less damaging to your credit than waiting for foreclosure.

You are Buried in Debt

Unfortunately, some people experience a job loss, a serious medical problem, a natural disaster or other financial catastrophe in the years just before they hoped to retire ... or right after they have begun their retirement.  If they are too sick or too deeply in debt to recover, they may believe they have no hope to ever retire and/or may have to spend the rest of their life drowning in debt.

Medical bills are the most common reason for bankruptcy in the United States, especially for people who are near retirement age or who have already retired.  If you have suffered a severe financial setback which leaves you deeply in debt, bankruptcy may be the best option for you.  In fact, it may be the only way you can stay out of extreme poverty as you age, and the future financial stress could potentially worsen your health situation.  Talk to a lawyer and see if bankruptcy or debt reorganization is an option for you.  Many well-known figures have had to resort to bankruptcy in order to save their retirement.  Ordinary people should consider this option, as well, especially if you have so much debt that you know you will never be able to pay it off.

You Are Still Supporting Your Children or Grandchildren

An estimated 3 million people over the age of 60 are supporting their grandkids.  An estimated 60 percent of people over the age of 50 are financially supporting an adult child or other relative.  An unknown number of parents and grandparents extend some kind of financial aid to a family member on an irregular basis.  These numbers show that the vast majority of people who are retired or near retirement age are helping to support someone else.  If the burden of supporting other family members is derailing your retirement, you may need outside help in dealing with these problems.

If you are a grandparent supporting your grandchildren, in some states you may qualify to become the foster parent of your grandchildren, which would make you eligible to receive financial aid from the state.  In addition, you may be able to apply for housing vouchers, SNAP (food stamps), and other types of aid.  You are performing a lifesaving service for these children and should not be embarrassed to ask for financial help.

If helping your adult children or other relatives is putting your own well-being and retirement at risk, you may need to solicit assistance in setting boundaries with these people.  You can ask other relatives or your financial advisors to help you explain to these dependents why you are no longer able to give them money.  If you do decide to loan them money, put your agreement in writing and charge interest of at least 2 percent.  If they default, at least you will be able to deduct it as a "non-business bad debt" on your taxes.  However, your best bet is to avoid giving them money in the first place.

If your adult child or other relative is also in a bad financial situation, you may see if you can help them apply for various forms of financial aid ... housing vouchers, food stamps, disability, unemployment, welfare, SSI, etc.  If necessary, take them to your local social services department or homeless shelter to see if there are programs in your community which can help people who are homeless or nearly homeless get back on their feet.  Your goal is to make these relatives less dependent on you and more dependent on themselves or government aid.  After all, you will not be around to support them forever.  At some point, they need to have a plan to support themselves, even if that means they need to rely on disability and food stamps.

If you are looking for additional information about retirement planning, common medical problems, Social Security, Medicare and more, use the tabs or pull-down menu at the top of this page to find links to hundreds of additional articles.

If you want an overview of retirement planning tips, watch for my book Retirement Awareness: 10 Steps to a Comfortable Retirement, which will be available from Griffin Publishing in 2018.

You are reading from the blog:  http://www.baby-boomer-retirement.com

Photo credit:  morguefile.com 

Wednesday, March 29, 2017

How to Prepare Financially for Retirement

Whether you are 30, 40, 50 or 60, everyone needs to take steps to plan to retire someday.  Of course, the younger we are when we start, the better prepared we will be to retire when the time comes.  No matter what your age, what are some of the things we need to do in the years before we stop working?  How can we make sure we are financially prepared when the time comes?

Steps in Retirement Planning

Save Money in an IRA and/or a 401(k) - If you work for an employer with a 401(k) or 403(b) plan, take advantage of it.  Have your employer withhold some of your pretax income and put it towards your retirement.  Some corporations will even match the donations of their employees, which means you will be able to accumulate wealth twice as fast! 

The younger you are when you start saving, the better off you will be when you finally stop working.  However, even if you are in your 50s when you start, you may still be able to put aside 10 to 15 years worth of savings, which could make a huge difference in the quality of your retirement.

If you are self-employed or do not have a 401(k) or 403(b) plan where you work, save money in an IRA instead.  You can even have both, if you have enough excess income.  However, if you save too much money, not all of it may be tax free.  It is still beneficial to save as much as you can towards retirement.

Talk to a Financial Planner about How to Invest Your Savings - If you are in a 401(k) or 403(b), your employer may give you a menu of mutual funds, tell you to pick one or two, and that is where they will invest your contributions.  The same thing could happen with an IRA, if you decide to set up an automatic withdrawal and investment program.  Most of us could use a little help in choosing the best investment plan, however.  It will probably be worth your time and money to talk to a certified financial planner or investment advisor representative.  Get their recommendations on how to invest your savings for growth when you are young, and for income when you get ready to retire.  Be sure to diversify your investments so you do not have too much money in one type of fund or investment.

Pay off Your Debts As You Approach Retirement - Nearly everyone will have a more comfortable retirement if they keep their debts to a minimum after they retire.  The closer you are to retirement, the more important it is to have a plan to eliminate all your student loans and credit card debts.  If you can also pay off your home and car, you are going to have a lower cost-of-living once you are living on Social Security and your savings.

Get an Estimate of Your Future Social Security and Pension Income - Everyone should periodically get estimates of how much they can expect to receive in the future from Social Security benefits and any employer funded pensions.  Everyone needs to know how much income they can expect to have after retirement. You also need to understand how much you could increase your income by postponing your retirement by a few years.

Come Up With a Retirement Budget - Estimate how much it will cost you to live after you retire.  If you have a large gap between your current expenses and anticipated income, investigate the steps you can take to reduce your expenses by downsizing, for example, and how you can increase your income by taking steps such as postponing your retirement age.  If necessary, you may also consider getting a retirement job which will help increase your income.  It can be a fun job, as long as it produces enough income to make your feel more financially secure.

Talk to Your Financial Planner or Advisor about Turning Your 401(k) or IRA into Income - Once you are ready to retire, find out how much money you can withdraw from your IRA and still be assured you will have enough money to last the rest of your life.  Discuss the 3 percent withdrawal rate, dividend funds, annuities, bonds and other investment vehicles which will produce an income.  You may want to invest in a variety of income producing products to give you the most financial security.

If you plan carefully and realistically, you can feel confident you are financially well-prepared for retirement when the time comes.

Watch for my book, Retirement Awareness, due to be released by Griffin Publishing in 2018. It will go into more detail about how to prepare financially for retirement.

If you are interested in more information about financial planning, where to retire, Medicare, Social Security, medical problems and more, use the tabs or pull-down menu at the top of the page to find links to hundreds of additional articles.

You are reading from the blog:  http://www.baby-boomer-retirement.com

Photo credit:  morguefile.com

Friday, March 15, 2013

Money and Financial Planning for Retirement

Since the beginning of this blog, a number of posts have been written about money and financial planning for retirement.   In fact, these posts have been among the most popular that I have researched and written.  The posts, linked below, include topics such as how to construct an annuity ladder, how to access your social security information, how much money you need to retire, choosing an executor of your will, and ways to earn money after retirement.

In addition, the article links below will help you access information on long-term care insurance, budgeting, financial facts about baby boomers, scams that are directed against senior citizens, and more.

Index of Financial Articles on the Baby Boomer Retirement Blog


2014 Social Security Raise Expected to be Tiny

Age Deadlines for Retirement Planning

Alternatives to Long Term Care Insurance

Amazon Savings Tips - How to Save Money Shopping Online

Are You Too Young for Retirement Planning?

Average Retirement Age in the US for Boomers

Awesome Work-From-Home Jobs

Be Careful at Black Friday Sales

Be Prepared for Emergencies

Best Companies Offering Jobs for Seniors

Beware Coronavirus Scams: Fraud is Increasing

Beware of Advance Pension Loans

Beware of Collectible Gold Coin Investments

Budgeting for Your Golden Years

Camper and RV Travel Jobs - How to Survive Financially on the Road

Casinos Encourage Gambling Addiction in Senior Citizens

Charitable Deductions and U.S. Estate Taxes

Choose a Financial Planner or Advisor with Experience 

Choosing an Executor of Your Will 

College Scholarship Tips for Grandchildren

Common Problems with Inherited Homes

Consumer Financial Protection Bureau for Older Americans

Credit Scores and Retirement 

Crimes Against the Elderly

Crimes Against Senior Citizens 




Handling Your Money and Bills in Retirement - How to Find Help

Hidden Costs in Assisted Living Facilities

Housing Costs Put Retirement at Risk

How Much Retirement Income will You Have? 

How to Access Your Social Security Information Online 

How to Avoid Poverty for Single Women Retirees

How to Build an Annuity Ladder

How to Choose a Good Investment Adviser

How to Downsize Without Moving and Earn Money Too!

How to Draw Down Retirement Assets

How to Choose a Financial Advisor 

How to Find Jobs Late in Life 

How to Fix Your Retirement Savings Shortfall

How to Increase Your Retirement Income

How to Manage Your Retirement Funds Yourself

How to Pass On Your Digital Assets When You Die

How to Prepare Financially for Retirement 

How to Publish Your Autobiography for Free 

How to Report a Scam or Fraud

If Grandkids Call for Money - Grandparent Scam 

Important Medicare Tips for Boomers

Important Dates for Baby Boomers in 2014 

Investigate Exchange Rates Before Moving Overseas 

Is it Time to Retire?  

Jobs for Workers Over 50

Keeping Track of New IRA Rules

Keep the Holidays Affordable 

Living on Social Security in the US 

Low Investment Costs on Retirement Funds can Save You Money 

Make Your Money Last the Rest of Your Life

Maximize Your Social Security Benefits for an Easier Retirement 
 



 



Senior Discounts - Use Them Wherever You Go

Seniors Embrace Technology and Smartphones

Seniors - Save Money on Almost Everything!

Sexism After Retirement 

Share Your Experience and Make Money on InfoBarrel

Shocking Financial Facts about Retirement

Shop Online Safely and Conveniently

Short on Retirement Savings 

Should You Retire with a Mortgage? 

Should You Rollover Your 401(k) Into an IRA?

Should You Use a Robot Money Management Advisor? 

Simplifying Your Life for Retirement 

Social Security and Remarriage 

Social Security Benefit Changes (2016)

Social Security Changes in 2013

SSI - Supplemental Security Income - Do You Qualify? 

Start an Online Business for Retirement Income

Stop Scammers, Stop Fraud and Report It - Learn How! 

Ten Ways to Make Money After Retirement

The Fifteen Most Popular Retirement Stories of 2013

The Free Cancer Screening SCAM - Do Not Fall For It!

The Retirement Income Red Zone

Top Retirement Posts of 2018 

Top Retirement Posts of 2019 - Health, Dementia and Money on the Minds of Retirees


Tuesday, October 4, 2011

How to Save Money for Retirement

Look for Sales and Save Money
Photo from www.morguefile.com

In cased you missed them, there were some very scary statistics scattered throughout the October, 2011 AARP Bulletin.  In the years since then, things have not changed much.  Basically, they come down to the fact that people are not saving nearly enough money in order to retire.  Here is some of what they had to say:

Families that have a head of household who is between the ages of 60 and 70 have only saved about 25% of what they will need for retirement.  (p. 3)

About 53% of all families in the US do not think they have enough retirement savings in order to have a comfortable retirement.  (p. 28)

In addition, the AARP Bulletin showed the impact that inflation is having on family wealth.  Between 1989 and 2009, the full time income for a man increased only about 3%.  Meanwhile, the cost of a college education for a child increased 73%, the cost of health insurance premiums rose 182%, and the amount of debt being carried by the average middle class family rose 292%!  (p. 28)  No wonder many of us feel that we are working harder than ever, but have less to show for it.

What can we do?  As impossible as it may seem, we all need to learn how to save money before we retire.  Everyone who is 50 years old or older should sit down and take a realistic look at how much income they will have when they retire, and then begin living now as close to that amount of money as possible! At the very least, you should try to live on only 90% of your income and save the other 10%.  If you cannot live on 90% of your income now, how do you think that you will live on just half of it ... which is what is going to have to millions of Baby Boomers!?

For example, let's say the head of the household in your home will receive approximately $2,000 a month from Social Security when they turn 67.  Their spouse will be eligible for an additional $1,000 a month in spousal benefits from Social Security when they turn 67, too.  If you expect to have $100,000 in your IRA or 401K by the time you retire, that could consider investing in a 20 year annuity and you would receive $400 - $500 dollars extra a month, at today's rates.  This comes to $3,500 a month in potential retirement income, including Social Security and investment income.

What is your current cost of living?  If you spend a lot more than $3,500 a month, you should start making adjustments to your current expenses to see if you can bring them down.  What will you need to change?  Will you need to move to a less expensive home or apartment, buy a less expensive car, or pay off your loans?  Perhaps you need to shop more carefully, by buying less and purchasing what you need when it is on sale. 

If you simply cannot bring down your expenses after retirement, is it possible that you could increase the amount of money you are putting in your IRA or 401K, so that you will have more retirement savings to invest when you stop working? Where can you come up with the extra savings? Are there services you could eliminate or reduce now, such as cable TV or your house telephone line?  Whatever you decide to do, start making the changes now, while you are still working.  The longer you wait, the more difficult it will be to take the necessary steps to have a balanced budget after you retire. 

With the right retirement planning, you can turn things around and take control of your retirement years.  It really is possible for you to become part of the 25% of people who have adequately planned and are prepared to retire!

If you are interested in more detailed information about retirement financial planning, where to retire, possible health issues you might encounter, family relationships and more, use the tabs or pull down menu at the top of the page to find links to hundreds of additional articles.

You are reading from the blog:  http://www.baby-boomer-retirement.com