Age Deadlines for Retirement Planning

Even if you are only in your 40's or younger, there are certain deadlines everyone needs to know in order to get the most from their retirement planning.  You do not want to miss any of these deadlines if you can possibly avoid it.  For your convenience, U.S. News and World Report recently compiled some dates, and I have added a few additional ones.  I suggest that everyone should print and save these dates in order to make sure they do not miss the opportunity to take advantage of them.  Nothing is more frustrating than being forced to pay a penalty because you missed a deadline.

Age Deadlines You Should Know:

50 - You can begin to put more tax deferred income into your 401(k) or your IRA than younger adults.  Currently, at age 50 you can begin putting $23,000 into 401(k) plans or the federal government's Thrift Savings Plan, and you can put $6,500 into your IRA.  The government tweaks the exact amount from time to time so, if you are younger than 50, keep an eye open to see what the amount is when you turn 50.  You want to be sure you are saving the maximum allowable amount in your tax deferred retirement savings accounts.

In addition, if you work as a public-safety employee and retire or leave your job, at age 50 you can withdraw money from your retirement plans without paying a 10 percent penalty.  You will still have to pay income taxes on the withdrawal.

55 - At this age, the rest of us can remove money from a 401 (k) that is associated with a job from which we have been laid off and not have to pay the 10 percent penalty.  This also applies if we quit or retire from a job.  You will still have to pay income taxes on the withdrawal.

59 1/2 -  You can receive distributions from any of your traditional IRA's and 401(k)s without a 10 percent penalty but, you guessed it, you will have to pay the income taxes.

60 - Widows and widowers can begin to collect their Social Security benefits based on the earnings of a deceased spouse.  However, their benefits will be substantially reduced, so this is not a wise idea if there is any way they can postpone claiming their benefits for at least several more years.

62 - Anyone who is eligible can begin to collect their Social Security benefits, although this is not a wise decision for most people.  First of all, your benefits will be permanently reduced by about 30 percent.  Second, if you are still working and you earn more than about $15,000 a year, you will lose part or all of your benefits. Of course, if you have lost your job and run out of unemployment benefits, or you find yourself in a similar difficult situation, you may need to take your benefits early.  Just remember that it is almost always better to postpone taking Social Security as long as possible, if you can.

65 - You become eligible for Medicare.  DON'T MISS THIS DEADLINE. Be sure to contact the Social Security Administration to sign up even if you are still covered by a policy on your job.  You can start this process as early as three months before you turn 65 and this is particularly important if you want the coverage to start as soon as you are 65.  If you wait longer than four months after you turn 65, your premiums could be permanently increased by 10 percent for every year that you delayed completing the proper paperwork.  Your best bet is to get in touch with Medicare before you turn 65 so that you do not have to pay a penalty later in life, when you may be living on a limited fixed income.  

66 - If you were born between 1943 and 1954, this is your full retirement age.  This means you can collect your full Social Security benefits.  In addition, you can still work without losing any of your benefits, if you choose to.  Ideally, this is the youngest age for anyone to collect their benefits although, as I mentioned earlier, there are times when people simply cannot wait this long.

66 to 67 - The full retirement age for people who were born between 1955 and 1959 will occur sometime between their 66th and 67th birthday.

67 - If you were born in 1960 or later, your full retirement age is 67.

70 - If you wait to collect your Social Security benefits until you are 70, you will increase your benefits by about 8 percent for every year you delayed after your full retirement age.  Don't wait any longer than age 70, however, because you will not get any increase in your benefits.

70 1/2 - If you have a traditional IRA or 401(k), you will need to begin making withdrawals and paying income tax on the withdrawals.  There are a lot of rules involving this and, if you mess up, you can pay as much as a 50 percent penalty!  Be sure to discuss this with your financial adviser and the company that manages your retirement account so that you handle everything correctly.  On the other hand, if your retirement savings are in a Roth IRA, you do not need to begin making withdrawals and you will not need to pay income taxes on your withdrawals.  You may want to read my recent blog post, "Traditional IRA vs Roth IRA" for more details about these two types of retirement accounts.

If you are researching ideas about how to retire someday, check out my index articles, below.  Each one contains an introduction plus links to other articles that pertain to that topic:


Gifts, Travel and Family Relationships

Great Places for Boomers to Retire Overseas

Great Places to Retire in the United States

Health and Medical Topics for Baby Boomers

Money and Financial Planning for Retirement

Resources:

http://money.usnews.com/money/retirement/articles/2013/05/06/12-important-retirement-planning-deadlines

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

Photo of Social Security card courtesy of www.morguefile.com

Save Money on Taxes After Retirement

Are you planning your dream retirement, but worried about how to afford the best lifestyle for your money? One way to make your pension and Social Security benefits go further is to live in a state that does not take a big bite out of them.  Fortunately, there are several states that do not require you to pay income taxes on these benefits and they are scattered throughout the United States.  The magazine, U.S. News and World Report, recently published a list of these states so that retirees can decide which one will work best for them.  They also included information about 2008 property tax rates and sales tax rates in each of these states.  As always, I have added my own comments,  since there are other factors that retirees will need to consider.

States with Low Taxes

Alabama - This state does not tax your Social Security benefits or pensions, and it only has a 4 percent sales tax. In addition, many people pay less than $400 a year in property taxes.  The low tax rates are especially appealing when you also consider the fact that, like most other southern states, Alabama has a low cost of living, making it very appealing to many retirees.  In addition, the weather in Alabama can be quite mild in the winter, although it gets hot in the summer.  You may want to look along the coast of the Gulf of Mexico for an relaxing, low cost retirement community.

Alaska - In this state, you will pay no income taxes and no sales taxes at all.  However, median property taxes are almost $2,400 a year.  There are other financial benefits to living in Alaska, as well.  One very popular financial windfall is the fact that, instead of paying income taxes, residents actually get an annual rebate from the state because of the large amount of revenue the state collects from the oil industry.  When my husband and I took a tour of Alaska, many of the tour bus drivers and gift shop employees were retirees who only worked during the three months of summer.  They were often very enthusiastic about sharing their stories of how much they loved living in this magnificent state for people who enjoy the great outdoors.  However, winters are very long and dark and not everyone will be happy living there during retirement.  In addition, if the rest of your family lives in the lower states, it will not be cheap or easy to visit them. Relocating here is not a decision to be made quickly based on one summer visit.

Florida - One reason so many people have traditionally retired here is because there is no state income taxes for anyone and only a 6 percent sales tax rate.  The median property taxes are a little under $1,900 a year.  Home prices are very low in Florida, too, with many homes in over-55 communities available for under $150,000, and it is not uncommon to find homes for under $100,000.  Florida also has the advantage of pleasant year around weather, which makes it appealing to many people who move there from states that are further north. This state will certainly continue to be popular with retirees in the coming decades.  Many beach communities have become quite expensive, although it is possible to find desirable communities that are less than a 30 minute drive to the beach.

Mississippi - This is another state with no taxes on either your Social Security benefits or pensions, and the average property taxes are under $500 a year.  However, there is a 7 percent state sales tax.  Mississippi is next door to Alabama, and there is a lot of similarity between those two states in climate and the low cost of living.  Again, you may be able to find an affordable and desirable retirement community within a short drive of the Gulf of Mexico, which could be very appealing to people who have always dreamed of a beach town retirement.

Nevada - Because of the money they raise from gambling, this state has no state income taxes for anyone.  The median property taxes are under $1,800 a year and the state sales tax is 6.85 percent.  While the property taxes and sales taxes are higher than the southern states, many people enjoy the fun Nevada lifestyle.  Nevada also has several quite diverse climates, including the desert climate around Las Vegas and the mountainous regions surrounding Reno and Lake Tahoe.  Many Californias who are looking for a less expensive place to live after they retire have been attracted to Nevada.  During the recent recession, Nevada was one of the states that was particularly hard hit.  As a result, property values in many areas are quite affordable.

New Hampshire - In this state, you will pay no income taxes on most forms of retirement income, although residents do pay taxes on their interest and dividend income.  This could be a significant cost for someone who is living primarily off of their investments, so watch out!  In addition, New Hampshire has exceptionally high property taxes, but no sales tax.  Whether or not living in this state will work for you may depend on your sources of retirement income and whether or not you can afford to pay the higher than average living expenses.  To be honest, although this state is included on the U.S. News and World Report list because of the lack of income taxes, other expenses may offset this savings, making it a much less affordable place to live than some of the other states on this list.

Pennsylvania - This state charges no income taxes on either Social Security benefits or your pension.  However, the median property taxes are over $2,200 and the sales tax rate is 6 percent.  One of our daughters lives in the Poconos, in a charming community where a lot of New Yorkers have retired.  While Pennsylvania may not be the cheapest place in the US to retire, it is considered a bargain by many New Yorkers who want to stay close to Manhattan, but in a more affordable location.  If the state of Pennsylvania interests you, check out my blog post from a couple of months ago called, "Retire to Friendly Lancaster County, Pennsylvania."  This particular county has several affordable retirement communities, and has become very popular with people who want to retire in the Northeast.

South Dakota - No state income taxes are paid by anyone who lives in South Dakota.  In addition, the median property tax is under $1,600 and the sales tax rate is only 4 percent.  However, like Alaska, the winter weather in South Dakota can be quite severe, so this state is not for everyone.  If you are already living in one of the northern states, though, South Dakota may be an affordable alternative if you want to stay in the area but keep your expenses low during retirement.  If you are not familiar with the area, I suggest that you rent for a while before you decide if you want to live there permanently.

Tennessee - Like New Hampshire, there are no income taxes on most forms of income, with the exception of dividends and interest.  In addition, median property taxes are under $1000 a year.  The sales tax rate, at 7 percent, is slightly higher than some other states.  In addition, Tennessee is further south than several of the other states on this list, particularly New Hampshire, South Dakota, Pennsylvania and Alaska, so the weather will be a bit more temperate ... although you may still get a little snow in the winter.  Property values in many parts of Tennessee are quite affordable, too.  This is a great location for people who wish to stay within driving distance of many of the lower mid-west and southern states.

Texas - This state has been mentioned many times in this blog as a popular retirement location.  There is no income tax for anyone in Texas, and the state sales tax rate is 6.25 percent (although many towns and cities do have additional sales taxes of their own.)  However, property taxes are a little high and cost the median family over $2,300 a year.  Housing prices in many parts of Texas, especially the small towns, are quite affordable.  Some of the areas of Texas that are quite popular with retirees are near Austin (Sun City Texas is only 30 miles from there), as well as along the Gulf of Mexico.   The Texas Gulf Coast is a very affordable region for people who want to retire in a beach community.

Washington State -   There is no income tax in the state of Washington, although the median property taxes amount to over $2,600 a year.  This is one of the highest rates for any of the states mentioned in this article.  The sales tax rate is 6.5 percent.  Many people love to live in the northwestern United States, and a number of retirees have been attracted to the San Juan Islands. We have friends who retired twenty years ago from Texas to Friday's Harbor in the San Juan Islands, and they never regretted the decision.

Wyoming -  This is one more state that does not have an income tax.  Other taxes are quite low, as well.  The median property taxes are not much over $1,000 a year and the state sales tax is a very modest 4 percent.  However, like some of the other states in the Northern U.S., this location may not appeal to everyone.  I worked in Wyoming one summer while I was in college, and we were having snow flurries when I left on the last day of August!  I grew up in Missouri, so I was used to cold winter weather, but this seemed like an early start to winter to me.  In addition, while I was not there during the winter, I heard many stories about blizzards and harsh winter weather.  Many of the people I met owned property in Wyoming but only lived there in the summer.  This is another location where you may want to rent for a year or two first, especially if you are moving there from someplace with a moderate climate.

If one of your biggest financial concerns after retirement is the amount of money that you will lose to income taxes, then the above list should be helpful.  Obviously, which state will be best for you depends on your personal source of retirement income, since a few of these states will take a bite out of your dividends and interest.  In addition, there is a wide range in the amount you might pay in property taxes from state to state, and that could easily more than offset the amount of state income taxes your might pay.  If you plan to purchase a home when you relocate, you will definitely want to take these taxes into consideration.  Choosing the right state for your retirement is dependent on a number of other factors, as well.  For example, if you will be living a long way from your children and grandchildren, you have to factor in the cost of traveling to visit them. 

Wherever you decide to live when you retire, take the time to work up a budget for several different locations.  In this way you will see the big picture and not base your decision solely on one factor, such as state income taxes.

If you would like more information to help with your retirement planning, check out the index articles listed below.  Each one contains an introduction and links to a number of articles on that topic:

Gifts, Travel and Family Relationships

Great Places for Boomers to Retire Overseas

Great Places to Retire in the United States

Health and Medical Topics for Baby Boomers

Money and Financial Planning for Retirement

Resource for tax rates:

http://money.usnews.com/money/retirement/slideshows/12-states-without-pension-or-social-security-taxes

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

Photo of night sky courtesy of www.morguefile.com

Lennar, Pulte and Centerline Multigenerational Homes

When I sold real estate in Texas in the 1990's, I occasionally had buyers who were looking for homes with mother-in-law suites or separate living quarters for their retired parents.  In those days, multi-generational homes were more difficult to find.  Often they were simple houses with traditional floorplans that with a small addition added on or a section of the home that had been partitioned off.  Frequently, these additions felt like an afterthought. Sometimes they were poorly adapted to the needs of aging seniors. However, in the years since that time, the demand for these homes has increased significantly and home builders are taking the lead in satisfying the need.

When people looked for mother-in-law suites in the past, their reason was obvious.  They needed a place where their elderly parents could live with them comfortably, while everyone maintained their own privacy.  Today, in addition to needing separate living accommodations for an older generation, a small apartment off the main house may be a blessing if you have adult children who return home frequently to visit. In addition, some people may want separate living quarters if they get a lot of out-of-town visitors.  No matter why you want a multigenerational home, several builders are now offering new designs to meet the demand.

New Home Designs by the PulteGroup

PulteGroup builds a variety of new home communities, not only under the name of Pulte but also as Centex and Del Webb.  They have come up with several designs that will comfortably accommodate an older relative, young adult or visiting guest.  According to an article entitled "New Models for Retirement Living: Sharing a Home With Friends or Family" in the May/June 2013 edition of Where to Retire Magazine, the author indicates that Pulte has even done their own research on this topic.  As a result, this company has learned that about 15 percent of potential buyers who have living parents already have that parent living with them.  About 30 percent of buyers with a living parent eventually expect to share their house with that parent.

Because of this research, Pulte has created a variety of floorplan choices that range from homes with dual master bedrooms to houses with two entirely separate entrances and kitchens.  In other cases, they simply took one of their traditional floorplans, and made the homes a bit larger, especially in the main living areas such as the kitchen and family room, so these houses can comfortably accommodate extra people.

My husband and I have visited one of the Del Webb Sun City models and we were particularly impressed by the Socialite floor plan which contains a small, separate apartment.  The plan is simple. At the front of the house a small wing juts forward toward the street.  It is just large enough for a large room with a private bath and walk-in closet.  This space has both a private entrance from the outside as well as an optional door that leads directly into the bedroom wing of the main house.  The space is large enough that one of our adult daughters, who was single at the time, immediately told us we should move there because she would love to stay in this private apartment off the main house.  (Honestly, I wasn't sure whether or not it would be an advantage to have a place that was so attractive to our adult children!)  However, if one of my elderly parents moved in with us, the place would be ideal. 

Next Gen Models by Lennar Homes

Lennar also has a special line of multigenerational homes that they call their Next Gen models.  These homes have two separate living areas, including a small kitchenette, bedroom, bathroom and living room in the secondary space.  Lennar has built models in Arizona, California and Florida.  This small "home within a home," as they refer to it, provides ideal living space for a family member who will be living with you permanently, as well as guest space for occasional visitors.

Depending on the location, some of these Lennar homes can be surprisingly affordable.  For example, some of their Next Gen homes in Bakersfield, California can be purchased for under $300,000, a reasonable price, especially if two or more generations are sharing the cost.

Generation Y and B Models by Centerline 

Centerline Homes has also developed their own designs for multigenerational homes.  Their Generation Y homes have a separate casita or cottage for adult children who move back home.  The Generation B model is for aging Baby Boomers.  This design contains a private apartment with a kitchenette. This private apartment is connected to the main house in order to make it comfortable and convenient for elderly relatives.  Of course, some aging parents might prefer the separate cottage rather than the apartment in the main house.  Either plan gives you some workable options for multigenerational living.

If you are interested in looking at more options for retirement planning, you may want to read the articles mentioned in the index articles below.  Click on any of these titles and you will find a short introduction to that topic as well as the links to a number of related articles:

Gifts, Travel and Family Relationships

Great Places for Boomers to Retire Overseas

Great Places to Retire in the United States

Health and Medical Topics for Baby Boomers

Money and Financial Planning for Retirement

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

Photo of Del Webb's Sun City Texas entry is courtesy of www.morguefile.com/commons

How to Fix the Primary Care Doctor Shortage

Many of the people who object to the January, 2014 implementation of the new Affordable Healthcare Act are concerned about possible doctor shortages.  This is a reasonable concern, especially for senior citizens, because a growing number of primary care physicians have already stopped accepting Medicare patients because Medicare doctor reimbursements are lower than the amount that doctors are paid by private insurance companies.  To make matters worse, according to an article entitled "How to Beat the Doctor Shortage" in the March, 2013 AARP Bulletin, more doctors than ever will be retiring in the coming decade.  Half of our country's physicians are over the age of 50. By some estimates, we already have a shortage of about 16,000 primary care doctors, especially pediatricians, internists and family doctors.  One reason for the shortage is because huge student loans force many young medical students to choose more lucrative specialties than family practice.  In other words, they feel that they simply cannot afford to practice general medicine.  When analysts look at these numbers, the situation seems dire, especially now that millions more Americans will soon become insured.

Solutions to the Primary Care Doctor Shortage

One of the lesser known provisions of our new healthcare system is that it will provide for an increase in the number of nurse practitioners and physician's assistants who are already being trained to handle routine health problems treating such as the flu, giving physicals, and supervising diets.  As a result, fewer doctors will be necessary for basic patient care.  The nurse practitioners and physician's assistants are also being trained to recognize when a patient may have a serious problem and should see a family doctor or specialist.

Another approach that is being tried in some medical schools is to shorten the length of time necessary to finish medical school.  In addition to turning out more doctors in less time, these new graduates will also have less student loan debt. 

Other ideas are also being implemented to encourage more medical students to enter general medicine.  For example, the National Health Service Corps will pay off up to $120,000  in student loans if young physicians will go to work in a community clinic, which is where many new patients will be treated in coming years.  Consequently, young medical students will no longer need to become surgeons or specialists just so they can afford to pay off their student debt.

This is an important issue, because a research study by the Institute of Medicine and the National Research Council discovered that U.S. citizens are in poorer health and die younger than people who live in sixteen other nations, including those in Western Europe, Canada and Japan.  If we want to change this trend, our country will need to provide people with easier access to medical care.

Are You Having Trouble Finding a Doctor to Accept Medicare?

Meanwhile, if you are waiting for these new programs to increase your access to medical care, what can you do if you are on Medicare and having difficulty finding a doctor who will accept you?  Go to the Medicare.gov website and look for the "Help and Resources" page.  Click on "Find doctors, hospitals and facilities."  You will need to enter your ZIP code.  Once you do, you will see a menu of different medical specialties, including primary care.  A list of general practitioners in your area will be shown, including their contact information.  Jot down the information on two or three and call their offices to make sure they still have openings.  There are still many, many doctors who will accept Medicare payments, so don't get discouraged.

Even if you are not on Medicare, this same list is a great way for anyone to find a list of doctors in their area who may be taking new patients.  You can also call or look up your state medical association online to see if they have a directory of new doctors who are just setting up their practice. Many of these new physicians are eager to find new patients. Your insurance company is also a great resource, as well as urgent care centers, hospitals and community clinics in your area.

If you are interested in learning more about aging and retirement, check out the index articles listed below.   Each one contains additional information as well as links to more articles on that topic.

Gifts, Travel and Family Relationships

Great Places for Boomers to Retire Overseas

Great Places to Retire in the United States

Health and Medical Topics for Baby Boomers

Money and Financial Planning for Baby Boomers

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

Photo of healthcare professional courtesy of www.morguefile.com