Tag Archive for Retirement

Are You Sabotaging Your Retirement?

Are You Sabotaging Your Retirement?

Are You Sabotaging Your Retirement?We all dream of that day in our future when we?ll officially leave the workforce to enjoy an endless amount of free time.

You might envision yourself moving to someplace warmer, finally getting around to every hobby you wanted to pick up, golfing, vacationing, getting through your to-read list, or simply enjoying the fact that you can do whatever you want with your day.

Like most employees you probably put away a portion of your paycheck towards your 401(k) or other retirement fund. However, like many others, you likely do that and only that, and your retirement fund is something that?s simply out of sight and out of mind.

If that?s the case for you, you could be sabotaging your retirement without even realizing it. Here are three ways you could be doing just that.?

1. Not Saving Enough

When it comes to your retirement, the more money you put in now, the more you?ll have in the long-run. That being the case, whether you?re saving only a small portion or not saving at all because you don?t think you can afford it, not saving enough is one surefire way to sabotage your retirement fund.

No matter what, start putting away as much as you can as soon as you?re eligible to participate in a retirement plan. Begin with at least 2-3% and work your way up one percentage at a time when you can afford it.

If you don’t have access to a 401(k) through your employer, you can start investing for retirement with an online broker like Ally Invest.

Ally Invest has an industry-low price of $4.95 per stock trade and has numerous free tools to help you start saving for retirement.

2. Failing to Factor in All of Your Needs

Thinking about your end goal now might seem like a lot, but come actual retirement, it might not be as much as you think. The worst thing you can do is underestimate how much income you?ll actually need.

Think about all of your needs and what kind of lifestyle you hope to have in retirement, then create a solid plan to save for those needs.

By doing so, you?ll ensure your comfort and keep yourself from having to worry about finances or re-enter the workforce as you?re trying to enjoy the rest of your life.

3. Borrowing from Your Savings

The basic principle behind a retirement fund is putting money aside in order for it to build up over time. Start borrowing from that fund or taking out small loans, however, and you?ll lose valuable time and money.

No matter if you pay that loan back, you?ll still miss out on interest you?d otherwise have accrued. Be sure you?re also putting other savings away to use when you really need it. You?ll have money to fall back on in a crisis and keep your retirement fund untouched.

In the moment, taking money out of your paycheck for retirement can seem painful. Moreover, depending on your paycheck, it can seem downright impossible.

Nonetheless, no matter your financial situation, you should do your best to add to that 401(k). And when you do, be sure to plan out and accommodate all of your needs, save as much as you can, and leave that money right where you put it. Come your time to relax from the workforce, you won?t have to worry about money.


At what age did you start saving for retirement? What portion of your paycheck do you put away currently?


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Don’t Panic About Retirement! Do These 5 Steps to Start Saving

There are a lot of different ways to save for retirement, and everyone’s personal finance journey is unique. That’s why the strategies vary so much. Additionally, age matters. Generation X, the Baby Boomers, and the Millennials don’t look at things the same way, even though they are all trying for the same goals with retirement. They have their own sets of problems, and a laundry list of various responsibilities that come with being an adult.

All of those things can add up and create more issues for people no matter what their age. On that list of responsibilities is retirement savings, but a lot of the times new electronics, a life event that wasn’t anticipated, or something else pushes savings to the back burner where it gets far less attention than it really should. That’s why 30 percent of US residents today feel worried about retirement. You shouldn’t panic over retiring, though, because there are tips you can follow to live in the now and still plan for a secure financial future.

Grow Your Savings By Starting Small

Compound interest can be a lifesaver, and it helps you grow your money even if you don’t have a lot to invest. By starting early and putting even small amounts of money into a savings or investment option that uses compound interest, you’ll see that money grow faster.

That’s because this type of interest is calculated on the initial amount invested plus the interest you’ve already earned, so you’re getting interest on your interest. It takes time to build up a good level of retirement savings, but compound interest can make it easier.

So let the interest work over a long period of time. Start saving as early as you can, and continue to save consistently. If you delay your start for a decade, for example, it could take as much as three decades to get caught up.

Determine Your Realistic Financial Needs

How much do you really need for retirement? That’s a question that is unique to everyone. There are some basic assumptions, though, and most people guess too low.

Forty percent of people guess $500K, but they would be about $250K too low for the average. You may need more or less, depending on the kind of lifestyle you want and how long you live beyond your working years. Around 81 percent of people in the US are not clear on how much they should have in order to safely retire.

Plan, Prioritize, and Protect What You Have

You will struggle to reach your goals if you don’t have a plan, and that’s true of retirement and savings, as well. If you want to follow what the experts recommend, take a look at the income your savings will provide on a monthly basis. There are so many options, but don’t get overwhelmed. There are financial advisors who can help you get the information you need to make the right plan.

The basic idea should be saving 15 percent of your income over a period of thirty years, but that’s only a rough outline. Some people will need more, and some may actually need less. There will also be unexpected issues come up, but you don’t have to let them stop you. Create an emergency fund, too, so you’ll be better protected.

Use What Your Employer is Offering

If you have a 401(k) or other retirement savings plan at your company, take advantage of it. Talk to the HR department and they can help you learn about everything your benefits package offers. If you’re a millennial you’re already eight percent less likely to enroll in the company’s 401(k). But you can change that.

Ask if You Have Questions

Don’t ever worry about looking dumb. You have to ask questions or you won’t get the answers you need. Be one of the 36 percent of millennials who get financial advice and help from a professional, not one of the 72 percent who admit they don’t know what they need to save for retirement. Check out the infographic below to get more data on retirement. That way you can compare your savings to your peers, and see how your retirement is stacking up.

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4 Considerations for Re-entering the Workforce After Retirement

hands-545394_640Entering the job force at any age can be daunting. Strong competition with a still recovering economy leads to a harder time getting employed especially if you are brand new to the workforce or are returning after retirement.

With more Americans having less saved up for retirement more retirees are returning to the job force or working longer. If you are planning on returning to the workforce after retirement, here are some things to keep in mind.

1. Working Longer Means a Greater Payout

Working longer and putting off collecting social security can result in a greater payout past the age of retirement (65-67). By not collecting social security sooner, you receive more of your social security benefits when you do vs. collecting them while working.

In 2015, $1 in benefits will be withheld for every $2 you earn over the annual earnings limit of $15,720. A higher earnings limit applies in the year you reach full retirement age. If you earn more than this limit ($41,880 in 2015), $1 in benefits will be withheld for every $3 you earn over that amount, until the month you reach full retirement age, according to 360FinancialLiteracy.org.

Once you quit working, your social security benefits should go back to their full amount.

2. Opportunity For a Career Change

Many retirees who return to the workforce take this opportunity to change careers or industry, or create their own business. Though when doing this, be sure that you have the right financing to start a business and live off of your savings while your business grows. It could take a while to start making a profit, especially if you are hoping to build a passive income.

3. Retirement Plans from Previous Employers

If you have a pension plan from a previous employer and you go to work for a different company, you shouldn’t run into any problems. If you take a different, lower position with the same company after your retirement, there could be issues. Some pension benefit plans have clauses that the benefit will be suspended should you retire and then come back to work. Before jumping back into working after retirement, check with your HR department to make sure there won?t be any issues.

4. Potential for a Higher Tax Bracket

If you are collecting payments on retirement funds, pension and getting a paycheck, it could bump you into a higher tax bracket. Even getting a job that pays more than what you were getting from your retirement funds could bump you up. Though social security and pension aren?t taxed, you could still be surprised with what you do owe for income tax. Be sure to calculate how much you might owe if you would end up in?a higher tax bracket. This may help you decide if it’s worth it to go back to work or what job to take after retirement.

Jumping into a new position or career after retirement is entirely possible! People do it all the time with great success. As with any new venture, make sure your current finances are in order and consider how this change could affect your finances too. If you have questions especially about retirement benefits, health insurance?or?social security go talk to HR or another professional to make sure you aren?t missing anything. Polish that resume and buy that new suit, you?ve got this!

Do you know anyone that went back to work after retiring? Did you? What are some ways you prepared to go back to work after retiring?


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Why a Reverse Mortgage is a Bad Idea

Why a Reverse Mortgage is a Bad Idea

Why a Reverse Mortgage is a Bad IdeaHome ownership is the golden standard for the traditional American dream. Thus, lenders have come up with lots of different programs to help make that dream a reality. There are programs that can help first time home buyers achieve this goal with little to no down payment. Plus, for older people they’ve come up with?an option for them to take out a reverse mortgage on the house they already own.

A reverse mortgage is where you cash in on the equity of your home. So instead of paying your mortgage every month, the bank pays you. But, you still have to pay for taxes, home upkeep and maintenance.

Though it sounds like a great idea to have the bank pay you every month, especially when you’re retired and may have a lower income, a reverse mortgage is usually a bad idea. Here’s why.

High Fees

Since you aren?t paying on your loan, there are higher fees associated with getting this type of loan. You will be charged an origination fee on a reverse mortgage, which you may or may not have to pay for a traditional mortgage. The closing costs on the loan are usually higher.?Plus, home owner’s insurance premiums may increase?if you need to make the difference between your equity and how much you take out as a reverse mortgage.

You may also get charged for a consultation on?the loan, even if you chose not to take out the reverse mortgage in the end. With a restricted income during retirement, it is usually hard enough to pay the bills, let alone having to pay?for these fees. A low income is why some people consider a reverse mortgage?in the first place. But, these fees will quickly eat away at the income you hope to receive from the loan.

You’re Still in Debt

Just because you aren?t paying on a?mortgage every month doesn?t mean that you don?t have any debt. When you take out a reverse mortgage, you are still taking on debt. You still have to apply for this loan, and you still have to pay back the bank one way or another.

If you pass away, your heirs will have to pay back the reverse mortgage. The loan will usually be paid back by selling the house, though it may not always bring enough to pay off the loan entirely. Although it wouldn?t be your problem, it can be tough for your family.

Could Out Live the Loan

As stated, a reverse mortgage pays you instead of you paying them every month. But, one thing to consider is how long you will live after taking out the mortgage. With people living longer than in the past, it’s possible that you might out-live your home equity and reverse mortgage.

If that happens, you’d have no money coming in. Plus, you’d end up making payments again to pay back the loan. Owing more than your house is worth is never a good thing, no matter if you were making payments or not.? You have to make up the difference on the loan.

You Can’t Move

If you take out a reverse mortgage on your primary residence and then have to be moved into a long-term care facility, you have to pay back the loan. In most cases, if you don?t live in the property for a year, you automatically have to start paying back the mortgage. When this happens, you’ll be responsible for paying for your new care facility or residence, plus an inflated mortgage cost. Since you are charged compounding interest on a reverse mortgage, the costs add up quickly.

Maintenance is Required

Even though you don?t have a house payment, you are still responsible for?home improvements?and?maintenance. If you don?t or aren?t able to keep the home up, you can default on this loan. When this happens, you’d owe the entire amount of the loan back to the bank immediately. Plus, it can destroy your credit. This lessens the chances that you’d be able to qualify for a different type of loan, like a personal loan, to help pay back your defaulted mortgage.

Though taking out a reverse mortgage may sound like good plan, it really isn?t. If you can?t afford your current home, try to downsize and find one that?fits your retirement budget. Taking the equity in your home to get a reverse mortgage should be your last option.


Have you ever considered taking out a reverse mortgage? Do you know someone who has?


Photo courtesy of: Compenion

Making your Retirement Shine Bright

glance-780635_1280If you are one of those people who looks towards the future, then you probably already have a retirement savings account of some sort. For most people this is something provided by an employer or a workplace. The traditional retirement account from an employer is called a 401(k).

The problem with an employer provided retirement fund is that there doesn?t seem to be any sort of stability when it comes to its relationship to the global economy. The value of the currency in the normal retirement account fluctuates with the economy. This can lead to a very scary set of prospects for your future and your retirement, considering the state of the economy right now.

What are the Alternatives?

A better option that you should probably consider, or already have, is a retirement account at a private institution, like a bank or finance company. This kind of account is called an IRA or an Individual Retirement Account. It isn?t much better than the typical retirement account from an employer though. Either option is very closely linked to the current market. If you haven?t been living under a rock recently, you will know that this is a very precarious position. What, then, is the solution that will make your future glitter with hope?

An Iron-Clad Answer Arises

Well, the answer to that question does literally glitter! Bad puns aside, the solution is a gold or silver IRA account. In short, a precious metal IRA account is one that you can open at a lot of financial institutions across the globe. The principle is that part of the money in the IRA is used to buy silver for IRA, or gold, whichever suits your taste.

Buying these metals may seem like nothing more than a fleeting fancy to the new customer. However, when you look at it properly and do your research, it begins to make sense. Precious metals are famous for not being directly linked to the global market. Unlike currency, the value of gold and silver (and other precious metals) doesn?t change with time or with fluctuations in the economy.

Don?t Take the Risk ? Get Secure

You may think that the account you have right now is secure against most market fluctuations, but it is a fact that metal has had a consistent value over the last couple of millennia. Ever since the dawn of time, mankind has been fascinated by shiny things. Why not feed your primal instincts while protecting your nest egg for the future? You might be surprised by the peace of mind you will feel upon getting a silver IRA account.

This means that getting an IRA account and then getting a portion of it converted into silver or gold will actually help you out immensely in terms of stabilizing your retirement fund. With silver protecting your investment in your future against possible crashes in the market, you should be able to easily get on your way to having a far more stable retirement account. Soon, the streets of your retirement fund will be paved with gold like biblical Jerusalem.


Photo courtesy of: DutchAir