Retirement Financial Planning | Retirement Living | Retirement Information

You may have noticed that the posts disappeared from this site for a couple days last week. I’m not sure how it happened but my database was corrupted and had to be restored. Luckily, my host was able to fix it. If not I would have had to restore it from a rather old backup. I learned my lesson there and am now having a backup emailed to me daily.

I also hired someone to make the comment link appear even when there are no comments. I know some people complained before that it was difficult to figure out how to leave comments. This should cure that problem. If there are any other blog features you would like to see let me know and I might implement them.

Of course the most important thing on a blog is content. I have been neglecting this blog lately but I plan to rectify that. Now that the site is back up and running there should be at least two posts a week. Feel free to suggest any topics that you would like to see covered.

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Retirement: News, Appraisals, Information, Research, Advice – Everything Life Settlements

The winner of the book The New Three-Legged Stool: A Tax Efficient Approach to Retirement Planning is Will P. If you didn’t win you will have another chance to win. I will be giving away a different book next week. Thanks to everyone for entering.

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Retirement: News, Appraisals, Information, Research, Advice – Everything Life Settlements

This week’s book giveaway is for the book, Why Are We So Clueless about the Stock Market? Learn how to invest your money, how to pick stocks, and how to make money in the stock market. The purpose of this book is to help readers understand the basics of stock market investing. Material covered includes the difference between stocks and businesses, what constitutes a good business, when to buy and sell stocks, and how to value individual stocks. The book also includes a chapter covering four case studies as well as a supplemental chapter on the pros and cons of real estate versus stock market investing.

To make this giveaway a little sweeter I am also going to include a copy of the 2010 New Yorker Desk Diary. To enter the contest just leave a comment. The winner will be chosen at random Friday June 18,2010. Limit one entry per person. Entrants with U.S. mailing address only please in order to keep my shipping costs down. I reserve the right to make other rules in the interest of fairness. Thanks and good luck!

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Retirement: News, Appraisals, Information, Research, Advice – Everything Life Settlements

A Target Date Retirement Fund seems like an easy way to save for your retirement.  You just invest your money in the fund that matches your planned retirement date and you are all set.  Of course, investing for retirement is not that easy.  There are several questions you should ask when deciding to use a target-date retirement fund to save for your retirement.

1. How risky is the fund? -  Not all target-date retirement funds have the same level of risk.  Two funds with a target date of 2025 could have wildly different proportions of equity and fixed-income investments.  You need to decide what is an appropriate level of risk for your goals.
2. What are the fees? -  Funds also differ on the fees they charge.  Paying too much in fees can seriously affect the performance of your target-date retirement fund.  Make sure you are not paying too much in fees.
3. How much should you invest?  -  These funds will not tell you how much you need to save for retirement.  You need to figure that out on your own.
4. Do you have other retirement savings? -  These funds are designed to be your sole retirement investment vehicles.  If you have other retirement savings that will change your investment allocation and you need to adjust accordingly.
5. What happens when you hit the target-date? – Some of the target-date funds are designed to end when you hit the retirement target-date while others are designed to continue and hopefully provide you with an appropriate return on your money while retired.  Whichever is the case with the target-date retirement fund you choose you need to make sure that your investment will provide you with a sufficient income during retirement.

These five questions are a good starting point when choosing a target-date retirement fund.  Be sure to investigate a prospective target-date retirement fund thoroughly before using it to save for your retirement.

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Retirement: News, Appraisals, Information, Research, Advice – Everything Life Settlements

There are many risks to your retirement savings. Here are five of the more common ones.

1. Starting too late -  When you are young it seems like retirement is far way.  However, by starting to invest for your retirement while you are young it will be much easier to save enough for a comfortable retirement.




2. Not saving enough -  Just saving enough to get your 401k match is better than doing nothing but it probably won’t add up to enough for you to be able to retire.  Even the conventional 10% figure probably isn’t enough.  Another bonus to saving more is the ability to retire early.




3. Lack of diversification – It is possible to be over diversified but most people’s savings suffer from a lack of diversification.  Putting all your money into your company’s stock is a common example.   That didn’t work to well for Enron employees.  You should have your retirement savings in several investments.




4. Taking too little risk -  People are naturally adverse to losing money.  The stock market slide in 2008 has made even more people risk adverse.  Saving your money in a money market paying 1% isn’t going to allow you to retire.  You need to take some risk.




5. Taking too much risk -  Examples of this would be betting all your money on one stock or one sector.  This could have a huge return but it could also cripple your chances of retirement.  You also need to move more of your money out of stocks and other riskier investments and into fixed income investments as you get closer to retirement.

That is just a brief overview of potential risks to your retirement savings.  Now that you have an idea of what the risks are you can do further research and educate yourself to avoid or minimize these risks.

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Retirement: News, Appraisals, Information, Research, Advice – Everything Life Settlements

You have probably seen several news reports quoting statistics from the 2010 Retirement Confidence Survey by the Employee Benefit Research Institute. Some of the more interesting figures from the survey are that 43% of Americans have less than $10,000 in retirement savings and 27% say they have less than $1000 in savings. Also only 16% have confidence in their ability to save enough for retirement.

These statistics may not be as bad as they seem. The statistics do not include the value of primary homes or defined-benefit pension plans. Also, you need to consider that some of the survey respondents are still in their 20’s and haven’t had much time to accumulate much in savings.

Even taking these factors into account though it is clear that most Americans need to be doing more in preparation for retirement. They survey showed that many people are unaware of how much they need to save for retirement or how to calculate how much they need to save for retirement. I think it is also clear that without the safety net of Social Security there will be millions of Americans that are never able to retire.

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Retirement: News, Appraisals, Information, Research, Advice – Everything Life Settlements

As part of Obama’s middle-class plan he includes a proposal for an automatic IRA. This has been proposed before but it has never been implemented. Here are a few details of this plan.

Under the plan certain companies that do not currently offer a retirement plan would be required to enroll their employees in an IRA. An automatic deduction of 3% would come out of the employee’s paychecks and be deposited into the account. The employee could opt to lower or raise the deduction or opt out altogether. It is not yet determined what would be the default investment for the IRA.

The positive benefit of an Automatic IRA would be that more workers would be covered by a retirement plan. Currently about half of the workforce lack employer-based retirement plans. Many workers delay contributing to a retirement plan and an Automatic IRA would greatly increase employee savings rates.

The negative aspect of an Automatic IRA is that it would be an added administrative expense for small businesses. Although those proposing the Automatic IRA state that the expense would be low it remains to be seen if that is actually the case.

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Retirement: News, Appraisals, Information, Research, Advice – Everything Life Settlements

There has been a lot of speculation about how long Social Security will be around and in what form it will be in the future. Figures vary but it is reported that the trust fund will start running at a deficit in 2018 and will be unable to pay full benefits by 2040. I have 22 years until I can file for Social Security so I decided to do some research on Social Security.

I was surprised to find out that you can file at 62 and still get your full benefit amount at age 70. With the uncertainties surrounding Social Security I would prefer to start getting my benefits as soon as possible. In order to get benefits at 62 and still get full benefits at 70 does require some work. The Social Security Administration allows you to “withdraw your application” for benefits at 69, reapply at 70, and get the same larger monthly check as someone who delayed taking Social Security until that age. The catch is that you have to pay back all benefits you have received. You won’t have to pay interest on the money though and you can get either a tax credit or tax deduction on any income taxes you paid on the Social Security.

This works if you are able to save and invest your Social Security benefits. Doing this gives you will roughly $20,000 in earnings if the benefits are saved at 5%. In addition to the extra $20,000 you will also have a significant increase in the amount of Social Security benefits. For those born after 1960 like myself there is a 77% increase in benefits from age 62 to 70. This option may not be around by the time I’m ready to file for benefits but for those retiring soon it is something to consider. For a more detailed look at the math involved visit the Retire Early Home Page.

*This post was previously published at TightFistedMiser.com

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Retirement: News, Appraisals, Information, Research, Advice – Everything Life Settlements

With a new year comes a new limit for contributions, however 2010 will have the same contribution limits as 2009.

For 2010, the contribution limit for Roth IRAs will be $5,000 for Age 49 and Below; $6,000 for Age 50 and Above (to reflect the “catch-up” amount).

If you are getting a jump on 2010 contributions, remember to mark your contributions as 2010 Roth IRA contributions or your brokerage may be confused. If you don’t write anything, your brokerage will likely mark the contributions for 2010 but it’s better to be safe than sorry.

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Retirement: News, Appraisals, Information, Research, Advice – Everything Life Settlements

Kiplinger’s has published a retiree map that might be helpful for you if you’re nearing retirement. It gives you a visual representation of states with favorable tax (or unfavorable) tax situations for retirees. It will show you:

• 7 states with no income tax
• 4 states with no sales tax
• 5 states with the lowest overall sales tax (including averages for county/city sales taxes)
• 5 states with the lowest median real-estate taxes
• Most pension-friendly states
• The states that don’t tax social security benefits

Not a bad map to check out if you’re nearing retirement and looking to make a move.

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Retirement: News, Appraisals, Information, Research, Advice – Everything Life Settlements