FACT or FICTION: Retirees Have Less Retirement Savings Than You May Think!
FACT: Today's retirees have a median $45,000 in savings, reports Transamerica, and that excludes home equity. And while the latter can serve as a retirement income source of sorts, it can't take the place of a robust IRA or 401(k).
If you're approaching retirement and are looking at savings in the ballpark of $45,000, consider this a wakeup call that you're not ready to stop working just yet. If you do, you might really set yourself up for long-term financial struggles.
(Source: MSN)
Thinking of retiring early?
Your savings must support you longer. It's stating the obvious, but the earlier you stop getting a paycheck, the sooner you must start relying on your investment accounts (and the sooner your balance starts to fall). Not only do you begin making withdrawals earlier when you retire younger, but you also lose some prime investing years when you're eligible for catch-up contributions and may be able to afford to make them.
(Source: USA Today)
Thinking of retiring early?
Your savings must support you longer. It's stating the obvious, but the earlier you stop getting a paycheck, the sooner you must start relying on your investment accounts (and the sooner your balance starts to fall). Not only do you begin making withdrawals earlier when you retire younger, but you also lose some prime investing years when you're eligible for catch-up contributions and may be able to afford to make them.
(Source: USA Today)
Wealth Wednesday Tip #481:Have a Sense of Purpose and Meaning
Make every day meaningful. Oxford University suggests that a meaningful life lessens the effects of aging. And, research from Patrick Hill and Nicholas Turiano found that people who have a sense or purpose or direction in life outlive their peers.
In fact, people with a sense of purpose had a 15 percent lower risk of death, compared with those who said they were more or less aimless. And it didn’t seem to matter when people found their direction. It could be in their 20s, 50s or 70s — even when controlled for other factors that affect longevity like age, gender and emotional well-being.
(Source: NewRetirement)
45% of millennial's, 49% of Gen Xers, and 69% of baby boomers believe if they claim their benefits early, the amount be recalculated at full retirement age (FRA) and their checks will increase. This is simply not true.
When you file for Social Security benefits prior to FRA -- which is based on birth year and is between 66 and 67 -- you're subject to early claiming penalties. For each of the first three years ahead of FRA, they'll shrink your checks by 5/9 of 1% per month. Those who start their benefits even earlier face an additional penalty of 5/12 of 1% per month.
(Source: Fool)
Is your retirement plan diversified?
Let us take a second look, contact us today.
What can the typical retired worker expect to receive from Social Security at age 62? According to payout statistics from the Social Security Administration in June 2020, the average Social Security benefit at age 62 is $1,130.16 a month, or $13,561.92 a year. That's only $800 above the federal poverty line for a one-person household in 2020, and well below the average retired-worker benefit of $1,514.13 a month in June 2020.
When will you start your official retirement plan? Why not start today?
Financial Fact Friday:
While the percentage of participants taking advantage of CARES Act distributions and expanded loan options is low, doing so may undo years of retirement savings, according to a new study.
Though the coronavirus pandemic has yet to run its full course, most participants are largely staying the course in terms of their long-term savings strategies. Since early March through the end of July, the study notes that only 2.5% of participants have suspended salary deferrals and only 5.6% have reduced their savings rate. What’s more, most who stopped or reduced savings did so early in the crisis and subsequent activity has moderated, the study further observes.
But of those who have taken coronavirus-related distributions (CRDs), 21% have withdrawn the maximum (the lesser of 100% of the vested account balance or $100,000) and the average loan amounts are three times higher for participants taking advantage of the CARES Act higher loan limits, the study notes.
(Source: NAPA)
FACT or FICTION: Most people haven't even calculated how much money they'll need for retirement!
FACT! More than three-quarters of workers planning to retire haven't even calculated how much money they'll need for retirement, according to a recent survey. Many don't know how to figure this out, or they have concerns about their future, including how much they can count on from Social Security benefits. This can definitely make things confusing, but it's not an excuse to skip retirement planning altogether and hang your hopes on good luck.
(Source: Fool)
2021 will be quite the year for Social Security!
To be clear, Social Security isn't headed for bankruptcy, even with this eye-popping funding shortfall projected over the next 75 years. However, sweeping benefit cuts of up to 24% may await retired workers by 2035 -- when the Trustees estimate Social Security's $2.9 trillion in asset reserves will be depleted -- if nothing is done to shore up the program.
Beginning in 2021, Social Security is expected to expend more money than it collects. The last time the Social Security program had a net cash outflow was all the way back in 1982, the year before the Reagan administration passed the last major bipartisan overhaul. This means approximately 165 million Americans alive today have never witnessed Social Security spend more than it collects in a given year.
(Source: Fool)
Wealth Wednesday Tip #333: Life Insurance Can Add To Your Income in Retirement
Your life insurance is another potential store of value. If you have a permanent life policy that accumulates cash value, you should be able to borrow against your policy. Life insurance loans generally carry competitive interest rates and have no specific repayment requirements. If you don't pay the loan back, your insurer will likely deduct the balance from the death benefit payout.
(Source: Fool)
Pitfall of only using a 401(k) for retirement... Tax advantages are among the most frequently cited benefits for 401(k)s. Contributions are pre-tax, meaning that they are deducted from paychecks and excluded from taxable income, which allows these funds to grow on a tax-deferred basis throughout a person's career. Qualifying withdrawals are taxed as ordinary income while avoiding capital gains taxation. Tax diversification can be transformative to a portfolio, we can help.
Wealth Wednesday Tip #577: You should have eight times your income saved by the time you turn 60.
If you are nearing 60 (or already reached it) and no where close to that number, you’re not the only one behind. A 2020 TD Ameritrade report, which surveyed 2,000 U.S. adults ages 40 to 79 with at least $25,000 in investable assets, found that 28% of those in their sixties have less than $50,000 in retirement savings.
(Source: CNBC)
The U.S. Census Bureau released a survey that about 60 million American households are expecting an income loss due to COVID-19 this month. Be sure to keep earmarking some monies for retirement. Yes, you need money today or the next couple of years, but frankly, you still should look out 10, 20, 30 years into the future. Remember to keep some focus on the long-term.
How does your retirement timeline look?
We can help you make this timing intentional for you. Contact us, today.
Financial Fact Friday:
While home prices continue to climb upward, the average interest rate on a 30-year mortgage is low by historical standards: just below 3%. To get a mortgage when you're retired can be "tricky" for some. If your tax returns don’t show enough income to qualify for a mortgage, you might be able to temporarily tap your retirement account to prove you can afford the loan.
Another option may be to qualify based on assets in that account, or explore “pledging assets” to make the purchase.
(Source: CNBC)
FACT or FICTION: The pandemic is pushing some older workers into retirement early.
FACT: The labor force participation rate is falling. That means there are more people out of work who aren’t looking for a job. That could be due to a lack of available openings, childcare issues at home — or folks who have simply decided to retire early. Since February, the number of employed workers over age 55 has dropped by 7%, and many will never return, said Richard Johnson at the Urban Institute.
(Source: MarketPlace)
A 2019 Survey of Consumer Finances shows that the average retirement savings for all families is $255,130. The median retirement savings for all families is $65,000. Ages 55 to 64 Average household retirement savings: $408,420. Median household retirement savings: $134,000. These are baby boomers, and the oldest among them are knocking on retirement’s door — just a couple of short years from Social Security’s definition of full retirement age. About 54.5% of households headed by a baby boomer have retirement holdings.
Do you have a holiday shopping budget set?
Financial Fact Friday:
401k Contribution Could Become Mandatory!
Automatic 401(k) Enrollment to Become a Requirement if The SECURE Act 2.0 becomes a reality. If an employee becomes eligible to participate in 401(k), 403(b) or SIMPLE plan, the bill would expect companies to enroll them at a minimum 3% contribution and a maximum of 10%. Any figure less than 10% would increase by 1% per year until it reached that threshold. In other words, unless the employee opts out of the plan, the company will divert at least 3% of his or her wages into a retirement plan.
(Source: Clark)
In a year where there is plenty to complain about, there is always something to be thankful for. Happy Thanksgiving from our family to yours.
Make every day meaningful. Oxford University suggests that a meaningful life lessens the effects of aging. People who have a sense or purpose or direction in life outlive their peers. In fact, people with a sense of purpose had a 15 percent lower risk of death, compared with those who said they were more or less aimless. And it didn’t seem to matter when people found their direction. It could be in their 20s, 50s or 70s — even when controlled for other factors that affect longevity like age, gender and emotional well-being.
(Source: New Retirement)
Wealth Wednesday Tip #561: Start saving, keep saving, and stick to your goals
If you are already saving, whether for retirement or another goal, keep going! You know that saving is a rewarding habit. If you’re not saving, it’s time to get started. Start small if you have to and try to increase the amount you save each month. The sooner you start
saving, the more time your money has to grow. Make saving for retirement a priority. Devise a plan, stick to it, and set goals. Remember, it’s never too early or too late to start saving.
(Source: DOL)
After improving slightly in 2019, the outlook for financial security in retirement for workers ages 30 to 59 deteriorated in 2020, according to a study released Tuesday by Boston College’s Center for Retirement Research. According to the study, 51% of U.S. households are now at risk of being unable to maintain their standard of living in retirement. That is up from 49% in 2019.
(Source: Boston College)
Wealth Wednesday Tip #571: There are alternate to your employer retirement plan.
An IRA is a popular alternative to workplace retirement plans, because anyone can open one with any broker. There's also fewer limitations on what you can invest in. This gives you more freedom to choose affordable investments that match your risk tolerance, which could help you grow your nest egg more quickly than you could with your workplace plan.
(Source: Fool)
Delaying retirement or working part-time through retirement is a popular strategy for those who weren't able to save as much as they'd hoped to during their younger years. The logic is pretty easy to follow: A job gives you a steady stream of income so you don't need to draw down your personal savings as quickly. Your savings will continue to grow, enabling them to stretch further than they would have if you were relying upon them alone.
(Source: Fool)
Ready to plan for a happy retirement?
Financial Fact Friday:
Avoid Retirement Depression (It is More Common Than You Might Think)
A study published in the Journal of Population Aging found that those who were retired were about twice as likely to report feeling symptoms of depression than those who were still working. And, research from the London-based Institute of Economic Affairs found that the likelihood that someone will suffer from clinical depression actually goes up by about 40% after retiring.
FACT or FICTION: More than 80% of today’s retirees say health is the most important ingredient for a happy retirement, meaning that the majority value good health even over financial security.
FACT! Americans age 50+ cite health care costs in retirement as their greatest financial concern, regardless of their wealth level. Yet the vast majority of people have not factored health care costs into their retirement planning.
(Source: NewRetirement)
