5 Costs That May Increase When You Retire
Retirement Costs
When planning for retirement costs, financial planners often calculate costs decreasing during retirement but there are some costs that will increase in retirement. It is important to plan for them. There will be a number of costs to consider when you’re approaching retirement. Budgeting may be easier because many costs will decrease like commuting, work clothes, lunches, dinners out when you are too busy to cook but there are at least 5 basic costs of living, which increase when people retire. These include:
1. Home/Property Maintenance Costs
The good news is that you will have more time to maintain your house but the bad news is all those repairs you’ve been putting off will cost money for materials even if you do the work yourself. It’s very likely that the cost of maintaining your home will increase during your retirement years, especially if you bought it many years ago and have been living in it for a while. The cost of home maintenance and improvement usually rises after retirement due to the age of the house and the need to replace things like the roof and the water heater, furnace or heat pump, etc.
Retirement Abroad: Affordable Retirement Living
Affordable Retirement Living
Have you thought about retirement? If not, why not?
Perhaps you’ve already retired or are approaching/planning retirement? Either the way, everybody thinks about it sooner or later. There is no such thing as ‘too soon’ when it comes to funding retirement and saving money. The key is to know how much you have to spend and find a location that’s affordable within your budget.
Seeing the World on a Budget
One goal many retirees entertain is to see the world after they retire. But often they don’t consider how affordable it really is to move/retire abroad and truly experience life as a resident rather than a tourist. The aim is to have all your debts and/or mortgages cleared and enough money to move to the place of their choice where they find comfort and relaxation. This kind of decision is not an easy one and entails many problems/obstacles. But once you consider the idea you may realize that it is more do-able than you previously thought.
The Major Obstacle- Family
For example many couples the major consideration is family. Of course as a family member you want to see your newly retired parents/grandparents retire comfortably and enjoy the later stages of their lives. Yet naturally the decision to split the family up can be a big one for both parties. Moving away from your family is a sizable decision that’s dealt with in varying ways from family to family. But often it is possible to move from a higher cost country to a lower cost and drastically improve your standard of retirement. And who doesn’t want their parents to have a more comfortable retirement.
Today it is quite possible to fund a comfortable affordable retirement in many places in the world where your Pension or Social Security will easily cover your expenses, including Ecuador, Thailand, and Mexico plus many more for less than $1500/month or about what Social Security pays for one retiree. If both members of the couple are receiving Social Security they can live well indeed and even save enough to make frequent visits back to the states to visit the grandkids. (Or fund trips to visit you).
Financial Considerations of Retirement Living
However there are other factors in retiring abroad, Continue reading
Is a Retirement Annuity the Answer for your Retirement Savings?
Retirement Annuity
You’ve probably heard that investment plans and financial schemes like, IRAs and 401 (k), are the best ways to plan for retirement. This might be true in most cases, but not always. For instance if you have invested your maximum contribution for the year to your retirement account and you’re seeking to add a bit more more. What can you do? In this case, among others, investing in a retirement annuity might be the Estate Planning solution you are looking for.
Understanding the Concept
Annuities are usually a “tax-deferred” investment. The idea is simple, all you need to do is invest a cash lump sum or make monthly installment payments to the annuity issuer (usually an insurance company) in return they will give a payment to you (or your beneficiary) usually after your retirement. The period of funding the investment is referred to as the accumulation stage and the period of receiving the payments is refererd to as the distribution phase.
The Advantages of Investing through an Annuity
Although the initial investment is after taxes, the earnings that are accumulated in your annuity are tax-deferred until you withdraw the amount from your account. This means that Continue reading
Doing the Roth Arithmetic
By Terry Coxon, Casey Research
It’s clear to me, even though it may not be clear to you, that unless there is something very unusual about your situation, if you have a traditional IRA, you should pay the tax now and convert it to a Roth IRA. Not just maybe, but definitely. Not just for a small advantage but for a big one. If you don’t convert today, you’ll ultimately surrender much more to the tax collector. You’ll be throwing money away. And you’ll keep throwing it away. It’s a result neither of us wants.
Your IRA is an object in motion, with money going in and out of it and investments turning over inside of it. It lives not just on your brokerage statement but across the years of your calendar as well. That’s why the Roth conversion question can seem so tangled. Because of the time dimension, deciding whether to convert isn’t as simple as deciding whether to replace one stock with another. But there is, as I’ll try to show, a way to look at the question that cuts through the complexity.
Comparisons
With a traditional IRA, you are allowed to contribute $5,000 per year of employment income (or $6,000 if you are 51 or older), and, if your income isn’t too high, you receive a tax deduction for the contribution. Earnings inside the IRA accumulate and compound free of current tax. Later, when you withdraw the money, it comes to you as taxable income (except to the extent of any contributions that weren’t tax deductible when made, which come out tax free).
With a Roth IRA, if your income isn’t too high, you may contribute up to the same $5,000 or $6,000 per year, but none of it is tax deductible. Just as with a traditional IRA, earnings inside the Roth accumulate and compound free of current tax. When the money comes out, assuming you are at least 59.5 years old and the IRA is at least five years old, the money goes tax free straight to your pocket. Continue reading
Public Pension Funds: Tens of Billions at Significant Risk
Is now the time to gamble with retirement?
By Elliott Wave International
To meet ambitious investment return targets, some public pension funds must now swing for the fences.
But many are down two strikes already, due to their previous big bets with hedge funds.
….the [pension] funds with a third to more than half of their money in private equity, hedge funds and real estate had returns that were more than a percentage point lower than returns of the funds that largely avoided those assets. They also paid nearly four times as much in fees.
New York Times, April 1
The same article describes how other pension funds have embraced this risky strategy, and how funds generally have their assets at risk. In 2007 pension funds allocated 10.7 percent to “high-growth” investments; by September 2011 they had increased that bet to 19 percent. All the while, hedge funds have underperformed, as this chart from our January 2012 Financial Forecast shows: Continue reading
Tips For Obtaining Extra Funds in Retirement
The Good Old Days are Gone
Years ago when a person hired into a job it was generally until the age of retirement, 30+ years. Companies gave pensions to workers to encourage longevity with the company. The retiree had a 401K, CD’s paying 15%, stock and bonds, and other high interest savings accounts. At retirement they lived off of monthly interest, in addition to Social Security. Retirees also had health, dental and vision insurance through that company until the day they died. People had their homes paid for by the time they retired. Continue reading
Eliminate Debt Before You Retire
No one wants to spend their retirement worrying about money. Unfortunately, in today’s economic environment debt is common. Once you retire it is almost certain that your income will decline. But if you have loads of debt, your expenses will stay almost the same or even grow with the accumulation of interest.
In days past, it was expected that you would have your mortgage paid off and be debt free by the time you retired.
The key is to get your expenses under control before even considering retirement and that is why many people these days are planning on postponing retirement for a year or two, either because Social Security retirement ages have been postponed or because of out-sized debt.
Many others who have already retired are even taking on part-time jobs at McDonald’s or Walmart to provide a bit of a cushion.
So the best idea is to eliminate debt before retirement, to avoid the possibility of having to take on one of these types of jobs afterward. Continue reading
Retire In 10 Year Years? Here’s How…
Believe it or not, it’s pretty simple.
No complicated math is required and you don’t have to be a financial expert.
However, the bad news is almost nobody will do it.
According to Employee Benefit Research Institute more than half of U.S. workers have less than $25,000 in accumulated savings and less than 46% have even bothered to figure out how much money they need to retire.
This not the way to retire in 10 years, but it is a prescription for serious financial problems later in life.
You can do better when you understand the following simple principles…
Continue reading
Bulletproof Your Retirement Account
If you are looking to retire in the next 10, 15, or even 20 years, it’s time to have a strategy in place before it’s too late.
Now is the time to plan and protect your family’s future by turning your portfolio into the financial fortress that you’re counting on in the
years to come.
In today’s short video, I share with you a way to bulletproof your retirement portfolio. Continue reading
