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Tag: retirement

  • Financial Tips For Seniors To Thrive On A Budget In 2024 | Entrepreneur

    Financial Tips For Seniors To Thrive On A Budget In 2024 | Entrepreneur

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    2024 has arrived. The new year has officially begun. On the financial front, tough times await seniors. Although seniors will receive better Social Security checks in 2024, that is not enough to cover all the costs. Thanks to inflation and high cost of living.

    So, what’s the way out? Smart budgeting and money management can help seniors to overcome this financial crisis.

    Why Should Seniors Follow A Budget In 2024?

    Although there will be a 3.2% hike in social security payments in 2024, seniors will still be in financial trouble.

    Here are some possible reasons:

    Higher cost of living:

    According to USA Today, 65% of seniors admitted their living expenses are 10.5% more than a year before.

    Loss of benefits:

    Many seniors (low-income groups) have lost access to financial assistance programs in the last year. The 8.7% COLA in 2023 and 5.9% COLA in 2022 pulled many seniors out of poverty. As such, they became ineligible for several assistance programs, such as rental assistance programs and SNAP. So, their out-of-pocket expenses have increased significantly.

    Seniors may also have to pay more tax in 2024. This is because of the extra money they received from the Social Security checks.

    How seniors can stick to a budget in 2024

    One of the best ways to master the art of money management is to set up a budget. For seniors, it is a must. Basic money management skills help seniors stay financially independent for a long time. When you live on a fixed income, your resources are limited. You have to manage everything with that amount. A budget can help you to do that.

    Follow The 70/30 Rule:

    This is a simple budgeting rule where seniors use 70% of their income for their necessary expenses. They save the remaining 30%.

    It is not easy to save money on a fixed income. But it is possible. You must prioritize your expenses for essentials like healthcare, utilities, housing, etc. Allocate 70% of the budget to essential items.

    Create a budget:

    Monthly expenses include housing, utilities, insurance, groceries, healthcare, and entertainment. Categorize expenditures into fixed (e.g., mortgage) and variable (e.g., dining out) to identify areas for potential savings.

    Evaluate retirement income:

    Evaluate all income sources. This includes pensions, Social Security, investments, and part-time jobs. Consider changes in income, such as adjustments in Social Security benefits or new investments.

    Explore senior discounts:

    Take advantage of senior discounts for various services, like transportation, dining, and entertainment. Most of the time, you must ask if a deal exists for seniors. You might be shocked in a good way! Stay informed about special senior days or promotions offered by businesses.

    Review your insurance policies:

    Regularly review your health, home, and auto insurance policies. Do they meet your current needs? You can purchase home and auto insurance policies from the same company to save money if required. Explore bundling insurance policies for potential cost savings.

    Consider downsizing:

    Look at your present living expenses. Is it eating up your budget? Can you save a single penny at the end of the month? If the answer to the first question is “yes’ and the second one is “no,’ it’s time to downsize. You can move to a smaller apartment or a cost-effective area where you can lead a comfortable lifestyle.

    Do your research before you move to a new place. Take a trip or two to see what living there is like. Think about the cost of living, which includes food, utilities, medical expenses, and the cost of living.

    Think about the quality of life, which includes things like the weather and the number of fun things you can do. If you want to move there, talk to people who live nearby about what they like and don’t like about the retirement community.

    Also, start getting rid of stuff and packing boxes at any time. Choose what to keep, give away, sell, or throw away. Is this too much for you? It might help to have a trusted family member or friend with you as you go through your home.

    Don’t spend as much now. Start cutting back on spending as soon as you can if you can. This might help you get used to living in a cheaper place when you move.

    Utilize preventive healthcare services:

    Preventive healthcare helps you lead a fulfilling and long life. It helps to diagnose medical issues early on and avoid acute health problems later on. So, if you want to avoid long-term medical expenses, use free or budget-friendly preventive healthcare services.

    You can also join wellness programs for affordable healthcare. Visit community health clinics to get medical treatment at a price you can afford.

    Pay off your debts:

    The Federal Reserve has quickly raised interest rates to keep inflation in check. That has made it much more expensive for families to borrow money for mortgages, car loans, school loans, and credit card debt.

    For example, the average APR (annual percentage rate) for credit cards is over 20%, the highest it has ever been.

    Use any extra money to pay off your debt. Most financial experts say that you should pay off your highest-interest debt first and try to pay all your bills on time every month if possible.

    There are several ways to pay off high-interest debts.

    Here are some of them.

    Enroll in debt management plan:

    If one of your financial goals is to eliminate high-interest debt, you can try debt management. Credit counselors offer tips for saving money and attaining financial security in a debt management plan. They analyze your financial situation and spending habits.

    After that, they formulate a budget plan per your financial goals to help you save money and gradually pay off your debts. They negotiate with creditors to reduce your interest rate and arrange an affordable repayment plan.

    Once you start working on the repayment plan, you can send payments to the debt management company. The credit counselors will forward your monthly payments to your creditors per the new agreement. This debt relief option works best when you can follow a budget and not incur fresh debt.

    Pay more than the minimum amount:

    Please pay more than the minimum amount due on your credit card. If you only make the minimum payment on your credit card bills, you will get some of your debt paid off, but you will probably pay more in interest over time. Your overall debt amount will increase due to the compounding high-interest rate. Paying more than the minimum amount may help you make a big hole in your debt.

    Follow the debt avalanche method:

    The debt avalanche method is a great way to pay off debt with a high-interest rate. First, put your debts in order of interest rate, and pay off the one with the biggest interest rate first. Then, move on to the bill with the next-highest interest rate, and so on.

    However, ensure you keep up with your payments on your other credit accounts. The less interest you pay over time, the more money you will save and get financial success.

    Opt for a reverse mortgage:

    A reverse mortgage is an excellent option to convert your home equity into income without losing your property. The best part is that you don’t have to make monthly payments. You don’t even have to pay tax on the income. So, if you are 62 years old or above and plan to stay in your home for a long time, apply for a reverse mortgage in 2024.

    Get rid of-pocket costs and our rules:

    Things can change, and your plans and benefits might not work anymore. After making a choice, it’s easy to forget about it. If you do that, you might miss out on money.

    Get together the things you need to pay for, like extra health insurance, covering for prescription drugs, life insurance, and long-term care insurance. Check to see if you have the best rates or cost-effective plan(s). Get a friend, family member, or professional who knows what they’re talking about to help you think about your options before you make any changes.

    Explore Medicare Savings Programs

    You might get an extra $100 a month from Social Security. Also, your rates and co-pays might go down. Check out Medicare Savings Programs to see if you can get help. Medicare Savings Programs (MSPs) help people with limited incomes to cover Medicare premiums. There are eligibility criteria for income and resources. However, the state laws can modify the financial guidelines in some instances.

    Look for ways to reduce property taxes:

    Home prices are increasing nationwide, and new assessments can hurt your wallet. Residents of many states who are 65 or older don’t have to pay property taxes. This could save you hundreds of dollars a year.

    Be aware of the healthcare costs:

    With rising healthcare expenses, staying informed about Medicare, supplemental insurance, and prescription plans is crucial. Regularly review healthcare coverage to make necessary adjustments based on changing needs.

    Update your estate plan and will:

    Update your wills and estate plans as per your current assets. This ensures a smooth transition of assets to heirs. You can minimize your financial and emotional burden on your loved ones.

    Diversify your investment portfolio:

    Revisit your investment portfolios. Keeping a mix of stocks, bonds, and other investment vehicles can help manage risk and optimize returns. Consult with a financial advisor to diversify your investment portfolio. They can help you align investments with individual risk tolerance and financial goals.

    Cook meals on a budget:

    Once you turn 60, your primary focus shifts to your health and finances. You can’t lead a reckless life anymore. You have to embrace healthy eating habits, and that too on a budget. Late-night dinners at an expensive restaurant are a big “no.’

    Plan meals in advance to minimize waste. Buy in bulk and take advantage of sales. Explore affordable and healthy recipes.

    Be cautious about scams:

    Financial scams are rampant in the country. And if you look at the stats, you’ll find that seniors are the easiest victims of financial scams. According to the FTC, individuals aged between 60 and 69 years have lost almost $836 billion due to financial scams. So, if you want to stay ahead of the game, beware of the common financial scams. For example, imposter scams, romance scams, tech support scams, etc.

    Stay alert. Be suspicious of the calls where you are pressured to make payments over the phone.

    Be prepared for a financial emergency:

    We don’t know what’s in store for you in 2024. While it’s good to hope for the best, it’s best to hope for the worst. Try to build an emergency fund that lasts for months at least. As a retiree, it is difficult to set aside money every month for your emergency fund.

    But if you consciously cut down all the discretionary expenses and save 10% of your income, you may be able to build an emergency fund. In that case, you can open a high-yield savings account where you can deposit a specific amount every month.

    Why is it difficult for seniors to thrive on a budget in 2024?

    The cost of living is going up so fast that even the smartest seniors can barely get by these days, mainly if they depend on a set monthly income. For example, look at these numbers.

    UMass Boston’s Elder Index determines how much money older people need to live independently. Its interactive modeling tool says that a senior citizen in excellent health who lives in the Washington, D.C. area and pays a mortgage needs $3,665 a month to meet their basic needs.

    Many older people have very little money left over after paying their bills, even if they have other sources of income.

    Conclusion

    If you want to be financially strong in 2024, follow the financial tips. Create a budget, pay off debts, get enough insurance coverage, downsize if required, diversify your investment portfolio, and opt for reverse mortgages. Once you master the art of money management, you can focus on the other essential aspects of your life. Your financial life will shine like the sun.

    The post Financial Tips For Seniors To Thrive On A Budget In 2024 appeared first on Due.

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    Lyle Solomon

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  • Falling behind on retirement savings? 4 steps to get back on track in 2024.

    Falling behind on retirement savings? 4 steps to get back on track in 2024.

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    For a substantial number of people approaching retirement, the future looks grim. Their savings rate is low, their anxiety level is high and they aren’t even sure they’ll be able to retire at all.

    More than one in five adults — 22% — have no retirement savings, according to AARP. Meanwhile, 64% are worried that they will not have enough money in their later years, and 47% of adults who are not yet retired think they will need to work at least part-time in retirement for financial reasons, AARP said.

    “It’s a public health crisis. Many people don’t have any retirement savings. People feel lousy — that they haven’t done enough — and say, ‘There’s nothing I can do about it.’ They put their head in the sand and try not to think about it,” said Mary Liz Burns, senior director of communications strategy at AARP.

    To raise awareness and in hopes of reversing this trend, AARP, the lobbying group focused on issues facing older adults, has launched a public service campaign with the Ad Council called “This is Pretirement.” The campaign is aimed at people who might feel invisible as they grapple with the stress of financing retirement, Burns said.

    “The average American is having a tough time saving. They’re not alone — there are many, many people in that same position,” Burns said. “There’s no judgment about what you have or haven’t done.”

    The multi-year “pretirement” campaign started in November and will continue to roll out to more markets and media outlets including TV, radio and social media. 

    The ads encourage pre-retirees to face the daunting aspects of saving for retirement. There’s also a website, ThisIsPretirement.org, that features free tips, resources and tools. Near-retirees can take a quiz and get a recommended action plan.

    “Think about actions you’re taking that may be harming you, such as carrying over credit-card debt each month. Think about the steps you can take to start,” Burns said.

    “Start somewhere. Anything is better than being frozen.”

    Where to start? 

    First, experts say you should create a budget that includes your income and all your expenses. You can do this on your own or with a financial adviser. 

    “Make sure you have a plan. If you don’t do the planning, you really won’t have a successful retirement,”  said David Schneider, founder of Schneider Wealth Strategies.

    JB Beckett, founder of the Beckett Financial Group, suggested working with a financial adviser who can examine your tax strategies, insurance coverage, Social Security strategy and healthcare expenses with an eye toward longevity and the unknown.

    And Joel Russo, founder of N.J. Retirement Planning, noted that retirement can last a long time. “A lifetime these days can be 100-plus years. People think retirement isn’t going to be that long, but it can last 30 years or more. That’s hard to finance without a comprehensive plan,” he said.

    Advisers need to look at a client’s whole situation to see the reasons someone may not be saving enough money.

    “People aren’t saving enough. But why aren’t they saving enough? What else is going on for them that they can’t?” Russo said. Getting an overview of your budget and your expenses can show you where your money is going.

    Catch up on contributions

    “Your 50s are a really important time to be very serious,” Schneider said. “Hunker down and get serious. Every investment needs to be prudent and diversified. Increase any savings, if possible. Make catch-up contributions, if possible.”

    Starting at age 50, you can make extra investments called catch-up contributions to your 401(k) and individual retirement accounts. In 2024, the 401(k) contribution limit will be $23,000, but catch-up contributions will allow you to save an additional $7,500. For IRAs, the contribution limit is $7,000, with a catch-up contribution of $1,000.

    Check in with Social Security

    As you work on your long-term plan, get your Social Security statement from SSA.gov and check it for errors. This will let you make sure you’re receiving credit for all your work over the years and find out where you stand with Social Security benefits, Schneider said.

    And because the last 10 to 15 years of your career are often peak earnings years, Beckett said to take advantage of savings opportunities to maximize your retirement efforts and minimize your expenditures.

    “You’re entering that retirement red zone in the last 10 to 15 years. If you haven’t saved enough, [then] cut expenses and save as much as you can,” he said. “Be careful not to spend too much. Don’t celebrate and buy a car when you get a promotion and end up with a $1,000 car payment. Use that extra money to sock away more money. Use science and math when it comes to money. Don’t get emotional with money.”

    It’s also crucial to prepare for the cost of long-term care.

    “The one thing that can erode an estate is long-term care,” said Eric Bond, wealth manager with Bond Wealth Management. “You might have $300,000 for long-term care, but that needs to be $500,000. It’s the most unsexy thing in the world to plan for, but you have to.”

    Earn more, save more

    You can also think about leveraging your experience and skills to get a higher-paying job that can help you close that savings gap, Bond said.

    “The best way to save more is to earn more. Try to make as much money as you can. Your job is to get another job that pays more,” he said. “In the past, pensions would keep people at companies longer. But now you can’t rely on a company that way.”

    Dial up retirement savings

    “Just try saving a little extra,” Bond said. “If you find you’re only eating mac and cheese, scale it back.”

    Bond also cautioned against borrowing or taking out a mortgage to fund your kids’ college education.

    “They can get just as good a job coming out of a state school. College is college. Unless [they’re] going to be a doctor, an attorney or an engineer — fine. But don’t sell your house or downsize to pay for college,” Bond said.

    Being open to continuing to work — even doing part-time or consulting work — can help you stretch your retirement nest egg. And working in your retirement years, if you’re healthy enough to do so, can provide not just extra income, but also routine and stimulation, which can be crucial for mental health.

    In the end, your retirement is likely going to be financed by your own savings and investments. So squirrel away as much as possible.

    “You only get one shot at retirement,” Beckett said. “There’s a retirement crisis out there. People need to save more — and save even more than they think.”  

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  • What to Do the Five Years Before You Retire | Entrepreneur

    What to Do the Five Years Before You Retire | Entrepreneur

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    Ideally, you’ll start planning and saving for retirement decades before you actually retire. And during retirement, you’ll need to think carefully about how you manage your finances and how you take care of yourself to ensure you don’t outlive your savings. But what should you be doing in the five years or so before you retire, to make sure your retirement is a successful, financially bountiful, comfortable one?

    Set the Right Mindset

    Before anything else, it’s important to set the right mindset. Preparing for retirement in the five years before you formally retire is all about balance.

    First, you need to think about the balance between living life the way you always have and living life in retirement; these are two drastically different lifestyles, and if you’re smart, you’ll attempt a gradual transition from the former to the latter. The smoother and more controlled your transition is, the less disruptive it’s going to be and the more successful your retirement will be.

    Second, you’ll need to find the right balance of efforts to make for retirement preparation. If you become obsessed with preparing for retirement, it can come to completely dominate your life and end up stressing you out. On the other end of the spectrum, if you’re too passive or unwilling to invest time or effort, you might be overwhelmed when it’s time to fully retire.

    Granted, you can always choose to delay retirement if you feel you’re not ready – but if you want to stick to your plan and retire successfully, it pays to adhere to some kind of schedule.

    Give Yourself a Personal Finance Audit

    Early in the planning process, you should give yourself a personal finance audit. This is an opportunity for you to evaluate your current finances, so you can accurately ballpark what you’ll have in retirement – and make any changes necessary to accommodate that future.

    For example, you should look at:

    Current Expenses

    How much are you currently spending every month? Do you anticipate these costs to be higher or lower when it’s time to retire? Eventually, you’ll have a picture of how much income you’ll have in retirement, and you’ll be able to deduce whether your expenses make sense in that picture.

    Current Income

    How much money are you currently making? Where are these streams of income coming from and how many of them will continue to be available to you after you retire? Most people experience a significant income drop after retiring.

    Retirement Savings and Investments

    How much do you currently have saved? Which investments do you have and how are they being held? If you follow a rigid formula, like adhering to the 4 percent withdrawal rule, how much money would you be able to spend on a monthly basis?

    Growth Projections

    You’re not going to retire for another five years. Accordingly, if you continue investing at the same rate, and you see growth rates in line with historical averages, how much will your principal increase? How much would that increase your available spending money?

    Invest in Your Health

    Some of the biggest expenses you’ll face in retirement are related to healthcare and medicine. After retiring, you may have access to different or inferior health insurance coverage, and even if you’re thrilled with your coverage, you’ll likely face more health issues as you age.

    Accordingly, now is a great time to invest in your health. You want to be in peak shape leading up to your retirement.

    Checkups

    If you have good insurance in place, make sure to attend all your regularly scheduled checkups. Proactive checkups may be annoying, especially if you have a busy schedule, but they’re incredibly cost effective and capable of catching issues early, potentially saving your life in the process.

    Dental Issues

    You also can’t afford to neglect your teeth. Depending on your current level of dental coverage, it may make sense to take care of long-standing dental issues now, while you’re younger and equipped with more income. For example, dental implants look and function like normal teeth, but they can replace broken or missing teeth in your mouth. As you get older, dental implant surgery becomes riskier, so it makes sense to have this procedure early when possible.

    Surgeries and Treatments

    If there are any other surgeries, treatments, or issues that you’ve procrastinated, now is the time to undergo them or address them. Work with your doctor to evaluate your overall health and take any measures necessary to improve it.

    You can also reduce your lifetime medical and healthcare expenses by changing how you live your life. If you do this now, you’ll have even more time to improve your health before retirement – and your good habits will likely stick throughout your retirement years.

    Dietary Habits

    Pay close attention to what you eat. Avoid consuming too many calories and make sure you get a diverse mix of different fruits, vegetables, lean sources of protein, and whole grains daily. It’s also important to stay hydrated.

    Physical Exercise

    Physically exercise every day that you can, as it’s one of the best ways to reduce stress and stay in good health. Even if the only exercise you get is a walk around the block, you’ll benefit from the activity.

    Bad Habit Elimination

    If you’ve had bad habits your whole life, like smoking or drinking alcohol, you may feel like working to eliminate the habit is a waste of time at this point. However, evidence shows that quitting bad habits like smoking can be beneficial even for older adults who have spent decades engaging in those bad habits. You can do it!

    Start Planning for Retirement Expenses

    Next, start planning for your retirement expenses if you haven’t already. Most people intentionally downgrade their lifestyle a bit in retirement to accommodate less income and the natural course of aging – but that may or may not fit your individual vision.

    Consider:

    Housing

    Is your house paid off or will it be paid off in the near future? Are you thinking of moving somewhere else? What housing options are available to you?

    Healthcare

    What type of health insurance are you going to have in retirement and how much is it going to cost you? How much coverage does it offer? If your health takes a turn for the worse, what are you going to pay for things like appointments, treatments, and prescription medications? Make sure you plan for your healthcare expenses to increase in the future.

    Food/Groceries

    How much are you going to spend on food and groceries? Are there measures you can take to reduce these costs without impacting your nutritional intake?

    Entertainment/Recreation

    How much are you going to travel? What are you going to do for entertainment? What kind of hobbies do you want to practice? Entertainment and recreation aren’t strictly necessary expenses, but they are important to consider when planning for retirement.

    These aren’t the only expenses you’ll face in retirement, obviously, but they are some of the most important and most controllable.

    Downsize

    Downsizing is an essential strategy for millions of retirees. Essentially, it means reducing your expenses by making sacrifices or downgrading certain aspects of your life. For example, you could move to a smaller home in a cheaper area of the city; such a move would reduce your monthly expenses, and possibly entitle you to more money to invest and withdraw from (if you sell your house).

    As you get older, downsizing is going to be harder. You may be less flexible or less mobile, and you’ll be even more acclimated to this current environment. If you plan on downsizing for your retirement, it could be wise to start the process now, while you have more strength, resources, and adaptability.

    Pick Up a Sustainable Side Gig

    It’s wise to have a side gig in retirement. It’s a great way to make some extra money and help your retirement savings go a little further. But it’s also a great way to stay mentally sharp and/or physically in shape.

    The key is to choose a side gig that’s sustainable; in other words, it should be something that you’re able to do now, but also something that you can do well into the future. If you start before you retire, you’ll have a smooth on-ramp to side gigging after retirement.

    These are some of the best options available to you:

    Freelancing

    Are you an amateur photographer? Have you always liked the art of writing? Do you know some of the fundamentals of graphic design? If so, consider freelancing. You can choose your own clients, set your own hours, and (for the most part) work from the comfort of your home. It’s an excellent retirement gig that can make you money for years to come.

    Ridesharing

    If you own a car and you’re still able to drive it confidently and safely, consider driving for a ridesharing company. In addition to making some extra money, it’s a great way to meet new people and explore your city.

    Teaching

    If you’re approaching retirement, it’s likely that you’ve learned quite a bit over the course of your career. That means you have something valuable to teach to others. Consider teaching or consulting as a side gig to make some extra money and help a new generation find success.

    Online Business

    If you’re more entrepreneurial, you can consider starting an online business as well. Offering unique content, reselling excellent products, or offering totally novel products of your own could generate a powerful stream of revenue for you.

    Find Hobbies (and New Friends)

    Retirement isn’t just about meeting your basic living expenses. It’s also about genuinely thriving during your golden years. Accordingly, it’s a good idea to find some hobbies that might be able to sustain you and help you socialize in your retirement. The more time you have to learn these hobbies and build your social circles, the more fulfilling they’re going to be in your retirement years.

    These are some of the most popular options:

    Gardening

    Gardening requires some physical effort, but not much, and the benefits of your labor are both beautiful and practically functional. If you grow your own fruits and vegetables, you can even use gardening to save money on groceries.

    Dance

    Whether you like the art and technical mastery of dance or just like expressing yourself, dance is a great way to stay in shape and connect with other people in retirement. Start with something slow and simple, then work your way up to more advanced forms and activities.

    Golf

    There are many reasons why retirees love golf; it’s relaxing, yet somewhat competitive, and it’s a great way to get non-strenuous exercise outdoors. Assuming you can afford it, now is a great time to learn the basics or perfect that swing.

    Photography

    Photography isn’t hard to learn, but it’s a hard art to master. If you develop your skills in this area, you can also use your photography to make money on the side.

    Bird Watching

    If you like being outside but you don’t want anything too challenging or intimidating, consider bird watching. It’s a way to connect with nature and share rare experiences with others.

    Learning/Classes

    Many retirees want to continue learning for the rest of their life, even if they don’t have a career where they can apply their new knowledge. See if there are any community colleges, workshops, or groups in your area where you can learn new skills and concepts. Of course, if that fails, you can always spend more time at your local library and watching YouTube videos at home.

    Get Your Affairs in Order

    Nobody likes to think about death, but it’s an important part of our reality and something that’s best planned for. The earlier you plan for it, the more time you’ll have to get all your affairs in clean order. Because of this, it’s wise to start getting some of your affairs in order before you even retire. Consider putting a will together, planning your estate, and making some plans for potential end-of-life care if it becomes necessary.

    There may be a specific date when you’ll retire for good, but realistically, retirement shouldn’t happen all at once. It’s a process that should gradually unfold as you take greater control of your finances and gradually plan for your post-working life. If you start planning for retirement five years (or more) before you actually retire, you’ll be in a much better position to enjoy these valuable years.

    Featured Image Credit: Photo by Monica Silvestre; Pexels; Thank you.

    The post What to Do the Five Years Before You Retire appeared first on Due.

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    Deanna Ritchie

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  • Cedar Communities Applauds Brookside Commerce for Winning First Place in 2023 Model Room Contest

    Cedar Communities Applauds Brookside Commerce for Winning First Place in 2023 Model Room Contest

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    In a remarkable display of creativity and dedication, Brookside Commerce, an esteemed assisted-living community in Commerce, Georgia, has won the coveted first-place title in the Cedar Communities’ highly competitive 2023 Model Room Contest.


    COMMERCE, Ga., December 19, 2023 (Newswire.com)
    –
    “The Winter Wonderland-themed room at Brookside Commerce stands as a shining example of excellence and innovation. This recognition is a testament to Brookside Commerce’s commitment to providing residents with an extraordinary living experience,” says Kaydee Foster, Spokesperson for Cedar Communities.

    Kaitlyn Raper, Administrator at Brookside Commerce, expressed gratitude for the acknowledgment, stating, “This award reinforces Brookside Commerce as a place where warmth, elegance, and community converge. We are dedicated to creating an exceptional living environment for our residents, and this recognition from Cedar Communities is truly an honor.”

    As Cedar Communities celebrates Brookside Commerce’s triumph, they invite individuals seeking an unparalleled assisted-living experience to explore the magic of the award-winning Winter Wonderland room. Join Brookside Commerce for an exclusive tour to witness firsthand the comfort, amenities, and joy that define life in their community.

    Discover what makes Brookside Commerce home for many residents. Schedule your tour today and embrace a life of distinction, comfort, and community at Brookside Commerce.

    For more information or to schedule a tour, please contact:

    Kaitlyn Raper

    Brookside Commerce

    199 West W Gary Road, Commerce, GA 30529

    706-336-5848

    Kaitlyn@brooksidegeorgia.com

    www.Brooksidecommerce.com

    About Brookside Commerce:

    Brookside Commerce, located in Commerce, Georgia, is a premier assisted-living community setting the standard for excellence. Their Winter Wonderland room, crowned first place in Cedar Communities’ 2023 Model Room Contest, reflects a commitment to providing an exceptional living environment. Explore the possibilities and make Brookside Commerce your next home, where comfort meets distinction.

    Source: Cedar Communities

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  • Inflation a scourge for retirees? Ottawa’s silver lining(s) – MoneySense

    Inflation a scourge for retirees? Ottawa’s silver lining(s) – MoneySense

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    Rising RRSP contribution limits

    Inflation also influences RRSP maximum contribution savings limits. In 2021, the limit was $27,830. For 2024, it is $31,560, which is a difference of 13.4%. Over a similar time period, 2018 to 2021, it rose from $26,230 to $27,830, a difference of 5.7%. 

    “Thus, recent inflation caused the RRSP limit to more than double over a similar time period,” Ardrey concludes. “This of course can increase your tax-deferred savings and also your annual tax deduction for your RRSP contribution.” 

    OAS clawback threshold also rises

    Among the goodies that will appeal to Canadian retirees is the rising threshold where they may encounter clawbacks of OAS benefits. Many retired couples in Canada pay close attention to this at the end of every calendar year. 

    The goal is for each member to maximize retirement income from all sources (pensions, investments, etc.) but to stay slightly below the point where Ottawa starts clawing back OAS benefits. 

    After all, OAS payments are for many a welcomed $690-a-month payment (that’s before tax) or $8,300 a year, and it’s inflation-indexed to boot. In 2020, the threshold at which OAS benefits began to get clawed back was $79,054, according to Hector, but that number has risen every year: to $86,912 in 2023 and a projected $90,997 in 2024. 

    So, senior couples with similar incomes in Canada should be able to earn almost $182,000 between them before even starting to see their OAS benefits get clawed back. And if that does happen, that’s what many would describe as a “nice problem to have.” 

    Is CPP inflation hedging a reason to take CPP a bit early?

    Fortunately, CPP benefits are not clawed back at any level, although of course they are still taxable. Here too, inflation indexing comes to the rescue for retirees and semi-retirees. In fact, for the second year in a row semi-retired actuary Fred Vettese argued that Canadian near-retirees hoping to maximize CPP payouts by waiting to age 70 might instead take it a year or two early to take advantage of inflation adjustments that kick in each January. 

    Vettese suggested that in late 2022—and more recently in this article—that those thinking of starting CPP in 2024 should start it before the new year. He responded in an email to me: “I determined it definitely made sense to start it in late 2023 instead. Doing so is worth an extra few thousand dollars.”

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    Jonathan Chevreau

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  • Should seniors cancel their life insurance policies? – MoneySense

    Should seniors cancel their life insurance policies? – MoneySense

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    It’s got to be your decision. To help you decide, I will give a quick review of why purchasing insurance makes sense and the two types of insurance available. You can then relate the reason for purchasing insurance to your current need for insurance. 

    Why do Canadians need life insurance

    Ultimately, Canadians buy life insurance because they want to take care of others should something happen to them. They want to protect their survivor’s lifestyle or maximize the inheritance with insurance when they pass away unexpectedly, or naturally after a long, healthy and happy life.

    There are two financial needs to consider when determining the amount of insurance needed: How much income would be needed, as well as current and future debts. Current debt may be a mortgage, and future debt may be children’s university expenses or future taxes.

    Find the best life insurance coverage for you

    Get a free quote and consultation to find the right coverage at the best price. It takes less than 2 minutes to start saving.

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    How much life insurance would you need?

    A simple method in determining the how much insurance you need to replace your income is to divide the income needed by a safe investment return.

    If you need to replace an annual income of $50,000, and you think you can safely earn 5% on the invested insurance proceeds a year, then divide $50,000 by 5%. This gives you a need for $1 million of insurance, or $1 million minus your existing investments. That is earning 5% a year on a $1 million gives $50,000 a year.  

    You could argue that you don’t need the $50,000 annual income replacement for life because, your expenses will be lower as you age, you will have other income such as the Canadian Pension Plan (CPP), Old Age Security (OAS), and so on. That’s all true— but this calculation does not take into consideration inflation. Over time inflation will whittle down the value of that $1 million.

    Does life insurance cover debt?

    Yes, and once you know how much insurance you need to replace income, then just add on the debt.

    Maybe when you purchased the insurance your situation looked a bit like this: A $750,000 mortgage and anticipated post-secondary expenses of $250,000 for children, if any, means upping the insurance from $1 million to $2 million.

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    Allan Norman, MSc, CFP, CIM

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  • The legendary Norman Lear had some sage advice for all of us about aging well

    The legendary Norman Lear had some sage advice for all of us about aging well

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    Norman Lear popped up on my computer screen at the designated time, wearing his signature bucket hat. I’d waited weeks for the interview and knew I had to think fast, because Lear was busy — as always — juggling projects.

    That was the point of the interview. He was 98 in 2020 and still working like an ambitious upstart. I was 30 years younger than him, contemplating retirement and researching a book about how to know when it’s time to go.

    I’ll admit to being more than a little nervous. Lear, who died Dec. 5 at age 101, was a legend, for one thing, a pioneer in the realm of prime-time TV shows that delivered social commentary along with entertainment. As a much younger guy, I half feared Lear might tell me to quit wasting his time.

    California is about to be hit by an aging population wave, and Steve Lopez is riding it. His column focuses on the blessings and burdens of advancing age — and how some folks are challenging the stigma associated with older adults.

    I asked Lear if he ever thought about retiring. He appeared to be in his kitchen, snacking on something, but he didn’t hesitate.

    “Not for a second,” he said with an exclamation point, making me feel like maybe I should go get my own bucket hat, pull it down to my ears and get to work.

    I had already talked to another Hollywood legend and Lear contemporary, Mel Brooks. I wanted to know if working, for them, was oxygen. If you stop working, you suffocate.

    “When I go to sleep at night,” Lear told me, “I have something that I’m thinking. Among other things, it’s about something I’m doing tomorrow … a day in which there are things I wish to do. So today is over, and we’re on to the next.”

    Here I was, making the vagaries of human existence more complicated than they needed to be as I tried to make sense of where I’d been and where I was headed in a year, in five, in 10.

    Lear obligingly played therapist, saying he lived in the moment, which really is all any of us can do. He said that he was certainly grateful for all the accolades and awards tossed his way in an epic career, but that he didn’t dwell on the past as much as what was in front of him right now. Imagine you’re in a hammock, he said, and you’re swinging.

    From over, to next. Over, to next.

    A smiling man, in glasses, white hat, red shirt, left, holds the hand of a woman with dark hair and a flowery red top

    Norman Lear joins actor Marla Gibbs at a ceremony to award her a star on the Hollywood Walk of Fame. Gibbs was a cast member on Lear’s TV sitcom “The Jeffersons.”

    (Chris Pizzello / Associated Press)

    “So long as I am interested in the next, I’m moving,” Lear said. “And there have been, for 98 years, a lot of wonderful nexts.”

    Lear had an insatiable intellectual and spiritual hunger, and that, along with the luck of physical health, is key to a long and happy life. Recently, I hiked Griffith Park with a 100-year-old gent, Pete Teti, who is all about embracing change. As one friend explained: “He’s made two violins, he does engraving, he’s a painter, he’s currently creating animation, he’s constantly learning about physics, geometry, fractiles.”

    At age 93, Lear once asked, in a New York Times interview, “Aren’t you expected to grow, learn more about yourself, learn more about the world? Why would you be less expected to grow when you’re 80? The culture dictates how you behave, and maybe the elderly buy into it, the way they grow old. My role here now is to say wait a minute. That’s not all there is. There’s a good time to be had at this age.”

    Marty Kaplan, director of USC’s Norman Lear Center — established in 2000 by the Lear family to study the impact of entertainment on society — said Lear was attending writers’ meetings and giving notes on current projects right up until the end. Kaplan said in a tribute on the center’s website that Lear “moved our hearts and minds to embrace our common humanity and live up to what is best in us.”

    But there was more to the man than work.

    “The list of things associated with longevity — with centenarians — all apply to him,” Kaplan told me. “Family and love in your life is paramount, and for him, it always has been. And then, purpose, an awfully important thing. The sense that you matter.”

    Another critical ingredient in the Lear recipe for aging well was gratitude, Kaplan said, citing Lear’s wartime service as a radio operator and gunner on dozens of World War II combat missions.

    “He wasn’t just swinging in the hammock. He was reveling in the pleasure of being alive, in existence, and the sheer miracle of anything existing,” Kaplan said.

    In our conversation, Lear wondered why I’d be contemplating retirement, given how much I loved my job. Well, I told him, there might be other things I’d love, but I’ve never had time to try them. I’d like to travel more, and maybe live in different places.

    Lear suggested the best of both worlds was within reach. Maybe I could travel more, have new experiences, and write about it.

    “It’s not retirement,” he said. “It’s on to the next.”

    I took inspiration from Lear’s zest. Work might well have kept him breathing, but it was all of life he embraced. He kept probing, shining a light, speaking out about ignorance and division. He once had a pen pal relationship with President Reagan because he thought it was important to hear the perspectives of political opponents.

    Kaplan wrote that Lear “moved our hearts and minds to embrace our common humanity and live up to what is best in us.”

    He said that in the hours after Lear’s death, he was looking through his biography, “Even This I Get to Experience,” and was struck by the epigraph. It was a quote from George Bernard Shaw.

    “You haven’t overcome the fear of death until you delight in your own life, believing it to be the carrying out of universal purpose.”

    steve.lopez@latimes.com

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    Steve Lopez

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  • Infinite banking in Canada: Should you borrow from your life insurance policy? – MoneySense

    Infinite banking in Canada: Should you borrow from your life insurance policy? – MoneySense

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    Now, after a fair bit of research and a few interviews with experts on infinite banking, I feel I know enough to pass on the basics—plus what you should think about before signing up. 

    What is infinite banking?

    According to a useful primer from independent insurance firm PolicyAdvisor, “Infinite banking is a concept that suggests you can use your whole life insurance policy to ‘be your own bank.’” It was created in the 1980s by American economist R. Nelson Nash, who introduced the idea in his book Becoming Your Own Banker. He launched the “Infinite Banking Concept” (IBC) in the U.S. in 2000, and eventually it migrated to Canada.

    An article on infinite banking that appeared both on Money.ca and in the Financial Post early in 2022 bore a simplistic headline that said, in part, “how to keep your money and spend it too.” The writer—Clayton Jarvis, then a MoneyWise mortgage reporter—framed the concept by declaring that the problem with the average Canadian’s capital is that it’s usually doing just one job at a time: it’s spent, lent or invested. 

    “But what if you were able to put your money to a specific purpose and continue using it to generate income? That’s the idea behind infinite banking (IB),” Jarvis wrote. He compared IB to a reverse mortgage: “In both cases, you still possess the appreciating asset being borrowed against—your policy or your home—and you have the freedom to pay back the loan at your leisure[.]” But Jarvis also evinced some skepticism when he added: “those who have sipped rather than chugged the IB Kool-Aid say it’s a strategy that may be too complex to be marketed on a mass scale.”

    Borrowing from your life insurance policy

    If you’re not familiar with the finer details of insurance, infinite banking does seem a bit arcane. Rather than put your money in a traditional bank—which until the last year or so paid next to nothing in interest on accounts—you would invest in a whole life or universal life insurance product, both of which provide some “cash value” from the investment portion of their policies. Then, if you want to borrow money, instead of making hefty interest payments to a bank, you would borrow against your life insurance policy. 

    As PolicyAdvisor explains, “Because you’re only borrowing from your policy, the insurance company is still investing your entire cash value component. So, your cash value still grows even though you’ve borrowed a portion of it.” 

    Those new to infinite banking should watch a YouTube primer made by Philip Setter, CEO of Calgary-based insurance broker Affinity Life. In it, he readily concedes that much of the marketing hype portrays infinite banking as some kind of “massive secret of the wealthy,” which essentially amounts to buying a whole life insurance policy and borrowing against it. Setter has sold many leveraged insurance products himself, but to his credit, in the video he calls out some of the conspiracy-mongering that seems to be attached to infinite banking, including the primary message from some promoters that traditional banks and governments are out to rip off the average consumer. 

    Infinite banking seems to be geared to wealthy people who are prepared to commit to the long term with the leveraged strategy, and who can also benefit from the resulting tax breaks (more on this below). It’s not for the average person who is squeamish about leverage (borrowing to invest) and/or is not prepared to wait for years or decades for the strategy to bear fruit. As Setter warns in his video: “Once you commit to this, there’s no going back.” If you collapse a policy too soon, it’s 100% taxable: “It only is tax-free if you wait until you die … you commit to it until the very end.” 

    Get personalized quotes from Canada’s top life insurance providers.All for free with ratehub.ca. Let’s get started.*This will open a new tab. Just close the tab to return to MoneySense.

    How are insurance advisors paid for selling infinite banking products?

    Asked how advisors are paid, Setter said they receive a lump-sum commission based on the premium amount of the policy. I also asked this of Asher Tward, financial head of estate planning at TriDelta Private Wealth. In an email, Tward said it’s “the same as with any insurance policy—mostly upfront commission based on premiums paid (higher if there is more initial funding). Fundamentally, this is a life insurance sale. If one undertakes an external or collateralized loan versus a policy loan, they may be compensated on the loan as well.”

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    Jonathan Chevreau

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  • How retirees can safely withdraw more from savings — and not run out of money

    How retirees can safely withdraw more from savings — and not run out of money

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    From Gen Z to baby boomers, one of workers’ darkest fears about retirement is outliving their money. So figuring out just how much to pull from retirement accounts for living expenses each year is, well, unnerving. You get it wrong, and the aftermath is bone-chilling.

    But here’s some good news.

    According to a Morningstar Inc. recommendation released this week, a new retiree can safely withdraw 4% of retirement savings annually over the next three decades without emptying the till. That’s the highest safe withdrawal percentage since Morningstar began creating this research in 2021. Last year, it was 3.8% and 3.3% in 2021.

    The new withdrawal rate is based on a conservative retirement savings portfolio that consists of 20% to 40% in stocks, 10% in cash, and the rest in bonds with a 30-year time horizon, according to the researchers.

    Read more: How much money do you need to retire?

    Why the raise for retirees this year?

    “Higher bond yields make everything easier for retirees and help explain why our highest safe withdrawal percent corresponds with portfolios that have just 20% to 40% equity,” Morningstar’s personal finance director and co-author of the research, Christine Benz, told me.

    Otherwise, investing a higher percentage of your retirement portfolio in stocks will ding you in their calculations. If you have 70% in stocks, the safe withdrawal rate goes down to 3.8%, according to the data.

    “Higher bond yields make everything easier" (Getty Creative)

    “Higher bond yields make everything easier” (Getty Creative) (ImagineGolf via Getty Images)

    By the numbers

    The anticipated 30-year returns for stocks were slightly lower in this year’s research compared with the previous year, with projected returns for an all-equity portfolio sliding down to 9.41% from 9.88% in 2022. Meanwhile, expected fixed-income returns (including cash) edged up to 4.81% from 4.44% in 2022.

    “Taking less investment risk makes sense for retirees who are seeking a high degree of certainty and consistency in their annual cash flows with a 90% probability of not running out of funds,” Benz said.

    That makes sense, however, “retirees who are comfortable with some variability in their year-to-year cash flows and the possibility of leaving a residual balance at the end of 30 years will likely want to favor a higher stock allocation,” she said.

    Read more: How much can you contribute to your 401(k) in 2024?

    How Morningstar came to this conclusion is complicated, but here’s the link for the nitty-gritty details. (Trust me, it’s complicated.)

    The reasoning behind the math? As yields on bonds and cash have increased, the forward-looking prospects for portfolio returns — and in turn the amounts that new retirees can safely withdraw from those portfolios over a 30-year horizon — have continued to inch up. A more moderate inflation outlook has also contributed, according to the researchers, who used an annual 2.42% long-term inflation forecast this year, versus 2.84% last year.

    Here’s how it all works: Start with a $1 million initial investment, a 4% stated withdrawal rate, and a 2.42% inflation rate, you would withdraw $40,000 from the portfolio in Year 1, $40,968 in Year 2, $41,959 in Year 3, and so on.

    “Retirees who take steps to enlarge their non-retirement portfolio income through strategies like delaying Social Security and/or working longer will be best positioned to employ variable spending and withdrawal strategies,” Benz said.

    Trading board is showing a crash in stock exchange market. Selective focus. Horizontal composition with copy space.Trading board is showing a crash in stock exchange market. Selective focus. Horizontal composition with copy space.

    Stock market volatility is just one of the risks retirees face when calculating how much to withdraw each year from accounts. (Getty Creative) (MicroStockHub via Getty Images)

    Of all the risks in retirement that can impact your chances of outliving your money — which include inflation, market volatility, or high out-of-pocket medical bills from a health crisis — longevity may be your biggest threat.

    In fact, most people don’t think about longevity risk when it comes to saving for retirement in the years before they step out of the workforce. “In our recent TIAA Institute study, more than one-half of American adults lack a basic understanding of how long people tend to live in retirement, a knowledge gap that can keep them from saving enough money to last as long as they live,” Surya Kolluri, head of the TIAA Institute, told Yahoo Finance.

    A new study by Jackson and the Center for Retirement Research at Boston College backs up Kolluri: Its survey of some 1,000 investors aged 55 and up revealed that about one-third underestimated their life expectancy. (Take this six-question quiz from the TIAA Institute and the Global Financial Literacy Excellence Center at the George Washington University School of Business to see if you have a grip on your own life expectancy.)

    Time horizon is the big variable

    In many ways, longevity becomes the biggest variable that impacts your spending needs. For some financial advisors, the 4% withdrawal rate touted by Morningstar’s report is simply too high. “There are too many risks,” said Joe Goldgrab, an executive wealth management advisor at TIAA. “If the market does poorly in the initial years after you retire, your money won’t have as long to compound, and you could shrink your savings sooner than expected. That’s especially true if the inflation rate is high.”

    In reality, a good retirement spending plan should be one where only one-third of your retirement money comes from withdrawals from your investment portfolio, added Goldgrab. The other two-thirds should be lifetime income such as Social Security, pensions — but those are becoming increasingly rare — and annuities, which a growing number of workplace retirement plans are including as an investment option.

    Hip senior gay man in colorful shirt dancing on a Turquoise background laughing and having fun. Part of the LGBTQ Portrait series.Hip senior gay man in colorful shirt dancing on a Turquoise background laughing and having fun. Part of the LGBTQ Portrait series.

    A survey of a little over 1,000 investors aged 55 and over showed that about one-third (32%) of respondents underestimated their own personal life expectancy, making them potentially in jeopardy of the early draining of financial resources. (Getty Creative) (Willie B. Thomas via Getty Images)

    It’s critical for retirees to get this math right, or close to it, to be ready for the rocketing costs of long-term care which can blow all the best spending calculations out of the water.

    This week a disturbing report, “Dying Broke,” was published by KFF Health News and The New York Times on America’s long-term care crisis, which has left scores of boomers staring at the possibility of having their savings wiped out by the sharp increase in the cost of care. Among those ages 50 to 64, many on the cusp of retirement, only 28% said they have set aside money outside of retirement accounts that could be used to pay for future living assistance expenses, per KFF polling. This share is higher among adults ages 65 and older (48%), but most adults in this group say they have not put any money aside for this purpose.

    The staggering majority of adults say that it would be impossible or very difficult to pay the estimated $100,000 needed for one year at a nursing home (90%) or the estimated $60,000 for one year of assistance from a paid nurse or aide (83%), according to KFF’s data.

    As Yahoo Finance reported this summer, an apartment in an assisted-living facility had an average rate of $73,000 a year as of the second quarter of 2023, according to the National Investment Center for Seniors Housing & Care (NIC) — and costs go up as residents age and need more care. Units for dementia patients can run more than $90,000 annually.

    The 4% rule hangs on

    How much someone can spend each year from their retirement accounts really is a tap dance that’s unique to their circumstances. And the 4% withdrawal rate is a percentage that has been the standard used as a tentpole for years and still is said by the financial advisors I reached out to this week.

    “Over the years, we have traditionally used anywhere between 3.5% and 4% as a safe withdrawal rate for a moderate portfolio with 60% equity exposure and 40% fixed income exposure,” George Reilly, a senior partner and financial planner at Reilly Financial Group in Metuchen, N.J., told me.

    Someone starting withdrawals in their mid-to-late 60s can take an initial withdrawal of 3.5% to 4.0%, increased by 3% annually, assuming a life expectancy of 92, Katherine Tierney, a certified financial planner and senior strategist at Edward Jones, told Yahoo Finance.

    Working longer can help stave off withdrawals from retirement accounts, let you add to accounts, and delay Social Security benefits to take advantage of a roughly 8% annual bump if you wait from full retirement age to age 70. (Getty Creative)Working longer can help stave off withdrawals from retirement accounts, let you add to accounts, and delay Social Security benefits to take advantage of a roughly 8% annual bump if you wait from full retirement age to age 70. (Getty Creative)

    Working longer can help stave off withdrawals from retirement accounts, let you add to accounts, and delay Social Security benefits to take advantage of a roughly 8% annual bump if you wait from full retirement age to age 70. (Getty Creative) (Jose Luis Pelaez Inc via Getty Images)

    Of course, if your retirement time horizon is shorter because you have stayed on the job until, say, 70 or older, you may be able to afford a higher starting withdrawal, she added.

    My takeaway: Use Morningstar’s rate as a good starting point and then channel your inner spirit of improv.

    Kerry Hannon is a Senior Reporter and Columnist at Yahoo Finance. She is a workplace futurist, a career and retirement strategist, and the author of 14 books, including “In Control at 50+: How to Succeed in The New World of Work” and “Never Too Old To Get Rich.” Follow her on Twitter @kerryhannon.

    Click here for the latest personal finance news to help you with investing, paying off debt, buying a home, retirement, and more

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  • Rupert’s Retirement and Fox’s Place in Hollywood

    Rupert’s Retirement and Fox’s Place in Hollywood

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    Matt is joined by journalist and former chief media correspondent for CNN Brian Stelter to discuss the unique business behind Fox and its relationship with Hollywood moving forward in the post-Rupert era, including how it continues to generate billions in profits every year, its lucrative deal with the NFL, and its ad-supported TV service, Tubi. Matt finishes the show with a prediction on Tom Brady’s media career.

    For a 20 percent discount on Matt’s Hollywood insider newsletter, What I’m Hearing …, click here.

    Email us your thoughts!

    Host: Matt Belloni
    Guest: Brian Stelter
    Producers: Craig Horlbeck and Jessie Lopez
    Theme Song: Devon Renaldo

    Subscribe: Spotify

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    Matthew Belloni

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  • RRIF withdrawals: What should seniors with million-dollar portfolios do? – MoneySense

    RRIF withdrawals: What should seniors with million-dollar portfolios do? – MoneySense

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    Registered retirement income fund (RRIF) withdrawals are fully taxable and added to your income each year. You can leave a RRIF account to your spouse on a tax-deferred basis. But a large RRIF account owned by a single or widowed senior can be subject to over 50% tax. A RRIF on death is taxed as if the entire account is withdrawn on the accountholder’s date of death.

    What is the minimum RRIF withdrawal?

    Minimum withdrawals are required from a RRIF account each year, and in your 80s, they range from about 7% to 11%. For you, Amy, this would mean minimum RRIF withdrawals of about $200,000 to $300,000 each year. This would likely cause your marginal tax rate to be in the top marginal tax bracket. Sometimes, using up low tax brackets can be advantageous, but you do not have any ability to take additional income at lower rates.

    RRIF withdrawals: Which tax strategy is best?

    Taking extra withdrawals from your RRIF when you are in the top tax bracket is unlikely to be advantageous. Here is an example to reinforce that.

    Say you took an extra $100,000 RRIF withdrawal and the top marginal tax rate in your province was 50%. You would have $50,000 after tax to invest in a taxable account. Now say the money in the taxable account grew at 5% per year for 10 years. It would be worth $81,445.

    By comparison, say you left the $100,000 invested in your RRIF account instead. After 10 years at the same 5% growth rate, it would be worth $162,890. If you withdrew it at the same 50% top marginal tax rate, you would have the same $81,445 after tax as in the first scenario.

    The problem with this example is the two scenarios do not compare apples to apples. The 5% return in the taxable account would be less than 5% after tax. And the same return with the same investments in a tax-sheltered RRIF would be more than 5%. As such, leaving the extra funds in your RRIF account should lead to a better outcome.

    So, in your case, Amy, there is not an easy solution to the tax payable on your RRIF. You can pay a high rate of tax on extra withdrawals during your life, or your estate will pay a high rate on your death. Given you do not need the extra withdrawals for cash flow, you will probably maximize your estate by limiting your withdrawals to the minimum.

    Should you donate your investments to charity?

    You mention donating securities with capital gains. If you have non-registered investments that have grown in value, there are two different tax benefits from making donations.

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    Jason Heath, CFP

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  • I Have $1 Million in Savings and a Pension. Should I Delay Social Security and Rely on My 401(k) for 8 Years?

    I Have $1 Million in Savings and a Pension. Should I Delay Social Security and Rely on My 401(k) for 8 Years?

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    A man considers delaying Social Security past his full retirement age to increase his eventual benefit.

    If you have $1 million in a 401(k) and collect a pension, you may be in a position to delay Social Security until age 70. Doing so can boost your monthly benefit by up to 24%. However, delaying Social Security will mean you’ll have to rely more heavily on your savings for several years and potentially take a large bite out of your nest egg. So is the tradeoff worth it? A financial advisor can review income sources and expenses and help you budget for a comfortable retirement.

    Basics of Paying for Retirement

    Funding retirement is about having enough income to cover your expenses. You may be ready to retire when your retirement income matches or exceeds your anticipated expenses.

    For most people, the secure lifetime benefits from Social Security represent a critical source of retirement income. Additional income may come from pensions, retirement accounts like 401(k)s and IRAs, rental income from investment properties and part-time work.

    On the expense side, essentials include housing, food and healthcare. Most people also have discretionary expenditures like transportation, entertainment, recreation, education and travel.

    People with enough savings can afford to delay Social Security and use their nest egg to cover living expenses and discretionary spending. While delaying Social Security can increase your eventual benefits, it also means depleting savings faster. Making this decision will require you to consider all of your sources of income as well as factors like taxes, market fluctuations and inflation.

    Delaying Social Security: The 8% Annual Boost

    Your benefit grows by about 8% annually each year you delay Social Security beyond your full retirement age – up until age 70. So, waiting provides a significantly higher income later. On the flip side, if you claim your benefits before reaching full retirement age, you’ll get less.

    For instance, if your benefit is $2,000 per month at full retirement age, claiming at 62 would cut it by 30%, leaving you with just $1,400 per month. Waiting until age 70, on the other hand, would boost your monthly check to around $2,480 per month – a 24% increase.

    Financial advisors say it likely makes sense for many retirees to similarly delay taking Social Security if they have other income sources.

    “The longer you can defer Social Security, the better because your benefit will grow by 8% annually,” said Jeremy Suschak, a certified financial planner (CFP) and head of business development at DBR & Co. in Pittsburgh. “Delaying also makes sense if expenses are low, debts are paid and assets can reasonably cover expenses.”

    In addition, there are multiple benefits to having assets in diversified retirement accounts, says Hao Dang, an accredited investment fiduciary (AIF) and investment strategist with Consilio Wealth Advisors in Seattle.

    “The location of assets is important for tax, legal and diversification reasons,” Dang said.

    “While most distributions from these accounts qualify as taxable income, the eligible age of penalty-free distributions may be different. The rule of 55 for 401(k)s allows for penalty-free withdrawals if you are no longer at your job. IRAs are limited to 59 ½ or older.”

    Talk to a financial advisor today to make a plan for retirement.

    Example: $1 Million Saver Who Delays Social Security for 8 Years

    A woman reviews her 401(k) as she considers when the best time for claiming Social Security. A woman reviews her 401(k) as she considers when the best time for claiming Social Security.

    A woman reviews her 401(k) as she considers when the best time for claiming Social Security.

    While claiming later increases Social Security significantly, deciding whether or not to delay claiming requires figuring out how you’ll pay your bills in the meantime. Consider a 62-year-old with anticipated retirement expenses of $5,000 per month. Like you, he has $1 million in retirement savings earning a 5% annual return.

    He also has a pension that provides $700 monthly, or $8,400 annually. This is approximately the average pension benefit, according to a 2022 Census Bureau analysis of older household income sources.

    If he takes Social Security at 62, his $1,400 monthly benefit plus his $700 in monthly pension income will add up to $2,100. With $5,000 in expenses every month, he’ll need to withdraw $2,900 a month from his retirement account. And with inflation, that withdrawal will increase over time to maintain the same lifestyle. With this route, he loses roughly $25,000 of his savings to waiting for Social Security – money that could have otherwise been generating investment returns for the long-term.

    But if he delays Social Security until 70, he’ll need to withdraw $4,300 from his 401(k) for eight years, which would lower his balance to just over $800,000 by the time he turns 70. At that point, he’ll start collecting Social Security.

    A financial advisor can help you understand the pros and cons of your options.

    Limitations: Inflation, Market Returns and Longevity

    Deciding when to claim Social Security involves contemplating uncertainty. One big risk is that your investment returns may fall short of your assumptions, which means you’ll either have to withdraw less or accept that your money won’t last as long as you anticipated.

    Another possibility: Inflation could outpace long-term projections, requiring you to spend more money to maintain your standard of living. Living longer than expected meanwhile, carries its own set of risks. A longer lifespan means more years of retirement to fund.

    Making the Call on Delaying Social Security

    A woman weighs her options for claiming Social Security at age 62 or delaying them for several years. A woman weighs her options for claiming Social Security at age 62 or delaying them for several years.

    A woman weighs her options for claiming Social Security at age 62 or delaying them for several years.

    If you have substantial retirement savings and a pension, delaying Social Security can pay off. But first, make sure you can afford to fund expenses from savings. Create a retirement budget accounting for all income sources. See if you can meet spending needs on savings alone for several years.

    Next, calculate your increased Social Security benefit from delaying. Weigh if the boost is worth shrinking savings for a few years. Finally, consider other factors like spousal benefits, taxes and unknowns like inflation, market volatility and longevity. To make a plan to minimize your taxes and protect your estate, talk to a financial advisor today.

    Social Security Planning Tips

    • If you’re unsure when the right time is to claim Social Security, start by estimating how much your benefits would be at different ages. SmartAsset’s Social Security calculator can help you project your benefits based on your income and age at which you plan to start collecting.

    • A financial advisor can help you plan for Social Security. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

    Photo credit: ©iStock.com/ferrantraite, ©iStock.com/Luke Chan, ©iStock.com/FG Trade

    The post I Have $1 Million in Savings and a Pension. Should I Delay Social Security and Rely on My 401(k) for 8 Years? appeared first on SmartReads by SmartAsset.

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  • Master Your Retirement: Financial Strategies for Success | Entrepreneur

    Master Your Retirement: Financial Strategies for Success | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    This story originally appeared on Under30CEO.com

    As you move towards retirement, it is crucial to strategize and get ready for your financial needs once you’ve retired. To guarantee you can sustain your preferred way of life without exhausting your savings, ponder over these three essential questions: Firstly, take a moment to examine your anticipated expenses in retirement, including housing, utilities, food, healthcare, and leisure activities. By creating a detailed budget based on these costs, you can better understand how much income will be needed to maintain your desired lifestyle during retirement.

    Understanding Retirement Expenses

    1. What amount of income will I truly require?
    To successfully prepare for retirement, devote time to reassessing your living expenses, factoring in retirement costs like travel, medical care, home upgrades, and potential assistance for relatives. Keep in mind that due to inflation, this figure is likely to increase over time, especially with respect to health care costs.

    2. Create a detailed and realistic budget.
    To determine the amount of income you will need in retirement, it is crucial to create a comprehensive budget that covers all your potential expenses. Be sure to include items such as utilities, groceries, insurance, taxes, and personal expenses, as well as allocate some funds for leisure activities and unexpected costs that may arise in the future.

    3. Factor in multiple sources of retirement income.
    When calculating your necessary retirement income, remember to consider various income sources, such as Social Security benefits, pension plans, investment returns, and possible part-time work. By diversifying your financial resources, you can better ensure financial stability and minimize reliance on any single income source during your retirement years.

    Sources of Retirement Income

    An essential aspect of retirement planning involves arranging for dependable revenue streams, such as Social Security, pension schemes, and mandatory retirement plan minimum distributions (RMDs) to address your basic necessities. To enhance your income, look into more adaptable sources like stock dividends, interest from bonds or CDs, and part-time employment.

    Related: You Must Understand This Crucial Retirement Benefit If You Want Your Money to Withstand Inflation — Whether You’re 25 or 75

    Additionally, consider exploring passive income opportunities, such as real estate investments or peer-to-peer lending platforms, which can provide a steady cash flow without significant time commitment. It is vital to diversify your income sources to minimize risks and ensure greater financial stability during your retirement years.

    Annuities can also provide extra cash flow; speak with a financial consultant to identify the most appropriate annuity for your requirements. There are various types of annuities available, such as immediate, deferred, fixed, and variable, each with its own benefits and risks. A financial consultant can help you evaluate these options based on your financial goals, risk tolerance, and retirement timeline, ensuring that you make an informed decision best suited to your needs.

    Asset Protection and Management

    Preparing for unforeseen situations, such as illness or death, is critical to avoid causing stress to your family and financial difficulties. One effective way to safeguard and manage your assets is by creating a comprehensive estate plan that includes essential legal documents like a will, trust, power of attorney, and healthcare directive. This ensures that your wishes are followed, assets are distributed according to your preferences, and your loved ones are taken care of in case of any unexpected events.

    Healthcare Coverage in Retirement

    Assess your Medicare insurance choices and think about acquiring additional coverage, like Medigap or Medicare Advantage bundled plans, to ensure you’re ready for future medical expenses. As you evaluate your options, it’s crucial to compare the coverage, benefits, and costs of each plan, taking into consideration your current and anticipated healthcare needs. Moreover, understanding the enrollment process and deadlines can help you avoid potential penalties and ensure a smooth transition to a comprehensive healthcare insurance plan that suits your requirements.

    It is crucial to begin exploring your insurance options early since different plans have specific enrollment periods. Understanding the various insurance plans available and their respective coverage will help you make an informed decision based on your personal needs and budget. Assessing your options in advance also ensures that you have ample time to gather all necessary documents and complete the enrollment process without missing deadlines.

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  • Haley, Christie open to raising Social Security retirement age

    Haley, Christie open to raising Social Security retirement age

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    Social Security’s pending insolvency grabbed attention at the Republican presidential debate Wednesday night, with some candidates saying they would be willing to raise the full retirement age for young people just starting out.

    “We have to raise the retirement age,” said former New Jersey Gov. Chris Christie. “I have a son who’s in the audience tonight, who’s 30 years old. If he can’t adjust to a few years increase in Social Security retirement age over the next 40 years, I got bigger problems with him than his Social Security payments.”

    Also see: ‘Rich people should not be collecting Social Security,’ Chris Christie says at GOP debate

    Nikki Haley, the former South Carolina governor, said promises to current older adults must be kept, but young people just starting out should see higher retirement ages.

    “What we need to do is keep our promises, those that have been promised should keep it,” Haley said. “But for like, my kids in their 20s, you go and you say ‘We’re going to change the rules.’ You change the retirement age for them.”

    Currently, the full retirement age is 67 for those born in 1960 or later.

    Read: Social Security is now projected to be unable to pay full benefits a year earlier than expected

    Haley declined to cite a specific age that retirement should be raised to, but said it should reflect longer life expectancy.

    Sen. Tim Scott, however, said he would protect Social Security for older adults and not raise the retirement age.

    “Let me just say to my mama and every other mama or grandfather receiving Social Security: As president of the United States, I will protect your Social Security.”

    Florida Gov. Ron DeSantis said he’d protect Social Security for seniors.

    “I know a few people on Social Security and … my grandmother lived until 91 and Social Security was her sole source of income. And that’s true for a lot of seniors throughout this country,” DeSantis said. “So I’d say to seniors in America: Promise made, promise kept.”

    When pressed whether he would raise the retirement age, he said: “So it’s one thing to peg it on life expectancy, but we have had a significant decline in life expectancy in this country, and that is the fact.”

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  • 6 Strategies to Help Lower RMD Taxes

    6 Strategies to Help Lower RMD Taxes

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    Individual Retirement Accounts (IRAs), 401(k)s and other workplace plans can help you build wealth for the future while enjoying some tax benefits.

    There’s just one important thing you need to plan for: required minimum distributions (RMDs). The IRS requires you to begin taking distributions from certain retirement accounts in the year you turn 73.

    If not properly planned for, these distributions could take a tax toll on your retirement nest egg. Applying some smart RMD strategies could help reduce distributions and potentially lower your tax bill.

    Consulting a fiduciary financial advisor can be a great first step to factoring RMDs, and the potential tax repercussions, into your retirement plan. That’s why we created a free tool to help match you with up to three financial advisors.

    Click here to take our quick retirement quiz and get matched with vetted advisors in just a few minutes, each obligated to work in your best interest.

    Research suggests people who work with a financial advisor feel more at ease about their finances and could end up with about 15% more money to spend in retirement.1

    A 2022 Northwestern Mutual study found that 62% of U.S. adults admit their financial planning needs improvement. However, only 35% of Americans work with a financial advisor.2

    What Are RMDs?

    RMDs are amounts you’re obligated to withdraw from certain tax-advantaged retirement plans, including:

    Roth IRAs don’t have RMDs, so you can leave money in those accounts as long as you live. While Roth IRAs do not have RMDs for the original account holder, beneficiaries who inherit a Roth account may be subject to RMDs.

    When Do RMDs Kick In?

    Generally, RMDs begin at age 72. More specifically, the IRS says you must start taking them by your required begin date (RBD). The required begin date is April 1 of the year following the year in which you turn 72. So if you turn 72 on Oct. 5, then your RMDs must begin starting on April 1 of the next calendar year.

    The amount you’re required to withdraw is based on your account balance and life expectancy (according to IRS tables). Withdrawals are taxed at your ordinary income tax rate. Failing to take RMDs on schedule can result in a 50% tax penalty.

    6 Strategies to Reduce RMD Taxes

    Taking RMDs can be problematic from a tax perspective. If you have large balances in your IRAs or workplace retirement accounts, taking RMDs could inflate your tax bill. That’s where it can be helpful to have a few RMD strategies in your back pocket to try and reduce what you owe.

    Here are six common ways to potentially shrink your RMDs in order to minimize taxes:

    1. Draw Down Your Account Early

    Once you turn 59 ½, you can begin taking money from retirement accounts without a tax penalty. Taking larger distributions in the early years of your retirement can reduce your overall account balance, lowering your RMDs later. This option could make sense if you expect to be in a lower tax bracket when you retire.

    Drawing down your retirement accounts before age 72 can offer another benefit. You may be able to delay taking Social Security benefits. The longer you delay benefits beyond your full retirement age, the more your benefit amount increases. If you can wait until age 70, for example, you’ll receive 132% of your benefit amount.

    2. Consider a Roth IRA Conversion

    Roth IRAs offer the benefit of 100% tax-free qualified withdrawals – and they don’t have RMDs. If you’d like to avoid RMDs, you could convert your traditional retirement funds to a Roth account. You’ll have to pay tax on the conversion in the year it occurs. But it may be worth it to take a one-time tax bill hit in order to avoid RMDs and withdraw remaining retirement funds tax-free.

    While converting traditional retirement funds to a Roth account may be an option to consider for avoiding RMDs, it is not guaranteed to be worth it for everyone. Tax implications should be carefully considered and consulted with a tax professional. A financial advisor could help determine if this could be a viable strategy for you. This free quiz can match you with up to three advisors who serve your area.

    3. Work Longer

    If you have some of your retirement funds in your current employer’s 401(k), you might consider working longer to avoid RMDs. As long as you’re still working in some capacity, you’re not required to take minimum distributions from a workplace plan where you’re still employed.

    That exception doesn’t apply to retirement accounts you had with previous employers. You won’t get a pass on IRA RMDs either. But continuing to work could help to reduce the total amount of RMDs you need to take once you turn 72. And again, you can delay Social Security benefits as well.

    4. Donate to Charity

    One of the most popular RMD strategies for reducing taxes involves donating the amount to charity. The IRS allows you to donate up to $100,000 a year from an IRA without having to pay income tax. The money you withdraw will still count toward your RMD so you don’t have to worry about a 50% tax penalty for failing to take distributions.

    There are a few rules for this strategy:

    • You can only donate up to $100,000 to a qualified charity

    • Your IRA custodian must arrange for the transfer of funds to an eligible charity

    • You’re not allowed to claim the donation as a charitable deduction your taxes

    5. Consider a Qualified Longevity Annuity Contract

    A qualified longevity annuity contract (QLAC) is a type of deferred annuity contract. You can use your retirement funds to purchase the annuity, then receive payments back at a later date. Payments are required beginning at age 85 and any money you put into the annuity does not factor into your RMD calculations.

    However, you can only put so much money into a QLAC – up to $200,000. While you can defer taking payments until age 85, you can’t avoid them indefinitely.

    6. Check Your Beneficiaries

    If you’re at least 10 years older than your spouse and name them as the sole beneficiary of your retirement account, you can use the IRS Joint Life and Last Survivor Expectancy Table to calculate RMDs.

    This strategy allows you to use your spouse’s longer life expectancy to determine how much to withdraw, which can lower the amount. Of course, if your spouse is closer to your own age or you have multiple beneficiaries, you wouldn’t be able to use this RMD strategy.

    Where to Look for RMD Advice

    Applying RMD strategies can be a simple way to reduce what you owe in taxes during retirement. You can use just one strategy or apply several in order to bring down your tax bill. While these strategies can help reduce RMDs, there’s no way to avoid RMDs indefinitely (unless you have a Roth IRA).

    Consulting a fiduciary financial advisor could help you determine a plan that factors RMD taxes into your overall retirement goals. Fiduciaries are obligated by law to act in your best interest as they manage your assets or money, and any potential conflicts of interest must be disclosed.

    Yet knowing how to find a vetted fiduciary advisor is, for many, the most confusing task of all. Common Google searches related to the topic reveal a desperate search for direction. “Fiduciary financial advisors near me,” “best fiduciary financial advisor,” and “financial investment advisors near me” are searched for hundreds of times per day.

    Finding a fiduciary shouldn’t be that hard. Thankfully, now it isn’t.

    Our free matching quiz helps Americans get matched with up to three fiduciary advisors who serve their area so they can compare and decide which advisor to work with. All advisors on the matching platform have been rigorously vetted through our proprietary due diligence process.

    The quiz takes just a few minutes, and in many cases, you can be connected instantly with an advisor to interview.

    Sources:

    1. “Journal of Retirement Study Winter” (2020). The projections or other information regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of your future results. Please follow the link to see the methodologies employed in the Journal of Retirement study.

    2. “Planning and Progress”, Northwestern Mutual (2022)

    ‘For important disclosures regarding SmartAsset, please click here.’

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  • So you want to retire and become a writer? Here’s some inspiration

    So you want to retire and become a writer? Here’s some inspiration

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    For some people, retirement is a long-awaited chance to sleep late, relax and celebrate the joys of life without pressure or deadlines.

    For others, it’s an opportunity to finally get to work.

    California is about to be hit by an aging population wave, and Steve Lopez is riding it. His column focuses on the blessings and burdens of advancing age — and how some folks are challenging the stigma associated with older adults.

    Within a span of a few days, I heard about two retirees who had long dreamed of becoming authors, but their jobs kept getting in the way. Then they pulled the cord, hit the keyboard and never looked back.

    I was on the phone one day with former L.A. Times columnist and editor Bill Boyarsky, and when I asked about his wife, Nancy, he gloated. Her seventh novel had just been published, he said, and she was already working on her eighth.

    Then I heard from L.A. County Superior Court Judge Kelvin Filer, who was talking up his brother, Duane. “He actually wrote a book documenting his first year of retirement,” the judge said. Before he excused himself with “I have to get back to my murder trial,” he added that his brother has since written several other books.

    I hear fairly often from people who use retirement to chase dreams. Some set out to learn an instrument or a new language or two. Others turn volunteering into second careers. But I probably hear from more aspiring writers than any other group of people setting out to reinvent themselves.

    A woman sits in her writing room at her Los Angeles home.

    In her writing room, Nancy Boyarsky is surrounded by her own paintings.

    (Al Seib / For The Times)

    So I paid visits first to Nancy Boyarsky, 87, who lives in West L.A., and then to Duane Lance Filer, 71, who lives in Carson.

    Boyarsky toils in a back room drenched in natural light, her cat Roxy at her side. She was a reader as a child and a fan of Jane Austen. At UC Berkeley, she took a creative writing class, “but the teacher didn’t think much of my short stories.” She recalls “a condescending smile” and a stabbing suggestion that the writing life was not for her.

    And yet she went on to make a living at a typewriter, banging out articles for various publications including the L.A. Times magazine, and she was an editor for a magazine called “L.A. Lawyer. She co-authored a book called “Backroom Politics” with Bill and spent the last 18 years of her career as ARCO’s director of communications for political affairs.

    While still at ARCO, Boyarsky took some writing courses at UCLA and began working on a novel called “The Swap.” The protagonist is a Los Angeles housewife who discovers on a trip to England that her husband is a cheat and that her life is in danger, a realization that transforms the “browbeaten housewife” into an enterprising private detective.

    A woman is surrounded by her paintings in her writing room.

    A small publishing house called Light Messages reached out to Nancy Boyarsky, saying it wanted to re-publish “The Swap” and asking the writer if she could turn her heroine into a serial sleuth.

    (Al Seib / For The Times)

    But when Boyarsky retired in 1998, she discovered, as so many writers have, that getting a book published is a tough racket, with your odds of success roughly similar to your chance of winning the Powerball lottery.

    “I got an agent, and he sent it out to publishers, and they rejected it,” Boyarsky said.

    A freelance editor suggested a major rewrite. Boyarsky did not agree, and she kept pursuing agents and publishers without success before putting the dream in a drawer and taking up painting. Her house is filled with her work, including impressive portraits and botanical art.

    But Boyarsky hadn’t entirely given up. In 2013, she took advantage of a growing trend and self-published on Amazon.

    “Mary Higgins Clark meets London … ’The Swap’ contributes to the women-driven mystery field with panache,” one magazine critic raved.

    “I was thrilled,” Boyarsky said, and the news got better.

    A small North Carolina publishing house called Light Messages reached out to say it wanted to re-publish “The Swap,” and Boyarsky was asked if she could turn her heroine into a serial sleuth. Seven Nicole Graves mysteries are now in print, and Boyarsky is hammering out the eighth while Bill, also a prolific author, works in another room on his next book.

    Light Messages edits, designs, distributes and markets the Nicole Graves books on a small budget, with Boyarsky getting a percentage of sales. (“The Swap” has more than 2,000 customer reviews and a four-star rating on Amazon.) Boyarsky said she made several thousand dollars on that one, less on the others, and she wouldn’t advise book-writing for anyone looking to get rich.

    But clearly, that Berkeley professor was clueless, and Boyarsky keeps writing — for love, if not for money.

    A man sits in his home office surrounded by images of musicians

    Duane Lance Filer, 71, sits in the room he calls the “fffunk Lab,” where he has written nine novels. Images of Miles Davis, Jimi Hendrix and Sly and the Family Stone inspire him.

    (Genaro Molina / Los Angeles Times)

    Duane Lance Filer had a bit of a different start. Rather than being told the writing game wasn’t for him, he got nothing but encouragement from his Black history teacher at Compton High School.

    “Mr. Taylor,” Filer said. “Alvin Taylor. He said, ‘Pursue your dreams.’”

    With that, and inspiration from the civil rights activism of his parents — Maxcy and Blondell Filer— Filer majored in political science at Cal Lutheran and wrote short stories there, joining the Watts Writers Workshop after college. Like a majority of aspiring writers, Filer had a day job, and for the last 29 years of his working life he was in the consumer affairs division of the California Public Utilities Commission, handling customer complaints.

    A bearded, bespectacled author

    After retiring in 2013, Duane Lance Filer spent a year writing a breezy book called “The Baby Boomers First-Hand, First-Year Guide to Retirement.”

    (Genaro Molina / Los Angeles Times)

    Toward the end of that career he wrote his first book, a semi-autobiographical novel about an aspiring young Black writer growing up in a changing Compton, a witness to white flight during the civil rights movement. Then, after retiring in 2013, he spent a year writing a breezy book called “The Baby Boomers First-Hand, First-Year Guide to Retirement.”

    Filer didn’t miss the train rides to and from work. There was lots of vacuuming and cleaning to be done, and he often shopped and prepared dinner for his wife, who was still working. There were some ups and some downs, but no regrets about retiring. On Day 365, Filer entered his writing den — he calls it the fffunklab; the three Fs stand for “Filer Family Fun”—to pen the final words of his guide while listening to Etta James sing “At Last.”

    The fffunk lab, by the way, is where I visited Filer. He’s carved out the space in a corner of the garage, with images of Miles Davis, Jimi Hendrix and Sly and the Family Stone surrounding him. He wore faded, patched jeans and a George Clinton Funkadelic T-shirt, calling himself an unreformed hippie. In a family of lawyers and educators — son Lance is an attorney, daughter Arinn is an assistant principal, wife Janice is a professor and retired principal — Filer is all about music (he plays bass guitar), art (he paints), and words.

    A portrait of duke Ellington inside writer Duane Lance Filer's ffunk lab.

    A portrait of Duke Ellington rests behind a Stratocaster guitar in Duane Lance Filer’s writing den.

    (Genaro Molina / Los Angeles Times)

    The fffunk lab is a supremely cluttered cave of sports and family memorabilia, along with the tributes to his favorite musicians. The desktop computer, on which the funkmaster has now written nine books, sits in one corner. He’s penned several children’s books and a novella called “The Legend of Diddley Squatt,” loosely inspired by the life of the late comedian Richard Pryor, who grew up in a brothel. Filer is now working on a sequel, his 10th book, and a screenplay about his father’s life.

    The only fly in the punch bowl is that despite his dogged efforts, Filer has no agent and no traditional publisher. He has self-published, paying different companies to print and distribute his books, hoping to recover the investment through sales.

    “I usually send out between 50 and 100 query letters with each book,” Filer said.

    The lack of response has not deterred him one iota. He sat in on some writing classes at nearby Cal State Dominguez Hills several years ago and keeps the dream alive, noting that his father took the state bar exam over and over again — literally dozens of times — before finally passing.

    Perseverance, he tells himself. Perseverance.

    Duane Filer at his home

    After retiring from the California Public Utilities Commission in 2013, Duane Filer decided to start writing books. He is currently finishing his 10th.

    (Genaro Molina / Los Angeles Times)

    He takes his morning walk while listening to his favorite music, reaching deep for inspiration. Then he enters the fffunklab, subjecting himself to the joys and cruelties of creative endeavor.

    “I love to write, and here’s the thing: None of my books make any money, or, I haven’t made a lot of money,” Filer said. “But I don’t care. At some point, my little grandson can say, ‘Oh, you never gave up.’ I will never stop writing. … I think this next book is going to be my best one.”

    steve.lopez@latimes.com

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  • Ask an Advisor: I Made $310,000 Last Year and Have $546,000 in Retirement Savings, But My Spouse Doesn’t Work. How Can I Save More?

    Ask an Advisor: I Made $310,000 Last Year and Have $546,000 in Retirement Savings, But My Spouse Doesn’t Work. How Can I Save More?

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    Financial advisor and columnist Michele Cagan

    I am 48 years old. I made $310,000 last year and I currently have $546,000 in my retirement plan at work. My husband is on disability and doesn’t work and does not have a 401(k) plan. I wanted to open a Roth IRA but I read that I make too much money. What options do I have to save more money for retirement? I’m debt-free except for my mortgage, which I’m trying to get rid of in the next two years before my daughter goes to college. What would you advise? 

    – Nilda

    Navigating retirement account rules can be confusing and frustrating, making it seem harder to save as much as you want to. You already have a solid foundation to build on, and more options than you might realize to beef up your savings.

    Even though you have a workplace plan, you can still contribute to a traditional IRA, though your contribution would be non-deductible. You can also create and contribute to a spousal IRA for your husband. And while you make too much money to directly contribute to a Roth IRA, you may be able to contribute through a backdoor Roth IRA.

    As for your mortgage, if your interest rate is lower than 4%, it might be worth not making extra payments and either saving or investing that money instead. High-yield savings accounts, for example, currently yield around 5%. One-year certificates of deposit (CDs) are even paying up to 5.5%, or more. Remember, just because savings or investments aren’t in an official tax-advantaged retirement account doesn’t mean you can’t use them to fund your retirement.

    Consider speaking with a financial advisor for more help saving and planning for retirement.

    Contribute to a Workplace Plan and an IRA

    A woman reviews her IRA and workplace retirement plan balances. A woman reviews her IRA and workplace retirement plan balances.

    A woman reviews her IRA and workplace retirement plan balances.

    Anyone can contribute to both a workplace plan and a traditional IRA, but your contribution may not be deductible, depending on your income.

    You can contribute up to $6,500 ($7,500 if you’re 50 or older) to an IRA for 2023. If neither you nor your spouse are covered by a workplace retirement plan, your contributions will be deductible.

    However, if you or your spouse has a workplace retirement plan like a 401(k), that contribution may be only partly deductible or completely non-deductible. Even if you can’t take a current tax deduction for your contribution, you’ll still get tax-deferred growth in the account. The growth and earnings will be taxed when you take withdrawals in retirement.

    Another plus: Having money in the IRA gives you the option of converting it to a Roth IRA. (And if you need help planning out your Roth conversion, talk it over with a financial advisor.)

    The deductibility you might have depends on your household income and filing status:

    Single or Head of Household Covered by Workplace Plan

    If you are single or the head of your household and have a workplace plan in 2023, IRA contributions are:

    Married, Filing Jointly and You Have a Workplace Plan

    If you are married, file jointly and have a workplace plan in 2023, IRA contributions are:

    Married, Filing Jointly and Your Spouse Has a Workplace Plan, But You Don’t

    If you are married, file jointly and have a spouse with a workplace plan in 2023 (but you do not), IRA contributions are:

    Create and Fund a Spousal IRA

    In general, you have to earn income in order to contribute to an IRA. The exception is if you have a spouse who works and earns enough to cover two IRA contributions. You can open a spousal IRA for the nonworking spouse. A spousal IRA gives your family a chance to double down on retirement savings.

    Despite its name, a spousal IRA is no different than a regular IRA in how it’s set up or its tax benefits. It’s not a joint account, either. Only the nonworking spouse owns this IRA. To qualify for a spousal IRA, you have to use “married filing jointly” as your income tax filing status, though.

    The same contribution limits for Roth IRAs and deductibility limits for traditional IRAs apply the same way they would for any retirement account. Traditional spousal IRAs are also eligible for Roth conversions. (And if you have more questions about spousal IRAs, consider matching with a financial advisor.)

    Is a Backdoor Roth IRA Right for You?

    A couple sets up a spousal IRA on a laptop. A couple sets up a spousal IRA on a laptop.

    A couple sets up a spousal IRA on a laptop.

    Roth IRAs come with a few beneficial twists that make them desirable for many taxpayers. For one thing, as long as you follow the rules, all withdrawals – including growth and earnings – are completely tax-free. For another, you don’t have to take required minimum distributions (RMDs), so your money has more time to grow.

    Unfortunately, Roth IRA contributions are subject to income limits, locking many people out of them. For 2023, single filers earning $153,000 or more and married filing jointly filers earning $228,000 or more can’t contribute to Roth IRAs.

    That’s where the backdoor Roth comes into play. This conversion process allows higher earners the opportunity to move money sitting in their traditional IRAs into Roth IRAs. (And if you need help setting up a backdoor Roth, talk it over with a financial advisor.)

    The process is pretty simple. If you don’t already have a Roth account set up, you’ll create one. You tell your IRA administrator that you want to convert all or a part of your traditional IRA to a Roth IRA. You fill out some paperwork, and the administrator handles the rest.

    Some other caveats to keep in mind:

    • There’s a special pro rata tax rule requiring that you have to consider all of your traditional IRAs as a whole, both pre-tax and after-tax contributions, to determine how much tax you’ll owe on the conversion. You can’t pick and choose which IRA money you want to convert.

    That said, the tax-free withdrawals in retirement may be well worth all the potential complications.

    Bottom Line

    You can increase your retirement savings by contributing to an IRA and a spousal IRA even if you have a workplace plan. You can also create tax-free retirement income streams by converting some of your retirement funds to Roth IRAs.

    Tips for Finding a Financial Advisor

    • Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

    • Consider a few advisors before settling on one. It’s important to make sure you find someone you trust to manage your money. As you consider your options, these are the questions you should ask an advisor to ensure you make the right choice.

    Photo credit: ©iStock.com/Moyo Studio, ©iStock.com/LaylaBird

    Michele Cagan, CPA, is a SmartAsset financial planning columnist and answers reader questions on personal finance and tax topics. Got a question you’d like answered? Email AskAnAdvisor@smartasset.com and your question may be answered in a future column.

    Please note that Michele is not a participant in the SmartAdvisor Match platform, and she has been compensated for this article.

    The post Ask an Advisor: I Made $310,000 Last Year and Have $546,000 in Retirement Savings, But My Spouse Doesn’t Work. How Can I Save More? appeared first on SmartReads by SmartAsset.

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  • OAS entitlement and deferral rules for immigrants to Canada – MoneySense

    OAS entitlement and deferral rules for immigrants to Canada – MoneySense

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    You generally need 40 years of residency in Canada after the age of 18 to qualify for the maximum OAS pension. The maximum monthly payment as of the fourth quarter of 2023 is $707.68 for someone who started their OAS at age 65. Someone aged 75 or older would be entitled to up to $778.45.

    Exceptions to the OAS residency requirement

    There may be situations where you qualify for the full pension without meeting the 40-year residency requirement. One example would be if you were over 25 and lived in Canada or had an immigration visa on or before July 1, 1977.

    Another instance where you may qualify for a higher pension is if you lived in a country with a social security agreement with Canada. Time spent in other countries may count towards your OAS residency formula. If you worked outside Canada for the Canadian Armed Forces or an international charitable organization, this time might also count.

    Deferring OAS to increase residency requirements

    If you have under 40 years of residency, your pension is pro-rated. You need to have lived in Canada for at least 10 years after the age of 18 if you apply for OAS as a Canadian resident. If you live outside of Canada when you apply, you need 20 years of residency.

    Interestingly, Amin, you can defer your OAS pension after age 65 to increase your residency requirements. This can work well for someone who is trying to get to 10 or 20 years, respectively, to qualify for the pension at all. In your case, the deferral will not have an impact on the residency calculation. I will explain why.

    The reason is an OAS recipient deferring their pension after age 65 can only benefit from one of two enhancements: one, the years of residency; or two, the age-based increase. If you defer OAS to after age 65, your age 65 entitlement increases by 0.6% per month or 7.2% per year of deferral. You can start it as late as 70 for a maximum 36% increase.

    If you get an extra year or 1/40th of residency, that amounts to a 2.5% boost in your OAS.

    Unfortunately, Amin, you cannot get the 2.5% residency boost and the 7.2% age boost for deferring. You get the higher of the two, which is obviously the age-based adjustment of 7.2%.

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    Jason Heath, CFP

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  • Ten Reasons Delaying Retirement Can Be a Good Decision | Entrepreneur

    Ten Reasons Delaying Retirement Can Be a Good Decision | Entrepreneur

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    People view retirement as the ultimate reward for decades of hard work. Many look forward to the day they can say goodbye to the monotony of the daily punch clock and finally kick back to enjoy the precious golden years. However, those who study retirement closely will find no one-size-fits-all strategy on how and when to retire. Moreover, savvy individuals are rethinking the traditional retirement age by delaying retirement for various reasons.

    Contrary to convention, retiring later can be a wise financial decision. Late or delayed retirement can come with its benefits. It can also be a practical decision based on one’s financial circumstances. Whether you’re nearing retirement age or at the peak of your career, it helps to consider the advantages of postponing your retirement plan by a few years.

    Is delaying retirement a smart move? 

    Pushing back retirement is an unconventional choice, yet it is one that more and more people are beginning to make. The average retirement age in the US is 65 for men and 63 for women. 

    The transforming economic landscape and changing demographics wherein populations are aging and living longer contribute to the changing retirement timeline. The following are the top reasons to delay retirement:

    1. Adding to retirement savings

    By delaying retirement for several years, you can boost your nest egg strategically. You can contribute to 401(k)s, IRAs, or pension plans by working a few additional years. 

    To boost your savings, you can make the most of employer-matching contributions. In the US, some employers match a percentage of retirement account contributions. Hence, you can accumulate these matching funds by staying longer in the workforce. 

    For instance, let’s assume a scenario wherein your employer matches a maximum of 50% of the first 6% of your annual salary that you contribute to your 401(k). With a $100,000 yearly salary and a contribution of 6%, your contribution would be $6000. Thus, 50% of $6000 would be $3000—your employer’s match. Your total contribution would then be $9000 per year. A 3% salary contribution matched at 50% or $1500 would yield a total of $4500 in contributions.

    Furthermore, past age 50, you become eligible for catch-up contributions to your retirement accounts. Additional contributions to your 401(k)s and IRAs can significantly bolster your retirement savings. As of 2023, individual workers can contribute up to $22,500 to their 401(k) plans—this amount is up from the maximum limit of $20,500 in 2022. 

    In addition, the income ranges that determine your eligibility for deductible contributions to Roth IRAs, traditional IRAs, and for claiming the Saver’s Credit will all be adjusted for 2023. All eligible income ranges will increase. 

    All taxpayers need to know all the IRA and 401(k) limit increases in 2023, including the following key points:

    Catch-up contributions limits

    An increase in the catch-up contributions for employees age 50 and above participating in SIMPLE plans will be adjusted from $3000 to $3500. Also, the catch-up contribution limit for those of the same age bracket participating in most 457 plans, 401(k)s, 403(b)s, and the Thrift Savings Plan of the US federal government will increase to $7500.

    Increase in IRA annual contributions limits 

    For IRAs, the annual contributions limit will be increased to $6500. However, the IRA catch-up contribution limit or max for those aged 50 and over remains at $1,000 and is not subject to a cost-of-living adjustment. 

    Also, you may live longer than you think. A 65-year-old man today has a 50 percent probability of living past 85. Sixty-five-year-old couples may be surprised to know that there is a 50% chance that one of them lives past 92. With your golden years possibly extended, there’s more motivation to accumulate as much savings as possible before you retire. 

    2. Extending the time horizon for investing

    Savvy investors delay retirement to take advantage of the investing time horizon. Not cashing out on investments immediately allows them to grow for a few more years. 

    For example, a diversified portfolio with a 7% annual return delayed by five years could produce an additional 35%. The projection assumes, however, that the market performs consistently. This strategy offers a practical advantage to grow your portfolio passively.

    By delaying retirement, you can benefit from compound interest. The longer your money is invested, the more time it has to grow and generate exponential returns from your principal and previous earnings.

    Choosing a longer time horizon also allows you to strategize your investments to allow for aggressive growth properly. Longer time horizons will also enable you to take more risks and allocate a portion of the portfolio to high-growth assets. This extension can increase your wealth substantially over time. Moreover, you can weather market downturns much more easily than those with shorter investment periods.

    3. Accumulating Social Security benefits

    You can boost Social Security benefits by delaying retirement a few years. The computation for Social Security benefits in the US is based on the highest 35 years of earnings. The benefits increase every year you postpone retirement until the absolute age limit. 

    You need ten years of work or 40 work credits to qualify for Social Security. To be eligible for the maximum benefit, you need a record of earning Social Security’s total taxable income for 35 years. In 2023, the earnings cap subject to Social Security tax is $160,200, up from 2022’s limit of $147,000.

    How to get the maximum Social Security benefit

    There are steps to optimize Social Security benefits. First, you must earn the maximum taxable wage, as stated above. Social Security will take your 35 best-paid years adjusted for inflation. It then averages those years together to compute your benefits. To make the most out of your Social Security benefits, you must contribute the maximum allowable amount. The max is adjusted periodically based on the US national average wage index across the time frame. 

    Next, you need to choose to start receiving your Social Security benefits later—at age 70. While it’s possible to begin accessing your benefits by age 62, postponing the receipt of these benefits till 70 will ensure that you get the maximum monthly amount when you retire. 

    4. Holding on longer to employer benefits

    As employees, some would-be retirees enjoy valuable benefits from their respective employers. Such benefits include life insurance, healthcare coverage, and retirement plan access. Delaying retirement lets employees enjoy these perks longer. The benefits offered by an employer can save you thousands of dollars and even provide valuable financial support in health emergencies. 

    When you extend your employer-sponsored health insurance, you enjoy better coverage and lower premiums. This scenario is better than having an individual plan or Medicare, saving you thousands of dollars annually.

    In addition, if your employer provides you with life insurance coverage, you can keep this coverage and avoid expensive premiums in retirement. 

    5. Buffering financial security

    Financial security is a growing concern among would-be retirees and those already retired. When they’re out of a regular job, many feel less secure about their finances. By delaying retirement, you can add to your savings and contribute to Social Security for longer—thus increasing benefits and reducing the probability of outliving your retirement funds. 

    The latest Retirement Confidence Survey or RCS conducted by the EBRI or Employee Benefit Research Institute and Greenwald Research reports that workers’ and retirees’ confidence in their ability to finance their retirement has significantly dropped in 2023. 

    Some of the reasons behind this plummeting confidence in retirement security include today’s uncertain economic climate, fueled by the threat of unchecked inflation, and some prevailing effects of the pandemic. Economic concerns are eroding Americans’ confidence in their retirement preparations. 

    The survey of 2,537 Americans was conducted between January 5 and February 2, 2023. Respondents were of working age or older. They were worried their salaries would be increasingly unable to keep up with inflation. Retirees worry about the cost of living and future expenses. The cost-of-living crisis has been setting alarms everywhere, including the US.

    Furthermore, 50 percent of retirees reported higher overall spending than expected. This figure represents an increase over last year’s figure of 30%. Among other key findings in the survey are the worsening of debt problems among workers, decreasing retirement accounts with retirement savings taking a hit over the last twelve months. 

    It also highlighted a lack of understanding of retirement plan investment options and the respondents’ preference for income stability in retirement over the prospect of growth in investments.

    6. Delaying Required Minimum Distributions (RMDs)

    Those with tax-advantaged retirement accounts like 401(k)s, or traditional IRAs must start taking distributions by age 72. Extending your years of work will allow you to delay the distributions, which may reduce liability. 

    For example, someone with a substantial IRA and a higher tax bracket can save up to thousands of dollars yearly if they delay their RMDs.

    7. Achieving financial freedom by paying off debt

    Many of today’s would-be retirees still carry debt. Working for additional years allows one to pay off some or all outstanding debt. Such debt can come from credit card balances, loans, or mortgages. 

    Retirees can free up retirement income for other purposes, including leisure, when debt is eliminated or reduced. Moreover, being debt-free before retirement significantly reduces financial stress. You can enjoy your golden years without the burden of monthly debt payments.

    When you delay retirement to reduce or eliminate debt, prioritize high-interest debt. Examples of high-interest debts are credit cards and personal loans. When you pay off such obligations, you free up more income for savings and investments. 

    You can also use the delayed retirement years to accelerate your mortgage payments. It’s crucial to reduce the principal on your loan and thus shorten your mortgage term. Paying off your mortgage early could potentially save you tens of thousands in interest.

    8. Pursuing passion projects

    Delaying retirement doesn’t mean you must stay in the same job you’ve had for decades. You can stay in the workforce but in a new company, project, or career that makes you more fulfilled. 

    You can pursue practical careers that offer a steady income without much of the rat race associated with your youth. You can be an independent accountant, become a notary, or start a fresh career as a consultant in your field. 

    You can also pursue passion projects that weren’t feasible earlier in life when you were still starting out, like starting a business.

    Many successful entrepreneurs started their businesses in their forties or later. Middle age can be a catalyst for business success. You combine the wealth of your experience with some financial security accumulated from your savings. You can follow your passions and leverage decades of expertise. 

    The public often gets caught up in the myth of the young Silicon Valley startup founder. Reality is much more grounded. On average, the most successful US startups—those in the top echelons of growth—were launched by founders aged 45. Thus, it’s twice more likely for a 50-year-old entrepreneur to establish a highly successful startup than a younger rival. Pre-retirement passion projects can be a source of financial success and personal accomplishment. 

    Staying in the workforce or business longer isn’t always about the money. It can be an opportunity to establish a legacy and devote more time to community and public causes. You can also work longer and use the additional savings to establish philanthropic projects. 

    If one of your lifetime goals was to establish a local scholarship fund or donate to a favored charity, delayed retirement can allow you to add to the financial capability required to contribute to your legacy.

    9. Promoting health and wellness

    For some people, an abrupt halt to mental and physical activity and the social interactions they’re used to at work can adversely affect their psychological and physical health. Engaging in daily social interactions and meaningful activities contributes to overall well-being. 

    For many retirees, part-time work and volunteerism contribute to their general wellness. Furthermore, research shows that continued engagement with meaningful work in late retirement is associated with better cognitive faculties and physical functioning among older adults. 

    10. Waiting out inflation

    Today’s inflation rates are concerning. If you are concerned about retirement preparedness, it may make sense to wait out the current scenario of rising prices and ensure you are on more stable footing before retiring. If you are unprepared to face the rising cost of living uncertainties, it’s better to stay in the workforce longer and observe whether circumstances will improve in the coming years.

    Late Retirement: A Power Move To Maximize Financial Potential 

    In a world where traditional retirement concepts are being transformed, more individuals are discovering that delaying retirement can be an astute financial move with the right strategies. Moving retirement by several years allows you to accumulate more cash and assets and compound your investments.

    In summary, you can use retirement to boost your nest egg by maximizing retirement contributions, optimizing Social Security benefits, paying off debt, extending your investment horizon, keeping your employer benefits, strategically delaying RMDs, and pursuing new and engaging passion projects that could be income-generating. The time between your peak working years and retirement could be a golden horizon where you supercharge your wealth while creating opportunities for self-discovery. 

    Instead of seeing it as a mere transition period, use late retirement as a power move to craft a new beginning—financially secure and emotionally fulfilled. 

    The post Ten Reasons Delaying Retirement Can Be a Good Decision appeared first on Due.

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    Chris Porteous

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