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When it comes to investing, some people don’t think in terms of thousands of dollars, tens of thousands, or even millions.
They think in hundreds of millions, or even billions. They have so much money they actually set up a private company, known as a “family office,” to manage all the loot.
And now Goldman Sachs, one of the bankers to the…
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Loneliness is more than a bad feeling. It’s as deadly as smoking up to 15 cigarettes a day and is associated with a greater risk of cardiovascular disease, dementia, stroke, depression, anxiety, and premature death, according to an advisory by the U.S. Surgeon General.
The mortality impact of being socially disconnected is greater than that of obesity and physical inactivity, U.S. Surgeon General Vivek Murthy said in an 81-page report called “Our Epidemic of Loneliness and Isolation.”
Social isolation among older adults alone accounts for about $6.7 billion in excess Medicare spending a year, largely due to increased hospital and nursing facility spending, the report said.
Read: Depression, isolation, loss of purpose: Could retirement be bad for your mental health?
Loneliness and isolation also are connected with lower academic achievement and worse performance at work. In the U.S., stress-related absenteeism attributed to loneliness costs employers an estimated $154 billion annually, according to the report.
“Given the profound consequences of loneliness and isolation, we have an opportunity, and an obligation, to make the same investments in addressing social connection that we have made in addressing tobacco use, obesity, and the addiction crisis,” the report said. Still, no federal funding or programming will be provided to combat the issue.
Essentially, social connection is a significant predictor of longevity and better physical, cognitive, and mental health, while social isolation and loneliness are significant predictors of premature death and poor health, the report said.
Read: Americans are lonelier than ever—and that’s bad for your health
The Surgeon General’s advisory is intended as a public statement that calls the people’s attention to an urgent public health issue and provides recommendations for how it should be addressed. Advisories are reserved for significant public health challenges that require the nation’s immediate awareness and action, the report said.
“Each of us can start now, in our own lives, by strengthening our connections and relationships. Our individual relationships are an untapped resource—a source of healing hiding in plain sight. They can help us live healthier, more productive, and more fulfilled lives,” the report said. “Answer that phone call from a friend. Make time to share a meal. Listen without the distraction of your phone. Perform an act of service. Express yourself authentically. The keys to human connection are simple, but extraordinarily powerful.”
Americans have become less connected to houses of worship, community organizations and their own families and have reported an increase in feelings of loneliness. The number of single households has also doubled over the last 60 years.
About half of U.S. adults report experiencing loneliness, with some of the highest rates among young adults. People cut their circles of friends during the Covid-19 pandemic and reduced time spent with those friends, according to the report.
Read: ‘When we retire, we lose a lot.’ How to avoid retirement shock.
Americans spent about 20 minutes a day in person with friends in 2020, down from 60 minutes daily nearly two decades earlier. Among young people, ages 15 to 24, time spent in-person with friends has reduced by nearly 70% over almost two decades, from roughly 150 minutes per day in 2003 to 40 minutes per day in 2020, the report said.
Technology has made loneliness worse. People who used social media for two hours or more daily were more than twice as likely to report feeling socially isolated than those who used such technology for less than 30 minutes a day, according to the report.
Murthy called on technology companies, employers, community-based organizations, parents and individuals to tackle the problem.
“We are called to build a movement to mend the social fabric of our nation. It will take all of us…working together to destigmatize loneliness and change our cultural and policy response to it.
It will require reimagining the structures, policies, and programs that shape a community to best support the development of healthy relationships,” Murthy said.
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Opinions expressed by Entrepreneur contributors are their own.
Owning investment real estate to generate income during retirement can be a valuable addition to your portfolio. There are several ways to utilize real estate in your retirement portfolio. In this article, we explore several ways owning real estate could be incorporated into your current balance sheet and become a major part of your retirement plans.
We will break down the different options you have and list a few pros and cons as well:
Related: 5 Reasons Why Real Estate Is a Great Investment
The most common way to make real estate a contributing factor in your retirement portfolio is owning rental real estate as a supplemental income stream. Let’s break down the pros and cons of such an endeavor:
The pros:
A stable, potentially rising stream of income
An activity to keep you busy in retirement
Potential additional tax advantages and deductions
Great diversification from stocks and bonds
The cons:
People rarely factor in all the costs such as insurance, taxes, maintenance, bad tenants, etc.
A large down payment or cash offer is often required to generate positive monthly cash flow.
Mortgage rates are high now compared to recent history, which makes positive cash flow a bit harder to achieve.
Potential liability from an unforeseen accident
There are a lot of great opportunities in the short-term rental space. This does bring on the added responsibility of marketing, generating positive reviews and buzz, as well as an increased need for maintenance and attentiveness. Like any small business where some extra work is required — if done well, it will pay off in the end. We have several clients who have had a lot of success with short-term rentals. There are even websites dedicated to helping you generate supplemental income from your properties.
Related: 9 Ways to Invest in Real Estate for Retirement
Physically owning and maintaining real estate is not the only way to go about benefiting from real estate as an investment. You might want to consider publicly traded real estate investments (REITs or Real Estate Investment Trusts).
These also come with their own sets of pros and cons:
The pros:
Higher stream of income vs. similar credit quality stocks and bonds
An easy way to access specific niches (i.e., targeting warehouses and data centers, housing, offices, medical communities, etc.)
Decent diversification from other types of stocks and bonds
The cons:
My personal recommendation is, if you own publicly traded real estate, make sure you own it primarily for the income, not for the principal appreciation. Yes, you could potentially make money over time, but you should think of this transaction as an income play.
Another option to consider is the private REIT space. A private REIT will give you an investing experience somewhere between owning real estate and owning a publicly traded real estate fund. If you’re interested in the private REIT space, you should work with your advisor to do some due diligence and keep in mind the following:
How does the fund’s liquidity work? What is your time commitment?
You’re paying fees to a sponsor and a property manager — not entirely different than you would pay when owning other properties.
Understand what these costs and fees look like.
What do they own, and what do they plan to buy?
Have they successfully gone “full cycle” before?
How did their funds do during prior periods of real estate distress?
Accept the fact that you’re giving up control over these decisions but mitigating the risk of bad decision-making by relying on professionals.
Related: What You Should Consider Including in Your Retirement Portfolio
Owning rental real estate can be a rewarding and wealth-building experience. If you’ve never owned rental real estate before, the idea could be daunting. But many experienced real estate investors will tell you that while the first investment property may be the hardest, it will only get easier from there.
Once you begin, you may experience a bad tenant. It’s bound to happen, and every rental owner should be prepared for the occasional bad apple. Don’t let one or two bad experiences scare you from being a landlord.
The more you’re willing to roll up your sleeves and get involved, the more likely you’ll succeed — just like with anything else in life. Any type of success in real estate does not happen by accident. Make sure you’re working with your financial planner and your property and casualty specialist to account for potential worst-case scenarios.
Whether you’re physically owning it with after-tax dollars or diversifying a portion of your retirement accounts into publicly traded real to increase your existing portfolio’s level of income — there are certainly a lot of potential benefits that at least merit a conversation about how you can utilize real estate in your retirement portfolio.
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Chris Kampitsis
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PARIS (AP) — French President Emmanuel Macron’s unpopular plan to raise France’s retirement age from 62 to 64 was enacted into law Saturday, the day after the country’s constitutional body approved the change.
Macron’s signature and publication in the Official Journal of the French Republic allowed the law to enter into force. The authorized changes will start being implemented in September, French government spokesperson Olivier Veran said.
On Friday, the Constitutional Council rejected some parts of the government’s pension legislation but approved the higher minimum retirement age, which was central to Macron’s plan and the focus of opponents’ protests.
The nine-member council’s decision capped months of tumultuous debates in parliament and fervor in the streets. Spontaneous demonstrations took place in Paris and across the country after the ruling.
France’s main labor unions, which organized 12 nationwide protests since January in hopes of defeating the plan, have vowed to continue fighting until it is withdrawn. They called for another mass protest on May 1, which is International Workers’ Day.
The government argued that requiring people to work two years more before qualifying for a pension was needed to keep the pension system afloat as the population ages; opponents proposed raising taxes on the wealthy or employers instead, and said the change threatened a hard-won social safety net.
Opinion polls show Macron’s popularity has plunged to its lowest level in four years. The centrist president, who made raising the retirement age a priority of his second term, plans to make a televised national address on Monday evening, Macron’s office said.
“The president’s remarks are very much awaited” and will both seek to appease tensions in the country and explain decisions that have been made in the past months regarding the pension reform, government spokesperson Veran said.
Macron was first elected in 2017 on a promise to make France’s economy more competitive, including by making people work longer.
Since then, his government has made it easier to hire and fire workers, cut business taxes and made it more difficult for the unemployed to claim benefits.
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Jim Cramer’s approach has always been practical and positive about financial freedom after retirement. He runs the CNBC investing club, which helps people make worthy investment decisions to amplify their money. In addition, Cramer is the co-founder and chairperson of TheStreet.
Born to creative parents, Cramer has always been appreciated for his unique ability to provide logical financial suggestions. Do you know what Cramer says about early retirement? This post unveils the secret – keep reading and learn the mysteries involved!
Jim Cramer published a book called ‘Real Money’ in 2005. On page number 66 of the said book, Cramer said – “the age-specific investment approach is your best option.” These lines reflect how crucial it was for Cramer to save for retirement. He believes everyone should start saving for retirement as early as possible.
Cramer started his career with the Tallasahi democrat. In 1977, he got his first steady paycheck. However, when he left Talasahi, he passed through tough times. He was living in his car when he used to work as a reporter in Los Angeles. Impressively, dodging that adverse financial situation, Cramer managed to put $1500 away for his retirement.
He says he invested the money in the famous Peter Lynch at Fidelity Magellan Fund. According to Cramer, that money was being invested for multiple years consistently. This, in turn, helped him to compound the money to such an extent that it could provide a moderate retirement income to live lavishly for at least a half dozen years post-retirement.
In the dawn of 2023, Cramer’s ideology seems very relatable. Saving for retirement has never been this crucial – the job market has gone insanely unstable, and the economy craves oxygen because of inflation. This is high time to adopt an age-specific mindset, as Cramer explains – you should focus on growth stocks in your 20s because you have enough time to take and manage risks.
When you enter your 30s, you should pull the chain a little hard and switch to more stable stocks like dividends. Moving on to your 40s, bonds should make up a more significant portion of your portfolio since this is the time to prioritize capital preservation.
According to Cramer, given the disrupted economic scene in the USA, even highly curated plans for retirement may fail. Therefore, you should switch to the alternative of retiring early. However, how should you move towards early retirement?
Cramer articulates that sticking to a strategy from your early 20s may help you retire early and enjoy financial freedom. There are several elements to consider, including the following.
When you are beginning, it’s crucial to know where you stand. Ideally, you will need 70% of your yearly income to fuel your yearly expenses after retirement. Therefore, identify your present financial position and look for ways to secure that percentage so you can retire early and not see poverty post-retirement.
Only compound interest can grow your money substantially. If you want to estimate how quickly you can multiply your money, you just need to figure out the years needed to grow it at a given interest rate. For instance, if the interest rate is 10%, it will take approximately seven years to grow $1000 into $2000. If you want more benefits, you can consider high-yielding stocks.
Be realistic when carrying out the calculation. If you are retiring early, you will probably live a long time without work. Is the venture going to be riskier than you bargained for? Will you be able to manage enough money to enjoy your retirement? Reassess the factors before you say goodbye to your job. Remember, leaving your retirement entirely on double-digit investment returns is not wise. Hence, be careful!
Everything about retirement may not be that juicy. You may experience health issues that can make a big hole in your pocket. Therefore, get health cover that can help you with your hospital bills.
If you have decided to retire early, you are probably ready to compromise the comfort of your monthly salary. Therefore, you should utilize the limited time frame to save massively for your retirement years. For instance, if you started earning at the age of 18 and you are planning to retire in your 40s, you will have approximately 20-22 years to grow your money and save for your retirement.
Given this, you should be very particular when picking investment instruments. Always walk with the alternatives that ensure sizeable returns over time. Besides, they should be able to beat inflation. You can browse through equity-based alternatives or annuity plans to secure a regular flow of income.
Only consistency can help you reach your goal when it comes to retiring early. Therefore, be regular with your investment and manage your portfolio actively. If you truly want to maximize your returns, consider monitoring your investments closely. You should be able to figure out which investments will suit you and which won’t.
The investments you have made previously should also be reanalyzed. Check if they hold their ground in the present day and have helped combat inflation. If their performance doesn’t seem promising, take out your money and put them in the right instruments.
You can do this by referring to the rule of 25. This says that you should acquire 25X your planned annual spending before retiring. For instance, if you want to spend $40,000 during the first year of retirement, you should have $10,00,000 invested when you leave your job. When you invest your retirement nest egg, it will continue to grow. This way, they will be able to keep up with the inflation.
The 4% rule is a widely accepted idea for retirement planning. It suggests that you can withdraw 4% of your invested savings during the first year of retirement. Afterward, you can adjust the withdrawal amount for inflation every year. Although you don’t have to adhere strictly to the 4% rule, you can make adjustments based on your risk tolerance, market performance, and investment portfolio.
Retiring early comes with two clear downsides – a shorter span to save and a longer period to spend. You need to achieve the best returns to dodge them, which can be done by building a balanced portfolio inclined to long-term growth. You can use low-cost index funds to achieve this goal. Usually, such funds come with allocations tilted toward stocks, and you are free to stomach them as long as you can.
Well, you may have done loads of homework to figure out how much you will need to spend your retirement comfortably. However, estimating the expenses could be a discussion. Generally, it starts in an innocent way – you throw that mandatory retirement party. After a few days, boredom hits, and you go out for a vacation. Then, you need a companion, so you get a dog. Well, now the 4% rule, as mentioned above, suddenly kicks in.
You should avoid this scenario. You decided to stick to that rule to beat inflation. It can never help you if you mindlessly spend much beyond your capacity. If you increase your recurring expenses in your retirement, you will likely run out of money soon.
Debts can be a hindrance to your early retirement efforts. When you are stuck with debt, you will find it challenging to acquire enough money to support your post-retirement life. Ideally, you should follow the fundamental 30:30:30:10 budgeting rule to avoid financial burdens.
As such, you should dedicate 30% of your monthly income to housing needs, 30% to groceries, utilities, and fuel, 10% to discretionary expenses, and 30% to your savings and investments. By following this rule, you will be able to save in a strategic and disciplined way.
Building a passive income stream may help you retire early, and there are several ways to do so. For example, you can start taking up freelancing projects or invest in dividend assets. Besides these two, you can also consider several other ways to generate passive income. They may include real estate investing, affiliate marketing, and creating and selling digital products. The key is to find a method that works for you, and that aligns with your financial goals.
Now that you are familiar with the secrets of early retirement, here are some lesser-known facts that can help you make an informed decision. Remember, everything about retiring early is not sweet, and you should be prepared to embrace its bitter side as well.
As highlighted before, in retirement, you will typically need to spend only 70% of what you spent when you were working. For example, if you spend $10000 yearly when working, it is expected to become $7000 once you retire. There won’t be liabilities such as shoveling money into your retirement account, paying social security taxes, and bearing the communication cost for work. However, in the early years of retirement, you are expected to spend more than you planned to fuel your newly retired lifestyle.
Moreover, the inflation rate is running at a red-hot 8.3% now. Nobody can say it will surge to what extent when you retire. Given this, you may need to revise your retirement savings plan considerably. EBRI reveals that 36% of retirees agree that their overall expenses have been higher than their calculations. Considering these facts, you should start saving even more rigidly to spend your retirement in comfort and peace.
Sometimes tapping your nest egg early may cost you significantly. Retiring before 59 makes you likely to pay a 10% early withdrawal penalty from tax-deferred accounts like 401 (K) plans and IRSs. Moreover, if you don’t have a Roth IRA, funded with after-tax contributions, your withdrawals from traditional accounts will be subjected to tax implementations.
For instance, if you withdraw $40,000 before you hit 59 and come under the 15% federal tax bracket, you are expected to pay $10,000 in penalties and taxes. This will leave you with $30,000 in hand.
If you are retiring with a mortgage, your housing expenses won’t retire with you. Thus, you should always try paying off your mortgage before you say goodbye to your job. However, even if you manage to pay your mortgage, you should be careful about your property taxes and home maintenance costs and plan your retirement budget accordingly.
Retiring early comes with a set of pros and cons. The benefits may include several elements. For instance, you can enjoy an opportunity to start a new career. Furthermore, early retirement allows you to spend more time traveling and exploring different dimensions of life. Most importantly, if you have planned strategically, early retirement can help you cherish financial freedom.
However, there are downsides as well. First, your social security benefits will be reduced. Next, you may struggle to make your retirement savings last longer. Finally, the lifestyle transition may affect your mental health.
Well, the answer is pretty self-explanatory. Most people believe the standard retirement age should range between 60 and 65. In fact, if you retire at this age, you can draw your full social security retirement benefits. However, depending on your financial situation, you may decide to retire early or late. There is no definitive formula that can help you find the right age for retirement. Thus, consider your goals when making the decision. You can also take professional help from financial advisors to make the right decision.
To set yourself free before you hit your 59, you must plan your finances strategically. You should invest in the right instruments, keep track of your budget, and save adequately for your future. In addition, you should purchase health coverage to deal with unforeseen medical emergencies.
Yes and no! If you plan to start a new venture after your 40s and your job obstructs your way, you may consider the idea of early retirement. Similarly, you can retire early if you want to enjoy a burden-free life a little earlier than the standard norms. However, if you are burdened with loans and have not been able to manage your finances well so far, you should think thoroughly before deciding to retire early.
Jim Cramer has always been positive about the idea of early retirement. In fact, he considered it one of the best weapons to beat inflation and live a worry-free life. However, Cramer has recommended a few to-dos to obtain the best benefits of early retirement. They include strategic and consistent savings, awareness of the present financial condition, etc.
The post Jim Cramer’s Secret to Early Retirement is Now Public appeared first on Due.
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Deanna Ritchie
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When 14-year-old Sun Yong Kim-Manzolini was adopted from Korea by an American couple, she didn’t know English or much about the U.S. — only that it was supposed to be a place of “freedom.”
But she was determined to make her adoptive parents proud. “I had to learn to love somebody — a stranger, basically,” Kim-Manzolini says. “But I was willing to do that because they were willing to take me in as part of the family.”
Kim-Manzolini did everything her parents told her she should do: studied hard, got good grades, went to college. After graduation, Kim-Manzolini landed her “dream job” as a certified medical assistant, and she fell in love with taking care of patients.
Related: Making the Move from Medicine to Entrepreneurship
Yet despite following the “right” path and working hard in her career, Kim-Manzolini, like so many Americans, found herself “living paycheck to paycheck” and “struggling to pay the bills.”
“I thought, This is crazy,” she recalls. “Why am I suffering financially? I’m working 40 hours a week. That should be enough, right?“
Of course, it wasn’t — especially since Kim-Manzolini was raising children as a single mother after leaving an abusive marriage. Her then-husband told her she wouldn’t be able to provide for her family on her own and would end up on welfare.
“And I thought to myself, He might be right,” Kim-Manzolini says. “But I’m not going to let him [box] me into that. Because I could work as many jobs as I needed to.”
So Kim-Manzolini did. For years, she spent her evenings and limited days off working different jobs to make ends meet: selling vacuums, running a catering business, cleaning houses. Through it all, she continued working as a medical assistant. But the constant grind wore on her.
“At one point, I thought to myself, There’s no way I’m going to do this for the rest of my life,” Kim-Manzolini recalls. “I need to change to a different job, do different things that will make me money to the point where I could at least take my kids on a vacation or have a day off and spend my time with my kids on the weekends.”
What’s more, Kim-Manzolini couldn’t fathom working so hard for so long only to be too old to actually enjoy her retirement; she saw the scenario play out time and again in her line of medical work, where patients retired just to “spend all their money on doctor’s bills, emergency rooms and assisted living.”
Related: How Much Money Do You Really Need in Retirement?
Kim-Manzolini knew she needed to find more lucrative sources of income — and she started looking into real estate, considering opportunities as an agent and investor in 2014.
It was while Kim-Manzolini and her new husband were attending real estate classes that she first learned of options trading. “What are you going to do with all of the money you make in real estate?” People asked her. “Why don’t you look into options trading?”
Although Kim-Manzolini didn’t know anything about options trading at the time, she was familiar with buying and selling stocks. She worked for a doctor who talked about his portfolio, but Kim-Manzolini had always felt it was “over her head” and that she couldn’t afford to invest on her salary.
“[Options trading] was intriguing because I didn’t have a lot of money, and it was really, really cheap,” Kim-Manzolini says. She began to research what it would take to get into options trading but was dismayed to discover that it would require a computer. She didn’t own or know how to use one at that point.
But when she retired one year later, in December 2015, Kim-Manzolini needed a new way to sustain herself — she had no money in her checking or savings accounts, and it was too soon to touch the pension plan, 401k and other retirement accounts she’d built up over the past 33 years.
I’d decided that I was going to study options trading — not knowing what kind of results I would get.
So, in January 2016, when her husband returned to work and her son to school, Kim-Manzolini announced that she was getting to work as well.
“My husband and my son said, ‘Huh, you just retired. What are you going to work for?’,” Kim-Manzolini says. “And I said, ‘I’m going downstairs to my office.’ I’d decided that I was going to study options trading — not knowing what kind of results I would get.”
Kim-Manzolini taught herself how to use a computer and treated her options trading research “like it was [her] new job,” practicing Monday through Friday when the market was open from 7:30 a.m. to 2 p.m.
By the end of that year, despite periods of “frustration” and “growing pains,” Kim-Manzolini had made roughly $100,000 with her practice account — and she was ready to try the real thing.
“Of course, I still didn’t have any money,” Kim-Manzolini says. “I couldn’t touch any money, so I took out a home equity loan. Because you have to start somewhere. And I put it into my investment account, started investing and ended up making $178,000. I went over my goal, and I thought, Oh my gosh. I was shocked.”
Image Credit: Courtesy of Sun Yong Kim-Manzolini
Related: 50 Inspirational Quotes to Help You Achieve Your Goals
Today, Kim-Manzolini, a grandmother of four, makes seven figures trading options.
And she’s paying it forward by teaching other people, particularly single mothers, how to use her “unique miracle system” to trade options so they can spend less time working and more time on what matters most.
“I thought, I’m going to teach this to single mothers so they no longer have to work six, seven days a week like [I did],” Kim-Manzolini says. “They no longer have to sacrifice their time; they get to watch their kids grow.”
But anyone who aspires to financial freedom can learn from Kim-Manzolini.
“[There are] people working nine to five for the corporate world who are overworked and underpaid,” Kim-Manzolini says. “They want to retire early. They don’t want to work forever — just like me.”
Related: How to Make More Money in 2023, According to The FI Couple
Kim-Manzolini credits her success to perseverance and the refusal to give in to fear.
“[People] tell us some fearful things,” Kim-Manzolini says. “My kids [said], ‘Mom, you are good at medical assisting and love your job. Patients love you. Doctors love you. What are you going to do?’ And I said, ‘I don’t know. But I’m going to do something that I want to do that is not a pleasure. It’s my own time.’ [That requires] self-discipline and overcoming your fears.
“Because a lot of us will stop when we [first] feel the fear,” Kim-Manzolini continues. “So one of the big takeaways is don’t ever give up — because if you give up, then you will never find out how successful you could be.”
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Amanda Breen
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For many Americans, the importance of planning for retirement has in recent years become an essential financial priority as many soon-to-be retirees are gearing up to exit the workforce in the coming years.
As people get older, retirement planning takes a superior position among other financial priorities. In a time where the cost of living is constantly rising, against the backdrop of an uncertain future, planning for your financial future becomes increasingly challenging as you start to age.
In recent years, several studies and surveys have found that it’s become increasingly hard for Americans to save and boost their retirement savings due to ongoing economic risks
In a GOBankingRates survey of 1,000 Americans aged 18 years and older, around 32.9% had no more than $100 in their savings account. A similar study published in 2022 found that nearly 22% of Americans had less than $100 in their savings accounts.
There’s no correct time or age to start planning or saving for the future, especially when everything seems to have so many added risks these days.
According to a Northwestern Mutual 2021 Planning & Progress Study, Americans have in recent years been increasing their retirement savings, with the average retirement savings account growing by 13% from $87,500 to $98,800.
Despite many bumping up their saving efforts, soon-to-be retirees, those aged 55 to 64 have a median savings balance of $120,000, while younger U.S. adults, under 35 currently have a median account balance of $12,300 according to a PwC report.
A number of unplanned scenarios throughout the last few years have forced many people into early retirement. Those who were unable to properly save and plan, have in recent years stepped out of retirement and back into the workforce as a way to financially sustain themselves.
The average age of retirement has increased from 60 in 1990 to 66 in 2021 and with the majority of adults now living longer than previously, enjoying life after work can be costly if you don’t start planning well before the age of retirement arrives.
Economic uncertainty and rising costs have beckoned American adults to start saving early on in their careers.
From this, research shows that for younger earners, those born between 1981 and 1985, the retirement outlook is more optimistic, as experts predict them to have the highest inflation-adjusted median annual income by the time they reach 70.
Early millennials, as they’re called, will see a 22% increase in their annual earnings once they enter retirement, compared to pre-boomers, or those workers born between 1941 and 1945.
Generation Z, individuals aged 19 to 25 are even better at saving for their future, with a majority of them putting away on average 14% of their income according to one BlackRock study published last year.
Younger generations have more confidence, and more optimism when it comes to planning for their retirement and future. Now with a majority of them taking up space in the workforce, financial priorities will soon begin to change, as many look to build a nest egg that could last them through retirement.
Following a strict budget, cutting unnecessary expenses, and learning how to work with money are some of the few things many people are doing to reduce costs to stuff their retirement savings.
Inflationary pressure throughout much of last year has seen an increasingly high number of American adults lean on credit cards and personal loans to help them pay for everyday expenses. As of 2023, close to half – 46% – of U.S. adults carry month-to-month debt, whether it’s credit cards or other interest-related debt.
Keeping expenses to a minimum can start by reducing high-interest debt such as credit cards or personal loans. For the majority of the working class, while it’s still possible to afford it, it’s suggested to minimize any interest debt you may still have, while you’re still receiving a monthly income.
Having this financial safety net means you’re in a position to lower your future expenses and direct more cash towards more important financial goals such as saving for retirement.
Taking control of your debt can be a challenge, as these expenses tend to accumulate over time, so it’s best advised to look at which payments can be dealt with first and foremost, and whether it’s possible to shorten the payment period so that it doesn’t stretch into your retirement years.
Another way to cut expenses early on in your career is to assess your insurance coverage. As you become older, health insurance coverage becomes an increasingly important product that you will need to carry for much of your golden years.
Taking the necessary steps now to ensure you have the right insurance coverage will help you better understand what type of product you should take out, and what you are paying for.
Often people only take out insurance coverage later in their life, once they are in a comfortable financial position. While this would make sense at the time, insurance products tend to become more expensive as you age.
While the difference in products may be a few dollars each month, over the long term these quickly add up. Speaking to a financial professional or broker will give you better guidance on which insurance products are best for someone in your position, and will give you the most benefits once you step into retirement.
Student loan debt is a massive burden for the majority of American adults. According to the Education Data Initiative, the average federal student loan debt is $36,575 per borrower, while private student loan debt averages $54,921 per borrower.
As of the start of this year, around 45.3 million adults in America have some form of student loan debt, with a majority of them – 92% – having federal student loan debt.
Carrying this debt into retirement is not only a financial burden, but it takes a strain on your retirement savings plans if you don’t manage to prioritize these payments.
Taking more ownership of your student loan debt now will help you in the long term, allowing you to direct more of your financial efforts later in your life toward setting up your nest egg. If you’re not sure how to manage your student loans or have been struggling to make payments, reach out to a financial advisor for guidance, or apply for student loan relief assistance.
If you currently work in the public sector, or for a government entity, see whether there are any student loan relief programs you can qualify for to help lighten the burden.
Mortgage rates have nearly doubled in a year, as the Federal Reserve continues with its aggressive monetary tightening, making it more expensive for consumers to borrow money.
In mid-January 2023, the benchmark 30-year mortgage rate was 6.48%, up from 3.22% at the same time a year ago. According to the U.S. Census Bureau, the median monthly mortgage payment sits around $1,100.
Americans have witnessed house prices soar in recent months, as demand grows, supply decreases, and the cost of labor and building materials continue to rise.
Despite these challenges, many adults still sit with a mortgage by the time they retire. Shockingly enough, 44% of Americans aged 60 to 70 have a mortgage once they step into retirement, with 17% saying they will never be able to completely pay it off according to the American Association for Retired People.
Many soon-to-be retirees and even those still active in the workforce are living with the high cost-burden of their mortgage. Being proactive to reduce these settlements while you’re still pulling a paycheck each month may help you lower your down payment term, but also give you some breathing room to rather put this money towards your retirement fund.
Several different financial programs exist to help homeowners with fulfilling their mortgage payment duties, and often banks provide clear and more concise financial guidance. Take the opportunity to resolve these payments sooner rather than later, and take advantage of lower rates where possible.
Vehicle insurance tends to increase over the years, and insurance providers adjust payments based on inflation and the market value of your vehicle.
Over time, you may end up paying slightly more for your car insurance, even if you still have the same car, or perhaps have downsized. Values for car insurance are calculated by your insurance provider using the actual cash value (ACV) of your car, to determine how much they will need to pay out in the event of an accident or to conduct any repairs on the vehicle.
What some insurers have done in more recent times, is to provide lower premiums for older customers, to help lighten the expense burdens they might have on their cars. This would make it a lot cheaper and perhaps more affordable for some retirees or car owners to hold onto more than one car.
Additionally, you can approach your current insurance provider to help settle a more manageable insurance premium based on several factors such as years of driving experience, age, and condition of the car, where it’s parked overnight, how often you make use of it, and who the primary driver of the car might be.
These factors, along with others will influence the total monthly amount you will need to pay for your insurance. It’s advised to annually assess your vehicle insurance to make sure you get the most budget-friendly deal available.
Another useful and smart way to minimize your expenses early on in your career is to avoid any unnecessary expenses such as subscriptions, streaming services, and internet bills.
While some may argue that these are essential to their everyday lifestyle and entertainment. The latest figures indicate that the average American spends roughly $114 on video downloads and streaming services, a nearly four-figure increase from 2016.
Internet bills have also increased over the last couple of years, despite seeing a growing number of consumers coming online.
The typical American household pays between $40 and $100 per month for internet services, with the average being $64 per month. Even the lowest internet packages can cost households close to $58 per month when adjusted for taxes and other service fees.
While there is a need and use for these products or services in the everyday household, it’s often best to keep these costs to a minimum. Splitting costs between those residing in the same house or apartment can be one way of bringing down expenses.
Another could be to take out fewer streaming or subscriptions and keep only the necessary products that have a purpose.
Make sure to research the best possible deals for these types of services, and now and again take some time to review your account statements so that you can see where your income is being spent.
You can always opt out or cancel these subscriptions, but make sure to read the fine print first, so that you don’t end up paying a higher cancellation fee, or continue paying for something you no longer use.
Planning for retirement has become an essential financial priority for many Americans. For those that still have enough time before the age of retirement, it’s best to plan and strategize as much as possible to ensure you’re on track with your financial and savings goals.
On the other hand, for those individuals that might soon step out of the workforce, and into retirement, making some cutbacks to minimize unnecessary expenses, while also boosting your retirement portfolio is perhaps the best way to ensure you can enjoy your golden years, without any financial stress.
There’s no right time to start saving for retirement, the sooner you have a savings plan in action, the better. Take control of your finances, and make an effort of breaking down the smaller costs, and minimize costs that could rather be directed to your retirement fund.
The post Small Changes, Big Results: What You Can Do To Minimize Costs And Plan For Retirement appeared first on Due.
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Pierre Raymond
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The U.S. has gone through massive crises that put a lot of households and businesses at rock bottom. It’s been over a decade since the Real Estate Bubble and the Great Recession. Yet their impact has been unforgettable. These are only two unforeseen events that sparked a surge of bankruptcies. And roughly a year before the pandemic, millions of Americans struggled to recover.
In 2020, the pandemic crisis transpired and scourged the U.S. economy. The restrictions led to limited operations across industries and overwhelming cash burns. In turn, millions of businesses had to shut down, either temporarily or permanently. It was most evident in the SME sector, with 9.4 million small businesses closing that year. Although the recession only lasted two months, the road to recovery was long and winding.
In the last two years, the economy has demonstrated a strong rebound. Thanks to easing restrictions that allowed business reopenings and increased operating capacity, unemployment was lowered, and the pent-up aggregate demand was fueled. At the end of 2021, GDP per capita reached $12,235, a 12 percent year-over-year growth. It even exceeded pre-pandemic levels with $11,300 on average.
Today, the U.S. is again facing a threat to its economic recovery. Inflationary pressures have stretched further than expected, peaking at 9.1 percent in 2022, based on a post published in Trading Economics. In response, the Fed made a series of interest rate increments peaking at 75 basis points. The effort is now paying off as inflation relaxes to 6.5 percent. However, one must not be complacent as rates may keep increasing to ensure macroeconomic stability.
Given all these factors, the labor market demographics have transformed. Retirement age is increasing along with prices. It is no surprise many would-be retirees are delaying their retirement. In fact, more than half of female workers decided to extend their working years. This is a logical choice since there are fewer revenue streams upon retirement. The last thing retirees need is cost-of-living adjustments.
Thankfully, they can get through life amidst market volatility. This article will discuss how retirees can cope with the impact of inflation.
Inflation has always been one of the integral macroeconomic indicators in the U.S. economy. It has played a vital role in gauging economic performance and predicting crises in the last century. In fact, economists built theories that put inflation at the center. One of these was the Phillips Curve. Analysts observed inflation’s increased predictability after WWII and the Korean War.
In the following years, the Fed thought they had a grasp on inflation. They tried to use its impact on the unemployment rate. However, this was disproven after the sustained high inflation led to stagflation. In the early 1980s, it was further proven to be meaningless as another massive crisis took place. Since then, the Fed went back to basics as interest rate adjustments remained effective. The inflation rate had become more stable and moved in a downward pattern.
In 2008, the Great Recession put millions of Americans into the gutter. Various factors contributed, but the real estate bubble was the primary driver. The effects of inflation were most evident in the commercial and residential property market. From 1996 to 2007, house prices rose by 124 percent. Even worse, the ratio of home prices to median income rose from 3:1 in 2001 to 4.5:1 in 2006.
People believed that real estate appreciation would continue, which encouraged adjustable-rate mortgages. But the lenders failed to account for the borrowers’ capacity to pay. By 2007, lenders had 1.3 million properties in foreclosure proceedings. And by 2008, home prices plunged by 20 percent.
Inflation effects on other industries should also be highlighted. The beginning of the recession was characterized by inflation rising above 5 percent for the first time in almost 20 years. In response, the Fed raised interest rates to help the economy cool down. It proved effective, but it led to contraction across industries.
Higher production and borrowing costs forced companies to lay off employees or shut down. In turn, the unemployment rate reached a new all-time high. The Bureau of Labor Statistics showed it peaked at 10 percent in 2009. This unprecedented event depleted the savings of millions of Americans. Retirees were the most affected and forced to delay retirement or return to work.
In the following years, the U.S. economy tried to regain its footing. Although the recession ended in 2009, the effects of inflation and interest hikes, unemployment, and the housing crash persisted. It was only in 2014 that the unemployment rate returned to pre-recession levels. Analysts also became wary of another potential recession in 2015. The U.S. economy slowed down once again, although the global economy was far more sluggish. Thankfully, it quickly recovered, with the GDP growth rate rebounding to three percent. Median household incomes also bounced back to pre-recession levels in 2016.
Amid all these massive changes, we can identify one important thing. Inflation has not played by the rules since the aftermath of the Great Recession. For instance, the Fed has implemented expansionary monetary policies to stimulate activities. Yet inflation was of little concern as it remained within the two percent target. By 2018, the U.S. recovered as the GDP growth rate became more stable.
In 2020, the U.S. faced another recession when the pandemic hit. Pandemic restrictions led to limited operating capacity and net losses. They led to massive layoffs and business shutdowns. The stock market prices dropped instantaneously, although the rebound immediately followed. Meanwhile, inflation fell to 1.24 percent as the demand across industries dropped. The unemployment rate set a new all-time high at 14.7 percent, as shown by the Bureau of Labor Statistics. In response, the Fed set interest rates to near-zero levels to attract business spending on investments and borrowings. All these events showed that inflation once again played by the rules.
Despite the pandemic restrictions, the U.S. economy found ways to withstand blows and bounce back. The third quarter of 2020 showed a slight recovery as businesses began reopening, thanks to digital transformation that empowered cashless transactions, hybrid work setups, and e-commerce. Also, the pent-up demand across industries contributed to business reopenings. Therefore, in 2021, labor market conditions improved as unemployment decreased by 4.1 million.
The market improvement was most evident in real estate. When interest and mortgage rates dropped, more prospective property owners applied for loans. The expected property appreciation also drove this scenario. As such, home sales soared and set the highest record in 14 years. In other industries, business reopenings increased as production costs and restrictions eased. The economy was poised for a strong and sustained rebound.
But only a year later, things seemed problematic for the U.S. economy. The Russo-Ukrainian War further aggravated the situation. Inflation is rising above pre-pandemic levels and stretching further than expected. In 2022, it reached 9.1 percent, a new record high in over 40 years. Fuel prices have skyrocketed, leading to rising costs of production. This coincided with the clearing of supply chain bottlenecks. In turn, the softening of demand across industries sped up.
To stabilize market volatility, the Fed had to become conservative in raising interest rates. It made a series of interest rate hikes by 75 bps for four consecutive quarters. Fortunately, it proved effective by enticing more savings and limited borrowings and spending.
Today, inflation stays elevated but much lower than its 2022 peak. According to the same Trading Economics article, It continues to relax at 6.5 percent. The consumer price index (CPI) of 296.80 is also improving from the 2022 peak of 298.01. Although it is only a 0.5 percent decrease, we are more optimistic about the macroeconomic conditions this year. Inflation and CPI may keep decreasing as the Fed ensures stability.
On the flip side, analysts worry about another recession. But it may not be deep since the 2022 inflation was more of a demand-pull than a cost-push. This is normal due to pent-up demand amidst economic recovery. Market volatility has become more manageable since inflation has dropped nearly 30 percent. Also, continued interest rate increments are expected, but these may cool down as inflation goes into a lull. In fact, the Fed only set the Q1 2023 increase at 25 bps. In the second half, inflation may become more manageable.
Moreover, the current economic scenario differs from the Great Recession. There are various factors to consider, but this article will focus on the most obvious ones. First, property inventories remain low, so shortages persist even if sales cool down. We can attribute it to property builders remaining conservative after the Great Recession.
It seems as though they have not ramped up construction and leasing over the past decade. Second, lending policies are stricter regarding the borrower’s ability to pay. Third, there is no speculative mania in the capital market. Fourth, the Fed’s effort easily stabilized inflation. Lastly, the unemployment rate is still a far cry from the labor market conditions in 2008-2009.
Of course, cost-of-living adjustments may continue as the purchasing power of consumers remains low. Near-term economic projections remain bleak. But in 2024, the efforts of policymakers may start to materialize.
The U.S. economy has gone through numerous massive crises, and retirees have always been one of the most vulnerable groups to risks. In the aftermath of the Great Recession, 25 percent of bankruptcy filings came from Americans aged 55 and above. Most of them were still working at that time. Many retirees had to deplete their savings accounts, borrow from predatory lenders, or return to work.
Today, another threat is here to disrupt their wealth management. Although the current market volatility is less risky, retirees must stay on the watch. Inflation remains elevated, raising the standard of living in the U.S. Also, healthcare costs are rising due to the combined impact of the pandemic and rising prices.
Currently, healthcare costs per person amount to $12,530 versus $11,462 in 2019. These events prove the importance of retirement planning and a consistent stream of retirement income. Sadly, the past decade has not been enough for many retirees to gain their lost retirement savings.
A recent survey shows over 70 percent of Americans have savings accounts. But inflation effects have been hard to tolerate. Another survey shows that 30 percent of American seniors have no retirement savings. Meanwhile, only 27 percent have maximum savings of $49,999. Even worse, 70 percent of American seniors are stuck in debt quicksand. In the same study, almost two-thirds of them admitted to having moderate to high financial security.
Given all these factors, it’s unsurprising that many Americans rely on social security benefits. But with the increasing cost of living, the amount they receive may not be enough today. Note that the average life expectancy in the U.S. is 79, so retirement may last 13 years. Also, those at least 65 years old are more likely to get hospitalized. So even with Medicare, healthcare and assisted living costs may not always be coverable. These figures show that many would-be retirees will have to adjust to the increasing standard of living.
This year, the annual cost-of-living adjustment (COLA) to social security benefits is 8.7 percent. This is one of the highest increments in over 40 years. It aims to cover the rising cost of basic goods and services for retirees. However, living on fixed income streams can still be challenging when prices are exorbitant. Although inflation is easing, prices are staying higher than pre-pandemic levels. These circumstances may require retirees to consider these valuable tips to cope with market volatility.
Whether a retiree or a would-be retiree, you must take some time to review your monthly budget and expenses. Doing so can help you determine what matters in your spending and increase savings. You may start by identifying your fixed and variable expenses.
Fixed costs refer to your constant expenses, which are part of your necessities or monthly expenses. These include water and electric bills, rent or mortgage, insurance expenses, and taxes. Rent and insurance expenses are most likely unadjustable. You can reduce your consumption to lower your water and electric bills. There are strategies and preparations to help you limit your taxes.
Meanwhile, variable expenses are those you can easily adjust. These include your spending on food, entertainment, and hobbies. Although food is a basic necessity, you can find ways to reduce your spending. For instance, buying less red meat or opting to have your food delivered instead of buying ingredients and cooking them. This is more efficient if you are living alone. This way, you don’t have to spend money on transportation, gasoline, and electricity. You can also limit your budget for groceries and decide what you often eat and use. Other variable expenses are optional, so you can limit your spending on them or avoid it altogether.
Review your expenses and identify those you buy the most. You may find ways to limit spending in those areas to restructure your budget plan. For easier calculation, add your fixed and variable expenses per month. You can average expenses in the last twelve months or focus on the most recent month.
Next, deduct the total amount from your monthly income. You are spending beyond your means if the difference is a negative value. It may push you to bankruptcy or debt quicksand. If the difference is a positive value, you are spending your income well. You can use the remaining amount to repay borrowings or add to your savings and emergency funds.
Aside from ensuring that you are spending within your monthly budget, seniors need to be aware of internet security. Economic downturns have shown to be linked to increased rates of online fraudulent activity. Given their healthy financial savings, trusting nature and the fact that American seniors are a growing group of internet users, they are an attractive target for scammers. The FBI has estimated that more than $3 billion is lost every year by American seniors in financial scams including romance scams, tech support scams and lottery scams. Internet awareness and protection is an increasingly important topic to discuss with senior online users. There are simple steps you can take to protect yourself:
Scams can happen to anyone. If you think that you have been a victim, make sure to call the local police, your bank (if money has been taken) and the FTC to report the scam. This can be devastating, impacting your savings, your identity and compromise your budget so make sure to take steps to prevent this from happening to you.
Investments can be an excellent way to increase wealth. But without proper asset management, all your resources may go down the drain. As a beginner, you may put your money in a trusted brokerage and let them find the best asset classes. They will base it on your risk preference and tolerance. You can also go solo if you prefer to do things your way.
The bond market may be a perfect fit for you as a conservative investor. Although it has lower yields, its volatility is more manageable than the stock market. You must also understand that bonds do not go along well with higher interest rates. Typically, they have an inverse relationship. But since inflation is cooling down, interest rates may follow the trend in the second half of this year. So it may be an excellent time to buy bonds while they are still low.
To be more secure, you can go for treasury inflation-protected securities (TIPS). Tips are also bonds, but they are often government-backed securities. Also, they are more inflation-linked, helping them to hedge risks and valuation losses due to inflation. They have far better yields than the rest of the bonds amidst market volatility.
If you are more of a risk-taker, you can invest in stocks. They have higher risks, but yields are more promising. Also, you can be more secure while trading by choosing dividend-paying stocks. Price corrections may still happen as recession fears persist. As such, you must consider several factors before buying stocks. You can start by assessing their fundamentals. They will hint at the stocks’ performance and ability to sustain their operating capacity. From there, you can check the whole industry and compare how your preferred company performs relative to its peers. Lastly, assess their stock price, whether undervalued or overvalued.
Having savings and investments may not be enough. Crises and natural disasters have proven that anyone can deplete their wealth instantly. With that in mind, you may add an extra shield to your assets. Insurance and annuities are both excellent options.
Many reliable financial advisors offer insurance products and annuities. They ensure financial security for retirees by providing them with single or perpetual payouts. You only have to pay premiums to avail yourself of one and maintain your funds in your account.
For better understanding, insurance is a payout distributed upon the death of the policyholder. Meanwhile, annuities are a constant or single payout distributed as long as the policyholder lives.
The current legal retirement age in the U.S. is 66. After filing your retirement, you can start receiving your social security benefits. However, delaying it is possible and even helpful in generating more social security income. You may increase your benefits for every year you delay your retirement or benefits up to 70. Therefore, if you wait for about two years, there may be a considerable improvement in your retirement income.
Retirement planning may be a long and winding process. It may be challenging, so you must prepare for it as early as you can. However, you must familiarize yourself with financial products before getting one. Check your budget priorities before saving. As such, talking with a financial professional can help you in wealth management and maintenance.
Proper financial planning for retirement has become more crucial than ever for seniors. Market volatility has highlighted that your wealth can disappear in an instant. Therefore, a secure income stream can help you get through your retirement years. Having strategic investments, insurance, and savings will ensure adequacy. You can achieve your retirement goals with the right knowledge, no matter how complex retirement may be.
The post Rising Inflation: How Will Retirees Get Through Life appeared first on Due.
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Chris Porteous
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It’s hard to know what the future holds. The best way to effectively prepare for it is by having the right knowledge. As we age, we begin to place more value on things like financial freedom and time to do our favorite activities.
Retiring is a milestone; spending many years working for a company or being self-employed has great benefits. But there are some financial and lifestyle challenges that come with retirement. Here are five you must know about.
Health issues that develop with age can become challenging if they involve expensive visits to the hospital. After retiring, your company will remove your health insurance. But after reaching 65, government programs will cover most of your medical costs. Still, these costs can increase with time and drain your retirement account.
Saving for retirement is essential, and depending on your lifestyle, you might need to adjust certain routines to ensure your money lasts. Outliving your savings could put some pressure on your back, especially when you don’t have another steady income to rely on. After retiring, you must budget to know exactly how much you need each month to live comfortably.
When you were working, you may have had various accounts for your 401(k), savings, and investments. Learning to do a self-directed IRA rollover will help you manage your money better and keep it available. Setting up one or two accounts with rewards like points or miles can also benefit you.
Social security is a benefit most people can take advantage of depending on their life situations, disabilities, and past work. This income may vary with policy changes affecting your budget and lifestyle. Savings and retirement accounts will impact your retirement life the most, so it is important to manage these correctly.
When you make your budget, you must consider every aspect of your life, including current spending habits and external factors. These factors may include unpredictable family expenses that could throw your budget off balance. A common challenge after retiring is overspending on family-related issues, and experience will teach you how to focus your energy and money on what’s most important.
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The notion of working in retirement may seem paradoxical, but it is not. Although you may have moved beyond your primary career, you should still devote a part of your week to some type of money-making activity. It is possible to round out your schedule and add satisfaction to your retirement through part-time, freelance, or consulting work. Furthermore, there are financial benefits as well.
To that end, here are nine reasons to consider reentering the workforce.
In most cases, retirees have sufficient savings and income from their retirement plans to meet their basic needs. Nonetheless, inflation, long-term care, and rising medical expenses need to be taken into account as well.
A survey conducted by the Insured Retirement Institute found only 18% of baby boomers are confident they will have enough money in retirement to live comfortably. Those who own an annuity, however, report 45% more confidence.
In short, if you did not save enough money for retirement, you may need to continue working as you age. Even if it’s not, a paycheck goes a long way to supplementing and extending those savings over time.
Most people are unaware that their work may affect their mental capabilities after they retire, according to the University of Michigan’s Health and Retirement Study (HRS).
“Your job can impact your cognitive functioning in later life,” says Amanda Sonnega, an associate research scientist at the Institute for Social Research (ISR).
It has been found that retirement is associated with some level of cognitive decline even after accounting for other health changes associated with age, she says.
“In general, working seems to provide a level of cognitive stimulation that is protective against cognitive decline at older ages,” Sonnega says. “Researchers are looking at what it is about work that serves this role.”
Part-time employment gives you the chance to switch jobs or roles. As a result, there are a number of benefits you can enjoy. For example, as you age, psychologists believe you should take on new challenges to slow your cognitive decline.
What happens if you’re retired but haven’t yet reached 65, the age at which you become eligible for Medicare? You may have to pay out-of-pocket for insurance or medical expenses.
When seniors retire and no longer have access to a company-sponsored medical plan, the high costs of medical care can be quite shocking.
The solution? Work for an employer that offers health insurance even to part-timers.
You can save hundreds or even thousands of dollars every month by working part-time for a company that offers health insurance.
Part-time employees are offered health insurance benefits by many large companies, including Starbucks, Ikea, UPS, Costco, Delta, Trader Joe’s, Lowe’s, REI, and the American Red Cross. You can find more companies that offer part-time employees health insurance benefits by searching online for “health insurance for part-time employees”.
Moreover, you may need to pay significant out-of-pocket expenses for prescription drugs once you qualify for Medicare. There are gaps in Medicare coverage that can be filled by additional health insurance through your employer or Medicare Supplement Insurance despite turning 65 and qualifying for Medicare.
Furthermore, Medicare does not cover all healthcare costs. “Pre-pandemic, the average hospitalization cost was $285,000, meaning you could face staggering healthcare costs even with Medicare coverage,” writes Chris Porteous in a previous Due article.
“Additionally, you should know that Medicare does not cover some critical health needs of retirees,” he adds. “These include long-term care, dentures, and hearing aids. Since 70% of seniors need assisted living care, that could be a significant financial problem.”
“The average cost of assisted living facilities is $4,500 per month,” states Chris. If you do not have Medicare Advantage, it is not covered by Medicare. For a limited time, it may only pay part of assisted living costs.
“While Medicare covers many healthcare costs, it stops short of paying enrollees for long-term or custodial care,” he continues.
The more money you earn in retirement, the less money you’ll need to take from your investments to pay for it. The length of your savings can even be affected by low-paying jobs.
Suppose you earn $20,000 a year as a retiree working part-time. For 30 years in retirement, a $500,000 portfolio generates $20,000 per year using the 4% withdrawal rule, notes Carolyn McClanahan, a financial advisor as well as a medical doctor. In most cases, it’s easier to earn $20,000 a year working part-time than to accumulate another half million.
“By not having to pull from your portfolio, it allows it to grow,” says Karl Schwartz, a Miami financial advisor, and certified public accountant. “Your assets end up growing quite a bit longer in that scenario.”
Since 1938, the Harvard Study of Adult Development has been tracking generations of families, and one of its major findings has been that retirement well-being depends on good-quality relationships, according to Robert J. Waldinger, Harvard Medical School professor of psychiatry and study director.
In retirement, the happiest participants replaced their old work relationships with new ones. Working regularly—whether full-time, part-time, or as a volunteer—creates an environment in which new interactions can be formed.
Furthermore, studies show that a variety of social relationships – such as those you might find at a part-time job – can contribute to stress reduction, lowering heart-related risks, alleviating depression, and even extending your life.
Did you know that you can work while drawing Social Security benefits without losing your benefits if you stay under the IRS earnings limit?
As of 2023, the earnings limit will increase to $21,240 for workers younger than full retirement age. For each $2 earned over $21,240, the Social Security Administration (SSA) deducts $1 from your benefits.
Earnings limits for people reaching full retirement age in 2023 are $56,520. For every $3 earned over $56,520, the SSA deducts $1 until you reach full retirement age. The earnings limit for those over full retirement age is not applicable for the entire year, however.
Here’s something that no one tells you about retirement. You’re probably going to be bored — especially if you retire early. However, it is possible to combat boredom after retiring by taking on new work.
A retirement job may provide mental stimulation to retirees. Retirement can cause boredom when retirees are suddenly faced with long days with nothing to do. With a part-time job, retirees can still travel or spend time with their families while enjoying the excitement of working.
When you meet someone new, the first question they ask is, “What do you do?” Most people answer this question by listing their job titles. But, the answer to this question is often elusive to retired people.
A person’s job typically indicates how they contribute to their community. The ability to bring value to someone else is one of the benefits of having a part-time job.
“You can build on your past experiences, your past skills and your past colleagues to look for that part-time job, or you can create your own new part-time job based on your interests,” says Sally Balch Hurme, author of Get the Most Out of Retirement. “Your enthusiasm for the topic or the area will put you ahead in becoming a successful employee.”
As already mentioned, you can improve your health and reduce your risk of serious illness by staying socially active and exercising your brain. Engaging in creative part-time work that challenges your mind and body is the perfect outlet to remain healthy.
Moreover, you can earn an income from your creative talents with a little effort.
For example, now that you have the time, you can finally pursue your passions, like painting, photography, woodworking, or baking. A local shop selling your products can be very satisfying and a great way to make some extra money. Or perhaps Etsy would be a better place for you to sell your items online.
Regardless, monetizing a lifelong hobby can become an exciting and lucrative part-time job.
Short answer? Yes.
Approximately 20% of Americans 65 years and older are either actively working or looking for a job, according to a report from the Administration for Community Living. Most of them are still employed full-time, although many have taken on alternative work or scaled back their hours after leaving their long-term careers.
Definitely.
It wasn’t uncommon for employers to have mandatory retirement policies as late as the 1970s. Typically, these employers did not hire workers older than 65 years old. Generally, these policies are illegal today.
As far as Medicare rules are concerned, they are relatively clear-cut. It’s a different story with cash benefits, though. A retiree’s wage income does not affect Social Security benefits once he or she reaches FRA (Full Retirement Age). On the other hand, the earnings limitation rules for younger retirees are quite complex and vary by age.
Stress is one of the first things that comes to mind. It is possible to feel physically and emotionally drained if you choose the wrong job.
As such, you don’t have to feel bad about quitting your part-time job if it leaves you exhausted and stressed. Instead, find another job that’s more suitable.
Additionally, there are unintended financial consequences. You should speak to a financial advisor before taking on a part-time job during retirement to ensure you won’t suffer financially. You’ll want to consider your retirement accounts, Social Security, insurance, and even tax consequences.
Finally, you will have less free time. Not all companies offer more flexibility to retirees. As such, pre-approval may be required for time off. You may also struggle to set your own schedule in retirement if you take on a part-time job.
Many retirees who stopped working are surprised at how much they miss the sense of community, routine, and purpose they had when they worked. It is important to grasp the “why” behind your desire to keep working so you can decide which post-retirement opportunities to pursue.
The post The Benefits of Working Part-Time in Retirement appeared first on Due.
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Deanna Ritchie
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Opinions expressed by Entrepreneur contributors are their own.
You signed up for life insurance in an effort to provide a financial safety blanket for your loved ones after your death, but what if you don’t need it or simply can’t afford it anymore?
Did you know that it can be turned into cash while you’re still alive to get you out of a financial crisis? You could even use it to build supplemental income for your golden years.
That’s right. You can sell your life insurance policy just like any other private property. This transaction is called a life settlement.
Maybe you need the cash to cover a major (and unexpected) expense or simply want to rid yourself of paying the monthly premium. Often, a life settlement is the only lifeline for many older adults struggling to cover heaps of medical bills after they fall critically ill or need long-term care in retirement.
Those unaware of this option end up selling their cars or homes or pile up huge debts while paying for care, not knowing that their insurance policy could get them the same amount (or more) of cash than what their vehicle is worth or the total equity in their property.
If you ever think of going down the same route, please don’t. Selling your life insurance policy to an individual or entity may be a smart move, depending on your unique circumstances. Knowing how to sell it and determining if it’s even the right move for you is critical to your financial future.
Related: Life Insurance: What to Consider As a Business Owner
A life settlement is when you sell your life insurance policy to a third party for a lump sum that’s less than the net death benefit but more than the cash surrender value.
Sellers usually receive a lump sum, and afterward, the buyer assumes responsibility for the policy, paying the premiums and receiving the full death benefit when the policyholder passes away.
As the policy owner, you can avail several advantages from a life settlement. Some of these include the following:
A life settlement is also an attractive option for those who have a policy with a high cash surrender value but don’t need the death benefit. For example, you may have purchased a life insurance policy to secure the financial future of your spouse or children, who are no longer dependent on you. With them becoming financially independent, the policy may no longer be needed.
The same goes for seniors who may have purchased a policy when they were in good health, but now, with their deteriorating health, they may be struggling to afford the premiums. A life settlement can help them eliminate this burden and improve their quality of healthcare and life.
Related: Why Life Insurance Has to Be Part of Your Wealth-Building Plan
Generally, you must be 65 or older and your policy must have a minimum face value of $100,000 to qualify for a life settlement. This is because investors wouldn’t want to pay premiums on a policy for you if you could continue to live for decades.
Also, many states require you to wait at least a couple of years after a life insurance policy is issued before you can sell it. In some states, the waiting period is five years.
The only drawback of a life settlement is that you’ll no longer have life insurance coverage. But if your family’s financial future is secure and you don’t need the policy, there’s nothing to lose in a life settlement transaction.
Whether you need the cash or want to free yourself of the premiums, life settlements are a big decision.
You must carefully assess your circumstances and consider all the benefits and drawbacks of selling a life insurance policy before making the final decision. Also, make sure you fully understand the laws in your state regarding life settlements to avoid getting into trouble.
If you think a life settlement is the best way forward for you, get in touch with a life settlement broker or financial advisor to discuss your options. It really helps to shop around before sealing the deal because some companies tend to make less than lucrative offers. A professional can help you make sure you get a fair price for your policy.
As soon as a suitable prospect is found, you and the buyer will have to sign a contract outlining the terms of the sale. Once the contract has been signed, you’ll receive the agreed-upon amount in a lump sum from the buyer.
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William Schantz
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I will have been with my partner for 50 years in July, but we’re not legally married. Can I receive his retirement when he dies? I’m very worried I’ll be on the street after taking care of him all these years. What advice can you give me?
-Lost
Dear Lost,
Lots of people will tell you that marriage is just a piece of paper. But that’s simply not true. Even if a couple is perfectly happy without that marital contract, there’s no getting around the fact that spouses are afforded a lot of benefits that aren’t available to long-term unmarried partners. These protections often become apparent at life’s worst moments, like when one person dies or becomes disabled, or the couple splits.
Before I go any further, I want to address the minuscule possibility that you’re in a common-law marriage. Couples in a common-law marriage have many of the same rights as couples who are traditionally married. For a common-law marriage to be valid, a couple needs to live together in a state that recognizes common-law marriage — and there are currently fewer than a dozen — and present themselves as a married couple. The lines are quite hazy, and this is difficult to prove in court. So because few couples actually have a common-law marriage, I’m answering your letter assuming that you’re not in one. But if you think you might meet the criteria, it’s worth consulting with an attorney about your rights.
Got a Burning Money Question?
Get practical advice for your money challenges from Robin Hartill, a Certified Financial Planner and the voice of Dear Penny.
DISCLAIMER: Select questions will appear in The Penny Hoarder’s “Dear Penny” column. We are unable to answer every letter. We reserve the right to edit and publish your questions. But don’t worry — your identity will remain anonymous. Dear Penny columns are for general informational purposes only, but we promise to provide sound advice based on our own research and insights.
I don’t want to scare you, but you’re right to be worried about being left with nothing if your partner dies before you. I’m not sure what type of retirement benefit you’re referring to.
But one of the big concerns when couples don’t marry relates to Social Security benefits. If you both worked for most of your adult lives and had relatively equal earnings, this probably wouldn’t be an issue. But marriage gives you the right to claim survivor benefits when a spouse dies. If your partner’s Social Security is your primary source of income, that’s a big concern. Likewise, you can’t receive spousal benefits while he’s still living.
The rules are a bit different for retirement accounts. When someone has a workplace plan, like a 401(k), they’re required to make their spouse their beneficiary unless they give written consent to someone else being named.
As long as your partner isn’t married to someone else, he’d be able to list you as his beneficiary, even though you’re not his spouse. The rules for individual retirement accounts (IRA) aren’t quite as stringent. Married or not, you can designate whomever you want as your beneficiary.
If you opt to remain unmarried, estate planning becomes even more essential. You and your partner should list each other as the beneficiary for any retirement accounts and life insurance policies. That way, when one of you dies, the asset will avoid probate and transfer directly to the surviving partner. You can also set up your bank accounts so that they’re payable on death to the other person.
Having an updated will is vital to cover other property. The saying in estate planning is that if you don’t have a will, your state has one for you. Since you’re not married, each person’s assets would go to the individual(s) your state considers your next of kin, even if they’re a distant relative.
If each of you would want the other to make decisions if you couldn’t communicate, you need to spell that out, as well. A medical power of attorney is a document that lets you designate someone to make health care decisions if you’re incapacitated.
People have all sorts of complicated reasons, both financial and non-financial, for not wanting to marry. If your partner has amassed a decent nest egg, he can probably make sure you’re left on solid footing if he dies before you. But if you’re depending on his Social Security, I think it’s worth considering a walk down the aisle, even after all these years.
Marriage certificate or not, part of building a life with someone is ensuring they’ll be cared for when you’re gone.
Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. Send your tricky money questions to [email protected].
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robin@thepennyhoarder.com (Robin Hartill, CFP®)
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Life insurance provides cash to your beneficiaries after you die. It’s meant to help replace your income.
But what about buying life insurance if you’re over age 60 or 65? Does it make sense?
In some situations, it can make sense to spend thousands of dollars a year for a life insurance policy after you retire. Some seniors use life insurance as an estate planning tool, a way to pass along inheritance to heirs or to cover debt and funeral expenses.
But for others, purchasing a new policy doesn’t make financial sense.
Here’s what you should consider.
People over age 65 can buy life insurance, but the premiums will be higher and it may be more difficult to pass medical underwriting requirements.
A specific type of life insurance policy — known as guaranteed issue life — is marketed to seniors as an affordable way to cover final expenses. But these types of policies come with restrictions and drawbacks. (More on that later).
Your health and age are two big factors insurance companies use to determine the cost of your premiums.
The older you are, the more expensive it is to purchase life insurance coverage. Likewise, the more chronic health conditions you have, the less likely you are to get a policy — or pay dearly for it.
Not everyone needs life insurance after they retire. Generally, if no one depends on you financially, or your heirs can inherit other sources of income after you pass away, life insurance isn’t necessary.
But there’s also a few cases when buying life insurance can help protect your family from financial hardship after you’re gone.
“You may not want medical debt or other end-of-life issues being claimed against your estate, especially if you don’t have a high net worth,” said Curtis Crossland, a certified financial planner at Suttle Crossland Wealth Advisors in Scottsdale, Arizona.
An estate is the legal term for all the assets you own when you die. After you pass away, the money in your estate is used to cover your outstanding debts.
Debts must be paid before your heirs receive any money. So if you accumulate more debt than you have assets, your children or spouse might be left with nothing.
“If you’re healthy and can qualify for life insurance, you might purchase it as a hedge against racking up huge medical bills before you pass away,” Crossland told The Penny Hoarder.
To be clear though, just because you die with a ton of debt doesn’t necessarily mean your survivors are stuck with the bill.
By law, family members do not usually have to pay the debts of a deceased relative from their own money, according to the Federal Trade Commission.
But your loved one could still be on the hook if they cosigned a loan with you. For example, if you and your spouse cosigned student loans for a child, your partner is responsible for paying off that debt after you die.
Even if your family isn’t drowning in debt after you’re gone, an insurance policy can pay out cash to help them live better.
Life insurance can help ensure your spouse can continue making mortgage payments, cover your funeral costs or provide financial support to an adult child with special needs.
For the wealthy, purchasing a life insurance policy in retirement can be a great way to pass along a sizable inheritance, fulfill philanthropic wishes or cover estate taxes.
Consider all the sources of income your spouse or children can access after you pass away, like bank accounts, retirement accounts, real estate and other investments.
For example, while Social Security pays a survivor benefit, it won’t be as much as Social Security paid when you were alive.
Likewise, if your spouse would lose most or all of your pension income after you die, life insurance can fill that gap.
Life insurance gets more expensive with every year you wait to purchase a policy. Simply put, the older you are, the higher your life insurance premiums will be.
Here are some examples.
A 35-year-old female in average health purchasing a 20-year term life insurance policy with a $250,000 death benefit can expect to pay about $16 a month in premiums, according to data from PolicyGenuis, an online insurance marketplace.
However, a 65-year-old female in average health could expect to pay an average of $193 a month in premiums for a 20-year $250,000 term life insurance policy.
That’s about 12 times more expensive.
Term life insurance policies tend to be cheaper than permanent life policies. A big drawback? Term policies only last a specific amount of time.
If you purchase a 20-year policy when you’re 65, there’s a decent chance your policy could expire before you die. That means all the money you paid in premiums for 20 years doesn’t lead to a payout for your heirs.
Whole life insurance is much more expensive, in part, because your coverage never expires.
But the cost can be staggering.
A 35-year-old female can expect to pay an average of $243 a month for a whole life insurance policy worth $250,000, according to PolicyGenuis.
For a 65-year-old female, that number jumps to a whopping $935 a month for a whole life insurance policy worth $250,000.
That’s $11,220 a year. Your coverage will never expire but you’ll pay nearly five times more for a whole life policy at age 65 than a term life insurance policy at age 65.
Your age isn’t the only thing that determines a policy’s cost.
Other factors that impact the cost of life insurance include:
Life insurance policies come in two broad types: term life and permanent life.
Here’s some more information about the different types of life insurance.
Term life insurance typically lasts 10, 20 or 30 years. Longer lasting policies charge higher monthly premiums.
Once the term ends, your coverage expires and you no longer need to pay premiums.
Most of these policies require a medical exam.
If you already have a term life insurance policy that’s set to expire, you may be able to convert it to a permanent life policy and keep your coverage in force.
You should call your insurer and ask what conversion options are available, said Courtney Wilson, president and founder of Fortify Insurance Group, an independent broker agency.
“Most policies have a conversion privilege of some sort,” Wilson told The Penny Hoarder. “Some of them expire when you turn 65 or 70, others only last the first seven to 10 years of the policy unless you buy an extension.”
Bypassing a medical exam is a big benefit of converting a term life policy into permanent coverage, according to Wilson.
“You’re protecting your insurability,” he said. “If you got preferred health status when you bought your term life policy and then you convert your policy in the future, you get preferred rates — regardless of your health status when you convert it.”
Permanent life insurance never expires so long as premiums are paid. These policies can build up a cash value you can borrow against later.
Some offer accelerated death benefits, which lets you access the money before you die if you’re diagnosed with a terminal illness or need cash to pay for long-term care expenses.
There are several types of permanent life insurance, including whole, universal and guaranteed life.
Permanent life insurance policies tend to cost much more than term life policies — anywhere from five to 10 times more.
Medical underwriting can be a major obstacle for older adults looking to purchase life insurance.
All life insurance products involve some degree of underwriting to get a picture of your background and determine how risky it is to insure you.
Traditional policies require you to undergo a full medical exam, including a blood and urine test. The insurance company may also contact your general practitioner to get a copy of your medical records.
Simplified issue and guaranteed issue life insurance offer a way to bypass medical exams — but you’ll pay for the privilege.
“You’re going to be a lot more limited with what you can get as an older client if you don’t want to go through the full underwriting process,” Wilson said.
Simplified issue life insurance doesn’t require lab work or a medical exam. The underwriting process might look like answering a few basic questions instead of undergoing blood work, a physical and everything else.
Coverage amounts tend to be smaller, usually no more than $100,000.
Premiums will be more expensive though. After all, the insurance company doesn’t know as much about your health or life expectancy, so you’re riskier to insure.
More insurers are offering an accelerated underwriting process, which collects more information from applicants and third-party sources than a simplified issue policy.
Policies with accelerated underwriting often offer competitive death benefits at affordable rates — and with shorter waiting periods than policies with traditional underwriting.
Unfortunately, accelerated underwriting is often only available to people 60 years or younger, Wilson said.
Guaranteed issue life insurance goes by many names. Final expense insurance, burial insurance, funeral insurance — it’s marketed differently, but they all share a few common traits.
Guaranteed issue is usually a permanent life insurance policy with a death benefit between $5,000 and $25,000.
That’s why it’s often called funeral insurance. The payout won’t cover much beyond final expenses and maybe some medical costs.
You can’t be turned down for this type of policy — which is why it’s marketed to seniors, who tend to have more chronic health conditions.
But there’s a catch: If you pass away within the first two or three years after purchasing your policy, your beneficiaries won’t receive the full death benefit.
Instead, if you die during this period, your heirs will usually receive a refund of the premiums you paid, plus interest.
“You’ll want to understand the claims payout record for the company you’re looking to buy from,” Crossland said. “Policies for elders that guarantee coverage no matter your health situation may have incredibly restrictive language.”
Low monthly premiums often make final expense insurance for seniors seem more attractive than other policies.
But since the policy value is so small, you may end up shelling out more money than the policy is actually worth.
Here’s an example.
Lincoln Heritage Life Insurance offers guaranteed issue policies to seniors. According to its website, a 65-year-old female can expect to pay $41 to $64 a month for a $10,000 final expense insurance policy.
Compared to the cost of a $250,000 term life policy ($194 a month) or a whole life policy ($935 a month), this feels like a bargain.
But consider this.
If you pay $50 a month for the policy, that’s $600 a year. In less than 17 years, when you’re age 82, you’ll have paid more money to the insurance company than the policy is actually worth.
Unless serious health issues disqualify you from better coverage, check out other policy types first. An independent insurance agent or financial advisor can help you shop for the best quote among multiple companies.
Buying life insurance in retirement is a personal decision. What makes sense for one person may not be the best move for someone else.
Before you buy a policy, weigh the pros and cons.
Pros
Cons
Many of the best life insurance companies sell policies for people in their 60s, 70s and even 80s.
Many insurers can provide you a basic quote if you fill out a form on their website. You’ll need to follow up with a representative or agent to get a more accurate estimate of your cost and coverage options.
Shop around for the best life insurance quotes. You’ll want to compare the death benefit and monthly premiums of each policy to ensure you’re getting what you need.
Ask each life insurance company about policy details and restrictions, including which causes of death aren’t covered and what happens if you fall behind on premium payments.
Don’t lie about your health status or medical history either. It might be tempting to fib if you’re in poor health but you’ll be committing insurance fraud.
If you’re caught, the insurer can deny your application. That information might also be passed along to the Medical Information Bureau, a company that life insurance companies use to look at the health history of potential customers. That can make getting coverage from another insurance company more difficult, if not impossible.
Finally, if the insurer finds out you lied after you pass away, they can adjust the death benefit your family receives, Wilson said.
Experts recommend meeting with an independent insurance agent, a certified financial planner or an estate planning attorney to see if purchasing life insurance makes sense for you and your family.
Rachel Christian is a Certified Educator in Personal Finance and a senior writer for The Penny Hoarder. She focuses on retirement, life insurance, investing and taxes.
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rachel.christian@thepennyhoarder.com (Rachel Christian, CEPF®)
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The Baby Boomer Retirement Crisis Is Here. Why the Richest Generation Is Struggling.
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If you’re enrolled in Medicare, routine vision care isn’t guaranteed.
Some privately administered Medicare Advantage plans cover eyeglasses and eye exams.
But Original Medicare — which provides health insurance to about 36 million Americans — doesn’t pay for your new eyeglass frames or an annual vision exam.
So how do you know, in your own case, what’s covered and what’s not?
Whether you’re new to Medicare and wondering what to expect at your next eye exam, or you’re a long-time beneficiary trying to save money on glasses, our guide to Medicare vision coverage and affordable eye care is here to help.
If you have a serious eye disease like cataracts or glaucoma, Medicare Part B will generally pay for treatment.
But that’s not the case for routine exams and eyeglasses.
Most private Medicare Advantage plans provide some coverage for glasses and routine vision tests. Original Medicare does not.
Here’s how it breaks down.
Original Medicare does not cover routine vision exams, eyeglasses or contact lenses. Lasik surgery isn’t covered either.
You’re on the hook for the full cost unless you have secondary insurance like Medicaid.
Original Medicare does cover eye care related to illness or injury, including cataract surgery and glaucoma screenings. More on that shortly.
Nearly all Medicare Advantage plans — which are administered by private insurance companies like United Healthcare and Cigna — include some routine vision coverage.
However, vision benefits are pretty modest — plans offer about $160 worth of eyewear and eye exam coverage a year on average, according to an analysis by the Kaiser Family Foundation (KFF).
Medicare Advantage plans also restrict the vision benefits they offer, including:
For example, 47% of Medicare Advantage plans limit beneficiaries to one pair of eyeglasses every two years, according to the KFF analysis.
Finally, to get these vision benefits, you will need to use certain eye care professionals and services within your specific Medicare Advantage plan network.
By law, both Original Medicare and Medicare Advantage must cover the same basic vision services for eye diseases and chronic conditions.
If you have an eye disease that causes low vision, such as macular degeneration or glaucoma, Medicare Part B will cover screening tests and standard treatment.
You’ll pay 20% of the Medicare-approved amount for these covered treatments and services after meeting your Part B deductible.
Medicare Part B covers 80% of the cost for:
The services above are covered whether you have Original Medicare or a Medicare Advantage plan.
Some diseases and conditions — such as lupus and shingles — can affect your vision even though they aren’t traditional eye diseases. Medicare Part B covers treatment for your eyes if you have one of the many conditions on this list from the U.S. Centers for Medicare & Medicaid Services.
Eyeglasses and routine vision exams are pricey for Original Medicare beneficiaries.
Fortunately, several programs and organizations offer free or discounted eyeglasses and exams for older adults.
Here are some of the best ways to reduce your out-of-pocket costs on routine vision care when you’re enrolled in Medicare.
The national average cost of a comprehensive eye exam is $150, but the figure can vary from $50 to $200 or more.
Here are a few ways to keep more money in your pocket without forgoing important eye care.
AAA and AARP members can receive discounts at participating LensCrafters and other retail locations nationwide.
Members of AAA and AARP can get the following discounts at LensCrafters:
AARP members also receive these discounts through other providers:
To receive your AAA or AARP member discount, make sure to present your membership card at participating locations.
Retailers like Costco and Walmart offer optical centers with affordable pricing on eye exams and glasses.
At Walmart, eye exams average about $75, but prices vary by location.
Like Walmart, Costco eye exam costs vary, but you can expect to pay anywhere from $50 to $100 for an exam.
Both retailers also offer a wide selection of eyeglasses in the $35 to $75 range.
EyeCare America is the public service arm of the American Academy of Ophthalmology.
Its Seniors Program provides comprehensive eye exams and up to one year of followup care for any eye condition diagnosed during the initial exam.
These services are free to qualifying older Americans. It’s one of the only national programs that offers free eye exams for people on Original Medicare.
To qualify for the EyeCare America Senior Program, you must:
Just a heads up: This program does not cover the cost of eyeglasses.
You can see if you qualify and apply for the program by filling out this form.
The Lions Club can pay for eye care and eye exams at local club locations and community events. Some locations also provide eyeglasses.
For more information, reach out to your local Lions Club chapter.
Students at optometry schools sometimes provide free or discounted eye exams during clinics.
These undergraduates are closely supervised by faculty members, so it can be a cheap way to score a routine vision test.
You can use this tool to search for schools in your area — although the eye exams and care provided vary from school to school.
Another option is asking local vision care providers if they offer any senior discounts or in-house financing plans. Make sure to call ahead and ask before scheduling an appointment.
Older people with low incomes may also qualify for free or reduced eye exams at their local county health department.
Finally, numerous local nonprofits offer free eye exams throughout the year. Call United Way’s 211 service to see if a program exists near you. Or Google “free eye exams near me.”
Affordable eyeglass lenses and frames are easy to find online or at large retail stores like Walmart and Costco.
There is also a program that provides free eyeglasses to those who qualify — but be prepared to jump through some hoops first.
The OneSight Vision Voucher program helps people in need receive free eyewear if they’re not able to cover the cost of eyeglasses with insurance.
Here are the steps you need to take:
Check out OneSight’s website to learn more about its vision voucher program.
Buying eyeglasses online is a cheap alternative to paying hundreds of dollars for a fancy pair at your optometrist’s office.
People who bought glasses online paid a median of $91, while those who shopped in-store spent $234, according to a 2021 survey from Consumer Reports.
Some online retailers, like Zenni Optical, offer single prescription glasses starting at just $7. You’ll pay more for special coatings, progressive lenses and other add-ons.
Many of these sites offer virtual “try on” features and come with convenient return policies so you can find frames and lenses that work for you.
Medicare beneficiaries can purchase private vision insurance to help offset the cost of eyeglasses and routine eye exams. According to KFF, Medicare patients spent an average of $242 out of pocket on vision care in 2018.
Plans are generally inexpensive — usually $10 to $15 a month — and premiums usually don’t increase with age like other types of health insurance.
However, private insurance copayments and deductibles may not make it worthwhile.
You should carefully examine any private vision insurance plan benefits and costs before signing up. Make sure the plan actually saves you money on eyeglasses and routine exams.
Medicare may not be your only form of insurance.
If you are also enrolled in Medicaid or Veterans Affairs health benefits, you may qualify for free or low-cost vision care.
Medicaid will cover eye exams for adults ages 21 and older in most states — but not all.
Medicaid is a federally funded health insurance program for people with low incomes. It’s administered at the state-level, so each state determines its own vision benefits and limitations.
According to KFF:
In states that do provide vision benefits, basic eye exams are covered. Prescription glasses with basic frames are also usually covered, but each state has specific caps.
Copays for eye exams with Medicaid are affordable, usually $15 or less.
Research your specific state’s Medicaid vision coverage or contact your local Medicaid office for more information. Speaking with a local Medicaid office and your individual plan provider is the best way to understand your specific vision benefits.
Once you’re clear on your coverage, make sure your eye doctor accepts Medicaid before scheduling an eye exam.
If you have VA health care benefits, the program will cover your routine eye exams and preventive vision testing.
Talk to your VA primary care provider or contact your nearest VA medical center or clinic for more information.
Veterans can also qualify for free eyeglasses or contact lenses by meeting one of the following criteria:
The following groups can also qualify for free eyeglasses through the VA:
Rachel Christian is a Certified Educator in Personal Finance and a senior writer for The Penny Hoarder.
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rachel.christian@thepennyhoarder.com (Rachel Christian, CEPF®)
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On February 1, 2022, Tom Brady announced his retirement from the NFL. His retirement lasted…all of 40 days. Brady went on to play another season with the Tampa Bay Buccaneers, got divorced from wife Gisele Bundchen, and was ultimately eliminated from playoff contention in the Wild Card Round.
On February 1, 2023, Tom Brady announced his retirement from the NFL…”this time for good” he promises. Brady posted his “emotional retirement essay” on Twitter, saying that although he got his chance at the long goodbye last year, this time he really means it. After 23 seasons in the National Football League and seven Super Bowl wins, perhaps the greatest quarterback of all time is done playing.
Brady’s the most decorated player in league history. He was drafted 199th overall in 2000 to the New England Patriots along with Bill Belichick. When the Patriots QB got injured during the 2001 season, Brady launched a dynasty that would terrorize other teams. After 20 years with the Patriots, Brady joined the Tampa Bay squad alongside best friend, Patriot tight end Rob Gronkowski.
In that first season with the Bucs, Brady and Gronk led the team to their second franchise Super Bowl victory. Often known as “The GOAT,” Tom Brady has been in the league longer than some players have been alive. He spent exactly half his lifetime playing in the NFL and has inspired many to play the game.
He was both feared and respected amongst the league. Popular players in the league like Patrick Mahomes, whom Brady beat in the 2021 Super Bowl, have already shown their love for the newly minted retiree.
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It’s hard to rebound from financial shocks in retirement. Job loss, divorce, a health emergency or a death in the family can strap your resources, deplete your savings and leave you wondering what comes next.
Economic volatility and soaring inflation only add to the stress.
If you’re an older American struggling to afford housing, it’s important to understand your options.
There are federal, state and local programs that help seniors with low incomes pay for housing. You might qualify for rental assistance or subsidized housing at a senior apartment complex.
Knowing where to start is often the hardest part. In this guide, we break down what you need to know about how to find affordable senior housing in your community.
We’ll also cover other ways to save money on housing, including how to negotiate rent with your landlord and when it makes sense to find a roommate.
If you’re exploring housing options for yourself or someone you love, you should first determine what type of living arrangement you need and what you can afford.
Thankfully, there are apartments and other housing specifically designated for seniors on fixed incomes.
Here’s how to get started.
Contacting your local public housing authority should be your first step in finding affordable senior housing.
This agency can help you apply for either low-rent public housing or a Housing Choice Voucher from the U.S. Department of Housing and Urban Development (HUD).
Only your local agency can tell you whether you qualify for this assistance.
To find your public housing agency:
Your public housing agency can also connect you to other grants, resources and programs only available in your community. This can include assistance with your utility bills, transportation vouchers or meal delivery programs.
You can apply at more than one housing agency for assistance. There are often long waiting lists, so if you’re willing to move to a nearby city or county, you might find housing faster.
Not sure if public housing is right for you? A HUD-approved housing counselor can help you explore all your options.
These counselors can help you with:
Counseling from these agencies is free for foreclosure-prevention counseling and homeless counseling. Other services such as rental advice may carry a fee — although agencies must provide counseling for free to people who cannot afford the cost.
To find a HUD-approved housing counseling service near you:
Staff who answer the main phone will be able to respond to or direct your calls to the appropriate person.
For general questions about HUD or its programs, you’ll want to contact your local HUD office. Find your local HUD office here.
Senior living sites like After55 and SeniorHousingNet let you search for affordable housing options in your local area.
You can also read reviews of senior apartments near you on Google and websites like SeniorAdvisor.com.
It’s up to you to determine if these low-income housing options meet your needs. Contact each property individually to see if you’re eligible for reduced rent.
Finding affordable senior housing takes time. Break the task up into manageable steps. Ask family and friends for help organizing paperwork and visiting housing agencies.
To qualify for low-income housing, your income must typically be less than than 80% to 50% of the median income in your county or city.
However, each housing program can set different eligibility requirements based on an applicant’s age and income.
Be prepared to provide lots of personal information and documents when applying for affordable senior housing.
You typically need to provide your:
If you’re struggling to afford housing, the federal government may be able to help.
There are several subsidized housing programs out there — and a few are specifically designed to assist seniors with low incomes.
The best way to see if you qualify for an affordable senior housing program is to contact your local public housing agency.
Keep in mind nearly all of these programs carry lengthy waiting lists of at least six months to a year. It’s best to apply as early as possible if you need affordable housing.
HUD’s housing choice voucher program allows the elderly, disabled and very low-income families to find their own housing.
You aren’t limited to units located in subsidized housing projects. Instead, you’re responsible for finding a suitable housing unit that meets minimum standards of health and safety.
This can include single-family homes, townhouses, apartments or even your current residence. Vouchers can also be used to buy homes in some cases.
If you qualify, a housing voucher is paid to the landlord directly by your public housing agency each month. You’ll pay the difference between the actual rent and the amount subsidized by the program.
Generally, your income can’t exceed 50% of the median income for the county or metropolitan area where you’re applying.
Tenants usually pay 30% of their monthly adjusted gross income for rent and utilities, and the voucher makes up all or most of the difference.
Public housing comes in all shapes and sizes. High-rise apartment buildings are the most common public housing option for older adults.
Income limits for public housing vary from area to area, so it’s important to contact your public housing agency to check requirements.
The elderly and disabled are typically given higher priority for public housing.
Rent can cost as little as $25 to $50 or as much as 30% of your household’s monthly adjusted income.
In the Low-Income Housing Tax Credit program, developers and investors receive tax credits from the state to buy, rehab or construct rental housing for lower-income people.
By law, each development must set aside a minimum number of units for eligible low- or very low-income residents.
Many LIHTC properties are operated as 55+ or 62+ communities, or senior apartments.
Residents must generally have limited or fixed incomes of around 60% of the area’s median income.
You can use this database to see a list of LIHTC properties in your area. Or contact a HUD-approved housing counseling agency to explore your options.
The Section 202 program subsidizes independent living-type apartments for older Americans.
Section 202 offers housing for the elderly and disabled who are able to live mostly on their own, but who still need assistance with certain daily tasks like cleaning and cooking.
These properties typically include other supportive programs and services like housekeeping, home-delivered meals, counseling, medication and transportation.
To qualify, you must be 62 years old with a very low household income, usually 50% of the area’s median income.
You typically get higher priority if you live in substandard housing, have been involuntarily displaced or are currently paying more than 50% of your income in rent.
You may struggle to afford your current rent or mortgage payment — even if you make too much money to be eligible for subsidized housing.
You have options, too. From negotiating rent to finding help to pay your utility bill, there are other ways to make housing more affordable as costs continue to rise.
Many renters across the country are facing major price hikes this year. If you’re on a fixed income, finding extra money can be nearly impossible.
But don’t give up yet! Try to negotiate rent with your landlord first.
Your strongest bargaining chip is showing your landlord similar units in your area with lower rents.
This comparison is a good indication that you’re overpaying, and that your landlord may have a difficult time finding someone else to move in if you decide to leave.
You can also try offering something in exchange for a lower rent price. For example, offer to maintain the outdoor space, keep the lobby clean or give up a coveted parking spot in exchange for $50 off your rent.
Negotiating is never a guarantee. But it doesn’t hurt to ask either — especially if the alternative is moving out.
Sometimes getting help with other bills can make paying rent easier.
There are hundreds of local programs nationwide that assist seniors with everything from utility bills to home repairs.
Eldercare Locator is a federal website that helps connect older Americans with trustworthy local support resources. You can also call Eldercare Locator toll-free at 800-677-1116.
By entering your city or zip code, you can find help with meals, transportation and home care. You’ll also find resources for legal services, elder abuse prevention and the State Health Insurance Assistance Program, which can help you save money on Medicare.
You may dread the idea of living with a roommate.
This is not how I envisioned my retirement.
But here’s the hard financial truth: Living alone is really expensive these days, especially in states like Florida, Nevada, Arizona and Texas, where rent prices are skyrocketing.
Finding a roommate to split the bills with is a smart way to save money.
If you own your own home, taking on a renter can help you afford the mortgage, homeowners insurance, property taxes and HOA fees.
Non-homeowners can save money on a one-bedroom apartment by renting a room from someone else or moving into a condo with a couple friends.
Nationwide online housemate search sites like SeniorHomeshare and SilverNest are specifically geared for older adults looking to coexist.
Both sites let you list your home to find potential roommates or find homeowners in search for a roomie.
There may also be local, offline homeshare matching programs for older adults in your community. Call 211 or contact your local Area Agency on Aging to inquire about this type of service.
A reverse mortgage is a type of loan that allows property owners ages 62 and older to convert home equity into cash.
Your home must be paid off or your mortgage balance low to qualify.
Unlike a regular mortgage, you don’t need to make monthly loan payments. Instead, your lender pays you, and your debt increases over time.
The loan is settled or repaid when you sell the home, move out or die.
Reverse mortgages are often controversial — and for good reason. If you don’t keep up with property taxes and follow other requirements, you can lose your home to foreclosure.
But for retirees who consider themselves “house rich and cash poor,” a reverse mortgage can free up money for everyday expenses.
There are lots of alternative housing options out there. Accessory dwelling units are one of them.
These separate living spaces can be an affordable housing solution for seniors. They exist in many communities already.
An ADU can be converted from an existing structure — like a garage — or built from scratch.
6 Types of Accessory Dwelling Units:
Some seniors choose to create these units on their own property, then take in renters to recoup costs and supplement their retirement.
Other families work together to raise money for construction, then create a unit on an adult child’s or relative’s property.
Senior advocacy groups like AARP are big supporters of accessory dwelling units as a housing solution for older Americans.
You can check out AARP’s guide, The ABCs of ADUs, to find out more about how to build these units.
But at $75,000 or more, creating a brand new ADU isn’t exactly affordable for most people.
Organizations like Habitat for Humanity may be able to assist with construction for qualifying low-income seniors.
You can also check with your local Area Agency on Aging to see if home repair grants or assistance is available.
Rachel Christian is a Certified Educator in Personal Finance and a senior writer for The Penny Hoarder. She focuses on retirement, Medicare, investing and taxes.
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rachel.christian@thepennyhoarder.com (Rachel Christian, CEPF®)
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This article originally appeared on Business Insider.
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Even though retirees have historically flocked to Florida, Rhode Island and Delaware may be two great alternatives for those ready to enjoy their golden years.
That’s according to Insider’s analysis of various datasets to find the best states for retirees to live in. Based on our methodology, 20 states ranked above Florida.
According to one analysis of the American Community Survey from the Census Bureau, Florida was the No. 1 state retirees were heading to.
But some retirees may not wish to move to Florida.
Insider wanted to see what other states may be great for retirees based on several factors, including average temperatures as well as the cost of living. According to our analysis and methodology, there were 20 states that ranked above Florida. This includes Arkansas, Texas, and Maine.
The following are 20 states that may be great for retirees. Below these top states is more information about our methodology and our full list of data sources we used in creating this ranking.
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Nebraska may be good for retirees interested in a cooler average temperature compared to other states. The state had a 60-month average from December 2017 to November 2022 of 49.5 degrees Fahrenheit. The state had pretty high employment in nursing care facilities in June compared to most other states, with 6 per 1,000 residents.
For retirees looking to move soon, recent data on Redfin shows there were more sales for homes in the state as of December 2022 than there were a year earlier, but the median sale price has risen from a year ago.
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Home to the Grand Canyon and a beautiful desert landscape, more people in general are moving into Arizona from elsewhere in the US, Census Bureau data suggests. Net domestic migration to the state was 70,984 between 2021 and 2022, higher than most states. Some retirees may also want to head to this Southwest state.
Arizona had a relatively high average annual growth in Medicaid spending per enrollee from 1991 to 2020 with a value of 4.1%. It also had a relatively high 60-month average temperature with a value of 61.8 degrees Fahrenheit.
The state, where 18.3% of the population was aged 65 or older as of 2021, is also home to the “most luxurious active retirement community” per a SmartAsset post: Rio Verde Community and Country Club.
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Illinois ranked highly for its average annual growth in Medicaid per enrollee from 1991 to 2020 with a value of 4.0%. It can be expensive to live there, however. Prices in Illinois were 1.4% higher than in the country as a whole. The state had a relatively high employment of nursing care facilities in June compared to most other states, with 5 per 1,000 residents.
The state is also home to what one post on Investopedia names as a top active retirement community: Sun City Huntley. That community has different sporting activities, like golf and tennis, as well as different clubs to join. Retirees may also be interested in independent living or retirement communities located in Chicago.
Illinois’ relatively low share of the population aged 65 and older and its slow growth in this older population from 2019 to 2021 brought down its spot on our ranking based on our methodology.
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17.4% of Arkansas’ population was 65 and older as of 2021. Prices were 10.6% lower than in the country as a whole. Arkansas had a higher employment of nursing care facilities per 1,000 residents in June compared to most other states, with 6 per 1,000 residents.
It had the lowest increase in its 65 and older population from 2019 to 2021 among states, at 0.2%, bringing down its overall average rank of metrics used to create the ranking.
One place to maybe retire to in the state is Bella Vista, which ranked No. 1 on Niche as the best place to retire to in the state.
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In the New England region, Massachusetts has seen its 65 and older population soar by 3.8%. As of 2021, 17.4% of its population was 65 and older. The state also ranked highly for its home health care services employment in June 2022 with a value of about 6 per 1,000 residents. The state may be good for retirees looking for a cooler temperature, given the state had an average temperature from December 2017 to November 2022 of 49.9 degrees Fahrenheit.
The state also has one of the fastest-growing retirement places according to a list from Realtor.com: Springfield. Realtor.com notes one pro of Springfield is its affordability.
Prices are high in the state though. Prices were 6.6% higher than in the country as a whole.
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Prices in Kentucky were 10.9% lower than in the country as a whole. The state also had one of the higher average annual growth rates in Medicaid per enrollee from 1991 to 2020 with a value of 3.7%.
Its percent change in its older population of those 65 and older from 2019 to 2021 and its employment per 1,000 residents of home health care services brought down its position in the rank. Kentucky saw its 65 and older population increase by 1.8% from 2019 to 2021, lower than many other states. And its home health care services employment in June 2022 was about 2 per 1,000 residents.
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Texas, the second most populous state and the fourth fastest-growing state, also ranked high on our list. Retirees may be interested in Texas for its food, its longstanding State Fair, or to join the many other people who have decided to move to Texas.
The state has one of the lowest shares of its population aged 65 or older, with a share of 13.2% as of 2021, but still has seen an increase from 2019 by 4.1%. It had a pretty high average temperature of 66.2 degrees Fahrenheit from December 2017 to November 2022. Among states and DC, it ranked No. 2 for its employment per 1,000 residents in home health care services in June, with a value of 9 per 1,000 residents.
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Maine had the highest share of its population being 65 and over as of 2021, at 21.7% or 297,101 of its 1.4 million people. The state has seen its 65 and older population grow by just shy of 4.0%.
The state also ranked higher than many other states in the analysis for its nursing care facilities employment residents in June 2022, with a value of 5 per 1,000 residents.
Retirees may also be interested in Portland, which Realtor.com named as one of the fast-growing retirement places. The post on Realtor.com notes that being able to get to “high-quality health care centers” is one reason this place in Maine is attractive to retirees.
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In New Mexico, 18.5% of the population was at least 65 years old as of 2021. Prices are relatively low; prices were 10.1% lower than in the country as a whole. Additionally, the state ranked highly for its home health care services employment in June 2022 with a value of about 7 per 1,000 residents.
According to SmartAsset, the state may be considered “moderately tax friendly.” SmartAsset noted these states include ones that “offer smaller deductions on some or all forms of retirement income” and were places where “sales, property, estate, inheritance and income tax rates in this category range in friendliness based on the degree of retirement deductions available.”
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Mississippi may be attractive for people looking for a lower cost of living. Prices were 13.4% lower than the country as a whole, much lower than other states.
It also ranked third for its average annual growth in Medicaid per enrollee from 1991 to 2020 with a 4.4% growth rate. The state also had a higher average temperature compared to most other states.
People looking to retire there may want to note that the median home sale price has climbed year-over-year in December, according to Redfin. However, there were also more homes for sale with a 43.9% year-over-year increase.
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About 21% of West Virginia’s population was at least 65 years old as of 2021. The state hasn’t seen much change in its older population, with an increase below 1% from 2019.
The state may be of interest for retirees looking for a cheaper state to live in. Prices were 9.2% lower than the country as a whole, lower than most other states.
Retirees looking to move there may enjoy going to Blackwater Falls State Park and Harpers Ferry National Historical Park or seeing if they should move to Summersville, which ranked as Niche‘s best place to retire in the state.
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From ski resorts to visit to hiking at State Parks, Vermont may be attractive to some retirees. Vermont had one of the higher shares of its population being at least 65 and over as of 2021, with a share of 20.6%. There were 133,173 people 65 or over in the state, an increase of 6.4% from 2019 and much higher than most other states.
It also ranked highly for its average annual growth in Medicaid per enrollee from 1991 to 2020 with a value of 3.7%.
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While Missouri hasn’t seen its older population climb as much from 2019 to 2021 as other states, with a growth of 2.5%, it may still be a great destination for retirees to think about living in. It came just short of the highest average annual growth in Medicaid per enrollee from 1991 to 2020 with a value of 4.5%.
The state also ranked relatively high for its nursing care facilities employment in June 2022 with a value of about 6 per 1,000 residents.
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While more people may be moving out of this state to elsewhere in the US according to net domestic migration data from the Census Bureau, the metrics we used show that Louisiana is among the states that may be good for retirees.
Almost 17% of the state’s population was 65 and older as of 2021. It had one of the higher 60-month average temperatures in our analysis, with an average of 67.6 degrees Fahrenheit. The state also ranked relatively high for its home health care services employment in June 2022 with a value of 4 per 1,000 residents.
For those looking to move to the state to retire soon, they may want to note that home prices have dropped. According to Redfin, the median sale price of $240,200 for Louisiana homes is down from a year ago by 2.0% with more homes for sale than a year ago. Homes are spending more time on the market, suggesting further that the housing market is moving in favor of buyers.
It’s also one of the states that doesn’t tax Social Security. Retirees may be interested in living in or traveling to New Orleans, including the well-known French Quarter, or Baton Rouge.
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Pennsylvania ranked highly for its average annual growth in Medicaid per enrollee from 1991 to 2020 with a value of 3.7%. The state, where 19.0% of its population was aged 65 and over, may also be good for retirees looking for a lower average temperature. The 60-month average from December 2017 to November 2022 was 50.3 degrees Fahrenheit.
The state also ranked highly for its home health care services employment in June 2022 with a value of 5 per 1,000 residents.
U.S. News ranked two Pennsylvania places at the top of its list of the top places to retire in 2022 to 2023. Lancaster ranked No. 1 followed by Harrisburg. York, Pennsylvania, also ranked highly at No. 5.
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In the southern region of the US, Alabama ranked toward the top of our list. Almost 18% of Alabama’s population, or 885,809 of the 5.0 million population, were at least 65 years old as of 2021.
One attractive factor that may appeal to retirees prices were 11.9% lower than the country as a whole. It also had a warmer average temperature between December 2017 and November 2022 of 64.5 degrees Fahrenheit.
Niche ranked Orange Beach, followed by Fairhope and Gulf Shores, as the best spots for retirees to live in the state.
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Retirees may be attracted to “Music City” or Nashville, staying in Memphis, checking out if Niche‘s top two places in the state for retirees Farragut or Germantown is right for them to live in, and hiking at the Great Smoky Mountains National Park.
The state is also one of a few states that doesn’t have personal income tax. And according to Redfin, there were more homes for sale as of December 2022 than in December 2021. However, the median home sale price as of December in the state was $368,600, which means prices have climbed year-over-year by 6.7%.
Prices were 9.1% lower than the country as a whole. The state also tied for 10th for its average annual growth in Medicaid per enrollee from 1991 to 2020 with a 3.4% growth rate. The state has also seen its older population of those 65 and older climb during the pandemic in 2021 from before the pandemic in 2019.
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In Ohio, 17.8% of its population was 65 and older. Prices were 7.5 lower than in the country as a whole.
Ohio had a higher employment of nursing care facilities per 1,000 residents in June compared to most other states, with the fifth-largest figure. Similarly, it ranked eighth in our analysis for the number of employees in home health care services per 1,000 residents.
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The East Coast state of Delaware with various beaches and close proximity to Pennsylvania and Maryland for those who want to travel may appeal to some retirees.
With about 20% of its population being 65 and over as of 2021, it’s among the states with the largest share of its population that is of this age group. Additionally, it’s seen a 6.3% increase in its 65 and older population from 2019. That growth is higher than most other states. Among states and DC, it ranked 11th for its employment per 1,000 residents in home health care services in June.
The state may also appeal to retirees because of its tax friendliness. One ranking from Kiplinger ranked Delaware at the very top in its list of the “Most Tax-Friendly States for Retirees” with the site noting “no sales tax, low property taxes,” and “no estate or inheritance taxes.”
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With a relatively high share of its population being 65 and over and places like Newport for beaches, Rhode Island may be an attractive state for retirees. It may also be a nice place for people who want a cooler temperature with the 60-month average from December 2017 to November 2022 of 51.8 degrees Fahrenheit.
Almost 20% of its population, 200,201 people, were 65 or older. And there are more older people than there were a few years ago in the Ocean State. The state had one of the highest percent changes in its population 65 and older, with an increase of 7.0% from 2019 to 2021. It also had a high employment of nursing care facilities with 7 per 1,000 residents.
However, the state is expensive to live in. Prices were 2.1% higher than in the country as a whole.
To create our ranking, we looked at seven different metrics. We used data for each state and Washington, DC to figure out the top states for retirees.
These seven metrics were:
We then ranked each state and DC for each metric. Afterward, we took the average of each rank and used that average to determine the best states to retire to.
Are you a retiree who moved to or lives in one of the top states part of our analysis? Email this reporter at mhoff@insider.com.
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Retirement means leaving many things behind. Unfortunately, taxes aren’t one of them.
Taxes in retirement can be complicated. You might be drawing income from multiple sources, including 401(k) distributions, Social Security, interest from a savings account, a pension or even a part-time job.
When tax time rolls around, figuring out how much you owe can be a headache.
Here’s a rundown of some taxes to expect in retirement. We’ll also discuss ways to reduce those taxes, along with free tax prep programs for seniors.
Not everyone is taxed on their Social Security benefits.
You won’t owe taxes on Social Security if it’s your only source of retirement income. Also, Supplemental Security Income (SSI) payments are never taxable.
The amount of tax you may owe depends on other retirement income you receive.
To figure out if you owe taxes on your benefits, the Social Security Administration considers what’s known as your “combined income.”
Here’s how it works.
Retirees must pay taxes on their Social Security benefits if:
The Internal Revenue Service won’t tax your entire Social Security income, even if you exceed those combined income thresholds. Instead:
50% of your Social Security benefits are taxable if:
85% of your Social Security benefits are taxable if:
Only about 40% of people who receive Social Security have to pay federal income taxes on their benefits, according to the Social Security Administration.
While 50% or 85% of your Social Security benefits may be taxable, they will be taxed at your ordinary income rate. Here’s a table of the 2022-2023 tax brackets for reference.
Withdrawals from qualified retirement accounts may also be taxable.
Whether you owe taxes depends on if you funded the account with pre-tax dollars (a traditional account) or post-tax dollars (a Roth account).
You’ll face taxes on withdrawals from traditional retirement accounts. This can include traditional 401(k)s, IRAs, SEP IRAs, Simple IRAs and 403(b)s.
Contributions to traditional retirement accounts reduce your taxable income in the year they’re made. But your taxes come due when you start withdrawing money in retirement.
Distributions from a traditional 401(k) plan or other qualified retirement accounts are taxed at your ordinary income rate. This ranges from 10% to 37%, depending on your tax bracket.
Wait until your income is lower to make withdrawals from a traditional 401(k) or IRA. The lower your tax bracket, the less you’ll pay in taxes.
Distributions from Roth accounts — including a Roth IRA and Roth 401(k) — generally aren’t taxable, which can make these accounts a great source of tax-free income in retirement.
There are a couple tax rules to keep in mind about Roth accounts.
Withdrawing money from a Roth account when your taxable income is higher is a good way to save money on taxes.
For example, if you plan on working a part-time job the first year after you retire, withdrawing money from a Roth IRA can minimize your tax bite. Once you’re no longer earning income, you can tap your traditional retirement accounts.
It might be tempting to leave money in your traditional retirement accounts as long as possible so you can avoid taxes.
But you can’t leave money in your 401(k) forever. Uncle Sam eventually wants his cut.
A required minimum distribution (RMD) is the amount of money you are required to withdraw from your retirement account each year after you turn 72.
If you don’t withdraw the money, you’ll owe big bucks. Failing to take required minimum distributions — or not withdrawing enough — can result in a 50% tax on the amount you didn’t take.
How much you’re required to withdraw changes from year to year and is based on IRS life expectancy tables.
Use this RMD calculator from the U.S. Securities and Exchange Commission to figure out how much you need to withdraw.
A quick note: A Roth IRA isn’t subject to required minimum distributions while you’re alive, though when you die, your account beneficiary may have to take RMDs.
Here’s how other common sources of retirement income are taxed.
Tax treatment for an annuity depends on how you purchased the contract.
If you bought an annuity inside a 401(k) or traditional IRA, the entire payment you receive is considered taxable income. It’s taxed as ordinary income, which is based on your tax bracket.
It’s a little different for annuities purchased outside retirement accounts with after-tax dollars. In that case, the portion of the payment that represents the principal (your original investment) is tax-free. The rest is taxed at your ordinary income rate.
For example, if you purchased an annuity for $100,000, and in 20 years it’s worth $180,000, the $80,000 is taxable.
You’ll owe federal income tax on payments you receive from a pension. Pension payments are taxed at your ordinary income rate.
Your employer will withhold taxes as the payments are made, so at least some of what’s due will already be paid, according to the Financial Industry Regulatory Authority.
You may also owe state tax on some or all of your pension income. Several states don’t tax payments from pensions at all, including Florida, Illinois, Pennsylvania and Nevada.
Interest earned on savings accounts, certificates of deposit (CDs) and money market accounts is considered taxable income by the IRS.
Interest earned from these accounts is taxed at your marginal tax rate, also known as your ordinary income tax rate. This can range from 10% to 37%, depending on your tax bracket.
If you earned $10 or more in interest income last year, you’ll receive tax form 1099-INT from your bank or credit union before Jan. 31.
Investments sold inside a taxable brokerage account — i.e. not a qualified retirement account — are subject to capital gains tax.
How much you owe in taxes depends on how long you owned the asset before you sold it.
Tax Year 2022 Long-Term Capital Gains Tax Rates
| Tax filing status | 0% tax rate | 15% tax rate | 20% tax rate |
|---|---|---|---|
| Single | $0 to $41,675 | $41,676 to $459,750 | $459,751 or more |
| Married, filing jointly | $0 to $83,350 | $83,351 to $517,200 | $517,201 or more |
| Married, filing separately | $0 to $41,675 | $41,676 to $258,600 | $258,601 or more |
| Head of household | $0 to $55,800 | $55,801 to $488,500 | $488,501 or more |
Hold investments inside a taxable brokerage account for at least a year if you want to reduce taxes in retirement. If your income is low enough (less than $41,675 for tax year 2022), you might be able to avoid capital gains taxes on long-term investments entirely.
Taking losses in a taxable brokerage account is another way to minimize taxes.
When you sell a stock or other asset for less than what you paid for it, you experience a capital loss. You can use capital losses to offset capital gains.
If you made a big profit earlier in the year, for example, selling stocks at a loss can reduce or even eliminate how much you owe in capital gains taxes.
Seniors who take the standard deduction enjoy an additional tax break in retirement.
People who are 65 and older — or people who are blind of any age — get a higher standard deduction. This can help reduce how much you owe at tax time.
For reference, the standard deduction for tax year 2022 is $12,950 for single filers and $25,900 for married couples.
Married couples who are age 65 or older can each receive a $1,400 bump to the standard deduction for tax year 2022 (which are filed in 2023).
Single filers can enjoy a $1,750 increase to the standard deduction.
Increased Standard Deduction for People 65 and Older
| Filing Status | Additional Standard Deduction for Tax Year 2022 (per person) |
|---|---|
| Married filing jointly or married filing separately | $1,400 |
| Single or head of household | $1,750 |
You can receive an additional $1,400 or $1,750 if you’re blind or have low vision that’s below 20/200 and not correctable with glasses. Your spouse can also enjoy a higher standard deduction.
This post from the National Disability Institute explains how to qualify for that deduction.
As you can see, taxes in retirement can get complicated.
Thankfully, the IRS and AARP Foundation offer free tax help for seniors at no cost to you.
Speaking with a financial advisor or tax professional is the best way to minimize taxes after you retire. A financial expert can help you navigate state and local taxes, as well as federal income taxes. They can also help you anticipate future tax bills so you can plan your finances in retirement accordingly.
Rachel Christian is a Certified Educator in Personal Finance and a senior writer for The Penny Hoarder. She focuses on retirement, investing, taxes and life insurance.
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Many people wish they could retire early — but it might not always be in their best interest.
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A new study out of Binghamton University published in the peer-reviewed Journal of Economic Behavior and Organization found that early retirement can cause “faster cognitive decline among the elderly,” Business Insider reported.
Related: 17 Habits of Self-Made Millionaires Who Retired Early
The Binghamton researchers studied Chinese data on millions of older citizens who’d taken pension benefits to retire early and compared their outcomes with those who remained in the workforce.
The pandemic led to early retirement for millions of Americans (whether by choice or not), per The New York Times, but by April 2022, nearly 64% of adults between the ages of 55 and 64 were working — roughly the same rate as in February 2020.
Although those who didn’t return to work might enjoy better physical health, including improved sleep and a reduction in alcohol consumption, they’re also at risk for reduced social engagement, mental activity and, as a result, more rapid cognitive decline, the study revealed.
Related: 4 Things You Need to Think About Before You Retire Early
“The kinds of things that matter and determine better health might simply be very different from the kinds of things that matter for better cognition among the elderly,” lead researcher Plamen Nikolov said in a statement. “Social engagement and connectedness may simply be the single most powerful factors for cognitive performance in old age.”
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