Serenity Retirement

A nice, fat IRA, which certainly seemed like a worthwhile goal 30 or 40 years ago, today is doing many retirees and near-retirees no favors. All of this supports the idea that RMD planning should anticipate its necessity.

(The Wall Street Journal)

Wealth Wednesday Tip # 981: Max out your IRA before the end of the year

IRA contribution limits are not nearly as high as 401(k) or 403(b) limits, which could make it feel a bit easier to max out. In 2022, the contribution limit for IRAs was $6,000 for people under age 50, or $7,000 for those aged 50 and older. This limit applies to both traditional and Roth IRAs. As a refresher, traditional IRAs are contributed with pretax dollars, while Roth accounts use after-tax dollars, and both require contributions to be made with earned dollars (such as from wages or self-employment income).

(Source: Market Watch)

Reasons to pump the brakes on retirement. If you've been dreaming of retirement since you entered the workforce, you might have a certain idea of what it looks like when you're no longer working. But there's a chance you might not start retirement when you thought you would, perhaps due to circumstances beyond your control. According to a recent survey by the Nationwide Retirement Institute, approximately 40% of workers are planning to push retirement later in life due to inflation. While life doesn't always go according to plan, would-be retirees can make the best of a bad situation by delaying retirement. So, if you're on the fence, here's why you might want to consider retiring later than you originally thought.

(Source: Insurance WSMT)

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Financial Fact Friday: IRS announces retirement plan contribution limits

The 403(b) and 457(b) contribution limits have increased from $20,500 to $22,500 and the age 50 catch-up contribution is up from $6,500 to $7,500 for the 2023 tax year.
Employees wanting to enroll in a Supplemental Retirement Account or to make changes to an existing account should complete the electronic Salary Reduction Agreement.
The deadline to submit SRA changes or new account enrollments is 5 p.m. on Dec. 14.
Changes will go into effect on Jan. 13, the first paycheck in 2023.

(Source: Mountaineer News)

FACT or FICTION: Full retirement age is either 66 or 67.

FICTION: For most Americans, the full retirement age is either 66 or 67, depending on when they were born. But you can claim your Social Security benefits four or five years early at 62. But just because you can file for benefits doesn’t mean you should.
Depending on your birthday, you’ll receive only 70%-75% of your full benefits if you claim at 62, which, as an example, would leave you with somewhere between $700-$750 per month out of what should have been a $1,000 check. Surviving spouses would have their benefits reduced by 30%-35%.

(Source: Yahoo Finance)

OPM Disability Retirement provides you with the option to retire early while receiving a secure monthly annuity, health and life insurance, creditable years of service and the ability to work outside of the federal sector. This is a life-changing benefit, and it’s important to know whether or not you will be able to receive it based on your condition.

(Source: Fed Smith)

Wealth Wednesday Tip #451: Talking about money during the holidays? It’s not always a bad idea

When getting together with family during the holidays, talk about money – whether it be asset management, budgeting, expectations for the future or estate plans.
Talking about money isn’t always easy, especially with family members. Not everyone feels comfortable discussing finances or wants to divulge information about their current or expected situations.
But having conversations about family finances – if even just light discussions about hopes, wishes and expectations – can make a huge impact. Adult children may not know their parents expect them to take over caregiving responsibilities when they’re older, for example. Family members may also feel embarrassed to mention a money problem they’re facing and could miss out on helpful suggestions loved ones have to offer – such as resources to look into or a financial adviser to consult.

(Source: Market Watch)

Retirement savers, especially Gen Z, hold steady, even in a rough stock market. Despite market turbulence that ate into retirement account balances and left workers feeling worse about their finances, the majority of retirement savers kept their contributions steady.

(Source: Market Watch)

Financial Fact Friday:

The average joint life expectancy (men and women together) is approximately 88 years for over 49% of the population. A full 20% of Americans live to age 95!

Depending on your unique perspective, that’s either good news or bad news. It is good because many people want to live for as long as possible, provided they are in decent physical and mental health. However, a long life can be bad news when it puts you at risk of outliving your money in retirement.

FACT or FICTION: “Retirement Cliff” In U.S. Workforce?

FACT: Companies are warning of a “retirement cliff” over the next 15 years that will leave over 400,000 open positions unfilled industrywide.

The National Association of Mutual Insurance Companies (NAMIC) says over the next 15 years, 50% of the current insurance workforce will retire. This will leave more than 400,000 open positions unfilled, while less than 25% of the industry is under the age of 35.

(Source: NPR from Illinois State University)

Before you make any serious financial decisions, like borrowing money from your retirement account, it's a smart idea to consult with a financial planner. These experts can help you decide if this is the best option for your current situation, or if it is a better idea to take out a loan from another financial institution.

(Source: Forbes)

Wealth Wednesday Tip #476: Getting Mortgage After Retirement

Whether you’re planning to relocate, downsize or finally move into your dream home, you may need to get a mortgage after retirement. Unfortunately, qualifying for a home loan can be difficult for those on a fixed income. Still, creditworthy homebuyers can purchase a new home by relying on income from retirement accounts and other investments.

(Source: Forbes)

Long-term care might be an overlooked expenditure, but it is becoming increasingly important to incorporate in retirement planning — especially for younger generations.

More than half of Americans will require help with bathing, eating and other activities of daily living by the time they turn 90 years old. They and their family members will be responsible for the care and cost of these necessities.

(Source: Market Watch)

There may be myths about retirement. Let us assist you through what’s currently applicable to your plans!

Financial Fact Friday

THE AVERAGE 401(K) balance dropped nearly 20% during the first three months of the year, according to a new report that suggests market volatility and income uncertainty related to the ongoing coronavirus outbreak are taking a chunk out of Americans' nest eggs.

(Source: US News)

FACT or FICTION: 58% of people are worried about running out of money in retirement.

FACT: According to Forbes, this is the number 1 fear of retirees. The first step in dealing with this fear is to make a retirement plan. Ideally, one starts the plan well before retirement so that there's time to make necessary changes before it’s too late (and/or too painful) to do so. Engage a financial planner to run the numbers, including alternative scenarios. The result of this exercise should be a comfortably high confidence level that income and assets are sufficient to cover expenses and liabilities for the rest of one's projected life (or lives). The plan should also make room for “contingent liabilities,” or expenses that may or may not occur.

(Source: Forbes)

Withdrawing funds from your retirement account is certainly better than losing your home or car due to COVID-19, but it's not the best choice for your long-term security. Saving for retirement is tough at the best of times, and withdrawing funds from your retirement account now will only make that more challenging. Consider a 0% credit card, personal loan or home equity loan. Be sure to consult a financial professional that is not selling you one of these products to be sure this fits into your overall retirement plan.

Wealth Wednesday Tip #369: Use Your Stimulus Check To Pad Your Emergency Fund

An emergency fund is something you need at any age, so if yours is lacking, consider adding your stimulus check to it. Even in retirement, you should aim to have enough money in easily available cash to pay for at least three months' worth of living expenses, so if you're not quite there, make padding your emergency fund your priority.

(Source: Fool)

Social Security is not meant to be your retirement paycheck.

"According to the just-released 2020 Trustees Report, the program's trust funds are expected to run out by 2035. Now that date isn't shocking; it aligns with what the 2019 Trustees Report predicted. However, what does get worse is the extent to which benefits may be cut in the absence of those trust funds.

Last year, the Social Security Trustees projected a 20% reduction in scheduled benefits come 2035. This year, they're calling for a 21% reduction. And, while that 1% may not seem like a huge jump, let's remember that many seniors count on Social Security as their primary or sole source of income. To lose any amount of those benefits in the future could therefore be downright catastrophic."

(Source: Fool)

Thinking about a 2nd opinion on your current retirement plan? We are here for you during this time to review your plan and options.

If you have $1 million and take a 10% loss, that’s a $100,000 drop, taking you to $900,000. Now let’s say the market rebounds 10%. That means you recover only $90,000 of the $100,000. And if you had withdrawn some of the money to live on, you will recover even less. One way to at least partially avert this risk is to begin moving some of your portfolios into more conservative investments as you near retirement age. When you were relatively young and in the accumulation phase of investing, you could afford to take some risks. But now your investment strategy needs to focus more on keeping what you have.

(Source: Pilot Online)

FACT or FICTION: Get a Job in Retirement. It’ll Help Your Wealth — and Your Health.?

FACT: The share of retirement-age Americans working has doubled since 1985, according to a study by investment firm United Income that examined federal data. Twenty percent of people aged 65 years or older either work or are looking for work.
Many Americans, particularly lower-income retirees, have little choice but to keep working to support themselves. Even for higher-income families, part-time work can allow them to hold off drawing down retirement portfolios or delay collecting Social Security to maximize its value.

(Source: Barrons)

Phased retirement allows older employees to reduce work hours gradually, creating a kind of slow transition into retirement rather than a sudden departure from the workforce. In addition to reducing work hours over time, these programs include initiating a partial drawdown of retirement funds from defined contribution or defined benefit retirement plans, says SHRM. Also worth noting, this approach to slowly disengage from work also include continued employer-sponsored health coverage until you fully leave the workforce.

(Source: Real Simple)

Wealth Wednesday Tip #721: How much can I spend in retirement?

Many people are convinced that their expenses will be vastly different in retirement. Different, perhaps. Lower? Not so much. “I’m moving to a lower-cost part of the country, so I’ll save money.” But you might want to use those savings to build up a financial reserve, because your expenses are sure to grow, by choice or by chance.

(Source: Market Watch)

Of Millennial households ages 28-38, 40% are burdened with student debt and, among these households, the outstanding loan balance amounts to more than 40% of income. Excluding student loans, the median net wealth-to-income ratio of the leading edge of the millennial generation looks very similar to that for previous cohorts. That is, millennials are saving for retirement, despite the student loans. But student loans continue to be a drag on their balance sheet.

(Source: Market Watch)

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Financial Fact Friday: There are many threats to a secure retirement

Suddenly, we find ourselves at a rather unsettling moment when it comes to our finances. The stock market, measured by nearly any metric, is expensive. Inflation has crept up by over 5% since last year, and it's sticky enough to prompt the Social Security Administration to increase benefits by 5.4% in 2022.
Furthermore, nominal interest remains low with real interest rates turning firmly negative. The assumptions behind the famed 4% rule look like they may not even apply today given anemic bond yields. Congress’s ability to enact beneficial policy has thus far left a lot to be desired.
This is all to say that working in retirement is one of the few levers you can pull to add another layer of security to your retirement plan. If you have the ability and willingness, adding another income stream seems like a no-brainer — particularly at this moment in time.

(Source: Motley Fool)

FACT or FICTION: Putting off saving, you will have time

FICTION: Retirement sneaks up on you faster than you think, and the longer you wait to start saving, the more difficult your task becomes. If your savings are only invested for a short time before you begin spending the funds, you won't have as many earnings to help you cover your expenses. That means you'll have to set aside even more of your own money every month to reach your retirement savings goal.
For example, if your goal is to save $1 million for retirement by the time you're 65, you'll only need to save about $403 per month if you start at 25 and earn a 7% average annual rate of return. You'll have contributed less than $200,000 yourself, which means that over $800,000 of your $1 million would come from investment earnings.

(Source: The Buffalo News)