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Showing posts from 2012

Social Security Claiming Strategies

What can married couples do to increase joint lifetime benefits? What is your “magic number”? Roughly half of retirees claim Social Security benefits at age 62, as soon as they become eligible. Some people delay benefits and postpone using their retirement savings as an income source. Others apply out of necessity; their financial situation leaves them little choice. 1 These factors aside, what if you have a choice? If you wait a few years to apply for Social Security, how much more income might you realize? Could you wait until age 66? The Social Security Administration has made 66 the “full” retirement age for people born during 1943-1954. If you were born in this period and you apply for Social Security at age 62, you will reduce your retirement benefit by 25% and your spouse’s by 30%. 2,3 That alone might convince you to wait. In addition, there are claiming strategies that may bring spouses much greater cumulative lifetime Social Security income, and they depend on

How the Election Will Impact Your Portfolio and the Economy

Many people are very passionate about politics and are extrapolating what will happen economically if their candidate or the other side gets elected. These extrapolations often run to ruin if the other side gets in and can cause great fear and emotion in the mind of the investor and lead to poor decision making. I like to adhere to the old adage that, "You do not talk about politics or religion." However, I'd just like to say that whatever 'side' you may be on, I'm sure an informed observer can look back through history and see presidents or policies they do not like. Yet, our country and economic system still persist today. I would observe that it is in fact quite resilient and supposing 'this time is different' rarely works well for those making predictions. Jason Zweig of the Wall Street Journal ran a good article in the October 19, 2012 Wall Street Journal, entitled "The Winner for Investors Is...," and  empirically (not pejoratively

Retiring Solo

Most retirement planning literature portrays a retirement transition in the context of a couple or a family – but what about those who retire alone? What particular challenges do they face, and how must their preparation for retirement differ?   Retiring alone presents unique challenges. Singles who retire may lack a spousal and familial support network other retirees count on. If a lone retiree faces sizable medical bills, he or she can’t draw on the financial resources of a spouse. Unmarried, childless retirees also lack adult sons and daughters who might be able to offer them financial help or serve as executors of their estates one day. Singles must plan ahead for them. The earlier, the better: A basic financial truth can’t be dismissed: single retirees will need to amass savings comparable to those of a retired couple. Why? It is because many retirement costs are fixed. Hospitals, universities, banks, pharmacies, mechanics and home improvement specialists do not of

Common Retirement Planning Mistakes

Why are they made again and again ? There are some classic financial missteps that plague retirees. Calling them “mistakes” may be a bit harsh, as not all of them represent errors in judgment. Yet whether they result from ignorance or fate, we need to be aware of them as we plan for and enter retirement.           Not maximizing Social Security. The full retirement age for many baby boomers is 66. As Social Security benefits rise about 8% for every year you delay receiving them, waiting a few years to apply for benefits can position you for greater retirement income. Married couples have even more options. 1 Roughly 40% of us retire earlier than we want to; about half of us apply for Social Security before full retirement age. Still, any way that you can postpone applying for benefits will leave you with more SSI. 1        Underestimating medical expenses. Fidelity Investments says that the typical couple retiring at 65 today will need $240,000 to pay for the

Medals Per Million

By now, you've seen the final medal count at the London Olympics, and no doubt felt a stirring of national pride.   American athletes took home 104 total gold, silver and bronze medals, comfortably ahead of China (87), Russia (82), Great Britain (65), Germany (44), Japan (38), Australia (35), France (34), South Korea (28) and Italy (28).   Does that mean that we Americans--so often accused of being a nation of couch potatoes--are the most athletic people in the world?   Total medal count is one way to measure, but it may not be the best.   Another measurement would take into account the relative number of medals compared to a country's total population: Olympic medals per capita, or (to avoid many decimal places) the number of medals each nation took home per million people in its population. Medals per million gives us a very different ranking.   By this measure, citizens of the Caribbean island of Granada are by far the most athletic, with 9.5 Olympic medals per

Don't Sabotage Your Retirement to Pay for College

It's quite normal that parent's desire to pay for college expenses for their children. However, doing so often is a competing objective against becoming financially independent and funding one's retirement. Emotions aside, remember there's only one chance at retirement, but your children will still have a lifetime of opportunity whether you pay for all, part, or none of their college. Christine Benz from Morningstar recently wrote on the topic, saying: "But by multitasking as so many parents do--saving for college and their own retirement at the same time--they run the risk of coming up light on the retirement front with no way to make up for the shortfall, except for working longer. The old saying about this topic is dead-on: Your child can get a loan to pay for his or her college education, but no one will give you a loan to pay for retirement if it turns out you haven't saved enough. Given increasing rates of longevity, rising health-care costs, a

RMD Precautions and Options

After you turn 70½, the IRS requires you to withdraw some of the money in your retirement savings accounts each year. These withdrawals are officially called Required Minimum Distributions (RMDs). While you never have to make withdrawals from a Roth IRA, you must take annual RMDs from traditional, SEP and SIMPLE IRAs, pension and profit-sharing plans and 401(k), 403(b) and 457 retirement plans annually past a certain age. If you don’t, severe financial penalties may be enforced. If you are still working as an employee at age 70½ , you don’t have to take RMDs from a profit-sharing plan, a pension plan, or a 401(k), 403(b) or 457 plan. Your initial RMDs from these accounts will only be required after you retire. However, you must take RMDs from these types of accounts if you own 5% or more of a business sponsoring such a retirement plan. 1 You must take RMDs from IRAs after you turn 70½ regardless of whether you are still working or not. The annual deadline is December

Parents Play Favorites When Helping Adult Kids Out

I saw an interesting article in the US Today about how and how much parents help their young adult children. There's some interesting financial planning implications found in the article. Perhaps what was most interesting is that children of parents who pay for all college expenses engage in the most 'risk behaviors.' Doesn't hurt and may actually help to have some skin in the game. Full article is below. Best Regards, Kevin Kroskey ---------------- Parents Play Favorites When Helping Adult Kids Out SAN FRANCISCO – More than 60% of today's young adults have received financial help from their parents — and those described as having more agreeable personalities as children get more money than others, finds a study to be presented today at a meeting of the Population Association of America.Among the 62% of young adults getting parents' help, the average amount was $12,185, says lead author Patrick Wightman of the University of Michigan-Ann Arbor. Abou

Boomers Can Get Help With Their Job Hunt

Good, short, and relevant article for many from the October 2011 edition of Money Magazine on the topic. Enjoy. --- More than half of Americans say they plan to work in retirement, according to a survey by the Transamerica Center for Retirement Studies.  Start your search with these organizations. WWW.ENCORE.ORG Run by think tank Civic Ventures, this website connects people 50 and older to post-retirement jobs with social purpose, mainly in education, government, and the nonprofit world.  You can also search the site for career resources in your area. WWW.RETIREDBRAINS.COM This site for older workers and retirees connects job seekers with recruiters and employers looking for seasoned staff. WWW.GRAYHAIRMANAGEMENT.COM This organization specializes in helping executives and senior managers find part-time and contract work. WWW.RESERVEINC.ORG Currently operating in the New York City area, Miami, and Baltimore, ReServe matches professionals 55 and older with jobs at nonprofi

Getting Financial Advice Vs. Being Sold Product from Lou the Butcher

Unfortunately for consumers, the financial advice profession is clear as mud. The large Wall Street firms aim to keep it this way with their deep pockets and lobbying efforts, because less transparency equates to greater profits. Ultimately, consumers want advice but are often simply sold product. Watch the video below for a short and amusing analogy of the issue and to gain greater clarity. - Kevin Kroskey, CFP, MBA

Should You Leave The States?

After recently returning from Mexico and meeting several ex-pats, it was noticeable to me an increasing trend of US citizens retiring abroad. I came across a good and short article in the October 2011 edition of Money Magazine on the topic. Enjoy. --- If you're serious about slashing costs in retirement, you've got to at least ask yourself this question.  While there are plenty of downsides to moving abroad, the weather can be great-and the savings can be huge.  Daniel Prescher, special projects editor with, estimates that a couple moving from Omaha would see their cost of living decline 50% in Merida, Mexico, or 25% in Panama City. (He says those cities are safe and have good health care and lots of expats-all big pluses.)  Contemplating a move?  Start here: WWW.INTERNATIONALLIVING.COM Gives you free information on crime, health care, and the like for 80 countries. WWW.XPATULATOR.COM Calculates how far your money will go in more than 300 pla

2013 Key Tax Proposals

On February 13, President Obama's Fiscal Year 2013 budget was released. Follow this link to get a full copy of the   2013 Budget . The   Treasury's Green Book   containing general explanations of the Administration's revenue proposals can be found here. Robert Keebler, a leading professional in the area of tax and estate planning, highlighted some of the key proposals potentially affecting taxpayers below: Extend Bush tax cuts for all but the top two brackets. The only change would be to have the 33% and 35% rates go back to their pre-2001 levels of 36% and 39.6%. Taxpayers in the top two marginal brackets would still benefit from reduced rates on the portion of their income taxed in the lower brackets. Raise the long-term capital gains rate to 20% for single taxpayers making more than $200,000 per year, $250,000 for married taxpayers filing jointly and $125,000 for married taxpayers filing separately. Tax rate on qualified dividends would revert to ordinary income tax

Changes in IRA & 401(K)s for 2012

The IRS has made cost-of-living adjustments to IRAs and employer-sponsored retirement plans for 2012, so here is what you need to know about the newly altered contribution limits and phase-outs for these plans. 401(k) & IRA yearly contribution limits. In 2012, these are the annual contribution limits for some popular retirement savings vehicles. ·          401(k)s, 403(b)s, most 457 plans, Thrift Savings Plan (TSP) - $17,000 with an additional $5,500 catch-up contribution allowed for those 50 or older. (2012 COLA: $500.) ·          Traditional & Roth IRAs - $5,000 with an additional $1,000 catch-up contribution allowed for those 50 or older. (No 2012 COLA.) ·          Simple IRAs - $11,500 with an additional $2,500 catch-up contribution allowed for those 50 or older. (No 2012 COLA.) ·          SEP IRAs - $50,000 or 25% of an employee’s compensation, whichever is lesser. (2012 COLA: $1,000.) ·          415(b) defined benefit plans – the limitation on annual benefits un