Financial $tuff

Retirement spending – you can’t take it with you

by
retirement spending
physicianfamily.com

Retirees:  It’s Okay to Spend

by Jane Bennett Clark for Kiplinger’s Personal Finance

November, 2016

“My mom enjoys a comfortable retirement, but she isn’t rich. A few years after my dad died, she sold her house. She used part of the profit to pay the big entry fee for the retirement community where she now lives, and she invested the rest. That amount, with her IRA, represents her retirement nest egg. Now, 12 years later, her stash is about the same as it was when she moved into her new home. But at age 91, she’s still cautious about spending down her retirement savings.

Her restraint isn’t unusual. A recent report by Chris Browning, Tao Guo and Yuanshan Cheng at Texas Tech University showed that most retirees of moderate means, as well as those who are affluent, don’t even spend all of their income from Social Security, pensions and investment earnings, much less draw down the principal in their nest egg. Their assets either stay about the same or grow over their lifetime. The wealthier the retiree, the bigger the gap between income and spending, and the more the savings pile up.

Even when retirees do tap their retirement savings­—as they’re required to do from tax-deferred accounts starting at age 70½—they don’t necessarily spend what they withdraw. A recent Vanguard study of retirees with at least $100,000 in household wealth showed that most of them took their required minimum distributions and reinvested one-third of their withdrawals.

Why do retirees resist spending their hard-earned (and hard-saved) money? Wanting to leave something to the kids is one reason (thanks, Mom!). But the bigger one is uncertainty. You can’t predict how long you’ll live, how your investments will perform over 20 or 30 years, or whether you’ll be hit by big medical or long-term-care costs, so you keep a cushion. In fact, that approach makes sense if you’re relying largely on savings to cover costs.

Failure to plan and lack of confidence also play roles in underspending.”  Read more

Financial decision making resources for divorcing or newly widowed women

by

If you are facing a divorce or if you are recently widowed, you may find the following financial decision making resources helpful.  When I was divorcing over 12 years ago, the judge ordered a qualified domestic relations order (QDRO) written and submitted to my ex’s workplace so I was guaranteed a portion of his pension when he retires.  The QDRO also required I hire an expert to figure out the value of the account at the time of the divorce.  The judge ordered my ex and I to split the cost of these extras.

Learn more about QDROs and other important issues from the resources below from the Women’s Institute for a Secure Retirement (WISER). 

“Both divorce and widowhood can be extremely emotional and oftentimes unexpected events in a woman’s life. The difficulties are often further compounded by the practical issues that arise during these transitional periods. WISER has developed various resources to help make this time a bit less stressful and to help newly divorced or widowed women make smart and informed financial decisions.

Read more

Visit thrift shops for your ugly sweater and other great finds

by

ugly sweater

Do you have an ugly sweater party coming up?  The Arc Thrift Shore is a great place to find one.  I’ve shopped at the Arc Thrift Stores for years.  They have all kinds of goodies, from nicknacks to housewares to furniture to clothes and shoes, to books.  They are a non-profit organization “dedicated to creating and funding programs that serve those individuals living with intellectual/developmental disabilities, with complex and evolving needs.”

If you are cleaning out your closets at this time of year to get a year-end tax deduction, The Arc will also gladly accept your donations.

If you don’t have an Arc Thrift Store in your area, check out Goodwill or Habitat For Humanity stores.  They also offer discounts and take donations.  Everyday is senior discount day at the Fort Collins Restore (15% off).  Goodwill in Loveland has a 15% senior discount everyday and 25% off on Mondays.  Check goodwill.org or habitat.org for discounts in the thrift shops near you.

If you find your award-winning ugly sweater at a thrift shop, send me a pic.  I’d love to see it!  Happy shopping!

ugly sweater

Does the 4 percent rule in retirement still apply?

by
Image result for 4 percent rule images
invest-safely.com

Is the 4 percent rule still relevant for retirees?

By Rodney Brooks for The Washington Post

October 10, 2016

“If you read about retirement, you will probably be familiar with the 4 percent rule.

The rule was created in the mid-1990s by a now-retired financial planner to keep people from outliving their retirement nest eggs. Here’s how it works: If you have a nest egg of $1 million, you should draw down no more than 4 percent, or $40,000 a year.

So here’s the question. Should you still be adhering to a rule created more than 20 years ago when the economy and interest rates were so different?

Well, it depends. Many planners still use it as a rule of thumb, but if anything, many recommend that you withdraw less — more like 2 or 3 percent. The reason is longevity. We are living longer. In fact, you can now live in retirement longer than you did in your career.”

Read more

 

I work part-time in retirement. Do you?

by

Seven of 10 Americans plan to work in retirement

by Rodney Brooks for The Washington Post

September 2016

“When it comes to retirement, a whopping 75 percent of Americans say they plan to work ‘as long as possible’ in retirement, according to a new report from Bankrate.com.  And for many of them, it’s not because they love their jobs:

  • 38 percent say they are planning to work because they want to
  • 35% percent say they plan to work because they need the money
  • 27 percent said they plan to work because they need the money and want to work

And according to the Bankrate.com survey, 47 percent of retirees are either very worrried or somwhat worried about outliving their retirement savings.  That’s up from 37 percent the last time that question was asked, in 2009.

What’s almost shocking?  Only 25 percent said they had no plans to work during retirement.

A reality check for most people planning to work through retirement: Most surveys show that even though a majority of Americans plan to keep working, most find they cannot because of health issues, layoffs or because they have to care for spouses or parents.”

 

“Rodney A. Brooks writes about retirement and personal finance for The Washington Post. Rodney has had a long and distinguished career in financial journalism. He previously worked at USA Today from 1985 until his recent retirement.”

Considering downsizing or a reverse mortgage for retirement income?

by

Planning for retirement income can be complicated by choices like downsizing or reverse mortgages.  The Center for Retirement Research has published a useful booklet, Using Your House for Income in Retirement, to assist you with this important financial decision.Housing Booklet image

“Using Your House reviews the two most common ways to use your house to boost your income in retirement – downsizing and a reverse mortgage – with clear examples, a discussion of the pros and cons of each approach, and links to tools on the web where you can get estimates of what downsizing or a reverse mortgage can do for you.”

PDF of booklet

© 2014, by Trustees of Boston College, Center for Retirement Research. All rights reserved.

From the Center of Retirement Research…Medicare Benefits

by

Medicare Enrollment Help is PlentifulImage result for medicare images

October 13, 2016

“Open enrollment starts Oct. 15 for people who’ve signed up for Medicare benefits and must buy into or change their supplemental Advantage or Part D prescription drug plans.

The Medicare Rights Center in New York tells me that you can ‘make as many changes as you need during this period’ and that ‘only your last coverage choice will take effect Jan. 1.’

A long list of resources appears at the end of this blog to help Medicare beneficiaries through the enrollment process. But there’s a lot of hoopla around the Oct. 15-Dec. 7 enrollment period, so it’s important to know what Oct. 15 is not about.

One’s birthday – and not a date on the calendar – determines when people should initially enroll in the Medicare program. Most people turning 65 who are not covered by their own or their spouse’s employer health insurance at work are required to enroll in Medicare Parts A and B during a seven-month period that starts three months prior to their 65th birthday. During this seven-month window, new Medicare participants must also sign up for their Part D drug plans – or risk paying a lifelong penalty. Oct. 15 is not the trigger date for selecting Medigap plans either.”

Read more at http://squaredawayblog.bc.edu/squared-away/medicare-enrollment-help-is-plentiful/?shareadraft=baba14345_57eaaf8795dfa