Inflation protection

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inflation protection
fidelity.com

Is inflation a risk to your retirement?

It is important to understand the risk that inflation may pose to your retirement income.

Fidelity Viewpoints, December 14, 2016

“For much of the last decade, inflation has been low by historical standards. But, recently, wage growth and higher prices have sent signs that inflation may be making a comeback, serving as a reminder of the risks that come when the buying power of a dollar falls. Such risks always exist, even when they don’t seem so obvious.

If you are a retiree or are planning your retirement, the effects of inflation can be pernicious. Inflation can eat away at spending power. That isn’t necessarily a problem. Some retirees actually see their spending decline as they get older. Still, retirees should at least be aware of the risks posed by inflation. When you are a retiree, you can no longer seek out higher wages to offset higher prices. You have to rely on the inflation protection of your pensions, Social Security, annuities, investments, or other income sources. Consider strategies to maximize these inflation-protection features; otherwise your ability to maintain your lifestyle may decline over time.

Some research suggests that people don’t understand the inflation protection provided by common retirement income sources. A survey from the Financial Literacy Center found that more than 40% of people did not understand how Social Security payments react to inflation—never mind pensions, annuities, or investments.”

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Interest rate hikes affect bonds and other markets

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What the Fed’s move may mean

The Fed raised rates, and expects the pace of hikes to pick up in 2017. What could it mean for bonds?

Fidelity Viewpoints, December 14, 2016

“For the second time in roughly a decade and the first time in a year, the Federal Reserve has voted to raise interest rates. Treasury bonds, which had already seen sharp losses since the election in November, saw yields climb in trading after the announcement.

While the rate change at the December meeting was widely anticipated by the market, the future path of rates, and what it may mean for bonds and other markets is less certain. Viewpoints caught up with Fidelity Government Income Fund Manager Bill Irving, to get his take on the December meeting, the path forward for the Fed, and what it may mean for investors.”  Read more

I think it is premature to call the end of the three-decade bull market for bonds.

interest rate
fidelity.com

Enjoy life to the fullest

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“After C.S. Lewis became a Christian, he wrote about his experience in a book fittingly entitled Surprised by Joy.  He once said, ‘Joy is the serious business of heaven.’  The Bible reminds us that Jesus ‘for the joy that was set before him endured the cross’ (Hebrews 12:2).

For the fullest possible happiness, give yourself completely to this Master of Joy.  Trust your whole life to Him.  Read His words, follow His ways, talk to Him, and He will irradiate your personality with “joy unspeakable and full of glory” (1 Peter 1:8).

enjoy life
liveaflourishinglife.com

To enjoy life to the fullest:

  1.  Live for a great purpose.
  2.  Read the passages of joy in the Bible.
  3.  Practice victorious tranquility.
  4.  Avoid the things that destroy happiness.
  5.  Bring happiness to others; it will rub off on you.
  6.  Accept God’s gift of joy and demonstrate it in your life.
  7.  Try the seven-day mental diet, refusing to say anything negative  for one week.
  8.  Walk with the Lord of joy and live in His Spirit.”

Peale, Norman Vincent and Donald T. Kauffman.  Bible Power for Successful Living: Helping You Solve Everyday Problems, Peale Center for Christian Living, 1993.

Retirement tax planning

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retirement tax planning
money.usnews.com

Retirees’ Tax Puzzle:  Pay Now or Later?

by Kim Blanton

Squared Away Blog, Center for Retirement Research at Boston College

December 1, 2016

“The majority of retirees pay no federal taxes. But taxes should be a concern for retirees who have retirement savings. That’s because the money they take out of their retirement accounts for living expenses will be treated as federal taxable income. It’s difficult enough to figure out how much money to withdraw – and when. Taxes are a separate but related issue.  

In this blog, we interviewed Michael Kitces, a well-known financial adviser and partner with a Maryland financial firm, who writes the ‘Nerd’s Eye View‘ blog. He discusses the basics of navigating the tax code. The challenge facing retirees is to make tax decisions today that will minimize taxes now and in the future.

Question: Do you find that new retirees are surprised by their retirement tax situation?  

Kitces: It’s usually not even on their radar screen. Pre-tax and post-tax income, different tax buckets – I don’t think most people even think about it once they’re in retirement. That’s why we’re still seeing people who are ‘surprised’ when they turn 70½ and the required minimum distributions (RMDs) begin, and their tax bill gets a whole lot higher. They say, ‘Why didn’t we plan for this?’ We say, ‘We’ve been recommending you plan for this for years!’

The reality is that while we’re working, we don’t think about taxes a lot – the first time you get your paycheck, you notice the difference between what your boss said you were going to get paid and what you take home. You get over that and then work for 40 years, and you just get used to your after-tax cash flow and lifestyle. But when you get into retirement, you have to think about whether accounts are pretax (traditional 401(k)s and IRAs) or after tax (regular bank accounts) or tax free (Roths), and how to draw them down. There’s nothing natural about it.”

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Retirement spending – you can’t take it with you

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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

Don’t let holiday depression creep into this joyous season

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During the Christmas holiday season last year I was afflicted with shingles and suffered depression due to the quarantine my doctor ordered.  It was the worst Christmas ever!  I was not able to attend church services on Christmas Eve nor see my family until January.  I was feeling hurt and alone.  I recovered but the depression due to the isolation was unbearable at the time.

Read further for helpful information if you, or someone you know, is suffering from holiday blues during this season and remember, “This too shall pass.”

holiday depression
homehelpers

Holiday Depression

by Michael Kerr

March 21, 2016

“Holidays are supposed to be a time of joy and celebration, but for some people they are anything but.

Depression may occur at any time of the year, but the stress and anxiety during the months of November and December may cause even those who are usually content to experience loneliness and a lack of fulfillment.

Why is depression so common during the holidays?

There are several reasons why you may develop depression during the holidays:

Social Isolation

Social isolation is one of the biggest predictors of depression, especially during the holidays.

Some people may have a small social circle or a lack opportunities for socialization. People who have feelings of disconnectedness often avoid social interactions at holiday time. Unfortunately, withdrawing often makes the feelings of loneliness and symptoms of depression worse.

These individuals may see other people spending time with friends and family, and ask themselves, ‘Why can’t that be me?’ or ‘Why is everyone else so much happier than I am?’

One of the best ways to deal with social isolation is to reach out to friends or family for support. You can also try talking to a therapist. They can help you figure out where your feelings come from and develop solutions to overcome them.

holiday depression
psychdigest.com

Grieving During the Holidays

Some people may be keenly aware of the loss of a loved one during the holiday season. Here are several ways to stave off the holiday blues that may descend at this time:

Begin a new tradition – Try planning a family outing or vacation, instead of spending the holidays at home.”

Read more ways to stave off the holiday blues and/or click here for Another good resource for helping an elderly neighbor or family member during the holidays.

The arts “enhance overall quality of life”

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the arts
sfgate.com

Express Yourself

From UCLA Health’s Healthy Years newsletter

December 2016

“Watching an artist paint, a dancer gracefully glide across the stage or a singer belt out a happy tune is witnessing bliss personified.  Children can find that joyful state of absorption rather easily: A single crayon on paper can do it.  As adults, however, we often lose that sense of blissful play, but it can be found again.

‘Because the arts serve as an emotional and physical outlet, they also help to decrease stress and combat depression and loneliness,’ explains Erica Curtis, board certified art therapist and instructor for the UCLA Arts and Healing Social Emotional Arts (SEA) certificate program.  ‘It’s a healthy means of distraction from pains, discomfort or other stressors.’

The Power of Making Music Together

Researchers from the University of Oxford wanted to explore whether singing was a special type of bonding behavior or whether any group activity would build bonds among members.  To test the theory, they set up seven courses: four in singing, two in crafts and one in creative writing.  Each course, made up of weekly sessions, ran for seven months.  Those attending the classes were given surveys before and after individual sessions in the first month, in the third month and at the end of the course.  In the surveys, they were asked to rate how close they felt to their classmates.

At the end of the seven months, all the participants reported similar levels of closeness, but those in the singing group stated feeling closer to their classmates earlier in the process.

Singing also requires breath control, which can improve lung function and decrease stress.  A small study found that regular singing might have a positive effect for those who have COPD (chronic obstructive pulmonary disease).

Learning to play an instrument, or dusting off one you used to play, can work wonders on your mood.  A study published in the journal Mental Health Practice found that the use of music as a therapy for people over the age of 65 has a positive influence on well-being by providing enjoyment, social interaction, improved memory and social inclusion.

Moving Your Feet to the Beat Feels Good and May Reduce Fall Risk

Osteoarthritis is common in older adults, and movement helps improve circulation to ease the pain of arthritis.  Dancing alone or with others can be a great way to feel better fast.”  Read more