Posts Tagged "manage money"

Fish jumping into a different bowl

Few Put Finances First When Retiring

Will you retire when you want to, when you have to, or when you can afford it?

This is crucial, because when Americans retire is more important than it’s ever been to our financial well-being in old age. Yet the research indicates this doesn’t carry enough weight in people’s decisions.

This doesn’t make any sense. The typical combined 401(k)/IRA balance is a slim $111,000 for working households between 55 and 64 years old that have a 401(k). And fewer and fewer retirees have defined benefit pensions, which provide reliable income. More than half of us are at risk of experiencing a decline in our standard of living after we retire, estimate economists at the Center for Retirement Research, which supports this blog.

Yet a recent survey by Fidelity indicated that the majority don’t think about the financial impact of their retirement timing. Retirees and pre-retirees said leisure was a major reason they have retired or would retire – even if they were falling short of their financial goals.

The most powerful route to improving workers’ prospects is to delay retirement, which dramatically increases monthly Social Security benefits and the income that can be withdrawn from a 401(k).

But Mark Zoril, a Minnesota financial planner, said pre-retirees typically do not drill down into their finances, though they have a vague idea of where they’re at. What he often sees is that an important change precipitates the timing of a retirement, whether a friend’s retirement or deteriorating health. …Learn More

Year-end Thank You to Our Readers

Holiday thank you

To stay current on Squared Away blog posts in 2016, we invite you to join our free email list. You’ll receive just one email each week – with links to the two new posts for that week – when you sign up here.

Readers can also follow the blog on Twitter @SquaredAwayBC or on Facebook.Learn More

top 10 Illustration

Readers’ Picks in 2015

Squared Away readers should know this ritual by now. We consult Google Analytics to determine the articles with the most reader traffic over the past year.

This blog covers everything from student loans to helping low-income people improve their lot. But this year’s Top 10 was dominated by one topic: retirement.

Readers’ favorites are listed in order of their popularity, with links to each individual blog:

  • Navigating Retirement Taxes
  • Medicare Primer: Advantage or Medigap?
  • Why I Dropped My Financial Adviser
  • The Future of Retirement is Now
  • Annuities: Useful but Little Understood
  • Winging it in Retirement?
  • Fewer Need Long-Term Care
  • Misconceptions about Social Security
  • Late Career Job Changes Reduce Stress
  • Mortgage Payoff: Freedom versus the Math

To stay current on our Squared Away blog in 2016, we invite you to join our free email list. You’ll receive just one email each week – with links to the two new posts for that week – when you sign up here.      Learn More

Horse race

What Derails a Planned Retirement Date

Workers are feeling very ambitious these days: one in three plans to retire after age 65. In the 1990s, just one in 10 did.

In reality, though, many older Americans today are retiring before they’d planned, resulting in lower monthly Social Security checks, slimmer 401(k) accounts, and more golden years to pay for.

There’s no shortage of research looking into what derails these plans. But, for the first time, a new study ran a statistical horse race among the various reasons known to impact older workers’ decisions. Health issues finished first in the race, followed by layoffs, and a spouse’s early retirement.

In an ideal world, eliminating these major shocks, along with a few less prevalent shocks that were also analyzed, would reduce the share of older workers retiring earlier than planned, from 37 percent to 27 percent.  [The remaining factors that were still unaccounted for in this analysis could be anything from not liking one’s job to financial or health events that went undetected by the survey.] …Learn More

Image from online tool

Social Security Delay: the Value to You

What matters most in retirement is how much money comes in the door every single month. That’s why this blog – and its sponsor, the Center for Retirement Research – hammers away at the wisdom of delaying when you sign up for Social Security in order to increase the size of your monthly checks.

So here’s a very quick project for the long Thanksgiving weekend: insert your birthday and earnings into this new online tool to get an anonymous, back-of-the-envelope estimate of how much a delay is worth to you.

The age you claim your benefits is crucial, because two out of three households rely on Social Security benefits for more than half of their retirement income. Yet the majority of people still sign up before they’re eligible for their full benefit, which is age 66 for most baby boomers. Monthly benefits are increased for every year of delay, up to age 70.

The cool part of the tool, released last week by the Consumer Financial Protection Bureau and the Social Security Administration, is the sliding feature. It shows how much monthly benefits rise if you change your claiming age from 62 to 66 to 70. Click here to try the tool. …Learn More

Two heads in a conversation

Listen to Your Elders Please

People do not like to hear advice from their “elders.” But shouldn’t retirement be an obvious exception?

The options for what most workers can do to salvage their retirement finances rapidly narrow as they get closer to retiring. After 50 or so, it’s also tough to find a better job, and only so much can be saved in short bursts – retirement saving requires years of diligence.

If you’re still listening, the following is sage advice drawn from two recent New York Life surveys of older workers on the cusp of retirement and octogenarians.

  • Workers in their 50s and early 60s said they started saving too late for retirement. They put the “magic age” at around 26.
  • Automatic savings vehicles such as 401(k)s (or even insurance or paying down a mortgage) turned out to be crucial to the sense of how secure pre-retirees feel about their futures. This was particularly true when children were living at home. …

Learn More

visiting an elderly woman

Long-term Care Policyholders Who Lapse

In an upside-down aspect of long-term care insurance, about one in four older people with a policy who eventually go into a nursing home had let that policy lapse sometime in the previous four years, forfeiting coverage that would’ve paid for their care.

The questions are who does this and why.

New research by the Center for Retirement Research (CRR) finds two explanations for why: a scarcity of financial resources and cognitive impairment, which limits the elderly’s ability to properly manage their finances, including their long-term care policies.

The researchers found no support for what they call “strategic lapsing” – a deliberate decision to quit paying the premiums by healthy older individuals who, upon reconsideration, conclude that their risk of needing care in the future is low. …Learn More

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