Think You Have Enough Money to Retire? Studies Say You Probably Need More

Planning for retirement can be an incredibly stressful and challenging process. People wonder whether they are saving enough now or how much money will they need once they retire. As retirement approaches, you might find yourself asking these questions more frequently and worrying more about your preparations.

In a recent report, the Bureau of Labor Statistics found that the average American spends $45,000 per year in retirement. Considering American retirement savings average $200,000, most people will quickly exhaust everything they have put away. Even with supplementary assistance from Social Security and other government programs, many Americans will find themselves unable to pay for necessities early in their retirement. Recent advances in medicine and life expectancy will be wasted if people are unable to afford the extra years they have been granted.

Fortunately, there are a variety of resources to help you plan for retirement and even some for once you have already left the workforce. An excellent tool to determine how your retirement finances stand is the RetireScore Calculator. This device is the only retirement calculator to combine both your health status and finances.

Most calculators focus on just one of these factors, painting an incomplete picture of your ability to afford your retirement. For example, if you have enough money saved for 13 years but a life expectancy of 25, you will need to drastically change your current saving and spending plans. Alternatively, if you have savings for 30 years but a life expectancy of 10, you should focus on improving your health first.

RetireScore will give your percentage chance of affording your retirement given your current health and financial status. From this figure, you can strategize how to alter or maintain your present practices and plans.

If you fill out the calculator and are surprised by the results, don’t worry. There are variety of steps you can take to re-center your retirement finances and create an actionable and successful strategy for the future. We wanted to highlight an option for supplementing your retirement savings and reducing your expenses that most people are unaware of: Selling your life insurance policy.

For some retirees, life insurance premiums are a burdensome expense that can increase as you age, and many people don’t realize they can sell their life insurance policies for cash, often for much more than the surrender value. Life insurance is a piece of property, much like your home, and you can sell it through a process known as a life settlement. In this transaction, the life insurance policyholder sells their policy to the buyer, known as a provider. The provider then continues to pay the premiums on the policy.

Surprisingly, many people allow their policies to lapse because they are unaware of this option. Annually, 250,000 policyholders lapse on their payments, missing out on an average of $51,300 each. Find out what your policy is worth here.

Life settlements are an opportunity to benefit your retirement savings in two ways. First, you are paid a large amount of cash up front that can help you afford your retirement. Second, you no longer have to make premium payments as you age, an expense that can cost thousands of dollars a year.

With an average payout of over $50,000, most people could increase their retirement savings by over a quarter.

Felix Steinmeyer is CEO of Mason Finance Inc. of San Francisco. He is a licensed life insurance settlement provider, member of LISA and received his MS and MBA from Stanford University.

401(K) Problems With IRAs And How To Fix Them

An IRA: the savior for men and women looking to retire. With a healthy retirement fund, you can live out your golden years in peace without financial worry. What’s that? The average IRA or 401(k) has big problems? The majority people don’t know this because their nest egg is a sure thing. Sadly, current retirement plans are subject to changing conditions such as inflation. As it steadily increases, the amount you have in an IRA drops. It’s pretty scary when you think about it, which is why action is vital.

To make sure your retirement is smooth sailing, here are the main issues and what to do next.

Poor ROI

ROI stands for return on investment, and 401(k)s are by no means lucrative. The average yield is less than 3.5% and that won’t get you anywhere near the mark to retire comfortably. There are plenty of options, but Bitcoin seems to be the most popular at the moment. Due to its potential for growth, a self directed IRA with Bitcoin is an excellent way to increase a nest egg.

As long as the cryptocurrency is encrypted, the risk is minimal. Another option is to get involved in government schemes which get employers to match or double your contributions.

Unorganized Record Keeping

The effort to provide a detailed account of your retirement assets is shocking. Because it’s still a manual activity, it can take forever. And, the information might not be correct when it does arrive. Then, there is the fact that you need a comprehensive and up to date list to plan effectively. The only way to organize a 401(k) is to be proactive with the records. Rather than trust s record keeper, you should make a personal spreadsheet and update it on a regular basis.

Changing Managers

Employers often set up plans to help employees with long-term investment plans. What they omit to tell you is that the people managing your retirement fund are no longer with the company. As a result, there will be a complete mismatch of direction. When two different people have separate ideas, the 401(k) is bound to suffer. Experts suggest investing in index funds as opposed to anything else to help limit the damage. MoneyCoach founder, Patrick Traverse, says that index funds can mean “tens of thousands of dollars at retirement.” It’s only a one percent saving yet it makes all the difference.

Dollar-Cost Averaging

Although a prudent way to make money, dollar-cost averaging makes zero sense when the market is negative. Lots of 401(k)s revolve around this method, and yours may be no different. Don’t worry if it’s the case because it is a straightforward thing to resolve. The key is to find a conservative option within your plan. After you have the right one, start directing the savings into it and play the waiting game. When the investment is ripe, take a chunk of cash and put it into a less conservative asset.

The most important point to remember is not to think your retirement plan is infallible. It isn’t and it needs constant tweaking and maintenance as a result.

Make Your IRA Work For You

When you are looking to make a real dent in your financial future, it makes sense to open up an IRA. The IRA is one of the most flexible and potentially lucrative accounts to park your money in, assuming you have the right access to learning about investing and all of the IRA benefits. If you have a 401K at your job, there can be advantages to that, but it can be frustrating to leave the investing and managing of the account to someone else. The Roth IRA can be another alternative, but that means you are pay taxes now and taking a chance that the rules will stay in place for when you retire.

The real bonus of an IRA account is that you can take control of your financial future. The control is with you, so the responsibility is with you. It helps to learn as much as you can about investing basics, so that you can make your IRA work to its full potential. An IRA that just sits there and is passively invested might not be your best option. You could be leaving money on the table.

Take some investing classes online and read as many investing books as you can. Find anything you can from Warren Buffett and his company, Berkshire Hathaway. He has built the most successful investment firm in the world, with patience and practical rules for investing. Read what you can by Jack Bogle, who invented the index fund and created Vanguard, perhaps the most widely used investment service in the world.

When you first learn how to trade a stock, it can be very exciting. You are researching a company, finding out about its business fundamentals and bottom line, then putting your money where your research is.

When you fund an IRA account, you can deduct those contributions from your taxes. You will have to pay when you withdraw as a retiree, but you can benefit if you expect your overall tax rate to be lower when you are in your golden years, than right now. The IRA is a great tool for high-income earners in the early phase of their career.

Just as important as learning how to invest your IRA funds, is the saving and setting aside of those funds in the first place. Learning how to budget your money now is essential to getting control of your finances. Learn how to cook for yourself, so you do not waste money at restaurants. Take a moment to look at your weekly and monthly spending and try to cut where you can. Do you really need those $5 lattes? If not, cut that expenditure out of your budget and put that money into an IRA. It might not sound like much, but it can really add up over time.

The key to being a good investor and being in great shape financially is discipline and direction. You need to set goals and figure out what you need to toin order to meet those lofty goals. That is what is required if you want to be safe and solvent in your later years. Starting an IRA now is an important part of that process.

Three Things To Do With Your Retirement Fund

As we get older, our attitudes to a lot of things in life start to change. We might adopt a different view of, say, alcohol and going out, or we might start to take our health a little more seriously. But one thing that will also undoubtedly change is what we do with our money. Our needs change as we age and we will start to realise that our money perhaps needs to go to different places. If you have saved money throughout your life, you may have a nice little pot of savings at your disposal for your old age, and you might be entitled to claim your pension too. But knowing what to do with all this money when you are heading into old age can be a bit daunting. Here are some of the ways in which many people choose to use their money in retirement and beyond.

Vacations

After working hard for all your life, you will probably agree that you deserve a bit of a treat. Perhaps you have worked in a career where you couldn't take much time off, or maybe you were a dedicated parent who couldn't bear the thought of leaving their kids for too long. Once you have retired, however, the world is quite literally your oyster. If you have some cash at your disposal, why not use it to travel with? The most common thing for people to regret in old age is that they didn't go out and see the world. So make sure you're not one of those people - book yourself onto a cruise, a round the world trip and set sail on your adventure of a lifetime!

Property

If you're all about re-investing that hard earned cash, then property could be the right route to go down. There is no greater financial asset than a house, and when you have retired, you have a few options open to you. You can keep your current home and use a trust attorney to protect the asset for your next of kin, or you can sell up and downsize. Many people choose to leave their property to their children in their will as it sets them up for a secure financial future.

Business

Getting back into business is probably the last thing on your mind when you've only just come out of work. But don't be so quick to shun the idea. A good way to top up your nest egg and to make sure it lasts forever is by investing in stocks and shares, or other people's businesses. Learn the basics of the stock market if that's the route you want to go down, as it can be quite a complicated process and you need to know what you are doing. Or, you can invest in a smaller business - a local startup, for example. This is another good asset to have on your repertoire and you will also know that you are doing something good by helping someone else fulfil their business dreams.

Don't Make These Severe IRA Rollover Mistakes

IRAs, or Individual Retirement Accounts (or Arrangements), are one of the most popular ways to save for retirement. They come with impressive tax breaks, which makes them ideal for saving up money. However, people often make a lot of mistakes when it comes to handling their IRA. Make sure you’re not making any of these common ones!

Not getting help if you needed it

If you’re ever confused about what exactly is going on with your IRA, then get help! Either ask someone in the financial department of your workplace or go to an independent financial advisor. After all, it’s your money in there.

Rolling over when you should be transferring (and vice versa)

Rollovers and transfers are two different things, though they appear similar if you’re just looking at the mechanics. A few people make the mistake of doing one when they should be doing the other. Make sure you know the differences!

Using cash when you’d prefer to use precious metals

You don’t have to use cash if you don’t want to. A lot of people assume that you need to go from cash to cash when you’re doing an IRA rollover. But you can use other assets if you’d prefer to go that route. Using precious metals as a way of keeping your money secure. Don’t miss out on using something like gold if you’re more comfortable with it! Find out more about gold IRA rollover if you’re interested.

Not doing your research

A lot of people are tempted to think as little about their IRA as possible. Once it’s set up, they’ll tend to it on rare occasions, and only when they have to. But your IRA is a very dynamic and complex thing. The amount of opportunities you’ll have for bigger tax breaks and bigger cash investments will be many. If you don’t know the ins and outs of your IRA options, then you could be missing out. Set some time aside to do some heavy research!

Putting in too much

Technically, there aren’t limits when it comes to what you can put into your IRA. But you could start facing penalties or reduced tax cuts if you start putting in too much. How much constitutes as “too much” will really depend on what institution you’re holding your IRA with. But, in general, being excessive will suggest to the IRS that you’re taking a few too many liberties with their goodwill. They’ll assume that you’re going to take that money out early, having saved it from taxes. Speaking of which…

Withdrawing too early

The point of an IRA, of course, is that it helps fund your retirement. If you take that money out early, the IRS will get a bit annoyed. You’ll often be hit with a penalty of 10% of what you’re taking out, at least, if you’re below the age of sixty. There are some circumstances in which you won’t be hit with this penalty. They’re not circumstances that you can really force, though. They fall into the category of “compassionate” breaks. High college costs or medical fees can see the penalty being waived, for example.