Do You Need Insurance Changes In Retirement

Insurance Changes

Who doesn’t look forward to retirement and the greater freedom to choose your own schedule? Sounds great to someone who has worked for years. But with any change in life circumstances, you may need to make some insurance changes in retirement as well.

But with the tremendous changes that come with retirement come the need for changes in your spending and don’t forget – insurance. You may need more or less coverage than what you have now.

Barbara Marquand of NerdWallet suggests evaluating your needs in the following areas:

  1. Ask about car insurance discounts. The fact that you are no longer commuting to work may allow for a decrease in your car insurance. Many states require companies to give discounts to drivers age 55+. Other organizations such as AARP and AAA provide discount opportunities as do completing drivers ed courses. But, if you’re planning to travel in rental cars, you may want to evaluate the amount and type of insurance you will require.
  2. Contact your homeowners insurance. Because retirees are often home more, the likelihood of burglary is reduced which makes for a good reason to offer a reduction in homeowner insurance. However, if you’re planning to do a great deal of traveling, you may want to increase your spending in this area.
  3. Revisit life insurance and long term care. Seems obvious, but health changes come with age. Your personal health may allow for decreases or require increases to maintain financial health.
  4. Sign up for Medicare. There is a 7 month window where you are eligible to sign up for Medicare. It begins 3 months before your 65th birthday. Follow current regulations at medicare.gov.  Late enrollment may mean having to pay higher prices.

Everyone’s retirement will look different with the many factors in play. If you need assistance, please look for a reputable financial adviser in your area.

You can read the full article here.

 

Is Retirement Possible Without $1 Million?

Retirement$1 Million Retirement

Of course entering retirement with a million dollars makes things easier, but you can absolutely live well without having met that magical goal. Preparing ahead of time and making small changes – or big ones – can pay off big in the long run.

5 Strategies

There are a few things you can try to help meet your goals like boosting your Social Security payments. Here are 5 strategies, from our friends at USNews.com that  you can employ to make your (less than $1K 401(k)) retirement a joy!

We would love to know if any of these suggestions have worked for you or if you think any of these strategies might help. We would also love to hear what else might have made your less than $1K savings work for you.

 

Best Advice From 3 Former Advisers

One criticism of retirement planning.

If you had to find one problem with the whole business of retirement planning, it might be that it is staffed by advisers who have yet to retire!  That’s certainly not to say that professional advisers don’t know what they’re talking about. I happen to know there many top notch advisers out there. They work tirelessly to assist clients and to help them retire successfully.  I, quite often, hear them seeking solutions to improve the financial welfare of their clients. I talk to several of those great advisers almost every day here at Torrid Technologies!

Interesting perspective

I ran across this article today about three former advisers sharing the things they’ve learned in their own retirement.  I found it especially relevant.  Since I enjoyed it, I just had to pass it along.  Most noteworthy – one of them even hired 2 advisers for himself. Check out the article from Marketwatch to see why he uses two different folks. Maybe what they’ve learned can help you make a plan for your own retirement.

Can we hear from you?

So hey all you retired advisers out there, please give us your insight. Share the best lesson you learned in retirement that could help other advisers?

If you used one of those awesome advisors out there, please share the best advise you received?

2017 IRA Contribution Savings Cheat Sheet

You may be bombarded with messages to “make your IRA contribution” this time of year.

For 2017, you have until April 18th tax day to finalize that contribution for the 2016 calendar year.

I was curious as to whether we could calculate various contribution amounts over many different time periods to see how long it would take to accumulate $1 million in an IRA.

So I fired up an Excel spreadsheet mainly because I wanted to create a matrix that shows many results in a small window.

Normally I would have fired up my RetirementView software and just run some numbers in there.  But if I did that I would have to run each scenario and then log the results.

Here is the “cheat sheet” that I created in Excel for 2017.

2017 IRA Contribution Cheat Sheet

2017 IRA Contribution Cheat Sheet

To explain what this means, I first explain that the entire calculation is based on a flat 5% return. If you had my spreadsheet, you could change this return and have the matrix recalculate all the values at a different return.

The left column in blue shows the number of years until retirement – this is the number of years that you “save” the amount specified in “Annual Savings”.

The green “Annual Savings” columns are showing you the calculations if you save $1,000 each year or $2,000 each year…. for the time period in blue.

The yellow area shows you the total amount accumulated for the time period including the compound interest of 5%.

Did I get to $1 million?

No.  The only place we got close was if we saved $5,500 a year for 45 years.

My guess is if we increased the interest rate to 6% we would be over the top.

So I did that in my Excel spreadsheet and voila the $5,500 for 45 years gets us to $1,240,295!

If you’d like to get a copy of my little IRA Contribution cheat sheet spreadsheet in EXCEL format, then CLICK HERE to get your copy of the Cheat Sheet for FREE.

Thanks and Happy Planning!

Mortgage Interest Deductions

When you do your taxes this year, it probably won’t be much of a comfort to know that in February 1913, the personal income tax was born. Bravo. But the good news is that if you will be writing out a check this year, you might want to ask yourself if a nice, fat mortgage interest deduction would come in handy next year.

For many people it certainly will. Mortgage interest is tax deductible. This means it is one of the expenses that reduces the amount of income on which you pay taxes.

Many, if not most, people who do not own houses, also do not itemize their deductions. That makes sense because if they added up all their potential deductions, the deductions would not be greater than the standard deduction. For 2016 the standard deduction for heads of household will also rise to $9,300 (up from $9,250 in 2015) but the other standard deduction amounts will remain the same: $6,300 for singles and $12,600 for married couples filing jointly. Personal exemptions will be $4,050 in 2016, up from $4,000 in 2015.

The beauty of the mortgage interest deduction is that it allows you to deduct all the interest you pay on your home loan. During the first years you pay on a home loan, nearly everything you pay is interest — up to 75 percent of your payment. That nice deduction can reduce the taxes you owe, while allowing you to live in the house you want. Owning a home also offers you some subtle protection from inflation. Inflation is an increase in the general level of prices for goods and services over time. So you notice that your grocery bill is going up and your dollars buy less, that is inflation, according to investopedia.com

According to inflationdata.com, in 2016 inflation was about 1.7 percent. For 2017, Kiplinger’s predicts inflation to head to 2.5 percent. Meanwhile, mortgage rates are ranging from 4.2 percent to 5.2 percent on 30-year fixed rate. That is an increase of at least 2 point from 2015 and 2016 but still very low. If you buy a home this year, and inflation continues to increase, you’ll soon be paying off your home with cheaper dollars. Your food will cost more; your luxuries will cost more; rent will cost more. But your mortgage is going to stay the same.

Meanwhile, inflation will also have some effect on home prices, forcing prices up. Right now, in most parts of the country, home prices are low because there are a lot of houses on the market and fewer buyers than five years ago. That means, right now you can get a lot of house for fewer dollars. In coming years, however, as the supply of houses for sale decreases, the pressure of inflation plus a reduced supply of houses, will force home prices up. In 10 years, your home purchase today will be a bargain and you will be living in a home you love while paying prices locked in the past! It’s like being a financial time travel

Social Security Strategies for Couples

Social Security is, like many government programs, rife with confusion.

For those nearing retirement age, it would be wise to plan now to create the benefits strategy that will maximize their retirement income while allowing them to enjoy life how they wish. Most experts, such as those at USA Today, recommend using benefit optimization software or an advisor to find the ideal outcome since there are a myriad of situations that affect benefits.

Maximize Benefits by Delaying (70/70)

Mathematically, delaying social security benefits until both partners have reached the age of 70 will normally maximize potential benefits. This is true because according to the Social Security Administration, benefits rise an average of 8 percent per year (for those born after 1943) for each year delayed past full retirement age until the age of 70. Delaying will ensure the maximum possible income for both partners.

The 66/70 Strategy

This strategy works best if both partners are about the same age and have earned similar incomes throughout their careers. In this scenario, it could be best to use what’s called a restricted application. Forbes outlines the plan by explaining that one partner will first file for benefits promptly at age 66. Immediately after that, the other partner will file a restricted application for spousal benefits (50 percent of the other partner) and begin collecting those. Meanwhile, the second partner will receive benefit increases over the next four years while they continue to work. After four years, the second partner files for their own benefits which will end their spousal benefit and put both partners on their own full retirement amounts. If both partners are destined to live a very long life this strategy may not be ideal, but it does offer a good mix of income and life enjoyment!

An Argument for Claiming Early

Most experts agree that claiming social security benefits early is a poor choice, but Fidelity Investments says it can make sense in some cases. If one or both partners are experiencing health issues or expect to have a shorter life expectancy for any reason it might be worthwhile to take benefits as soon as possible to maximize enjoyment during those non-working twilight years!

2 Ways of Thinking

Things are so divided these days. Say the word “Republican” to some people and an internal flare goes off. Say the word “Democrat” to another and you get the same reaction.

This article leads with the title, “Congress could pump the brakes on these new retirement plans”. It’s been shared multiple times on social media sites. But before anyone flares up, let’s break it down. Is this really a political play or just 2 different ways to see something – both having pros and cons?

The article state:

At issue are the state-run retirement plans being created in states including California, Oregon, Illinois, Maryland and Connecticut. Under the programs, workers who don’t have access to retirement plans through their jobs would be automatically enrolled in portable individual retirement accounts (IRAs), and contributions would be deducted directly from their paychecks.

A new Labor Department ruling is making it easier for states to offer Retirement Plans. Congress is considering doing away with the rule.

Supporters say – This would make saving for retirement easier to use and providing access for some that don’t currently have access to a 401K of some sort. States should be allowed to do this.

Opponents say – If states begin making their own plans, companies who currently offer retirement savings plans may discontinue offering savings plans of their own. It isn’t free for companies to provide these services, especially when they also offer contribution matching.  Opponents would prefer to make it easier for companies to start and maintain 401K programs as well as offer incentives to companies to provide any or better savings plans.

Neither say – Retirement savings plans are bad and should be done away with. Both sides are just looking for the best way to offer option to Americans workers. Now, it’s just a matter of opinion – which seem to be in no short supply these days! LOL!

More Information (per the article):

  • State plans, as currently proposed, do not allow company matching – which might actually decrease your current saving ability.
  • No current structure exists for oversight – could lead to higher costs initially and possibly more long term if those oversights are sourced out to third parties.

So, just curious, what do you think?

Should states be allowed to move forward with these plans or not?

Why or why not?

February 2017 Newsletter

Well, it’s been a while since we’ve been able to get a newsletter to you. We’ve just been so busy making some changes around here. Small ones like database boring stuff. The the BIG ones like developing a new platform for the 2017 version that has LOTS of upgrades and enhancements. See the last page of the newsletter for some of them. All enhancements listed here.

I hope you enjoy this newsletter. We’d love to hear what you think!

Here’s the link to the whole enchilada – Feb 2017 Newsletter

2017 – Lots of Enhancements!

When the 2017 version is fully live you will see a significant number of enhancements – maybe not initially because we still want you to “see green” and “get the red out”. But there are lots of things you’ve asked for and now they’re here! Many of these enhancements are things you have brought to our attention, requested, hoped and prayed for – we aim to please, so here’s hoping your request made the initial list.

Here’s a list of (most of) the 2017 Updates:

For ALL Editions:

  • Basic 2017 branding changes.
  • Files can now be opened and edited on both MAC and PC computers.
  • Updated Help file with new 2017 tax tables and Social Security changes.
  • Updated Social Security algorithm and related data points to 2017 data for bend points, national average earnings, maximum creditable earnings, average wage index series, and cost of living adjustment.  Now using 20 year average of 2.13% for the COLA in the built-in estimate.  If you do not use the built-in estimate, make sure you consider using the 2.13% COLA under Settings – Social Security.
  • Major improvement in the printed report using professional design, alternate shading, and color.
  • Added clear note “After Taxes in Today’s Dollars” for the Retirement Income Goal.
  • Maximizing main window now has resizable buttons.
  • Maximizing main window now increases font size of the Spreadsheet for better readability.
  • Added “Simple” Spreadsheet that only has most important color columns. Use Ctrl-R to switch to it.
  • The executable file has been renamed from Planner.exe to RetirementView.exe so you can find it more easily in the list of Processes if you need to.
  • Added a built-in Print Preview screen for the printed reports.
  • Added a built-in PDF printing and saving option for the printed reports.
  • Changed old Most Recently Used file menu items to Open Recent menu.
  • You can now run the plan out to age 117 – the age of the oldest person in the world.  Good luck and good health!
  • If couples plan and one spouse still working, we now deduct Social Security Tax at 6.2% (Subject to the Max Earnings test) and Medicare Tax at 1.45% (thanks Peter Plant).
  • Updated EBRI.org retirement factoids that pop up if you click returns in unregistered demo mode.
  • Re-added the Backups routine that backs up data file changes in case you need to recover lost data.
  • Removed built-in AppUpdate since it failed on most computers. Now just point to online download pages.
  •  Fixed bug where spouse was already retired but the spouse tab was not disabling job income and other “Not Applicable” fields (thanks Nick Seltun).
  • Fixed bug where clicking on spouse Job Income field or Retirement Age field would call SetAlreadyRetired which would by mistake set the primary client Job Income to zero (thanks Nick Seltun).
  • Fixed bug in print out on Investments page where the blended return BEFORE retirement did not make any sense if it was a Couples plan and one spouse was already retired. The program would average a 0% return for the retired spouse since they had no “before” retirement period. We now just print “N/A” since that return does not make any sense when the retirement has already started (thanks Nick Seltun).
  • Fixes long time bug for “Invalid Type Mismatch” on the secondary grid controls on Investments, Cash Infusions, and Special Expenses.
  • Fixes long time bug where program could not print in color if your default printer was set to “black and white” printing only (i.e. you could not switch to color and get the reports to print in color).

For the PROFESSIONAL EDITION:

  • Advisors with a CFP can now print the Registered Trademark symbol with their name.

For the PERSONAL/COUPLES Editions:

  • Added ability to use files to create multiple scenarios as needed (File New, Open, Save, Save As, Close).  Note that it is still locked to the one name and/or spouse name.

Full list of all current updates and enhancements will be located on our help desk.

If you are just learning about our software, you can find us at www.torrid-tech.com. Also check out our video tutorials and our YouTube channel.

If you have any questions about our software give us a call at 888.333.5095 or email us at support@torrid-tech.com.

It’s National Save For Retirement Week

Are you saving for retirement – saving enough or even saving at all?

Check out this article at USA Today by John Shepherd to see if you’re part of the 52%.

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