THANK YOU FOR REGISTERING FOR OUR WEBINAR…

(It was a ONE CLICK registration… so you should shortly get an email from GoToWebinar with details in your email box)

Make sure you attend the WEBINAR to learn all about this new system!

DETAILS SHOULD BE EMAILED TO YOU DIRECTLY FROM GOTOWEBINAR!

Thanks and Happy Planning!

Regards,

-Tim

P.S.  No this is not my car… It’s a Ford GT350 from a car show outside a conference in Phoenix a few years back.

Buying or Renting Your Home In Retirement

The kids are gone, the house is paid for. You are ready for retirement. The question is whether keeping the house is the best idea. It’s a real retirement dilemma.

According to USA Today, as many as 46 percent of seniors aged 65 or older are deciding to rent a home rather than buy a new house or keep their previous one. There are pros and cons to each option.

Buy

For someone who already owns their own home with no mortgage payments, keeping the house might seem an obvious choice. According to the Motley Fool, this house can be used as a source of income in retirement through a line of credit or a reverse mortgage. This could be important if there is a sudden need for extra money.

On the other hand, annual upkeep eats up as much as 1 to 4 percent of the value of the house each year. These expenses can add up quickly on an older home. Then there are property taxes and homeowner’s insurance. It is also entirely possible that a housing market crash could erode the value of the home right when it is needed the most.

Rent

On the flip side, selling a home near or during retirement when the market is right could add a lot of cash flow and savings to draw from in the event of an emergency. The idea being, cash can be invested and might be worth more over time than the house’s appreciation.

Kiplinger’s took a look at several scenarios involving home ownership, selling, and renting. They wanted to decide which option made the most financial sense. The study determined that in the short run renting was the better choice. It also found that buying a new home was more profitable after ten years or more. Finally, they noted that it could be possible to pay yearly rent with interest gained from investing profits from the sale of a home.

Remember too, when considering this retirement dilemma, that this time of life is also about freedom. Separate from the financial aspects, renting a home could allow retirees to move around to different parts of the country. Renting can make travel easier than worrying about having to sell or maintain a house from a distance.

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Roth Withdrawal – Short Term Gain – Long Term Loss

Roth IRAs are unique retirement tools. They allow the owner of the account to withdraw their original deposits from the account at any time without penalty. Roth accounts are funded with after-tax money. Uncle Sam, therefore, doesn’t have to worry about getting a cut as money moves in and out of the IRA. This feature could lead some people to use their Roth IRA as a sort of emergency fund if they have no other savings to draw from.

According to [Old Link Removed], however, it is not a good idea to use the account in this way. Gains you’ve accumulated over time will be lost with a single withdrawal.  Since there are lifetime limits on contributions, the impact can be great. Say that a 25 year-old deposited the $5,000 yearly limit and wanted to see how much this would turn into when they retire in 40 years. At 7 percent interest compounded annually, there will be $74,872 when they turn 65. Taking that $5,000 back out when they are 30 to cover an emergency will result in only $21,489 over the same time frame. Taking money out early might sound good in the short term, but it will be disastrous for long-term financial security.

Read the [Old Link Removed].

Raising Your Credit Scores

Credit scores:  It is so incredibly important for a person’s financial well-being. So why is there is a surprising amount of mystery surrounding the FICO method of evaluating credit scores? According to FICO itself, after examining its own data, they revealed some solid information.  This can help explain how much a person could expect their credit score to rise after a delinquency falls off of their report.
What did they find? After one delinquency was removed from an account holder there was a rise. Over a three month period, it seems that it typically resulted in a 14-point rise in their credit score. A removal of all outstanding delinquencies over the same period showed a 33-point increase. Although this might not seem like a dramatic increase, they also point out that the penalty for major negatives on an account decreases over time, so the recovery after it actually falls off can be modest.