It seems like “retirement savings” is a huge stress factor in many people’s lives, in some surveys, Baby Boomers have even cited that they lose sleep over how they’ll fund their golden years. With people living longer, recovering from the biggest recession since the Great Depression and having more costs in their lives to keep up with, many Baby Boomers either don’t have enough saved or *gasp* don’t have anything saved at all for retirement! But, not to fear, even if you don’t have a single penny saved towards retirement (because you saved for your child’s college education, were hit big by the recession or simply were always trying to catch up), there are still things that you can do to create a retirement income for your golden years.
- Save: This one might seem like a no brainer, but actively begin putting money aside and looking at your budget. How much can you afford a week or month to put aside? What could you absolutely live without? Even putting away $100 a month will help to begin supplementing your retirement income. Also, think about what kind of saver or spender you are. Are you the type of person who goes to the store and buys strictly what’s on the list? Or do you get reeled in at checkout by all those products to buy? Figure out where your weakness and strengths are when it comes to spending and saving and address them accordingly.
- Where to put all this money you’re saving? If you’re employer doesn’t offer a retirement savings program through them (if they do, and they will match anything, put in as much as you can afford to!) set up a 401(k) and/or a Roth IRA. Although Roth IRAs aren’t tax deductible, the positive aspect of a Roth IRA is that, when you do begin to use the money, you can withdraw it tax free.
- Set a goal: It is a proven fact, that when we set goals, we tend to perform better. Ask any athlete, and they’ll tell you the goal they’re working towards. Same goes for saving.
- Unfortunately, the window to invest conservatively has passed for many who are trying to catch up with their retirement savings. But, that also doesn’t mean that you can just invest on a whim. Finding a balance in investing is key at this point, look into stocks and mutual funds, but make sure to research diligently.
- Work on eliminating debt: This is a biggie and probably the hardest to do. Employing some of the tactics mentioned in the points above may help: putting money aside, reviewing your budget and reallocating funds, can be a good way to start.
Even though many Baby Boomers are losing sleep, realizing that they may well live into their 90s and beyond, there is still hope for saving for retirement. Following these steps, taking a good, honest look at your budget and consulting with a financial advisor can help you get on the right path towards a healthy, happy and prosperous golden years.
In a previous blog, we looked at the benefits of a Phased Retirement. Basically, the main benefit was to keep the mind active and help the recent retiree have a purpose in their daily life. Another route to fulfill these needs can be through an encore career. There are many different ways to fulfill this, either through paid or unpaid, new or known career knowledge. Below we highlight a few ways to start an encore career.
- Volunteer Work: For those who are truly financially independent in their retirement, meaning they have enough to live the life they envisioned or are comfortable in their retirement life, volunteer work is a great way to keep the mind active and have a feeling of purpose, like they are making a difference in their weekly life. Volunteer work is also fulfilling because the retiree can choose which field they would like to work in, such as volunteering in the field of early childhood or helping those struggling to get back on their feet. This flexibility may help the recent retiree feel fulfilled and passionate about what they are doing with their golden years.
- Turning a hobby into a business: This is a path that many experts warn to think through carefully, because far too many people have plunged their entire retirement savings into a passionate hobby that simply didn’t turn into a business. But if the retiree has a limit of what they are willing to invest in their new visionary business, then this may be a path that is very fulfilling! A hobby, such as knitting or gardening, in today’s internet age, can take off to a whole new sphere of success! And doing what one loves (such as in the field of volunteer work) AND receiving a supplemental income from it can seem like a win-win: extra money and a passionate reason to get out of bed each morning.
- Phased Retirement: As mentioned in a previous blog, phased retirement can benefit the retiree because they are able to stay active, it is in a field that they have vast knowledge in and they can receive a supplemental, part time income (depending on how many hours are scaled back). The need to have a weekly purpose is easily fulfilled and is an easier path than starting a new business.
- A part time career: This is one that is most familiar to retirees, be it a greeter at a store, a cashier at the local grocery store or some other part time job, many retirees find this the easiest path to transition into. There is no great commitment or taxing work to be done, but includes a flexible schedule and some form of supplemental income. There are many businesses that actually look for recent retirees because they find that they are more dependable than some teenage part time workers and that they are flexible are in their schedule.
- A brand new career: Similar to a part time career, this entails going into a new field, possibly an earlier passion that may not have been financially possible before. For example, being a tour guide at a local museum or national park or a speaker to children at a school, about what life was like back when. Or it could be a totally new career, such as an Uber or Lyft driver, where the hours are decided by the retiree.
- Advisor: Similar to a Phased Retirement path, becoming an advisor (either for a company that the retiree has worked for or a competitor) can help the retiree with supplemental income, but also to help feel needed and as if they are making a difference somewhere.
Regardless of which path the retiree chooses, we here at Her Retirement feel that staying mentally and physically active is important to maintaining a healthy lifestyle during their golden years. Because after all, the golden years are meant to be enjoyed and to feel like there is a purpose to getting out of bed each morning.
A trend of high student debt has developed in recent years and decades that has left many soon to be retired Americans with a choice: do I fund my child’s college education, to help them fulfill their dream or do I continue to fund my retirement, in order to live a comfortable life later on? For many, this pulls at the heart string, because everyone wants to do as much for their child as possible. But experts agree, that there can be a major down side to neglecting your retirement in order to fund your child’s college education.
We, as parents, want the best for our children. We raise them with the best experiences we can give them, from extracurricular activities to family vacations. This continues, for many, even after their children leave the home to go study at college. With college tuitions rising drastically, many parents are left with the decision of letting their children take out loans, which may put them into exponential debt after college, derailing them from being able to choose a job, but instead accepting a job to simply pay their student debt. Or, the parents borrow or stop investing in their retirement in order to save their children from huge student debt. Although there are programs and loans through the government, that help students to pay lower interest rates, it is tough for many parents to teach their children that they can be whatever they want to be, when in reality, their children may not be able to fund a career because of oppressing student debt.
If the parents choose to fund their child’s college education, there are, for some, the hope that their child will take care of them in their retirement years. The idea is that their children are an investment, and that the investment will pay off for them during their retirement years, when their child is a world renowned doctor or successful business person. The downside to this thinking is the stress that this may put on the child AND the relationship between the child and parent. There are many cultures where children are expected to take care of their parents, from Europe to Asia, the Middle East to Africa. Unfortunately, this is not a trend that has translated into many family cultures in America. Instead, sociological studies show that we tend to value the individual over the benefit of the group as a whole. Obviously, this varies from family to family, but as a whole society, many children move away and want to live their lives. This is not meant to be a negative observation, but rather one that looks at the reality of what our society values.
With this mentality intact, isn’t it fair to translate this need to take care of oneself into parenthood? There is a trend in Mommy circles imploring mothers to take time for themselves. This may be in reaction to the idea that the mother (and father as well) are to be sacrificial for the family. But the analogy that gets used over and over again is, that if your glass is not full how can you give to your family? And it’s fair to translate this into retirement savings. If we do not invest wisely in our own retirement, then how can we be independent later on in life?
“I wish I had time to travel to…” is a phrase that many of us think or say throughout our lives. Some of us may even have lists of places we want to see during retirement while others may just visit a destination on a whim. Some things to consider before traveling are:
- Do I have money saved up to fund my traveling adventures? Traveling should be an added expense to your retirement planning. Just like with any part of your life, extra money should be put aside to fund traveling. With that said, how much will it cost? This also depends on…
- How much time do I want to spend there? Are you going for a week to San Diego or a month to Tuscany, to paint and enjoy the Italian surroundings? This will factor in to how much you should save to make sure you are truly able to enjoy your travels.
- Will I be physically able to travel there? If pondering this question, ask yourself, “how long of a plane or train ride is it?” “Will a layover, to stretch your legs, be a good option? Or is a direct flight better?” “Is it a tourist attraction, where your main objective is to see the historical, artistic or architectural sights or are you looking to see the wonders that nature has given us, which entails walking and hiking?”
- If traveling internationally, where is the closest embassy or consulate? This is important to note in the case of an emergency. If you lose a passport or need help, in any way, the embassy or consulate can be your safe haven away from home.
- Will your medical insurance cover you, if traveling internationally? If you happen to fall ill or hurt yourself (especially if you’re hiking or walking a lot), will you be covered by your insurance and will you be able to seek medical attention at your destination?
- Are there any discounts that you can receive, for being a senior citizen? Finally, this is on a lighter note from the previous examples, but many places offer a discount for senior citizens because they know that the retired population has a disposable income that they are looking to enjoy and traveling may be how they want to spend their money.
Adventures are meant to be enjoyed. And for many, this is not possible until the time and funds are available, usually after the kids have left the house and the career has come to an end, where time and money are at your disposal, letting YOU decide what to do with those hours and dollars as you see fit. So why not travel the USA and the world, to see what you have always wanted to see and experience. Go ahead, we dare you J
They’re known as snowbirds. During the winter months, thousands of them descend from the north and enjoy the warmer climate of the southern states. You’ll find them throughout Arizona and Florida, enjoying the warm weather and basking in the sun. Unlike other migratory creatures, they do not do this yearly, but rather towards the end of their life.
Snowbirds, otherwise known as the retired population of American citizens, sometimes dream and excitedly talk about their retirement relocation plans. After all, what is not to love about warm weather, away from snow and ice, clearing the driveway and cars and bundling up in freezing temperatures? But before moving, here are a few things to consider:
- Have you spent time here before? Living somewhere verse seeing that life on television or print can be drastically different. It is important to note what life is really like there. Have you vacationed here often? Have you been here only a few times? The more you are familiar with the area, the better you’ll be able to gauge if this is really a place where you want to relocate.
- What is the difference between vacationing and living? Vacationing somewhere and living there can be drastically different. When on vacation, we tend to eat at restaurants more and see tourist attractions. But once you live somewhere, is this going to be too much (as far as eating at a restaurant) and enough (eventually, you will have seen all the tourist attractions in the area). Can you live here as a resident and not just a visitor?
- How much does a plane or train ticket cost to come “home” for the holidays? If your children still live nearby, how involved are you in their daily life? Do you have regular meals together? Do you work as a grandparent daycare for your grandchildren? Being used to being involved in someone’s life every day to not seeing them but a few times a year can be a drastic change and tough for some snowbirds to handle. The solution then to consider is how much does it cost to fly between the two destinations? Make sure to also consider the influx of price during the busy seasons, holidays and summer travel.
- How much will it cost to live there? This is a practical consideration to research. Just as when you considered where to live to start your family, what are the property taxes for the area? What about the average mortgage?
- What amenities are there for the retired population? Is there a doctor’s office nearby? What about a pharmacy? As health needs increase in retirement, it is important to make sure there are necessary amenities, as well as leisure amenities. Do you enjoy swimming? Is there a swimming pool nearby? Do you like hiking? Are there reasonable hiking trails in the area? All of these will help to make sure that you don’t regret your move and yearn to move back “home”.
- Do you know people in the area, to help with household chores? As we become more comfortable and further into our retirement, it is important to note that there will be certain household chores that you will not want to or cannot do. Do you have friends in the area who will come and mow the lawn? Or are there affordable businesses who will take care of such chores? What about fixing household repairs?
Relocating is meant to be an adventure, but making sure that the adventure is fulfilled and worthwhile is the realistic portion of living the dream and may guard against any regret you may have about leaving “home” in the rearview mirror.
What is the number one fear of retirees? According to a recent Allianz study, 60% of individuals’ feared that they would outlive their income or their portfolios’ ability to create an income for the remainder of their life. According to research conducted by Transamerican Center for Retirement Studies, only 11% of people have even thought about how much they should invest in their retirement. But of those who have already begun to plan on how much they’ll need for retirement, half admit that they are merely guessing as to how much they’ll actually need. To continue with this study, 61% cited that they have a retirement strategy, but only 14% have it written down somewhere. And less than a quarter have a Plan B in case their retirement plan doesn’t pan out.
To look at the current soon-to-be retirees, there are 76 million individuals who are part of the “Baby Boom” generation (those who were born shortly after the end of World War II). Yet these Baby Boomers are facing unprecedented hurdles when it comes to planning for their retirement:
- Previously dependable retirement income is disappearing or becoming less dependable (i.e. Social Security). 55% of those categorized as moderate wealthy consumers, felt they were more likely to be struck by lightning than to receive what they were promised from Social Security).
- With less dependable retirement income, such as Social Security, more Baby Boomers are forced to privately and personally finance their retirement.
- Increased life expectancy from previous retirees.
According to the Allianz study, Americans fear that a retirement crisis is developing (92% among all applicants and 97% of those in their late 40s), 61% were more scared of outliving their retirement income than facing death. Among those aged in their late 40s, this number rose to 77%.
With all this uncertainty about traditional retirement planning being sufficient for the future, it is no wonder that many soon to be retirees are apprehensive about what the future will bring. The good news is that there are financial experts to help guide those who are beginning or have been planning their retirement financing. In order to quell the worry, make sure that your retirement affairs are in order and are working the hardest they can to keep you safe and secure during your most enjoyable years.
Ahh Retirement! The golden years, the time to do what your job may have kept you from enjoying, as you were commuting to a 9-5 and working on someone else’s schedule. But this all changes in retirement, you are your own boss and you decide what is on each day’s agenda! But one thing that may deter this sense of ownership of the day: health concerns. For many soon to be retirees, their health is a major concern. In a recent industry survey of 1,000 non-retired and retired Americans, 69% said they were concerned, with 41% saying they were “very” concerned. For many Baby Boomers, they see the finish line to their hard worked years in their career, but may not be able to enjoy the celebration due to doctor’s visits, limited mobility or frequent trips to the pharmacy to help treat ailments.
So how can you be proactive and make sure that you have the best chance of enjoying your well-deserved golden years? Taking care of yourself leading up to the golden years is the number one way, which includes eating a healthy, balanced diet and getting plenty of exercise. And what you eat is also important. A recent article on the website “Forever Young” cited the health effects of the herb Tumeric. If you have eaten Indian food, then you may very well have tasted it. It is known for its orange color and powerful taste. Its health benefits include its work as an anti-inflammatory and its high dosage of anti-oxidants. It also helps fights free radicals, rejuvenates cells, cleanses the liver, protects the heart and helps boost moods and brain support. In regards to mood and brain support, Tumeric has proven to shift levels of norepinephrine, dopamine and serotonin. If that’s not enough, this herb also helps to support better memory, focus and cognition due to the ten neuro-protective actions that it contains. For the body, Tumeric works as an anti-fungal, anti-microbial and anti-bacterial and helps to combat infections and boost the immune system. There are other benefits when cooking with Tumeric as well. For example, when Tumeric is cooked with cauliflower, it helps to prevent Prostate Cancer and combining it with other foods helps to prevent breast cancer, melanoma, has shown to prevent and slow the onset of Alzheimer, detoxifies the liver and because it has anti-inflammatory agents, it is useful for those suffering from arthritis.
We as a society tend to look for a quick fix, anything in a pill form that can work as a wonder drug to help cure ailments we are suffering from (those that sometimes occur because we’re not taking in healthy foods, but rather chemically engineered foods). Tumeric, and many other healthy herbs, spices and foods in general, can help to prevent many ailments and illnesses which begin to rear their ugly head during our golden years or help us to treat them and make life more enjoyable. After all, the retirement years ARE called the golden years for a reason. Shouldn’t you be able to fully enjoy them?
The day is finally here, RETIREMENT! You wake up (when you please, although your body is probably still used to your rigid work schedule wake up), roll out of bed, brew a cup of coffee, sit down and…now what? It seems the goal has been reached, the golden years are being redeemed, but yet, what’s the next part? The list of things to accomplish and enjoy may be long: travel, hobbies that may have been neglected and new adventures to begin. But what to do with the day to day? This is where many retirees end up, not knowing how to transition from a regular 9-5 or other regular work schedule to being the boss of their own time.
The freedom and flexibility of retired life, for some, may seem scary and the confusing feeling of wanting to go back to work may creep in. Many retirees cite that their day to day life deteriorates in some way from the lack of structure. As human beings, we are very routine. We get used to the safety of knowing what comes next in our day. A lack of structure can be frightening and something that many do not expect to be a worry or fear in retirement, after all, as teenagers, don’t we yearn for the freedom away from our parents?
But alas, there is a solution. Many retirees find that they don’t have to leave the workforce completely, but rather, they phase out their retirement. They scale down their 40 hour work week to a few days and few hours a week. The above situation may be one reason, but there are multiple reasons why recent retirees remain at their jobs, ranging from the need for a supplemental income to needing a purpose and routine to daily life.
Phased retirement is a program that many employers are implementing because it is also beneficial to the employer. The benefits that the recent retiree possesses can help the transition process proceed smoothly. In many cases, the recent retiree may serve as a mentor to the employee being trained to take over their position. Or, they may stay on and act as an expert or advisor to the business, loaning their many years of knowledge. For the retiree, they are able to continue to exercise their vast knowledge of their field and keep the wheels turning, both for their own mental faculty and the company.
Another added benefit to staying active during retirement (either through a hobby, volunteer work or phased retirement) is that the brain remains active. Science has shown, that keeping mentally active helps to ward off dementia. For example, studies have shown that those who speak multiple languages (therefore engaging various aspects of their brain) have a lower risk of Alzheimer than those who speak only one language.
Regardless, if your passion for your career continues past retirement or if you choose a new hobby to undertake, the main suggestion that studies seem to stress is to stay mentally active, to keep the wheels turning and to continue to have purpose and satisfaction in daily life. Because as humans, we all seek self-fulfillment and purpose, which can often be lost in the free flowing world of retirement.
Reverse mortgages have gotten somewhat of a bad reputation, often being seen as an irresponsible last option for people looking to resolve a financial situation. But as with many things, if used correctly and with the right tools, they can actually be a good option as another source of income during retirement. In order to qualify for a reverse mortgage, the applicant must be 62 years or older, have equity in their home, are able to pay property taxes, have homeowner’s insurance and are able to continue maintaining their home to a sufficient level.
Reverse mortgages have changed significantly in the last 10-15 years, especially since 2012. Although complicated, reverse mortgages (with the advisement of a financial planner) can be a viable option for many entering into retirement. Reverse mortgages (also known as the HECM program) is administered by the Housing and Urban Development Department and Federal Housing Authority. Since 2012, an attempt has been made to make reverse mortgages a more viable option. For example, to do away with the “irresponsible” reputation component, applicants for a reverse mortgage now have to undergo a more rigorous financial evaluation, hopefully deterring those who may be using a reverse mortgage as a desperate means. All borrowers must also go through counseling sessions, have an appraisal on their home by the FHA and the house must be their primary residence. After all of these qualifications have been met, the borrower may be approved for up to $625,500. If the borrowers are unable to meet these standards (if they no longer reside in the residence) the loan must be paid back. The approved loan is based on the value of the home, and can be paid in a lump sum, tenure payments, term payment, a line of credit or a modified tenure or term payment. But the borrower is never held to one payment and can apply to have the payment method changed if their financial situation happens to change.
Several myths have also been dismissed about reverse mortgages, such as that a spouse who was not on the mortgage may be kicked out of the residence upon the death of the mortgage holder or that the owner of the mortgage loses the title to the home when they sign on the dotted line.
What is not a myth though, is that high costs are still an issue. But as with many financial tools, shopping around to get a better rate can save the applicant money, as the initial costs for a reverse mortgage ranges anywhere from $2000 to $10,000.
A reverse mortgage is a non-recourse loan that is secured by collateral, which is usually property. If the borrower defaults or when the loan does eventually come due, the issuer can seize the collateral but cannot seek out the borrower for any further compensation, even if the collateral does not cover the full value of the defaulted amount.
So when is it ideal and responsible to use a reverse mortgage? There are four situations which come to mind:
- Using a reverse mortgage so that a retirement portfolio can continue growing.
- Using a reverse mortgage line of credit once their retirement portfolio is no longer available.
- Using a reverse mortgage to pay off an existing mortgage or to pay for necessary renovations (either because of the age of the house or need for more accessible accommodations).
- Borrowers can also use a reverse mortgage to help supplement retirement income, i.e. using the reverse mortgage tenure payment option instead of annuities to help delay Social Security benefits or to help pay off taxes (in the case of Roth conversions) or to fund long-term care insurance premiums.
As with most financial decisions, it is important to consult a competent financial advisor to see if this is a route that is worth taking and also to consider your own unique personal situation. Having all the tools in front of you, educating yourself and understanding your different options, is the best way to make sure that you are getting the most out of your retirement income.