Category Archives: Financial

Maximize Social Security Benefits with Three Clever Tricks

Maximize Social Security Benefits with Three Clever Tricks

Obviously, retirement brings on a host of new challenges for seniors-specifically in the financial arena. However, armed with the proper tools, seniors can ensure a financially comfortable retirement. The objective is to build a strong foundation of retirement funds that provide a steady stream of income you won’t outlive.

In the past, most seniors and their financial planners have somewhat dismissed Social Security as a powerful retirement planning tool. Although Social Security certainly offers a reliable stream of income, the amount is diminutive and the benefits have a limited range of motion.

However, between the ages of 62 and 70, there are three clever tricks seniors can use to maximize their Social Security benefits: a reset, a file and suspend and restricting an application. By employing these three strategies, seniors may be able to greatly boost their benefits. Here’s how each tactic works:

Trick #1: Do over

The Social Security reset, or do over, is a great tactic for those who regret taking a reduced benefit at the age of 62. If you wish you would have waited and received the full benefit at 65 or 66 or earned the extra delayed retirement amount by putting off retirement until the age of 70, you’re in luck: you may have a second chance.

You can “reset” your benefit amount by coming out of retirement. All you have to do is file Social Security Form 521, also called “Request for Withdrawal of Application.” You’ll have to repay all the Social Security benefits you’ve received to date (no interest or inflation adjustment included.) Then, you can reapply for Social Security at your current age. You can only pull the reset one time-once you file Form 521, it’s irreversible.

The Social Security Administration will almost automatically approve your request, and you will receive the higher Social Security benefit amount for the rest of your life. Plus, your spouse may be able to collect additional spousal or survivor benefits based on your amped up benefit as opposed to your lower “early” retirement amount.

Trick #2: File and suspend

If you are married and you and your spouse retire at different ages, you can use the “file and suspend” tactic to maximize your Social Security benefit.

For example, let’s say you have reached your full retirement age at 66, but you plan to work until 70 to receive the delayed retirement credits. (This bonus can increase your full benefit amount by 32%.) Your wife, who does not work, just turned 62. You can file for Social Security now, but request an immediate suspension of your benefits. Then your wife can apply for her Social Security benefits at your current benefit level. Your wife will receive checks at a higher amount than she would have on her own employment record, and you won’t be locked into the lower benefit payment.

Once you turn 70, you can remove the suspension and begin receiving checks at the higher delayed retirement amount. Additionally, if you save up enough money to pay back the benefits your wife received, you can reset at the age of 70. This will not only increase your benefit, but it will also boost your wife’s spousal and survivor benefits.

Trick #3: Restricting an application

The restricted application is another tactic that may increase your benefits. Let’s say Bob is 66 and plans to work until he’s 70. His wife Jenny, who is also 66, is ready to retire. Jenny won’t be collecting from Bob’s record because she has earned her full benefit on her own record.

Instead of filing for Social Security, Bob decides to “restrict an application” only to Jenny’s benefits. This allows Bob to file as a spouse on Jenny’s record and collect half of her full benefit. In the meantime, Bob can continue working and build up delayed retirement credits on his own record. If Jenny earns $800 a month, Bob will collect $400 a month-which boosts their overall benefit amount by 50%.

Then, when Bob retires at 70, he will earn a higher benefit amount for his delayed retirement credits. Once again, this will mean Jenny will collect a higher benefit if Bob dies before her.

While these three Social Security tricks can help many taxpayers amplify their benefits, these strategies aren’t for everyone. For example, let’s say you plan to collect early and reset later. What if you are unable to save enough to pay back the benefits? Even worse, what if you die before having a chance to reset? Your spouse will then be left with a meager survivor benefit.

You should take time to think things through before you employ any of these tactics. You may want to discuss your options with a financial professional, who can help you come up with the best game plan for your unique situation.

Sketch Out a Winning Retirement Gameplan

Sketch Out a Winning Retirement Gameplan

After years of toiling away in the office, you’ve finally decided to enter into your glorious retirement years. You’re probably dreaming of relaxing days, visits with the grandkids, plenty of travel and lots of free time to explore new hobbies. Not so fast—before you clock out for the last time and bid farewell to your co-workers, you’ll need to sketch out a winning retirement gameplan.

As with every other major life change, retirement takes plenty of preparation. Not only do you need to figure out how you’re going to pay the bills—you’ll also want to prepare for the emotional and mental challenges many retirees face after leaving the workforce. Once you’re retired and have more free time, you may find yourself bored, isolated and even depressed.

Here are a few steps you should take to ensure your exit from the working world and entry into retirement is a smooth transition:

· Do your boss a favor: You may be tempted to take off running from the office as soon as you announce your retirement. However, it would be beneficial to both you and your employer if you stick around and help your boss find a suitable replacement. You may even offer to help train your successor. Not only will your boss be forever grateful, but this will help ease your transition into retirement.

· Draw up a retirement budget: Before you jump into retirement, you’ll want to make sure you have enough income to last throughout your lifetime. Sit down and figure out just how much money you’ll need each month for the next 40 years in order to maintain your current lifestyle. If you don’t think you have enough money in your retirement funds to cover these monthly expenses, you may want to rethink your plans. You might consider delaying retirement, exploring an “encore” career or picking up a part-time job.

· Consider health care expenses: Even if your employer offers a retirement health plan, you should set aside plenty of funds to cover the cost of health insurance. A company can take away these retirement health benefits at any time, so you’ll want to make sure you’re covered from every angle.

· Sign up for government aid ahead of time: Sometimes, it can take 90 days or longer for Social Security benefits or Medicare to kick in for eligible retirees. If you’re 65 or older, approaching retirement and want to start receiving benefits as soon as you stop working, you should sign up for benefits a few months before your official retirement. Visit or call 800-772-1213 to register.

· Plan now for retirement hobbies: Boredom is one of the biggest challenges many retirees face. But if you plan ahead to stay active, you’ll be much more likely to enjoy a full, rewarding retirement. Think about some new hobbies you’d like to pursue, sign up for volunteer work, register for some interesting classes or even consider a part-time job. You may also want to find out if your company offers an “alumni group” you could join. Many businesses arrange these groups as a way for retirees to stay in touch with other former colleagues. As long as you continue to take part in meaningful activities and feel like you have a purpose to your life, your retirement will be much more fulfilling and enjoyable.

Tips for Saving Money in Retirement

Tips for Saving Money in Retirement

In youth, retirement is often idealized as a return to carefree days of leisure. However, as it actually approaches, this ideal fades to reality.

Retirement is a phase of life where there’s a limited amount of money and limited ability in determining how long it must last. This is a mathematical problem that requires observant spending in order not to outlive the money, but still have enough for those things that are most important.

Plan Ahead

Financial advisors highly recommend for retirees and those about to retire to have a current snapshot of what their spending looks like. Advisors also warn that spending often rises at the onset of retirement as individuals begin to do all the things they’ve deferred while working. As these desired activities get accomplished, leisure spending often subsides. However, other expenses, health care for example, may increase. None the less, it’s vital to realize this increased spending stage of retirement and budget accordingly so that your nest egg isn’t overdrawn in the process.

Facing Realty Reality

Often one of the most emotional decisions is whether or not a housing downsize is needed. Many retirees may find themselves realizing that they undertook an unsustainable mortgage or spent too much on rental properties. These over-extensions can create a negative cash flow. While there may be emotional attachments, there needs to be an open and honest conversation about whether existing housing is sustainable or desirable in the long-run. One important point to remember is that selling isn’t cost free; there are any number of costs involved, including real estate commissions. The average closing costs were $3,741 on a 200,000 home in 2010. There may also be potentially higher property taxes from moving.

Expense Accounting

In retirement especially, the golden rule on spending should be to spend what you’ve planned and plan what you’ve spent. According to financial planners, one of the most significant retirement mistakes is not having a budget where you know fixed costs and discretionary costs. Discretionary spending is an area where it’s fairly easy to cut back on incurred costs during retirement, but you need to know what is discretionary and how much it totals. When tracking this type of spending, many find that dinning out is an area where a significant portion of money can be saved without feeling like a significant sacrifice has been made.

Stay Financially Solvent

It’s natural for parents and grandparents to want to financially assist their family, but this should never be done if it jeopardizes financial solvency. After looking at cash and expenses that are being covered for family, such as private school tuition and annual holiday gifting, and how those expenses fit into the above budget, it might be necessary to make significant deductions to avoid the risk of running out of money.

Decide What’s Most Important

During and before retirement, personal spending goals need periodic reevaluation. Start with core goals – what’s most important to you. Then, look at what the financial reality is to accomplish those goals. When the two aren’t congruent, it may be necessary to look at discretionary spending or housing. This is when the retiree will need to decide what’s most important. For example, some may be willing to give up portions of discretionary spending to maintain housing in close proximity to their family, while others may feel that helping a grandchild through college is worth a housing change. Either way, a game plan must be in place to simultaneously accomplish what’s most important and maintain financial solvency.

Bargain Driving

Outside of housing and health care, vehicles are usually one of the retirees greatest expenses. Aside from any loan amount on the vehicle, there’s the ongoing cost of operating, maintenance and repair, and insurance. Cutting back to just one car, downsizing, and avoiding wear and tear can save money.

Re-Evaluate Retirement Goals Based on Longer Life Expectancy

Re-Evaluate Retirement Goals Based on Longer Life Expectancy

There are many unknowns when planning for your retirement, especially regarding how long you can expect to live.  Most financial planners base calculations on a life expectancy of 90 to 95 years, but what is your real life expectancy?  What impact will a longer life have on your retirement?

Federal government statistics reveal that the life expectancy of a male born today is 73 years and a female is 79 years.  However, these numbers are somewhat misleading, because if you make it to retirement age, then you can expect to live longer than the average.  If you are a man who turned 65 in 1995, you could expect to live an additional 15.6 years – to age 81.  A woman who turned 65 at the same time could expect to live an additional 18.9 years, to almost 84 years.  Every time we reach a new milestone, our overall life expectancy increases.  The increases in longevity prevailed throughout the 20th century, and there is every indication that the upward trend in average lifespan will continue.

Another twist in the life expectancy calculation is that half of those who reach a milestone age will live beyond that age.  As the government continues to collect and analyze data, we see that the 65-year-old man in 1995 has an even greater chance of living beyond age 81.  In fact, living into your 90’s is no longer rare.  When looking carefully at the numbers, we see that almost one-third of men and almost one-half of women who reach age 65 will reach age 85!

How do these calculations fit in with your retirement planning?  They assist you in avoiding a worst-case retirement scenario – outliving your savings.  During your golden years, you will be living from money in your 401(k) and IRAs, and maybe from a pension.  If you are one of the lucky 65 year-olds that live to be 85, but you only planned to live to age 73, you may be struggling to make ends meet.   Using this reasoning, it is vital that your retirement planning extend beyond your expectations, and then some.

Since people are living longer, retirements are lasting longer, which may require some adjustments.   For instance, you should be cautious with spending in your early years of retirement so that your resources last longer.  Another idea is to be more aggressive with investing, or even head back into the workforce with a part-time job.  You may also wish to consider purchasing long-term care insurance to cover the high cost of late-life health problems.  No matter what decisions you make, be sure to do so in such a way that you can enjoy every minute of your retirement.

Getting Older May be the Secret to Happiness

Getting Older May be the Secret to Happiness

It may seem illogical, but in order to be truly happy, you need to age.  The years between 60 and 80 are the time when the majority of people are the most joyful, this according to a recent survey conducted for bank HSBC.

So how do all of these people in their 60s and 70s find the key to happiness? It starts with obvious factors such as good health and a respectable standard of living; but even these don’t make as large a contribution to one’s happiness as you might think. In fact, there aren’t really any external factors that play a part in making people happy.  Happiness is a natural outcome of aging that originates from within. That’s because the frequency with which negative feelings occur actually declines as you advance in years; and when they do happen, they don’t last as long as when you are younger.

Of course, the level of happiness you achieve varies according to the individual. Your genetic makeup influences how happy you will be, as does your parents’ happiness. Your health can influence how content you are, too.  People who are severely ill aren’t as happy as those in excellent health. But that’s true at all ages. The odd thing is that when researchers compared the morale of frail older adults to younger adults, the older adults beat the youngsters in the happiness department hands down, in spite of their infirmity.

The reason older adults can remain happy is probably related to their desire to make the most of the time they have left. Knowing that the clock is ticking makes people figure out the things that make them angry, and then either learn how to avoid them, or what they can do to cope.

Researchers also noted that brain function changes with aging. Brain imaging studies found that older peoples’ brains react less strongly, and for a shorter period of time, to negative feelings. They concluded that one’s improved outlook on life is probably a combination of changes in perspective, and changes to the amygdalae, a part of the brain that processes emotion.

Another change that comes with age is less emphasis on how much money one has.  Money only seems to have any real importance for those who are struggling to meet their every day expenses.  People that have a steady stream of income for life, no matter how small, learn to adjust to their new financial circumstances and find contentment.

Finally, continuing to engage in activities that you feel are important will add to your happiness. These activities need to be things that make a contribution like taking care of a grandchild, doing volunteer work, or working in a second career. Getting involved is life enhancing, and a little appreciation of life’s simple pleasures goes a long way on the road to happiness.

Be a Wise Consumer to Avoid Buyer’s Remorse When Purchasing a Home

Be a Wise Consumer to Avoid Buyer’s Remorse When Purchasing a Home

Buying a home is likely one of the most expensive purchases in a person’s life.  Due to the magnitude of the financial obligation that comes with home buying, there are sometimes feelings of remorse regarding the purchase. These feelings may be soothed by the fact that right now, many local markets are buyers’ markets, which means there’s more inventory to consider and more time to negotiate on price.

However, you can still experience buyer’s remorse, regardless of market conditions, especially if you are a first-time buyer. It’s a normal reaction to second-guess something as life-altering as buying a house.

If you are prospect for a new home, try following these suggestions to eliminate any pangs of self-doubt about your purchase:

  • Do your homework – Start by clarifying in your own mind what you want in terms of housing needs and the neighborhood. That includes such factors as the quality of the schools, commute time to work, and proximity to shopping and entertainment venues. The more you comparison-shop a particular market, the more you will learn how far your real estate dollar will stretch in that area. Pay attention to current news stories about the market you are interested in, and don’t ignore the long-term trends.
  • Obtain pre-approval before you shop – Getting approved for a mortgage before you look at houses will remove another fear that buyers commonly experience: that you won’t be able to afford the monthly payments on the property.
  • Use your support system to help alleviate any doubts – Once the paperwork is finalized, many buyers start to feel the first signs of discomfort. That’s the time to talk to friends, parents or siblings who can reinforce the decision to buy.
  • Make the new space your own – The only way to get connected to your new home is to personalize it. Paint the walls and consider new wallpaper or carpets. You don’t have to spend much money, but if the changes reflect your style, the home will begin to feel more like your own. As you individualize your home, you will create a sense of ownership, producing positive feelings about your purchase.
  • Don’t continually replay the decision in your mind – Remind yourself that you made an educated decision and move on. There’s one more sure-fire way to help remove any regret:  just think about having to start the buying-selling process all over again!

If your looking at purchasing a home in Washington or Idaho, I would like to recommend my good friend Paul Murray to you.