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Posts Tagged ‘retirement planning’

Retirement Income: How Much Will You Have?

How much income will your assets generate in retirement? Do you know?  If you answered no, you’re not alone. A recent study from the LIMRA Secure Retirement Institute (LIMRA SRI) found that more than half of all workers don’t know how their retirement assets will translate into income.1

Creating a retirement projection can boost your confidence in your strategy and help you identify areas for improvement. According to the LIMRA study, almost 70 percent of the surveyed participants said they were more confident in their ability to retire after estimating their income. Of those who hadn’t estimated their income, only 30 percent were confident.1

You can use a retirement income estimate to gain insight into your planning. You may see that you need to increase your contributions or perhaps make a change to your allocation. Below are a few tips on how to use a retirement income estimate in your planning:

 

Review all your retirement accounts and income sources.

 

Job change is a common occurrence today. Many people change employers or even industries several times in their career. Each time they do, they may leave a 401(k) account behind at their old employer. It’s possible that you have old 401(k) plans and IRAs spread across multiple employers and financial institutions.

 

The first step is to gather information from all your accounts into one view so you can analyze your asset balances. Gather statements from your investment accounts. Contact old employers to get information on old 401(k) balances, deferred compensation and other retirement accounts.

You’ll also want to estimate possible income sources. Social Security’s website can provide an estimate of your future benefit. If you’re fortunate enough to have a pension, contact your human resources department or plan administrator for a benefit estimate.

Once you’ve gathered that information, consolidate it in one report. You may need to work with a financial professional to convert your balance information into an income estimate. However, adding up your total assets and income is a good first step.

 

Project your income.

 

Once you’ve gathered your balance information, the next step is to project your retirement income. With your Social Security income and pension benefit, you may know exactly what the amount will be. It can be more difficult to project income from an investment account because the distributions aren’t guaranteed* or predictable.

A financial professional can run withdrawal simulations for you that can project your retirement income using different variables. For example, your financial professional may be able to use software to model different rates of return and withdrawal amounts to show you what is sustainable in retirement. That could give you more confidence or help you identify areas for adjustment.

 

Create a retirement budget.

 

A budget is always a helpful financial tool, but it’s especially powerful when planning for retirement. You can project your retirement expenses based on your current spending and inflation. You can then compare your estimated spending with your projected retirement income.

If your income exceeds your expenses, you may be on the right track. If there’s a gap, you may need to do more work and consider saving more money to reach your retirement goal.

Again, this is a process in which you may benefit from speaking with a financial professional. They have experience building retirement budgets and can advise you on costs and issues that you may not have anticipated.

 

Ready to estimate your income and boost your retirement confidence? Let’s talk about it. Contact us today at Retirement Peace Project. We can help you analyze your needs and develop a plan. Let’s connect soon and start the conversation.

 

1https://www.limra.com/Posts/PR/Industry_Trends_Blog/More_Than_Half_of_All_U_S__Workers_Have_Difficulty_Understanding_Retirement_Savings_in_Terms_of_Future_Monthly_Income.aspx

 

*Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values.

Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.

18184 – 2018/10/22

Single in Retirement: Tips to Plan for Long-Term Care

Planning for retirement is always a complex process, but it brings unique issues for singles. Married couples often benefit from joint pension payments and dual Social Security income streams, as well as multiple 401(k) accounts and IRAs. Single retirees may find it more challenging to plan for retirement without the benefit of a partner’s income and assets.

Increasing amounts of Americans are single as they enter retirement. That’s especially true for women. According to data from the U.S. Census Bureau, more than half of all women age 65 and older in 2014 were single.1

If you expect to be single in retirement, you may face unique planning challenges and issues. One of the biggest could be the need for long-term care, which is extended assistance with daily living activities such as eating, dressing and bathing. Long-term care is often provided either in a facility or in the home and can cost thousands of dollars per month. According to the U.S. Department of Health and Human Services, 70 percent of retirees will need some form of long-term care.2

Unless you have a strategy in place, long-term care could drain your retirement assets. Below are a few questions you can ask yourself to start planning for long-term care expenses. If you haven’t started planning, now may be the time to do so. It’s never too early to consider the risk and your options.

 

Who can assist you if you need care?

 

Long-term care is often caused by cognitive issues like Alzheimer’s, Parkinson’s or the aftereffects of a stroke. In the beginning stages of these conditions, a spouse may be able to provide much of the necessary support and assistance. That can delay the need for an in-home aide or a move to a facility.

However, single retirees don’t have the benefit of a spouse to help with day-to-day living activities. Consider who could provide assistance if you should develop a cognitive issue. Do you have grown children in the area? What about other relatives, like a sibling or nieces or nephews? Could you rely on friends or neighbors?

Be careful about depending on friends and family for too much help. While they may be willing to pitch in occasionally, you don’t want to be dependent on someone who has other important obligations. Consider that you may need to pay for a full-time health aide if you wish to stay in your home.

 

Who can make financial and medical decisions on your behalf?

 

Incapacitation is another big concern in retirement. Incapacitation is the inability to make or communicate decisions about your finances or health care. Again, this is often caused by cognitive issues.

Without any input from you, your relatives or doctors may be forced to make decisions on your behalf. They may make choices that you wouldn’t make for yourself. You can avoid this risk by establishing written planning documents such as a power of attorney or a living will. These legal documents provide exact instructions on how your health and finances should be managed and who should make decisions on your behalf.

How will you pay for care?

 

A recent Genworth study found that the average room in an assisted living facility cost $3,750 per month. An in-home health aide was more expensive, costing on average more than $4,000 per month.3 How long could you afford to pay those costs out of your retirement assets? Consider that many people need long-term care for several years.

You may want to look at long-term care insurance. You pay premiums today in exchange for long-term care coverage in the future. Coverage varies by policy, but most insurers cover care that’s provided either in a facility or in a home, and will pay some or all of your costs. A financial professional can help you find the right policy for your needs and budget.

Ready to plan your long-term care strategy? Let’s talk about it. Contact us today at Retirement Peace Project. We can help you analyze your needs and implement a plan. Let’s connect soon and start the conversation.

 

1https://money.usnews.com/money/personal-finance/articles/2016-09-23/many-women-will-be-single-in-retirement-are-you-ready

2https://longtermcare.acl.gov/the-basics/how-much-care-will-you-need.html

3https://www.genworth.com/aging-and-you/finances/cost-of-care.html

 

Digital Assets and Estate Planning: 3 Tips to Protect Yourself

Estate planning should be a component of any financial plan. The term generally refers to the distribution and management of one’s assets after a person passes away. While it may not be pleasant to think about your death, it’s an important exercise. You can create a lasting legacy and eliminate needless stress for your loved ones by developing a strategy. Estate plans usually include a will, trust and other planning documents.

Estate planning isn’t just for financial assets, though. You also may want to include guidance and instructions for your digital assets. For example, your email could contain important or sensitive information. Perhaps you have privacy concerns with your social media accounts. Maybe you have photos on a cloud server that would hold sentimental value for your family. You may even have online investment accounts or income streams that your loved ones may need to access.

While the world may have gone digital, much of estate planning law isn’t quite there yet. There aren’t many laws that govern how digital assets and accounts should be handled after someone passes away. While a will, trust and other tools are accepted as legal documents to manage financial assets, it’s unclear how these documents can be used with regard to digital accounts. Below are a few tips on how to navigate the digital afterlife:

 

Decide on your objectives for your accounts.

 

It’s always helpful to clarify your wishes and objectives before you take action. Start by listing your important accounts, such as email, social media, photo and file storage, and more. Then think about what should happen to each account after your death.

Would anyone need access to the account for any reason? Would your family need to search your emails or perhaps access a financial account? Are there any assets like photos or messages that hold sentimental value?

Privacy should also be a concern. Is there anything in your email or social media accounts that you wouldn’t want your family members to see? There may be certain information or communications that you don’t want to share with your children or other loved ones.

 

Research how various platforms handle inactive accounts.

 

Most digital companies have policies in place on how they handle accounts for deceased customers. Some are very strict and won’t allow access to anyone else without some kind of court order. Others will allow another person to access the account if it’s been inactive for a prolonged period. Some social media companies will keep your page up as a “remembrance page” with limited access to others.

Do some research to see how your primary account platforms operate after a user’s death. They may allow you to designate a backup person to take over your account or access certain information. If they don’t allow that option, you may need to consider alternative strategies.

 

Create written instructions for your heirs and loved ones.

 

Theoretically, you could include account management instructions, usernames and passwords in your will or other documents. That may not be a great idea, however, as those documents are often filed as public record. That means anyone could gain access to your accounts.

Instead, consider using a password management tool to store login info, and then simply have your estate executor provide that info to the appropriate person. You could also store a document with digital asset instructions along with your other important documents, such as your insurance policy, will and others.

Ready to review your estate planning strategy? Let’s talk about it. Contact us today at Retirement Peace Project. We can help you analyze your objectives and all your assets, and then develop a plan. Let’s connect soon and start the conversation.

Check These 3 Items Off Your Planning List Before You Retire

 


 

Trying to decide when to retire? It’s a question that every worker faces at some point. In some cases your decision is made for you, because of health issues or employer restructurings. In an ideal world, however, you would get to retire at the time that’s right for you. There’s no universal correct answer on when that time is. It should be based on your unique needs, goals and objectives.

It may be helpful to think about what you need to complete before you retire. For example, you may want to save a certain amount of assets. Or you may want to reach full retirement age (FRA) for Social Security. Maybe you have stock options or other employer benefits that need to vest before you leave the working world.

There are also planning items you can use to minimize risk and improve your odds for success. Below are three such items. If you’re thinking about retirement but haven’t completed these items, now may be the time to do so. A financial professional can help you complete your planning so you can enter retirement with confidence.

Develop your retirement budget.

Are you one of the 60 percent of Americans who don’t use a budget?1 If so, retirement is the perfect time to make a change. A budget is one of the most effective financial tools available because it helps you make informed purchasing decisions and stay on track to reach your goals.

A budget is especially important as you enter retirement. One of the biggest risks in the early years of retirement is that you spend too much and deplete your assets too quickly. That could lead to you not having enough money in the later years of retirement. A budget can minimize this risk.

You can’t predict every expense you’ll face in retirement, but you can make estimates based on your current spending and your desired lifestyle. Also, be sure to include inflation in your budget. Your cost of living is likely to increase over time.

Map out your retirement income.

Where will your income come from in retirement? If you’re like most retirees, you’ll receive Social Security benefits. You also may receive a pension or some other type of income. And you’ll likely need to take distributions from your 401(k) plan, IRA or other retirement accounts.

Take some time to project your income. The Social Security Administration can provide you with benefit estimates, and your company’s human resources department should be able to provide estimated pension payments. A financial professional can help you determine a reasonable distribution amount to take from your savings each year. You also may want to consider an annuity, which can generate guaranteed* lifetime income.

Minimize your risk exposure.

Life can be unpredictable, and it’s possible that your retirement may not go according to plan. For instance, you or your spouse may develop a condition such as Alzheimer’s that requires long-term care. The financial markets could suffer a downturn that limits your ability to draw income. Your health care costs could be greater than expected.

A financial professional can help you develop strategies to minimize your exposure to risk. For example, you may want to consider long-term care insurance. An annuity could be a helpful tool to guarantee* your income and minimize downside risk. These steps and more could help you avoid dangerous threats that could sink your retirement.

Ready to implement your retirement strategy? Let’s talk about it. Contact us at Retirement Peace Project. We can help you analyze your needs and develop a plan. Let’s connect soon and start the conversation.

 

1https://money.cnn.com/2016/10/24/pf/financial-mistake-budget/index.html

*Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values.

17848 – 2018/7/30