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Retirement And Estate Planning

July 22, 2011 By Leave a Comment

People are not in the work force forever, so it is very important to plan. A retirement plan is necessary. It is important to start a retirement plan as soon as possible. The more time money has to accumulate in investments, the more money an individual will have when they are ready to retire.

Retirement plans vary, depending on an individuals financial goals, lifestyle, and income. It is important for an individual to create a retirement plan that works for them. What’s good for me may not necessarily be good for someone else.

Budgeting is the key to successful retirement planning, and financial planning in general. This involves estimating retirement income, along with retirement expenses. This can be difficult. Most people would assume that they would spend less when they retire but this is not exactly the case. It is best for an individual to save more then what they think they need because expenses may decrease and others may increase. No one should ever assume that they will spend less when they retire.

According to BussinessWeek, longevity, healthcare, excess withdrawals and Social Security should all be analyzed when making a retirement plan. Prescription drugs and other medical costs are a perfect example. Young people usually have lower medical costs when compared to the elderly. There is no telling whether medical costs are going to rise or fall, but an increase in the cost of health care is more probable.

Life expectancy is very important when making plans for retirement. Life expectancy continues to increase, meaning that people will be in retirement for a longer period. This means that retirement will be more expensive. This has created a predicament for many older Americans.

There are many solutions to an increasing life expectancy. Individuals should definitely consider retiring later, or working part time. I plan on working as long as I can because I think work can be very fulfilling in many different ways. I plan to have a job that I enjoy. Otherwise, it may be difficult to continue going to a job for 30 to 40 years. When I do retire, I will definitely consider part time work if I do not have a considerable amount of money saved.

Retiring at the right time is just as important as saving money for retirement. Choosing the right time to it retire can save an individual thousands of dollars. Many people are not ready to retire, and regret it. Beyond money, many people’s lives revolve around their careers and retirement can be difficult to adjust to. (MSNBC)

Before retiring, eliminate as many expenses as possible. Then can really reduce retirement expenses. Pay off houses, cars, and any other outstanding loans should all be considered. Paying off loans can give an individual a sense of stability. There are also other options. Keeping a mortgage during retirement can also be beneficial. Investing money in a 401K instead of prepaying a mortgage could save individual thousands of dollars. This can really reduce the cost of living. Other adjustments should also be made before retirement. Income usually decreases after retirement. People should consider reducing expenses a couple years before retirement in order to get use to living with less money.

Location is just as important as assets, when planning retirement. Recreational activities, cost of living, and safety are all things to consider. Certain aspects of location depend solely on the individual. This is precisely why it is important to think about these things before retirement.

There are many different ways to generate savings and income for retirement. IRA’s, 401 K’s, Social Security, pension, and savings accounts are excellent ways to generate funding for a comfortable retirement. It is very important for young people, like me, to understand all of these because they can be crucial to retirement.

Estate planning is just as important as retirement planning. Estate planning should usually occur prior to retirement, but it becomes increasing important once an individual is retired. Estate planning is important because it allows the individual to distribute their assets, and cover the debts if they die. The first step of estate planning is to do an asset inventory. It is important to make sure to include any asset that has an appreciable value.

This may not sound like a big deal, but if an individual dies without a will, the state divides assets for you. Having a will is crucial for any with a large amount of assets, or if an individual has many dependents. If someone works hard their entire life, and accumulates a lot of assets along the way, they should control where these assets go.

Estate planning is much bigger than having a will though. According to CNN Money, it is very important to consider the taxes involved when your assets are distributed. According to CNN, the estate tax is set to phase out by 2010. If new legislation isn’t set in place, then the tax will be reinstated in 2011. CNN also has many more suggestions. They argue that individuals shouldn’t leave all their assets to their spouse because it can be a burden. This could possibly increase their estate taxes because the sum will be larger. Instead, they suggest leaving more assets to children. This is definitely a good idea if the spouse has a considerable amount of assets. After 2010, assets over one million dollars will be taxed.

Generosity goes way beyond family members when an individual dies. If charities and foundations are important, then it is possible to leave money to these organizations, tax free after death. If giving is important to an individual, they never have to stop. Donating money to charities and foundations may appeal to those who don’t want as much of their money going towards taxes.

Estate and retirement planning are both very important. They both involve financial responsibility. Being financial responsible can be difficult, but it can also prevent a lot of unnecessary stress. It is so much easier to focus on the important things in life, like family and friends, when an individuals finances are in order. Both chapters go into detail about maintaining financial responsibility, whether it is by accumulating assets or creating legal documents.

It is very important to stay well informed about both issues. The economy continues to change, and there is no telling what can happen to it. Sources like Business Week, Forbes, and The Wall Street Journal can really help when making important decisions about finances. Increased taxes, inflation, new legislation, and the stock market can all have an effect on retirement and estate planning. There is no bullet proof retirement or estate plan, so consulting publications and professionals can be very beneficial.

Sources:

http://www.businessweek.com/magazine/content/07_06/b4020112.htm

http://money.cnn.com/magazines/moneymag/money101/lesson21/

http://www.businessweek.com/investor/content/nov2007/pi2007111_402059_page_2.htm

http://www.msnbc.msn.com/id/9697670/

Written by dtrimble

Let’s Talk Money: Financial planning expert Anil Rego of Right Horizons and Rahul Aggarwal, chief executive officer of Optima Insurance Brokers, answer queries of users regarding their retirement planning and tell them what’s best for them.
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Putting your Retirement Money Into Good Use by Investing in Real Estate

July 22, 2011 By Leave a Comment

401k and real estate investing is one good example of putting your retirement money to work. By definition, a 401k is a retirement plan initiated by employers in which employees may save money for retirement. Saving money while working ensures employees that come retirement time, they will have money available for spending and/or investing.

One good way spend your 401k is to invest it. 401k and real estate investing can help employees earn extra for using their 401k in investing in real estate. It is not necessary for employees to scrape out money from their own pockets when investing since it is possible to loan or borrow from their 401k plan.

Paying back the loaned money from a 401k is also easy once you have earned from your real estate investment. So long as you are careful, organized and up-to-date when loaning money from and paying back your 401k, you are safe. The idea is to return what is due and to be on time when your due date comes. Otherwise, you could be charged with penalties.

401k and Real Estate Investing – Points to Ponder

The idea of using your 401k into real estate investing could be as inviting as well as daunting to some employees. There is no harm in trying; after all it is your retirement money that is on the line in case you choose to use it in this type of investment.

Here are some important things you should remember if you choose a 401k and real estate investment:

• You should know the amount of money you can loan from your 401k. The amount of money you will be able to loan will actually depend on the amount of your 401k.

• 401k and real estate investing does not give you any tax benefit when you purchase for real estate.

• You are not eligible for any mortgage interest tax deductions.

IRA and Trust Companies

If you want more flexibility with your 401k and real estate investment, you may also put your money into an Individual Retirement Account [IRA]. Though this move may or may not be allowed at some point. You can check with your employer or your 401k facilitator to give you advice about putting it into an IRA.

Putting your 401k investment in your IRA may pose risks and penalties. But if you are a risk taker, you will find that all these are worth it when you succeed at 401k and real estate investing.

Another option for 401k and real estate investing is by commissioning trust companies. These trust companies will do the buying and selling of real estate for you, so the actual work is not under your control. But your 401k will benefit from the profits that will be earned and given to you once these trust companies close deals in your behalf.

It is not common knowledge to most people who have 401k retirement plans that they too can make use of it to their advantage. There are other possible investing options out there. 401k and real estate investing is just one of the good options to choose from. But the rest is up to you and if you are willing to delve into this type of investing with all its risks and challenges.

Ken Fong
Real Estate Information.

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Retirement

July 22, 2011 By Leave a Comment

As the New Year begins many of us will be thinking of our futures. We will look back and be proud and happy that we survived the last year and will look ahead to what 2011 might hold. All of our stories will be different and short of saying “I want to win the Lottery”, most of us will have dreams and aspirations above and beyond being able to keep our job and support our families.

Here is one thing that you should be thinking about more than ever, regardless of your age…retirement. Many baby boomers who were brought up to live day-to-day, rather than to plan for their future, are finding that they don’t have enough to retire on. For some, that may be true, but in all actuality, most baby boomers live above their means and if they are willing to keep their feet planted a little more firmly on the ground, most can retire and live comfortably or can at least go to working part time as they reach the age they can draw Social Security.

Ah-that word-Social Security. You know, it was never meant to be a full retirement income. It was meant to supplement your retirement income either from pensions or investments. So, no, you can probably not live well on Social Security, but it will probably still be around when you need that income supplement in your golden years. Don’t expect it to keep pace with inflation though. A cost of living increase for Social Security recipients has been non-existent for the last couple of years and seems to be a favorite place to curb government spending. No, it’s not right and yes, it is sad, but that’s life and unless major changes take place in Washington, we will be footing the bill for “bridges to nowhere” instead of helping to support our aging.

When it comes to retirement, there are a number of things that you can do to plan for that time in your life. If you are young, you may think you have plenty of time, but take it from an oldie but goodie, it arrives quicker than you think. So, save for your retirement like you save a down payment for a house, for a car or like you save for your son or daughter’s college education. Make it a part of your budget and one place that you cannot give an inch. Put the money away or invest it wisely and leave it alone, even if it means you have to wait to buy that house for a while. (A hint: if you look at where the housing market is today, it is much worse off than the stock market and will probably take longer to recover. Some people have lost 50% of their home’s worth…so real estate may not be the wisest investment. It may be cheaper to rent and to put the money you save on home maintenance into a good IRA or increase your contributions to your 401K.)

If you are not young, then do everything in your power to position yourself for retirement. And if you don’t see that happening, don’t give up hope. Instead look at semi-retirement. For some people baby steps will be necessary to survive their retirement years. So, don’t kick yourself in the butt and “sit in the garden and eat worms”. If all you can do is a little, then that’s what you do. For example, make a decision to spend cash. In other words, if you can’t afford it, then you don’t buy it. And, while you’re doing that, make a commitment to pay down your high interest credit cards. Start with the cards or loans with the highest interest first and make double the monthly payment if you can. It may take 3 years, but once you pay that off, then you can take that money and put it towards the next card or the next loan and as you position yourself better, you can put the money you are not spending on debt each month and either increase your 401K contributions or look at mutual funds or an IRA. And time just seems to fly and before you know it you are not only debt-free but you can take your honey out to dinner and a movie once in a while and not worry about “robbing Peter to pay Paul” because you decided to splurge. And…best of all…you will have the leeway to put money away for a rainy day AND for your retirement.

Comfortable retirement is not a totally illusive dream. Even people already in their 50s can do some really positive things to make their retirement years easier…and yes…even enjoyable.

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