Each day, more than 10,000 Americans celebrate their 65th birthday. It’s a milestone, and for some, it signifies the beginning of retirement. Your friends, family, and coworkers may know you’re planning to retire. Some might even ask “When’s the big day?” If you have concerns about maintaining retirement income, you may not know whether you’re ready.
While it’s ideal to have targets in mind when creating your retirement strategy, there is always the possibility for the unforeseen. If you believe you might come up short, there are some choices for closing the gap.
Waiting to retire is another direction and an increasingly popular one. If you can continue at your current job for a few years, those are years where you aren’t spending retirement income, which may allow you to continue accumulating money in your retirement accounts or other investments. Your work life doesn’t need to continue at the same pace, either. You might shift to part time with your employer. There’s also the option to pursue a part-time job in another line of work, perhaps something that lets you follow your passions or pursue an interest.
There’s also delaying Social Security. The longer you wait, the more you stand to collect. In fact, if your strategy includes some combination of personal investments, working longer, and collecting Social Security later, that gap in retirement income may be smaller. Naturally, this all depends on your specific needs and desires. However, as you strategize retirement spending, it’s always good to consider your choices.
Source: forbes.com/sites/markavallone/2019/09/28/the-most-reliable-ways-to-generate-retirement-income/ [9/28/19]
Golf Tip: Curing a Slice
When you slice a drive or fairway shot, it means the club is swinging over your body rather than around it. To try and reduce the chance of a slice, align your feet and shoulders parallel with the target line. Bend forward from the waist at address, with your back straight, and try to swing the club underneath your shoulders on the backswing and downswing.
Source: Lozano Golf Center
What are the things you expect out of retirement? When you think of the many aspirations that you hold for your post-work life, which are the most important to you? Does home ownership figure prominently in your strategy, or is it relatively unimportant to you?
A recent report from Harvard’s Joint Center of Housing Studies states that 80% of households with a member 65 or older own their home. That indicates that many people in the traditional retirement years have prioritized ownership. However, a web service for renters called RENTCafé has analyzed government data and discovered that the number of renters 60 and older saw a 40% rise during the years 2007-2017, with even larger boosts in some larger cities.
Why the rise? There are several reasons, and not all of them may be immediately obvious. For one, just because you own your home, it doesn’t necessarily mean that you’re ready to handle the cost of ongoing home maintenance. Putting a new roof on your house can be costly, and plumbers aren’t exactly inexpensive. For some retirees, these costs may be overwhelming, so figuring home maintenance into your retirement strategy could prove advantageous.
Your own health could be a factor as well. A sudden illness or injury might make life in your home more difficult, necessitating a move.
The good news is that were you to transition from home ownership to renting, there is a $250,000 exclusion for capital gains on a home you’ve lived in for two of the previous five years ($500,000 for married couples filing jointly). That exclusion has the potential to cushion your transition significantly, should it become necessary or desirable. Either way, it’s good to take this into consideration as you strategize for retirement.
The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation.
Source: finance.yahoo.com/news/3-reasons-why-renting-smarter-150935459.html [9/30/19]
Depending on where you retire, you might spend more on certain expenses than your peers in other regions of the country. So finds a 2019 study conducted by American Advisors Group, which identifies the leading U.S. regional retirement costs.
For example, AAG found that pet ownership is most common among retirees in the Midwest. That does promise an expense: the cost of owning and caring for a cat or dog, for example, can run from $5,000 to $20,000 over the pet’s lifetime. Retirees in the West were the most likely to spend some dollars on continuing education, either for pleasure or for a new part-time job; that cost definitely has to factor into a retiree’s monthly budget. Northeastern retirees were the most likely to move into master-planned senior communities, and the cost of that lifestyle can run anywhere from $20,000 to $120,000 annually. Southern retirees were the most likely to buy boats, and of course, keeping up a boat can cost quite a bit of money. These expenses may seem major or minor, depending on your financial standing, and if you are entertaining them (regardless of where you happen to live), you will want to gauge whether your household budget will allow them.
Source: tinyurl.com/y3zrxsoy [9/4/19]
Increasingly, Americans older than 65 are finding compelling reasons to return to the workforce, whether part time or full time. Some want the money; some want the challenge and sense of purpose.
One factor in their favor: companies in many industries are having a hard time finding enough qualified workers. So far this year, U.S. job openings have outnumbered job applicants. That was also true in 2018. Strong economy or not, this disparity could go on into the future because, generationally speaking, more Americans are exiting the workforce than entering it. So, employers may want older workers with decades of experience to stick around or soon return.
A Harvard Business Review analysis says that by 2025, 25% of U.S. workers are expected to be at least 55 years old. This implies that more than a few doors may be open for retirees who want to work again. You may be one of them. To find compelling work, in which your contributions are valued, think about what your interests are now, as opposed to when you started your career. Announce your job search to your friends and update your skills. Attend meetups and events where you can meet like-minded retirees and employers who respect them and reach back to some of your old career or college contacts.
Source: investors.com/etfs-and-funds/personal-finance/retirement-concerns-why-you-should-never-retire/ [10/23/19]
A 2018 study published in Circulation, a journal of the American Health Association, concludes that about 60% of early deaths can be linked to negative lifestyle factors. As you approach what is considered retirement age, think about what habits or behaviors could promote health and happiness in your future.
Are you exercising to a degree that, while not arduous, takes you slightly out of your physical comfort zone? Strength training and endurance training are particularly important as we age, and so is stretching to maintain flexibility. (Flexibility relates to balance and joint health.) Nutrient-rich foods need to win out over foods that are merely calorie dense. Living, volunteering, or working with purpose rescues you from the dilemma of having nothing to do. Intellectual challenges and engagement become vital for your mental health, as does your attitude and degree of social interaction. The choice of being a participant in life and its adventures and activities, instead of simply a watcher, may bring recurring physical and mental payoffs.
Source: ahajournals.org/doi/10.1161/CIRCULATIONAHA.117.032047 [4/30/18] / forbes.com/sites/rogerwhitney/2019/10/25/longevity-and-retirement-8-great-habits-to-rock-life-as-you-age [10/25/19]
Here is some encouraging news for women born between 1966 and 1975. Research from the Urban Institute, which defines people born in those years as Gen Xers, projects that the median Gen X female retiree will earn 88% more across the course of her working years (age 20-69) than the typical female baby boomer. If accurate, that may mean Gen X women will end up building relatively greater retirement savings
While Social Security retirement benefits may be taxable at the federal level, depending on income, 37 states do not tax them. (For more information regarding state tax treatment of these benefits and your tax situation, check with your tax or accounting professional.)
Investment Advisory Services offered through BCJ Capital Management LLC., a (SEC) Registered Investment Adviser. Information presented is for educational purposes only. It should not be considered specific investment advice, does not take into consideration your specific situation, and does not intend to make an offer or solicitation for the sale or purchase of any securities or investment strategies. Investments involve risk and are not guaranteed, and past performance is no guarantee of future results. For specific tax advice on any strategy, consult with a qualified tax professional before implementing any strategy discussed herein.
This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. BCJ FG 19-163