Advanced Retirement Planning

The recent stock market plunge reminds us to be diversified! Even a diversified portfolio can lose money, but diversification helps stem your losses by reducing investment risk. You want to be sure you’ve spread your money around so if any stock market sector crashes particularly hard, you’ve got investments in other sectors providing stability. (Source: AP)

Are you feeling panicky? It may make the most sense to "do nothing!" Yes, for many, leaving your retirement savings alone and continue contributing as you normally would is a smart move. Time could be on your side and things will balance out in the long run. Be sure you're consulting with a financial professional that can look at your entire plan and evaluate how much risk you should be taking. ... (Source: Business Insider) See more

If there's one expense that tends to go up in retirement, not down, it's health care. That's why it pays to take advantage of a health savings account (HSA) during your working years. Many seniors are caught completely off-guard when they realize how costly medical care is. Why the disconnect? Part of it boils down to misconceptions about Medicare. Many people assume that it's free, when in reality, it costs money just to maintain coverage. (Source: USA Today)

Be Mindful of Your Contributions "Whether you make $200,000 a year or $50,000 a year, this is where you should start. If your employer-sponsored retirement plan gives you the opportunity to divert some of your own income into an investment account, take it. Not only are you saving pretax dollars, but your employer may also make contributions on your behalf typically by matching yours up to a certain percentage. All this money will grow tax-free until you're ready to withdra...w it, pay regular income tax, and spend it. Some 401(k) plans have a Roth provision allowing after-tax salary deferrals. If you're in a lower tax bracket now than you think you'll be in when retirement rolls around, contributing to a Roth 401(k) could be a good strategy to generate some tax-free income during retirement (though you'll still have to pay tax on investment earnings as they're withdrawn). Workplace plans are made even better by their high annual limits. In 2020, an employee can contribute up to $26,000 ($19,500, plus a $6,500 catch-up if you're over age 50) to a profit-sharing 401(k). In total, contributions to a single employee's defined contribution plan including their own deferrals and employer contributions max out at $56,000 or 100% of their compensation, whichever is lower. That's more than you'll be able to save, tax-deferred, anywhere else."

Today is the first day of Spring! "Spring, where the flowers bloom and so does hope!"

Wait if you can... While Social Security makes up 40% of the average person’s retirement income, it’s such a valuable source of retirement income, it’s important to maximize this benefit. You are eligible to receive Social Security at age 62, but you’ll get dinged for each month you collect before your normal retirement age, which for anyone born after 1960 is 67 years old. By the same token, you get a bonus of about 8% a year for waiting until age 70. (Source: CNBC)

If you're young enough, "hanging in there" could be your best strategy. During big market swings, your investment portfolio could lose money. This is where ignoring the market becomes important if you’re investing for retirement. Try to focus on that long-term goal and not the short-term volatility of the markets. If the turbulence has you worried, don’t forget that though the market is falling, it’s falling from record highs. Investing in the stock market remains the best way to achieve long-term growth. (Source: MarketWatch)

Budgeting in retirement is a whole new ballgame, and there's one expense that's likely to trip you up: taxes. "Taxes are tricky for retirees. If you've earned regular wages your whole life, you're used to automatic withholdings from your paycheck and an annual true-up of your tax bill. But once you leave the workforce, that hands-off approach to taxes could result in unnecessary penalties. Here's why: Most sources of retirement income are taxable, but those sources may not be withholding taxes on your behalf. That can be a shocker on two fronts. One, the IRS will assess an underpayment penalty, which is never ideal. And two, you'll have to rework your budget to set aside the money to pay Uncle Sam going forward." (Source: Fool)

Too many people have no plan for retirement, and are not saving much or anything for it. According to the TransAmerica Center for Retirement Studies, the median retirement savings balance of Baby Boomers (those aged about 56 to 74) is $152,000, which isn't very much when you consider that our retirements may be 20 years long or longer. The median for Generation X (those aged around 41 to 55) is only about $66,000. Unless you're independently wealthy or are expecting a fat pen...sion income in retirement, you need to spend some time figuring out how much money you'll need for retirement and how you'll amass that sum. Many experts recommend aiming to have 70% to 80% of your pre-retirement income as your retirement income, though it's smart to crunch some numbers and see what makes the most sense for you, given the estimated costs of your planned retirement lifestyle and a hefty sum available for healthcare needs -- among other considerations. (Source: Fool) See more

Tonight, before you close your eyes, make sure that you set your clocks ahead one hour as Daylight Savings Time officially starts at 2 am!

The Secure Act Requires Your 401(k) Statement to Show Monthly Retirement Income "A small provision in the Secure Act, signed into law in December to help Americans save for retirement, aims to remove some of that uncertainty. The law requires employers offering 401(k) plans and similar plans to show employees not just the total balance in their account but also a projected monthly income in retirement based on that balance." (Source: Barrons)

Save, Save, Save! Workers today need to sock away even more money for their golden years to ensure that they don't run out, and those who fail to save adequately are often forced to delay retirement in order to boost their cash reserves. In a recent MetLife survey, 21% of workers aged 55 and over have delayed retirement, or expect to delay that milestone. But what's surprising is that the average person in that category either delayed retirement by 4.4 years, or expects to de...lay by that long a time period. Not only that, but for 34% of older workers who delayed or plan to delay retirement, that extra time in the workforce amounts to five years or more. (Source: Met Life) See more