If Social Security Payments Pay Only 77% in 2034 – What Will You Do?

Category: Financial and taxes in retirement

September 14, 2018 — Thanks to one of our regular idea contributors, Jeff H, we have a not so hypothetical problem for you. If, as the Social Security Trustees warn, the retirement portion of Social Security exhausts its reserves in 2034 and is only able to fund 77% of promised benefits starting in that year, what will you do? A similar question could apply to Medicare, which is expected to run out of money even earlier, in just 8 years (2026). Medicare’s case is harder to prepare for: if nothing is done, presumably benefits will be cut or reimbursements to doctors and hospitals reduced, driving even more health care providers out of Medicare.(Note: in our recent newsletter the headline said ‘cut 77%), which was an inadvertent error. The accurate statement is that benefits would be paid at 77%.)

In spite of a steady stream of warnings from Trustees and other experts, legislators have done nothing to address the coming problem. With soaring deficit projections expected (more…)

Posted by Admin on September 14th, 2018

Don’t Die Without a Will – Please!

Category: Financial and taxes in retirement

August 30, 2018 – Is your estate planning goal to maximize the amount of money you give to the IRS, give probate attorneys a huge cut of your assets, leave nothing to your favorite charities, and pit your relatives against each other in family destroying battles over money and possessions? If those are your goals, achieving it is easy, just die without a will.

We will all miss Aretha Franklin. Her music lives on, but one thing her heirs will miss, besides the Queen of Soul, is a will. Reportedly, like Prince, she did not leave a last will and testament. Some people never get around to a will because they don’t want to take the time, or possibly admit their mortality. Others dither because they can’t make (more…)

Posted by Admin on August 29th, 2018

Is the 4% Spending Rule Still Relevant Today?

Category: Financial and taxes in retirement

Aug. 21 2018 — Fortunate retirees, those with a good amount of retirement savings, agonize over a perplexing problem: how much can you safely take out of your retirement funds? Spend those hard earned savings too fast and, if you live too long, live in poverty. Hold on too tightly, and you will go on to your greater reward with a big pile of unspent money in the bank. Your heirs will be able to fly first class, even if you didn’t!

The traditional rule of thumb for spending is the 4% rule. Originally popularized by Bill Bengen in 1994, the idea was pretty simple – you have pretty good odds of spending of not running out of money if you take out 4% of your savings every year of retirement. The theory (more…)

Posted by Admin on August 20th, 2018

Older Americans Increasingly Facing Bankruptcy: No Shortage of Causes

Category: Financial and taxes in retirement

August 7, 2018 — Since 1991 older Americans have experienced a three-fold increase in the rate they file for bankruptcy. From February 2013 to November 2016, there were 3.6 bankruptcy filers per 1,000 people 65 to 74; that rate was only 1.2 in 1991. Today one in seven bankruptcy filers is of retirement age, 65 years or over.

Causes
The problem is that there are so many causes, and many times it is a combination of problems that sinks the ship. Leading the list of causes is increased spending on medical care. As we age it gets worse: while folks 65-74 spend 34% of their Social Security income on medical expenses alone, that rate goes to 74% among (more…)

Posted by Admin on August 6th, 2018

Think Taxes Are Best Reason to Choose a Place to Retire? Might Want to Rethink That

Category: Financial and taxes in retirement

July 31, 2018 — Although “low taxes” was the third most important consideration for finding a place to retire in our recent Topretirements.com survey, we know there are a lot of baby boomers who have set moving to a low tax state as their most important goal. Although for some that might be a valid objective, we are not so sure that for the majority of folks it should carry so much importance. This article will explore 6 reasons why.

It is a sad fact that about half of retirees do not have sufficient financial resources to maintain their current lifestyle once they retire. There is no shortage of reasons for these financial shortfalls, some of which include: not saving enough money, poor investments, divorce or widowhood, having to take care of adult children or parents, medical situations, or losing a job before expected retirement. For these people, maintaining a comfortable lifestyle is going to take some adjustments. That probably means finding a cheaper place to live, and could also mean working longer than they had planned. But, avoiding taxes will be the one issue they generally don’t have to worry about.

There is another segment of retirees for whom moving to a low tax state is a possible consideration. These are the lucky people who will have significant retirement income, most likely from a pension. But while no one wants to pay taxes, making that as priority #1 could be a mistake. Here are 6 reasons to rethink (more…)

Posted by Admin on July 30th, 2018

Our Online Social Security Application – Latest Update

Category: Financial and taxes in retirement

July 18, 2018 — Back in May we reported on our experience of applying online for our Social Security retirement benefits. The plan was to have the application completed and accepted in time to start receiving benefits in August, 2018, the month we turn 70 years old. Here is our report on the latest chapter in that process – in short, we are making progress, but not there yet! (You can read the entire report, including this update, at “Applying Online for Social Security- Our Experience“.
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July Update – Not quite there yet!
Since I filed my application in mid May I have been waiting to see what would happen with it. I did receive a letter from SS saying my application had (more…)

Posted by Admin on July 17th, 2018

The 10 Cheapest States to Retire

Category: Financial and taxes in retirement

June 11, 2018 — Some of the more reliable “10 Best Places to Retire” Lists come from Kiplingers. They recently came out with their “10 Cheapest States to Retire” version, and we think it is a pretty good effort. To come up with their ratings they looked at cost of living, taxes on retirees, average health care costs for retirees, and fiscal health of the state. As is often noted, sometimes you get what you pay for, although in the case of most of these states, you do tend to get more for your retirement dollars.

Although they didn’t numerically rank their “cheapest 10”, one ranking that is clear was cost of living compared to the rest of the U.S. Note that these rankings are on a statewide basis: different areas of different states can have dramatically different living costs. In big (more…)

Posted by Admin on June 11th, 2018

Should You Hire a Financial Advisor, or Do-it-Yourself?

Category: Financial and taxes in retirement

— “Beware those free dinners”—

May 9, 2018 — One of several recent Member article suggestions was this one: “Is it better to hire a financial advisor or handle that financial planning yourself? And if you hire one, how should you go about it?” Thank you Lewis, that is a topic we know a lot of retired people struggle with.

We should preface this article by saying that we are not financial experts. This piece summarizes recent interviews with four baby boomers who have wrestled with this topic themselves, plus some of our own experiences with financial advisors. At the end you will find links to some other great resources about how to/whether to hire a financial (more…)

Posted by Admin on June 8th, 2018

Applying for Social Security Online: Our Experience

Category: Financial and taxes in retirement

May 16, 2018 — (Updated July 18 with more experience feedback). Back in March I received a letter from the Social Security Administration – “It is time for you to register for your retirement benefit!” I was impressed with their timing and efficiency, since my 70th birthday will be this August. Nicely done. This article will chronicle my experiences in registering for my Social Security retirement benefit online – lessons learned that hopefully will help others when it comes time to claim their benefits.

My decision was to wait until age 70 to claim. Fortunately we have been able to afford to live without that benefit so far. That blessing, coupled with very good genes (my parents’ average age before departing this earth was 97), made it seem like a good bet to wait until 70. That way I could capture the 8% increase a year for delaying from age 66, and then enjoy that extra money for a long time past the breakeven point in my late 70s (and my wife after I pass). Time will tell if that was a good move or not.

Registering for Social Security retirement benefits
My plan and hope was to register online, and not have to spend time on the phone or waiting (more…)

Posted by Admin on May 15th, 2018

Tough Questions: Mixed Results from Our ‘Social Security IQ Quiz’

Category: Financial and taxes in retirement

May 2, 2018 — Even though the average scores were quite low on last week’s Social Security IQ Quiz, there is still plenty of good news. Best of all, we are happy that so many people, over 2,000 and climbing, took the time to take it last week. It wasn’t easy, particularly with its occasionally tricky multiple choice options. But after having taken it, gotten a score, read the answers, and understanding why they were correct – a lot of people now have a better understanding of this critical retirement benefit. Hurrah!

In this article we are going to cover the highlights of the quiz and how our test takers did on it. We won’t go into the nuts and bolts of every answer, because we already provided all the correct answers and explanations at Your Social Security Quiz Results.

Overall scores
The average score on the quiz was 50%. Of the 2046 taking it as of (more…)

Posted by Admin on May 1st, 2018