Archive for the 'IRAs and Retirement Accounts' Category

Reverse Mortgage vs. HELOC

Reverse Mortgage or HELOC – Which is Best? Reverse Mortgages

If you’ve decided to tap into your home equity during retirement, there are a few different ways to go about doing this. Most likely, your options will come down to a Reverse Mortgage or a home equity line of credit, or “HELOC”.

Reverse Mortgage vs. HELOC

A reverse mortgage and a HELOC have a lot in common.

  • Both a reverse mortgage and a HELOC are loans secured by the equity in your home.
  • After taking out a line of credit or a reverse mortgage, you can repay the loan at any time.
  • You will accrue interest over time with both loan types.

There are also some distinct differences.

  • With a HELOC, you will begin making interest payments right away, whereas with a reverse mortgage, you will never need to make a payment until you pass away or move from your home.
  • A HELOC requires a certain credit threshold as well as a minimum level of income. With a reverse mortgage, the borrower’s financial picture is analyzed according to different terms that may consider credit and income, but are not now dependent upon or limited to those factors.
  • The available loan amounts from a HELOC and a reverse mortgage are not the same. You can find out how much you can borrow using online calculators.
  • A reverse mortgage allows for a lump sum option or a line of credit, while a HELOC is always in the form of a line of credit.

The best choice will depend on your financial situation and preferences.

See How Much You May Be Eligible To Borrow With A Reverse Mortgage

How to Increase Your Social Security Benefits

Benefits of Waiting to Claim Your Social SecurityWinning Couple - Isolated

The New York Times, November 15th, 2013

For many who are over the age of 62, collecting your Social Security benefits is a rite-of-passage of sorts, the payoff of your years of letting the IRS take your hard earned money out of every paycheck.  For some, particularly those who have already retired or who don’t work, they can’t wait to start collecting it when they first become eligible at the age of 62.  But did you know that there could be benefits for waiting to start collecting it?

Much like an annuity, your Social Security can give you some guaranteed income for life.  But unlike an annuity, it doesn’t require you to put down a large sum of money up front, as your large sum of money has already been accumulated over the years from your paychecks.  However, the amount that you can begin to collect at the age of 62 (you can start accessing it anywhere between the ages of 62-70) is hardly enough for you to live on.  Click here to learn more about how waiting to start collecting your Social Security can get you a higher amount of guaranteed money for life.

Senior Program Budget Cuts Making it Harder for Seniors to Stay in Their Homes

Federal Budget Cuts Affecting Seniorsarrow

CNNMoney, November 19th, 2013

For many seniors, being able to stay in their own homes can be their last claim to independence and dignity, and will not be easily let go of.  However, most will readily admit that a little help here and there can be essential to their ability to stay in their homes.  This is why Government funded programs that can give seniors rides to the doctor or grocery store, or even send “companions” to their homes to help with cooking and cleaning, can be the difference between being able to stay home versus having to move into assisted living.

Unfortunately, Federal budget cuts that started in March of this year have cut funding to these programs by up to $80 billion dollars.  The non-profit organizations that head up these programs have definitely been taking notice.  76% of these agencies have stated that these cuts have effectively prevented them from being able to give the proper care that some of these seniors need to be able to stay at home, thus eliminating their option to do so.  Read the article linked below to learn more about how these cuts are affecting our senior citizens.

Baby Boomers Entering Retirement

Time for Baby Boomers to Grow UpBaseBall-Square

USA Today, October 21st, 2013

As hard (and in some cases, as depressing) as it may be to believe, many of the people from the so called “Baby Boomers” era are turning 65.  And “Boomer” or not, many seniors are having a tough time making the transition from employee to retiree.  The struggle can range from anywhere between planning out your retirement finances, all the way to finding things to do to fill your newly wide-open schedule.

Not to fear retirees!  There are many different kinds of services available to you to help you get into your retirement groove.  From talking with a retirement coach to help set goals and make plans for your retirement, to speaking with a certified senior adviser to help inform you on things like senior housing or health care, you have options.  Read the article at the link below to learn more about the services that are out there to help you maximize your comfort in retirement.

Free Online Course to Teach You About Retirement Finances

Masters Course in Finance Available Online

The New York Times, October 11th, 2013

Most of us could potentially benefit in any number of ways from going back to school.  The biggest motivation to do this for the majority of us would probably be to make more money.  But if you’re not ready to enroll for the Spring semester, what if there was a class that you could take to teach you more about what you can do with the money that you already have?  And what if you could do that from the comfort of your own home?

A finance professor at the Stanford Graduate School by the name of Joshua Rauh had a revelation.  He realized that his graduate-level course on the finance of retirement and pensions could be beneficial to more than just his students.  This is why he decided that he was going to make it available to any who are interested.  To maximize availability, it was going to be a free course and it would be offered online.   Read the article at the link below from the New York Times on the perks of what Professor Rauh’s class can offer to your average person, and how you can sign up!

Can You Teach a Young Dog New Tricks Too?

Is Our Youth Finally Learning?

Market Watch, October 24th, 2013

In today’s high expense society, an alarming percentage of seniors are having a difficult time transitioning into their retirement years, financially speaking.  More and more are struggling to make ends meet on their 401K’s and Social Security alone.  And while many people in this age bracket like to talk about the “ignorance of youth,” is it possible that our younger generations are taking notice of the struggles they see their parents and grandparents are going through?  And beyond that, is it conceivable that they are actually taking pro-active steps to make sure they don’t face the same hardships?

A new study conducted by Wells Fargo & Co. says yes.  While 75% of people in their 40’s and 50’s are saying they regret that they have not started saving for retirement sooner, 34% of people in their 30’s stated that they already have a written retirement plan in place.  A pretty impressive number when compared to the 24% of those in their 40’s.  Read the article at the link below to read more about how our young people seem to be wising up to the need to plan ahead.

Easy Math for Retirement Investments

Investing your retirement savings can be stressful and confusing.  An easy rule of thumb though is to subtract your age from 100 — the difference is the suggested percentage to be in stocks or other risky investments.  For example, if you are 65 years old, you should have 35 percent of your assets in the stock market.

However, that equation probably doesn’t really give you enough information for the right way to safely and efficiently invest your money.  Luckily there are many relatively new investment advisors that have automated their investment advice online – making it a potentially less expensive option than hiring a full service financial advisor.

NewRetirement has researched and screened these asset allocation services.  Companies like MarketRiders can help you identify the right investments, reduce fees, and alert you when you need to rebalance.


Portfolio Allocation 101

Portfolio Allocation 101

Five years from now, there’s going to be one investment that did better than any other, and of course, you don’t know what that investment will turn out to be. Due to this issue, the desire to come up with an ideal asset allocation is a strong one. Given that we don’t know the future, what guidelines can we use to make our investment decisions?
The Basics: Asset Allocation:
Asset allocation involves dividing an investment portfolio among different asset categories, such as stocks, bonds, and cash. The asset allocation that works best for you at any given point in your life will depend largely on your time horizon and your ability to tolerate risk.

Time Horizon – Your time horizon is the expected number of months, years, or decades you will be investing to achieve a particular financial goal. An investor with a longer time horizon may feel more comfortable taking on a riskier investment because he or she can wait out slow economic cycles and the ups and downs of our markets. By contrast, an investor saving up for a teenager’s college education would likely take on less risk because he or she has a shorter time horizon.

Risk Tolerance – Risk tolerance is your ability and willingness to lose some or all of your original investment in exchange for greater potential returns. An aggressive investor, or one with a high-risk tolerance, is more likely to risk losing money in order to get better results. A conservative investor, or one with a low-risk tolerance, tends to favor investments that will preserve his or her original investment.

Risk versus Reward
When it comes to investing, risk and reward are entwined. All investments involve some degree of risk. If you intend to purchases securities – such as stocks, bonds, or mutual funds – it’s important to understand that the potential exists to lose money.

The reward for taking on risk is the potential for a greater investment return. If you have a financial goal with a long time horizon, you are likely to make more money by carefully investing in asset categories with greater risk, like stocks or bonds, rather than restricting your investments to assets with less risk, like cash equivalents. On the other hand, investing solely in cash investments may be appropriate for short-term financial goals.
Investment Choices
A vast array of investment products exist – including stocks and stock mutual funds, corporate and municipal bonds, bond mutual funds, lifecycle funds, exchange-traded funds, money market funds, and U.S. Treasury securities. However, there are three major ones to consider:

Stocks - Stocks have historically had the greatest risk and highest returns among the three major asset categories. As an asset category, stocks are a portfolio’s “heavy hitter,” offering the greatest potential for growth.

Bonds - Bonds generally contain less risk than stocks but offer more modest returns. As a result, an investor approaching a financial goal might increase his or her bond holdings relative to his or her stock holdings because the reduced risk of holding more bonds would be attractive to the investor despite their lower potential for growth.

Cash - Cash and cash equivalents – such as savings deposits, certificates of deposit, treasury bills, money market deposit accounts, and money market funds – are the safest investments, but offer the lowest return of the three major asset categories. Generally speaking, the chances of losing money on an investment in this category are extremely low.

These are the asset categories you would likely choose from when investing in a retirement savings program or a college savings plan. But before you make any investment, you should understand the risks of the investment and make sure the risks are appropriate for you.
Why Asset Allocation Is So Important

By including asset categories that behave differently under varying market conditions, an investor can protect against significant losses. Market conditions that cause one asset category to do well often cause another asset category to have average or poor returns. By investing in more than one asset category, you’ll reduce the risk that you’ll lose money and your portfolio’s overall investment returns will have a smoother ride.

The Magic of Diversification
The practice of spreading money among different investments to reduce risk is known as diversification. By picking a diversified group of investments, you may be able to limit your losses and reduce the fluctuations of investment returns without sacrificing too much potential gain.  If you don’t include enough risk in your portfolio, your investments may not earn a large enough return to meet your goal.
By having a good portfolio, you are already one step closer to planning a safe retirement. To take a few more steps closer to an even safer retirement, check out our Retirement Calculator.

New Year’s Resolutions

It’s that time of year again – Time to make those New Year’s Resolutions!  This year while you’re thinking about all the ways to improve yourself or your life in 2012, don’t forget to add improving your retirement plan to that list!

What do you plan on achieving this coming year to help strengthen your retirement?  Are you going to invest more money into your IRAs of 401(k)s?  Are you going to purchase a lifetime annuity to guarantee income later in life?  Or are you going to look into Long Term Care Insurance to make sure you are covered in case of unexpected medical costs?  There are many small adjustments that you can do to increase the health of your retirement plan.  You can use our retirement calculator to see what a small adjustment can do for you and how far your money will stretch.  We’ll be here in the New Year to continue to help with all of your retirement planning needs – Have a Happy New Year and see you in 2012!

Sign up for one of our retirement newsletters to stay informed during the year!


401(k) Matching Makes a Comeback

Some good news in retirement planning!  Last week, consulting firm, Towers Watson, found that out of the companies that had halted their 401(k) matching programs, three-fourths of them have now once again begun the practice.

The end of matching programs started back in 2009 when it was more evident that the economy was not getting better and corporations’ bottom lines began to suffer .  Though the savings programs were still available to employees, the days of receiving big matches were no more.  Now, Towers Watson has found that out of the 231 companies that had admitted to stopping their matching, 205 have brought it back and 8 out of 10 of the companies reinstated the match at the same levels that they had previously offered.

This is great news for those who still contribute to their 401(k)!

How is your retirement saving coming along?  Will you have enough to last you throughout your entire retirement?  See when and if you’ll run out of money by using our retirement calculator.

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