Jump-Start Your Retirement Plan, December 2014
Kiplinger is teaming up with the National Association of Personal Financial Advisors (NAPFA), whose planners will answer questions on retirement planning and other financial challenges. Submit your questions here and get free personalized financial advice on Thursday, December 11, from 9 a.m. to 5 p.m. ET.
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Hello Sandy, I'm not sure what your specific question is, but I have a few comments. When you mention that you will take your Social Security at 66 and your husband will then get spousal benefits, have you thought about possibly "filing and suspending" at that age, which will still allow your husband to take the spousal benefit, but will let your benefit grow at 8% for each year you wait to start -- up to age 70. The reason that this is so attractive is that the annuity payment we can get from Soc. Sec. is the most generous annuity available, and it has inflation-protection, which can be really important if we live a long life. If your pension will not be indexed, this could be especially useful to provide you with some inflation protection. Having some of your savings invested in equities should also give you some asset growth, and therefore some help with inflation. You need to take a look at what you expect your living expenses to be in retirement, and how much coverage you have for potential health and long-term care expenses and then look at how to allocate your assets with that info in front of you. -
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Hi Mattie! Take a look at Kiplinger's recent Ask Kim column Retirement Plans for Self-Employed Workers. -
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Greetings. I’ve been a Kiplinger subscriber for decades. I’m 60 and retired for eight years. My wife is 60 and retired for seven years. We each are collecting a pension. We have treasury bonds, a brokerage account, two 401k’s, IRA’s and Roth IRA’s totaling 2M (Not counting the house). SS is right around the corner. It will bring in 26k at 62. I know I’ll have to sit sooner or later with a fee-only advisor to figure this out, but, do we collect at 62? Do we start tapping the other accounts and in what order then collect SS st 66 or even later? We have no children so all these assets are for our spending pleasure.
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I am retired and am drawing Soc. Sec. and also a veterans disability compensation monthly. I do not pay taxes on these two income sources and therefore I am in 10% income tax bracket (lowest). I am looking to invest some money I have ($150,000-$200,000) and that will be in straight taxable form, since I have no 401k. Where would be some good places to invest this as far as names of funds, type of funds, use of etfs perhaps, REITs maybe, or just CDs? I was considering buying a house a few years ago but didn't, and don't know if I will now, so I am looking for the best place(s) to park this money as I am in the 65 year old range. Your advice would be appreciated to me and a lot of others with the exact same question under similar circumstances.
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Silky, since I don't have your age, I will make some assumptions: you are retirement age and planning on some social security strategy. If you haven't made that decision, please see the social security article in this forum. Back to your question. I would wait to withdraw money needed BUT, you should start now to identify how much you will need monthly and get at least 2 years of that amount inside your retirement accounts in cash and maybe ultra short bond funds. When you need to start withdrawals, you won't be fretting over what the market is doing. Good luck!
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rfdon: First, thank you for your service to our country. What is your intention for this money? Do you need to to live comfortably or are you simply looking to earn more than money markets and the like are paying. If you are looking to earn more than money markets, then you should consider investing conservatively enough in a broad mix of assets classes with the potential to earn more than inflation, which is your biggest risk. Find low-cost, broadly diversified funds from a family like Vanguard, but make sure you are comfortable with the risk you are taking
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Anne: It is possible
to roll a 401k into a Roth IRA. Here is the link from the IRS webiste. -
Hi Anne -- Check out this story from Kiplinger's Retirement Report: Check Options Before Rolling Over a 401(k).
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Retirein2years: If your spouse was born in 1957, her full retirement age is 66 years and 6 months. If she was born in a different year, you can find her FRA, here: www.socialsecurity.gov Once she reaches her FRA, her benefits change to SS retirement benefit. At this point, she can claim either her benefit or half of your benefit. (she can't claim both). Here is a great Kiplinger's article on claiming Social Security when disability benefits are involved: www.kiplinger.com -
Good Afternoon! My name is Phil Hogg, a fee-only Fiduciary and CERTIFIED FINANCIAL PLANNER (TM) Professional with Hogg-Murnighan Financial Planning located in Chicago, IL and the world wide web at www.hmfinancialplanning.com I hope to answer a few of your questions today regarding personal finance and saving for retirement. -
MikeP: Put in as much as you can "afford". The contribution is pre-tax, which is a tremendous benefit. An HSA is not like an FSA in that you do not have to "use it or lose it", you can roll over the unused portion to the following year and beyond. The funds have to be used for approved medical expenses and will be taxed and a potentially penalty if not used for this.
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Hi MikeP -- Here are some of our FAQs About Health Savings Accounts.
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I am 66 and paying a surcharge on my Medicare because of my income. Medicare said the surcharge was based on my 2013 taxable income. I am stopping work in one month. Can I get the surcharge recalculated, and possibly removed because of the job loss now or do I have to wait?
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MikeP: I re-read your question, and may have not answered correctly. If you are looking to invest funds you already have placed in an HSA, then do so somewhat conservatively. I use a balanced fund, which is 60% equities / 40% bonds. Make sure the expenses in any fund you use are low.
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ARC: As a partner, do you have any say in beginning a 401(k)? the company would not have to contribute for any employee if they don't want to or can't afford to. Of course continue with maximum to the ROTH IRAs as long as you qualify. One of the things you could do, although not tax deductible, but tax friendly is to open an account at a discount broker and invest in index funds. For short term not good idea, but for long term, could be an added source of funds until retirement accounts become available. Get a second opinion from a fee only planner if someone tries to sell you a universal life insurance policy or a high fee annuity. Good luck and thanks for joining
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Hi Woody, There are many things to keep in mind when selecting one of those three choices. Firstly- the actuaries in charge of calculating those three options selected these numbers based on certain rates of returns and life expectancies for you and your wife and made them so that anyone would be indifferent between the three options. There are pros and cons to all three choices- for the lump sum- it is up to you to invest the funds wisely in hopes that they grow over time. You can take "annuity payments". i.e. a certain amount a month or year to replicate income. For the immediate annuity- keep in mind interest rates are low so you are locking in an annuity that will not change with inflation. Lastly, for the annuity for deferred benefit- if one or both of you passes away, your heirs will not receive anything (unless you can select a beneficiary). With that said- if you would like guaranteed income now, you can lock in the annuity, but if you want the lump sum to invest, that gives you a lot of flexibility over the long run. Also - keep in mind income taxes if you select the immediate annuity.
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My husband is 71 and has been collecting Social Security since he was 62. I have always maintained a higher salary than he and will be qualified for a higher social security benefit when I am 66 than he has. My question is: when I am 66 can I take advantage of the social security "restricted application" and receive 1/2 of his social security benefit until I am 70? AND will he still collect the same monthly amount from social security while I ALSo take 1/2 of his benefit for 4 years?
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While 90% of my investment are in index funds, 10% are in individual stocks. Now that I know index funds are more diversified than individual stocks, should I sell them to exchange for index funds? But selling those stocks will cause me to pay capital gain tax. Given that my purpose is not to cash out the individual stocks, should I instead keep them for long run and then pass them to my children as inheritance so that no taxes will incur? Thanks.
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I plan to get remarry again in 2015. I am a 61 widower. My fiancée is 55. I have a 401k valued about $100K. She has a pension valued about $40K and will own her own home in 5 years. I'd like to move to the NM within 1-2 years. Besides long term care what are some of the financial things we need to consider?
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Hello, I already contribute 15% of my income to a lifecycle fund each month. I have extra income and am looking for a second "alternative" investment to the traditional dollar cost averaging strategy. Can you recommend something, either 1) slightly higher risk, or 2) medium, rather than long term? I would also be interested in a product that could potentially be profitable even in a bear market.
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Hello! Thanks for this!
Right now, my wife is a stay-at-home mom, but in a few years, when our youngest kid in in school, she's planning to go back to work, which would pretty much double our salary. Then, we can really shovel all that delicious new money toward sensible financial goals. In the meantime, we're making due as a one-income home.
All our debts are at fairly low interest rates. A student loan at 1.75%. A car loan at 2%. And our mortgage at 5%. No credit card debts.
For now, should I be putting little bits of extra money into 529 accounts for the kids' college, into my retirement IRA/401K, or pay down our highest interest debt(our mortgage at 5%)? Or something else entirely?
What should change when she goes back to work? -
I am 62 my wife is 59. I plan on retiring at 66. I need help on withdrawal of savings at 66. I am taking SS at 66 and delaying my wife's SS until she can draw %50 spousal benefit, I am at full SS benefit. I am debating a lump sum vs 100% spousal benefit annuity. It would be $540,000.00 lump sum vs $2,850.00 monthly benefit at 66.
I have a $750,000.00 IRA and $250,000.00 in emergency fund/cash/ bonds/insurance, all items are accessible and total return of 4.5% and I forecast that will be my return during retirement. My expenses are $71,000.00 a year and I will save $24,000.00 a year over next 4 years.
What is a good plan? Hope I gave you everything needed. I am fully insured in LTC/Health/Disability/Life and I have estate planning completed except a trust and do I need a trust and what kind and will I have to continue LTC Insurance?
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Is it prudent for a mother to gift $230,000 to a son and daughter in law prior to her death, if there is concern that the money( which is held in an acct in the mothers name but POD to the son and D in Law) would be owed to creditors?
In other words, can the mother avoid having that money go to creditors by gifting the money now vs. after her death having the account transfer by P.O.D.. -
