Jump-Start Your Retirement Plan, September 2015
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, September 17, from 9 a.m. to 5 p.m. ET.
3rd & 7 37yd
3rd & 7 37yd
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Hi Lee. I can't comment on Hancock's product but these types of Hybrid policies are becoming quite common. If you have an existing life insurance policy with cash value, you may be able to convert that policy to a hybrid policy as well. I suggest you contact a fee only financial planner to help you. The have insurance experts that they can refer you to and help you make the best decision for you. Find one at www.napfa.org.
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Lee, that type of product is usually life insurance with an additional cost for a rider added to it that lets you access some of the life insurance death benefit for long-term care costs. These products can be difficult to understand and evaluate. Also since it often gets overlooked in discussions about these hybrid life/LTC products, remember to ask yourself do you actually need life insurance? And if not, is it worth paying for life insurance you don't need to have the ability to buy the LTC rider?
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Hassan. Be a little wary of these 'formulas" that state how much you should invest based on your age. Every client situation is different and there is no set number. A qualified planner can better help you determine your allocation based on a thorough analysis for your particular circumstances
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Hi, Leslie. This story should help:
How Your Brokerage Account Can Bypass Probate
www.kiplinger.comA transfer on death account passes directly to beneficiaries you designate but lets you keep control over the account now. -
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If you have reached full retirement age, and you are:
• eligible for a spouse's benefit and your own retirement benefit, you may choose to receive only spouse's benefits.
•eligible for an ex-spouse's benefit and your own retirement, you may choose to receive only the ex-spouse's benefit. Your ex-spouse needs to be 62 but he or she does not have to have filed for benefits. -
Hi, if someone is making $1000K a year, (for the last 20 years, or slightly less - was given raises incremently each year) and is 57 and wants to wait to collect social security at age 67. so they stop working full time and take a part-time or lessor paying position for say 30K - 40K a year. How adversely will that effect how much their s.s. payment will be? Is it calculated as an average of your salary, or your latest paying job? should one "stick it out" at the higher paying job until they are ready to collect? or not work at all until ready to collect, but then you are missing out on salary money too?
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Hi Jean. I believe the benefit is calculated based on your highest 35 years of earnings. Earlier years are adjusted for inflation. If I recall, it is a multi step formula for calculating the benefit. Whether or not you should "stick it out" depends on a lot of things that I can't answer here. At age 57, you would benefit from a retirement analysis prepared by a professional. Find one to help you at www.napfa.org.
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Many people wonder how their benefit is
figured. Social Security benefits are based on
your lifetime earnings. Your actual earnings are
adjusted or “indexed” to account for changes
in average wages since the year the earnings
were received. Then Social Security calculates
your average indexed monthly earnings during
the 35 years in which you earned the most. We
apply a formula to these earnings and arrive
at your basic benefit, or “primary insurance
amount” (PIA). This is how much you would
receive at your full retirement age—65 or older,
depending on your date of birth. -
How Much Will I Get From Social Security When I Retire?
www.kiplinger.comHere are a couple of ways to estimate the amount of your monthly benefit check in retirement. -
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Jean - Your Social Security Benefits are based upon your higher 35 years of earnings, indexed for inflation. Use the Detailed SSA calculator to model it (it lets you enter earnings year by your) and see how it changes. Assuming that you don't die prematurely, working longer can increase your SSA benefit in the long term, but depending on your earnings history the impact may be smaller or larger.
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Hi Jess. Roth, Roth, Roth. Did I mention Roth? You are young and probably at the lower end of your lifetime earnings. You probably do not need much in the way of current tax deductions but you will really benefit from TAX FREE withdrawals when you retire. I think you should do Roth :)
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To reiterate what Frank said:
Invest in a Roth 401(k) If You Can
www.kiplinger.comWorkers of all ages can benefit from stashing away after-tax money now in exchange for tax-free withdrawals in the future. -
My husband died at age 69 and never claimed his Social Security benefit. I'm 60 and trying to decide whether to claim a survivor benefit now or wait. Will my survivor benefit be reduced if I claim before my full retirement age? And will I get a higher amount because he delayed?
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Jess - if your tax rate now and your tax rate in retirement are the same, it's theoretically a wash. But in practical terms, the Roth is often better for young people just starting out retirement-wise because they may be at a lower tax bracket now than later in life. Having said that, the impact on your paycheck right now will be smaller if you do the traditional. Does your employer offer any matching contributions?
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This might be of interest, Meg
Social Security Strategies If a Spouse Dies
www.kiplinger.comClaiming survivor benefits after losing a spouse can ease the financial loss. -
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Meg, I am sorry for your loss. Yes, your widow's benefits will be reduced if you take it before your FRA. You might benefit from finding a financial planner who does Social Security Benefits planning. Especially if you have an earnings history that is similar to or higher than your late husband's. The strategy mentioned in the Kiplinger article posted comes to mind but may or may not be an effective approach depending on your earnings history.
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Lizzie - Maybe. If you are likely to be at this employer long enough to have those contributions vest (meaning you get to keep them, often 3-5 years, but sometimes less), you should try to contribute at least that much. If saving 4% is a financial stretch for you, doing it pre-tax can make it less painful. If 4% or more is not a big stretch, you are effectively saving more by doing the same amount to the Roth because you are also paying the income taxes now, separately.
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Hi Sarah. Possibly. Assuming this is not an IRA Annuity, but a non-qualified annuity:If you take the withdrawals as needed, taxes could be higher because earnings, which are fully taxable are distributed first.If you were to annuitize, the distributions follow what is known as an "exclusion ratio". This means a portion of the distribution is taxable and a portion is not. As an example, if you started with $80,000 and the annuity grew to $100,000, ~20% of the monthly distribution would be taxable.
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What is the best way to pick a financial adviser? I am in my upper 40’s and figure it is about time I get some help while I still have some time to make some corrections. There are a million out there and, of course, they all say their advisors/options are the best. I do not know what some of the tips are as far as paying them (how much is too much) or picking one in general. Any advice would be helpful.
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Good timing on your question Jon. We just addressed that topic on our new Wealth Creation Channel: wealth.kiplinger.com
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Jon - This is a great starting point. Field Guide: www.napfa.org
I would suggest meeting with several planners to see who fits best and to compare costs and benefits. Planners tend to vary in approaches and you will be be the best judge of who fits your needs and style best. But I definitely find recommend someone who is a fiduciary at all times to you. NAPFA has an advisor look up tool at www.napfa.org. If you are interested in an advisor who specializes in working with Generation X and Y clients or one who can meet with you virtually, you might also try www.xyplanningnetwork.com (Disclosure, I am a member of both organizations.)
Field Guide: www.napfa.org -
Jon, also check the CFP Board web site. They have a list of 10 questions you should ask your advisor,