What You Need to Know About Your 401(k)

In this new year, you may have the opportunity to reevaluate your employer-sponsored retirement plan. Most companies will give you the option to choose between a Traditional and Roth 401(k). Chances are, this decision will require a little research to ensure you’re making the right choice for you. We’ve done what we can to compile the basics, and help you understand exactly what you need to know about your 401(k).

Making the Most of Your Morning

Whether you’ve been retired for ten years, or you’re on the last leg of your nine-to-five, embracing the morning can help elevate your productivity, allowing you to make the most of every day. 

Life is incredibly busy, with hardly any signs of slowing down. Hitting snooze is one of the easiest decisions to make in the morning, but the payoff of deciding to get up and out of bed, choosing to create a better day from the moment your eyes open – those are the decisions that will allow you to transform your mornings into a time of true rejuvenation.

We’ve narrowed it down to three simple decisions – eat, refocus, and get moving.

Understanding Required Minimum Distributions - Part I

If you have an account in a qualified retirement plan, you need to understand that one day you will be forced to take withdrawals from your account whether you want to or not. For many this is not a significant concern as these accounts were designed to provide their income in retirement and they are or will withdraw more than enough from them to satisfy the rules. Either way, we will cover some of the basics about Required Minimum Distribution (RMD) along with some key considerations.

Required Minimum Distributions, as already stated, apply to employer sponsored retirement plans including 401(k), 403(b), 457(b), and profit-sharing plans. RMD also applies to traditional IRAs and IRA-based plans such as SEPs, SARSEPs and SIMPLE IRAs.

3 Retirement Blogs You Have to Read (& Might Even Make You Start Your Own!)

It’s no shock that retirement brings about a lot of free time. Some fill it to the brim, while others enjoy a slower pace. No matter where you fall on the spectrum, blogging is a hobby that can keep up with whatever speed you decide to take.

Whether you decide to start your own blog, or just browse through the musings of fellow retirees, here’s three retirement blogs that we think you’ll love!

1.   Home Free Adventures

      Couple Tim & Lynne Martin sell their home, live out of suitcases, and spend their days touring the world with the money they would have spent on their Californian lifestyle. Lynne writes about their travels, gives advice to others who may choose to follow in their footsteps, and maintains a nationally recognized blog all the while. Read Tim’s take on how they found themselves traveling full-time here!

When It Comes to Retirement Planning, One Size Does Not Fit All Part 2: How Much Income Will I Need In Retirement?

As discussed in our previous blog post, When It Comes to Retirement Planning, One Size Does Not Fit All Part 1: The Safe Withdrawal Rate, individuals facing retirement are now being involuntarily thrown into the role of retirement planner due to the gradual extinction of defined benefit pensions.  Without the proper education and training, these individuals have to trust broad, general assumptions regarding retirement planning; which, needless to say, presents several problems.

When It Comes to Retirement Planning, One Size Does Not Fit All Part 1: The Safe Withdrawal Rate

An involuntary shift is taking place with the gradual extinction of defined benefit pensions: the individual is being thrust unwittingly into the role of retirement planner. As a firm that specializes in retirement planning, we have been cautioning clients for years about the dangers this represents. Foremost among them is the lack of training and education obtained by most who now must depend on themselves to tackle topics as broad as investment management, risk assessment and management, tax planning and economics, to name but a few.

What's In Your Retirement Plan? The Four Buckets Strategy

We’ve all seen the popular Capital One credit card commercials that always end with the same question: “What’s in your wallet?”  In the same way, I like to ask an equally important question: “What’s in your retirement plan?”

When considering this question, I’m reminded of a conversation I recently had with a couple who came to our office.  They asked if they could simply retain us and pay us by the hour, as opposed to having us manage their investments.  They went on to explain that the reason they didn’t want us to manage their investments was because they wanted to maintain the ability to pull their money out at any given time. 

Do I Really Need a Will, Living Will and Durable Power of Attorney?

A visit to our office will always include the question, “Do you have your will, living will, and durable power of attorney in place?”  Some of our clients affectionately refer to this list of questions as the “nag list.”  Our intention is not to nag our clients, but rather, to emphasize the importance of having your will, living will, and durable power of attorney in good order.  Even the most comprehensive financial plan can crumble without the appropriate legal documents in place.

How Will You Spend Your Retirement Years?

Retirement.  A single word that holds significant weight and meaning for many different people.  What does retirement mean to you?  Although the term can be interpreted differently based on personal dreams and passions, author Catherine Pulsifer seems to accurately capture the universal idea: "Planning to retire? Before you do, find your hidden passion, do the thing that you have always wanted to do."  Check out the list below of some of the most common retirement hobbies; maybe you’ll find your hidden passion!

Social Security Benefits - When to Begin Collecting Them

As with most financial planning topics, this question, although seemingly straightforward, is actually rather complicated. As a result, when it comes to retirement planning, there are few issues that raise as much interest right now as Social Security.

Although it’s been around since 1935, most people today still admit knowing very little about Social Security and how it works. Yet, it is an important aspect of any retirement plan. Consider the following statistics:

• Nine out of ten individuals age 65 and older receive Social Security benefits.¹
• Social Security benefits represent about 39% of the income of the elderly. ¹
• Social Security provides more than half of the income for nearly two-thirds (65%) of elderly beneficiaries.²
• For almost four out of ten elderly recipients (36%), Social Security provides more than 90% of their income.

According to the Social Security Administration, the average monthly benefit being paid to current retirees is $1,234 per month. For a 66-year-old man with an average life expectancy of 82, this represents total payments of well over $200,000 in today’s dollars.

With so much at stake, the decision to begin Social Security benefits becomes a critical one. Let’s review the basics, setting aside for the moment the rules of eligibility.

Retirement and Life Only Pension: Part 2

When planning for retirement, challenges can arise. In the previous blog post we discussed the issues that may arise with life only pensions. In some cases, a life insurance policy purchased prior to retirement can be a great solution. Life insurance policies can potentially provide the security you need to cover several scenarios.

•       If the retiree pre-deceases their non-working spouse, the non-working spouse should have enough life insurance in place to purchase a pension, annuity or investment that will give them income for the rest of their life. 

•       If the retiree and non-working spouse both die, the life insurance policy should be structured so that their children or heirs can benefit.

•       If the non-working spouse passes away first, the retiree has several options.  They can keep the life insurance policy and use it for charitable estate planning, which would include gifting for charities, their community or their children or heirs.  They can also cash it out and, in our example, increase their income from $700/month to $1,000/month plus depending on whether there's any cash value in this policy. 

Retirement and Life Only Pensions: Part 1

When it comes to retirement planning, most people just want to provide for their loved ones.  In this blog series, we’ll discuss some ways you can make sure they’re taken care of.

A life only pension is a pension that is designed to pay out for the rest of your life only. These benefits apply whether or not you’re married. If you take a life only pension from an institution and you are married, have a significant other or children, “life only” means it will pay only for the rest of your life and that's it. If you pass away the next day or you never collect, it will be absorbed back by the institution and nothing will be paid to your spouse, children and/or heirs.

Legal Considerations for Retirement Part 7: My Assets

In the previous parts of this blog series, the overarching theme has been protecting your assets. In this, the final part, of the blog series, we will answer a few more questions about your assets, namely whether your heirs will have to pay taxes on your assets and how you can protect your assets from a nursing home. With these questions answered, entering retirement is not as worrisome as it seems.

Legal Considerations for Retirement Part 6: Do I Need an Attorney?

Before retirement, you should consider many important things. In the previous part of this blog series, we discussed power of attorney. In this part of the blog series, we will discuss if you need an attorney to file for social security benefits and what to do if you’re denied.

Do I need an attorney in order to file for social security retirement benefits?

You do not need an attorney in order to file for social security retirement benefits¹, although you may find it helpful. You can file for social security benefits on your own. However, you may want to contact your financial planner when you apply for social security benefits. Although you can file on your own, the guidance of a financial planner² is often useful.

Legal Considerations for Retirement Part 5: Power of Attorney

In the previous part of this blog series, we discussed the importance of a living will. When you have a living will, you will need to give someone power of attorney. In this part of the blog series, we will discuss power of attorney and what happens if you don’t have it.

What is Power of Attorney?

Giving someone power of attorney¹ is a very important decision. Power of attorney gives another person the ability to make legal decisions on your behalf. If you become ill and incapacitated, then you may consider granting power of attorney to a spouse, adult child, sibling, parent or close friend. The person granted power of attorney has the legal right to make many important decisions including financial decisions, gifts of money, healthcare decisions and recommending a guardian for your children. Since someone granted power of attorney has the legal authority to make your financial and health decisions, you should choose someone that you trust. It is especially important to choose someone you can rely on because power of attorney is not regulated by the court system, which means it could be easy for someone to abuse this power. 

Legal Considerations for Retirement Part 4: Living Will

There are many options out there for retirement planning. In the previous parts of this 7 part blog series, we discussed last wills and revocable living trusts. In this part, we will discuss living wills and what you need to know when you create one.

What is a living will?

When creating a living will, you should know a few important things. A living will is commonly known as an “advance health care directive.”¹ It is a legally binding document that states your preferences for medical treatment if you are unable to express these wishes. A living will gives healthcare professionals direction when they are giving you treatment. For example, if you write in your living will that you do not want to be intubated, then it is against the law for a doctor to do so. Also, a living will is only effective in the state that you live in. For example, if you live in Pennsylvania and draft a living will, then a hospital in New Jersey does not legally have to follow the will.

Legal Considerations for Retirement Part 3: Revocable Living Trusts

Navigating the legal considerations of retirement can be very complex. In part 2 of this 7 part blog series, we discussed last wills. Now, in part 3 of this series, we’ll discuss how you can be sure your assets go to your loved ones with a revocable living trust¹ and what happens if you die without a living trust or last will.

What is a revocable living trust?

A revocable living trust is a way for you to leave money for your loved ones. It allows you to have some control over your money, even after you have passed away². A revocable living trust is a substitute for a will, as it also provides for the distribution of your wealth after you pass away. However, unlike a will, you can distribute your assets while you are still alive.

Legal Considerations for Retirement Part 2: The Last Will

As more Americans enter retirement, many are navigating the tricky financial and legal paths ahead. When it comes to planning your retirement, a last will is exceedingly important. In this, part 2 of a 7 part blog series, we will discuss why you need a last will.¹

Why do I need a last will?

As discussed in the previous blog post (link to part 1), a last will is the document you use to allocate your resources to your beneficiaries after you have passed on. A last will helps you decide who will receive which assets and how much they will receive. If you do not have a last will, then the state will distribute your assets² to your relatives after your death.

Legal Considerations for Retirement Part One: The Overview

The average age of Americans is rising¹, which means there are now more Americans retiring than ever before. Most people hire a financial planner when planning their retirement, but many do not realize that it is also prudent to hire an attorney. The process of protecting one’s assets is often very complicated and an attorney can help navigate this process. There are many questions a retiree should ask themselves to protect their assets. In this, part 1 of a 5 part blog series, we will discuss why you need an attorney if you have a financial planner, and the difference between a last will, a living will, and a revocable living trust.