Oftentimes as retirement approaches, many people choose to move into a retirement community as opposed to a private home. There are many things to consider when taking this route in your retirement.
The first step in shopping for a retirement community is taking a good look at what you want…much like a personal inventory. Characteristics such as age, health, marriage, financial status, religious preference, personal interests and hobbies will help define the type and location of retirement communities best suited to an individual’s or couple’s personalities and capabilities. Don’t worry…there are plenty of options when it comes to retirement communities…there is one just for you!
The fees and ongoing costs of a retirement community can vary widely. Some retirement care communities provide unlimited medical and nursing home care as part of the total package. Others include a certain amount or level of care, but charge more if you exceed the limits. Still others are "fee-for-service," with the charges depending on the care needed.
Many communities will require applicants to pass physical and mental checks. Applicants with cancer, strokes or dementia may have their applications rejected. Even facilities that accept people with unhealthy conditions do so on a space-available basis. Therefore, the best idea is to apply while you are still healthy. People who wait until their first health crisis to apply might not get in.
So-called "independent living” retirement communities are designed for seniors who are relatively independent, both physically and socially. The primary perk in this kind of retirement community is maintenance-free living; no house and lawn upkeep, linen service, trash pickup, transportation, and lunch served in a common dining center. These kinds of retirement community homes give seniors the freedom to truly enjoy the "Golden Years". Activities are another big part of independent living communities and often include crafts, exercise classes, live entertainment, movies, parties, outings and overnight bus trips, each adding a new dimension to the senior’s experience.
Residents generally choose apartments from one of three floor plans.
When looking at a retirement community, find out if it is accredited. The Continuing Care Accreditation Commission is the only accrediting agency for continuing care retirement communities. Ask how medical care is provided. Is assisted living or nursing home care on site or on-call? Scrutinize the agreement and make sure you thoroughly understand it. Also, some retirement communities will let potential applicants spend a night in the retirement community home and take a meal. If you do this, take every opportunity to talk to as many other residents as possible to get a truly unvarnished view.
Wednesday, December 27, 2006
Making Your Retirement Dollars Go Further
It has been said over and over again that there are 2 keys to making retirement assets last: asset allocation and managing your withdrawals. However, as you enter retirement you will realize that there countless choices to make. So what are the best ways to increase your chances of retirement success?
Firstly, and obviously, keep a lid on those withdrawals. Research shows that the ‘magic number’ is 4 percent. If you keep your annual withdrawals below four percent, your money has a good chance of outlasting you. Remember, though, that the balance is a moving target—4 percent of a $500,000 balance is $10,000 less than four percent of a $750,000 balance.
Another possibility is to work longer. If you don’t think that four percent is enough to live comfortably, think about working a bit longer. This doesn’t mean work until you are 85, but a few extra years may help. A few extra years in the workforce gives your portfolio more time to grow and reduces the number of years you will need to use that money.
Try to have a cushion. Two to three years' worth of living expenses in a money-market fund or short-term bond fund means you won't have to sell investments when they're down. Also, allocate wisely. The solution isn't ever to have 100 percent of your assets in equities, nor is it to have 100 percent in treasuries and cash. The solution, of course, lies somewhere in between.
No matter your age, you have an IRA rollover in your future. If you're an older baby boomer, and you've been saving smartly in a company plan for a decade or more, you'll be rolling over what could be a six- or seven-figure sum from your 401(k). For younger folks, you have a rollover decision to make every time you change jobs. What do you do?
Don't spend it. It may sound obvious to say don't cash a lump sum out of your current plan and spend it — yet that's exactly what many people do. Big mistake. You'll owe income taxes plus a 10 percent penalty if you're under age 59 1/2, and you'll lose the chance for future tax-deferred growth.
Firstly, and obviously, keep a lid on those withdrawals. Research shows that the ‘magic number’ is 4 percent. If you keep your annual withdrawals below four percent, your money has a good chance of outlasting you. Remember, though, that the balance is a moving target—4 percent of a $500,000 balance is $10,000 less than four percent of a $750,000 balance.
Another possibility is to work longer. If you don’t think that four percent is enough to live comfortably, think about working a bit longer. This doesn’t mean work until you are 85, but a few extra years may help. A few extra years in the workforce gives your portfolio more time to grow and reduces the number of years you will need to use that money.
Try to have a cushion. Two to three years' worth of living expenses in a money-market fund or short-term bond fund means you won't have to sell investments when they're down. Also, allocate wisely. The solution isn't ever to have 100 percent of your assets in equities, nor is it to have 100 percent in treasuries and cash. The solution, of course, lies somewhere in between.
No matter your age, you have an IRA rollover in your future. If you're an older baby boomer, and you've been saving smartly in a company plan for a decade or more, you'll be rolling over what could be a six- or seven-figure sum from your 401(k). For younger folks, you have a rollover decision to make every time you change jobs. What do you do?
Don't spend it. It may sound obvious to say don't cash a lump sum out of your current plan and spend it — yet that's exactly what many people do. Big mistake. You'll owe income taxes plus a 10 percent penalty if you're under age 59 1/2, and you'll lose the chance for future tax-deferred growth.
Getting Advice About Retirement
When it comes to retirement, it is difficult to predict what will happen. The economy is always changing, which means it is hard to know how much money is enough and how you should prepare. Here are a few ideas to get your feet planted…
If your employer is offering a retirement plan, it is almost always a good idea to participate in this. Many plans allow employees to contribute pre-tax dollars and some employers even match contributions up to a certain percentage.
As you choose an investment mix for your retirement plan, consider your tolerance for risk and the length of time you have until retirement. If you do not have a lot of time until retirement, you may want to steer clear of more aggressive investments, which tend to be more volatile.
Remember that traditional IRA contributions may be tax-deductible. For the 2001 tax year, the modified adjusted gross income deductibility threshold for active participants in an employer-sponsored retirement plan ranges from $33,000 - $43,000 for single filers and $53,000-$63,000 for a married couple filing jointly. If you are not participating in an employer-sponsored retirement plan, 100% of contributions are deductible. If you are not able to deduct a Traditional IRA contribution, consider a Roth IRA. With the Roth, income grows tax-free.
If at all possible, try to avoid withdrawals from your retirement account. For example, if you are changing jobs, roll your 401k (or other pension plan) directly into a Conduit IRA. This type of IRA will maintain your plan's tax-deferred status and allow it to be rolled over to a future employer's plan.
IRA contributions for a tax year that are made any time before April 15 of the following year may still be deductible on the previous year's return. Talk to a tax advisor for more information.
There are plenty of things to think over when it comes to retirement, but make sure to keep these ideas fresh in your head. Retirement will creep up on you faster than you think, so it’s best to be ready for whatever it may throw at you.
If your employer is offering a retirement plan, it is almost always a good idea to participate in this. Many plans allow employees to contribute pre-tax dollars and some employers even match contributions up to a certain percentage.
As you choose an investment mix for your retirement plan, consider your tolerance for risk and the length of time you have until retirement. If you do not have a lot of time until retirement, you may want to steer clear of more aggressive investments, which tend to be more volatile.
Remember that traditional IRA contributions may be tax-deductible. For the 2001 tax year, the modified adjusted gross income deductibility threshold for active participants in an employer-sponsored retirement plan ranges from $33,000 - $43,000 for single filers and $53,000-$63,000 for a married couple filing jointly. If you are not participating in an employer-sponsored retirement plan, 100% of contributions are deductible. If you are not able to deduct a Traditional IRA contribution, consider a Roth IRA. With the Roth, income grows tax-free.
If at all possible, try to avoid withdrawals from your retirement account. For example, if you are changing jobs, roll your 401k (or other pension plan) directly into a Conduit IRA. This type of IRA will maintain your plan's tax-deferred status and allow it to be rolled over to a future employer's plan.
IRA contributions for a tax year that are made any time before April 15 of the following year may still be deductible on the previous year's return. Talk to a tax advisor for more information.
There are plenty of things to think over when it comes to retirement, but make sure to keep these ideas fresh in your head. Retirement will creep up on you faster than you think, so it’s best to be ready for whatever it may throw at you.
Choosing a Retirement Home
So you’ve decided it is time to retire or maybe you have been retired for several years. Thoughts of moving into a retirement home have started to cross your mind. So what is the best option? Where should you look? What are some things to be aware of?
As with many other things in life, getting into retirement homes boils down to a question of money. Financing a retirement home is now a little easier if you are a homeowner; an increasing number of mortgage companies offer ways to convert equity you’ve built up in your home into money for a retirement community home. Before you shop for a retirement home, talk to a mortgage specialist and find out if you can apply your equity to paying for a senior retirement home, and how much you would have to work with.
Many people buy insurance to help financing a retirement home well in the future. Some insurance companies offer private insurance policies specifically for long-term nursing home care. If you choose to go this route, make sure to shop carefully. These policies can vary greatly in coverage and cost, and it is important to understand precisely what kind of policy you are purchasing, and whether it will support the kind of retirement homes you will need.
Many people make the mistake of believing that Medicare covers the cost of most long-term care services such as retirement homes. However, Medicare only covers short-term, acute care during a hospital stay. You will need to work out other forms of financing if you haven’t saved enough by the time you need to find a retirement home.
Financing retirement homes with an insurance policy can help meet the expenses you'll encounter, but you must be careful. If you are considering an insurance policy, make sure that it pays benefits immediately upon entry into a nursing care facility or senior retirement home. Many insurance policies, which are purchased prior to the need for nursing care, require a waiting period after entry into a nursing care facility before payments are made. It is highly unlikely that nursing care insurance can be purchased after a person has entered a nursing care facility.
As with many other things in life, getting into retirement homes boils down to a question of money. Financing a retirement home is now a little easier if you are a homeowner; an increasing number of mortgage companies offer ways to convert equity you’ve built up in your home into money for a retirement community home. Before you shop for a retirement home, talk to a mortgage specialist and find out if you can apply your equity to paying for a senior retirement home, and how much you would have to work with.
Many people buy insurance to help financing a retirement home well in the future. Some insurance companies offer private insurance policies specifically for long-term nursing home care. If you choose to go this route, make sure to shop carefully. These policies can vary greatly in coverage and cost, and it is important to understand precisely what kind of policy you are purchasing, and whether it will support the kind of retirement homes you will need.
Many people make the mistake of believing that Medicare covers the cost of most long-term care services such as retirement homes. However, Medicare only covers short-term, acute care during a hospital stay. You will need to work out other forms of financing if you haven’t saved enough by the time you need to find a retirement home.
Financing retirement homes with an insurance policy can help meet the expenses you'll encounter, but you must be careful. If you are considering an insurance policy, make sure that it pays benefits immediately upon entry into a nursing care facility or senior retirement home. Many insurance policies, which are purchased prior to the need for nursing care, require a waiting period after entry into a nursing care facility before payments are made. It is highly unlikely that nursing care insurance can be purchased after a person has entered a nursing care facility.
Choosing a Place to Retire
Placement is one of the most important things when retiring. Distance from family, neighborhood, finances, etc. all come into play when considering your retirement location.
When house hunting for the best place to retire, don't worry about finding your dream home right away. You can always trade up later. If you have benefited from the real estate boom in your first home, you can easily put your equity to work in a second place to retire. Or you can trade down to a smaller home.
Looking for the best place to retire means the best place for you. When contemplating retirement locations, consider factors like taxes, median home price, the local night life, sports teams, golf courses, culture, educational opportunities, crime rates and the overall environment.
Also, keep in mind the distance from friends and family. If you have new grandchildren, you may not want to move clear across the country. Remember, unlike some professional athletes, you're only going to retire once. So make the best choices the first time.
Your search for the best place to retire might include a factor your parents never considered: work. A recent study found that 70 percent of those 45 and older plan to continue working in their "retirement" years, another survey found that the number may be as high as 80 percent. Surprisingly, the pure enjoyment of work or a desire to try something new are significant considerations for choosing retirement locations.
One interesting trend among people looking for the best place to retire is to choose retirement places with appealing cultural and recreational lifestyles, then looking for ways to earn a living there. Some who make this jump end up telecommuting, starting a small business, or working part-time.
The best place to retire for you might be a college town. Many of those wondering where to retire were in college from the middle 1960s into the early '70s and so a college or university areas can be good retirement places. In addition, universities generate jobs and lend a youthful vibe. And they often come with arts centers, medical facilities, and good restaurants.
When house hunting for the best place to retire, don't worry about finding your dream home right away. You can always trade up later. If you have benefited from the real estate boom in your first home, you can easily put your equity to work in a second place to retire. Or you can trade down to a smaller home.
Looking for the best place to retire means the best place for you. When contemplating retirement locations, consider factors like taxes, median home price, the local night life, sports teams, golf courses, culture, educational opportunities, crime rates and the overall environment.
Also, keep in mind the distance from friends and family. If you have new grandchildren, you may not want to move clear across the country. Remember, unlike some professional athletes, you're only going to retire once. So make the best choices the first time.
Your search for the best place to retire might include a factor your parents never considered: work. A recent study found that 70 percent of those 45 and older plan to continue working in their "retirement" years, another survey found that the number may be as high as 80 percent. Surprisingly, the pure enjoyment of work or a desire to try something new are significant considerations for choosing retirement locations.
One interesting trend among people looking for the best place to retire is to choose retirement places with appealing cultural and recreational lifestyles, then looking for ways to earn a living there. Some who make this jump end up telecommuting, starting a small business, or working part-time.
The best place to retire for you might be a college town. Many of those wondering where to retire were in college from the middle 1960s into the early '70s and so a college or university areas can be good retirement places. In addition, universities generate jobs and lend a youthful vibe. And they often come with arts centers, medical facilities, and good restaurants.
Getting Ready to Retire
There are countless strategies that to improve the quality of your retirement. However, there are some essentials to keep in mind as you approach and endeavor on your retirement. This is a time full of opportunities…here are some ideas to maximize your satisfaction.
Pump up your retirement savings by increasing your contributions to your 401(k). New contribution limits let you stash more dollars in your qualified plan than ever before. You find in the long run, you will not regret this.
Save automatically by setting up automatic deposits to a mutual fund or IRA. When you get a raise, consider directing all or part of it to your retirements savings. This will prevent the money ever from passing through your hands or your wallet, which will limit spending on extraneous things.
Take the time to think through your investment strategy. What will be the right investment mix for you once you are retired? What is your current investment mix? It never hurt to take the opportunity to rethink your financial strategies.
Review your life insurance coverage and consider long-term care protection. You may think it seems a long way off now, but preparing now could save you thousands later and give you the ability to choose your own care. This will ensure not only saved money, but saved stress on yourself and family members in the future.
Take this opportunity to be a little selfish. If you have the funds, go on a vacation or take a course you’ve always wanted. Sure, you can still help out with your grandchildren’s college fund, but make sure there is a little left over for your own enjoyment.
Determine the impact of early retirement on your retirement benefits from your employer’s plan. Learn the difference between taking out a lump sum payment and income for life. This is a situation where you might want professional advice.
Finally, don’t let a new car or an extravagant vacation lure you off course. Make your retirement a priority before you get there, and you’ll find that you will have more money to spend on all the things you want later in life. Waiting will pay off!
Pump up your retirement savings by increasing your contributions to your 401(k). New contribution limits let you stash more dollars in your qualified plan than ever before. You find in the long run, you will not regret this.
Save automatically by setting up automatic deposits to a mutual fund or IRA. When you get a raise, consider directing all or part of it to your retirements savings. This will prevent the money ever from passing through your hands or your wallet, which will limit spending on extraneous things.
Take the time to think through your investment strategy. What will be the right investment mix for you once you are retired? What is your current investment mix? It never hurt to take the opportunity to rethink your financial strategies.
Review your life insurance coverage and consider long-term care protection. You may think it seems a long way off now, but preparing now could save you thousands later and give you the ability to choose your own care. This will ensure not only saved money, but saved stress on yourself and family members in the future.
Take this opportunity to be a little selfish. If you have the funds, go on a vacation or take a course you’ve always wanted. Sure, you can still help out with your grandchildren’s college fund, but make sure there is a little left over for your own enjoyment.
Determine the impact of early retirement on your retirement benefits from your employer’s plan. Learn the difference between taking out a lump sum payment and income for life. This is a situation where you might want professional advice.
Finally, don’t let a new car or an extravagant vacation lure you off course. Make your retirement a priority before you get there, and you’ll find that you will have more money to spend on all the things you want later in life. Waiting will pay off!
Subscribe to:
Posts (Atom)