Investing for Retirement in a Bear Market

January 25th, 2015  |  Published in Retirement  |  1 Comment

Stock market investors have enjoyed a bull market for quite a few years now. History tells us that there will eventually be another bear market. How you handle your retirement investments during a bear market can make a big difference in the return provided by your retirement investments. Selling at the bottom of a bear market could produce a big loss for your retirement portfolio.

I was lucky that I started investing in earned for retirement during the last bear market in 2008. I didn’t get in right at the bottom, the market did go down for a few more months after I started investing. Despite the few months of negative returns, having bought stocks cheap during the bear market helped me get some great returns once the next bull market started.

Now that I have retirement investments though I need to consider what to do when the next bear market hits.  One strategy is to pull out of the market when the bear market starts to avoid further losses. The problem with that strategy is that nobody really knows when a small dip in the market is the beginning of a bear market or just a temporary correction during a bull market.  It is also impossible to know for sure when a bear market has hit bottom. For this strategy to work you need to be very lucky or be able to tell the future.

Another strategy, which is the strategy I might use, is to just stop investing in the market during the bear market. You would put your money into bonds or cash instead. If you use this strategy you need to figure out when to start investing in the market again. If you wait too long to start investing when the bull market resumes then you miss out on a lot of potential returns.  Or you could just stay fully invested in stocks the whole time and therefore ensure that you don’t miss out on the beginning of the bull market. When it comes to investing in a bear market there is no foolproof strategy. Jumping in and out of the market every time there is a small dip though will likely lead to inferior returns.

A Pre Retirement Checklist

September 18th, 2014  |  Published in Retirement  |  Comments Off on A Pre Retirement Checklist

Retiring is a big step for many people. Usually, there is a whirlwind of confusion, chaos and concern before retirement, followed by a slight breeze of boredom and longing. In order to keep everything under control, here is a list of 20 things to do before retirement, in order to make the time after retirement less overwhelming.

– Prepare an updated balance sheet of income and expense.
– Use up your company paid vacation.
– Get rid of debt.
– Make a list of things you’d like to do – a “bucket list.”
– Play a small prank on your boss and co-workers.
– Get your car inspected for any upcoming services.
– If you have a will, make sure it is updated.
– If you don’t have a will, get one, and then make sure it stays updated.
– Home inspection – check and replace any worn out items like doorknobs, faucets, light fixtures, etc.
– Begin the paperwork to file for social security.
– Make sure you have transitional insurance in place, and are applying for other forms of insurance.
– Consider moving to a smaller home or apartment for the sake of ease in maintanence.
– Consider moving to a single story home for ease of movement in the future.
– Assess life insurance needs.
– Play another prank on your boss or co-workers (this is just getting to be too much fun.)
– Talk to your financial advisor about making changes to your portfolio to help support your needs and wants after retirement.
– Check into long-term care insurance.
– Assign a power of attorney in the event of an emergency.
– Have an attorney draw up an advanced medical directive to make sure everyone knows your health care and end of life wishes.
– Play a practical joke on your boss – AND coworkers just to have a good laugh.

Now that you have all of that out of the way, you can sit back, relax, and enjoy the rest of your retirement celebrations. Don’t forget to count down the number of days on a large, easy-to-read wall hanging that can be seen clear across the room. On your last day, run around making funny faces, playing practical jokes, and generally having a grand time.

Mix a bit of silliness in with the serious business of preparing to retire. Pay attention to your current investments as well as your estate and any insurance you wish to keep after retiring. Also, make sure your basic needs are covered and you have some wiggle room in your finances for at least three months after you retire.

This extra cushion will allow you to get settled into your new life, finding your “groove” so to speak, and start taking advantage of all the things you were planning on doing. Plus, you will have time to reminisce on those practical jokes you played on your boss and coworkers. Retirement is a fun time and should be enjoyed. Just make sure you have all of the work done before you go off and play.

Ruling Affects Retirement Benefits for Married Gay Couples

July 1st, 2013  |  Published in Retirement, Social Security  |  Comments Off on Ruling Affects Retirement Benefits for Married Gay Couples

Married gay couples should take a closer look at their Social Security benefits and their Individual Retirement Accounts. Last Wednesday, the Supreme Court ruled the Defense of Marriage act unconstitutional. Now that the Act denying federal benefits to legally married same-sex couples has been struck down the retirement benefits of married same-sex couples will be affected.

The Social Security benefits of married gay couples will be affected due to the ruling. Surviving spouses should now be able to claim the Social Security benefits of their deceased spouse. In general, married gay couples have the same options to collect their Social Security benefits in the same way heterosexual couples do.

Another change is that if an IRA is rolled over from a deceased same-sex spouse to the surviving gay spouse the individual retirement account would not be taxed. Pensions could also be left to a surviving same-sex spouse. These are just a couple of the changes that will affect same-sex couple financially. Changes affecting retirement plans are just a small part of the changes that will be made overall. Same-sex married couples should now receive the same tax treatment as heterosexual married couples at the federal level. It is not yet clear when the changes will actually be put into effect but couples should be on the lookout for an announcement of when the changes go into effect so they can make changes to their retirement plans.

If you want a more detailed breakdown of the possible changes due to the court ruling check out this summary article at Lambda Legal.

The 7 Deadly Retirement Sins

June 25th, 2013  |  Published in Retirement  |  1 Comment

I was provided with a free copy of the book, The 7 Deadly Retirement Sins to review. Since the book is about retirement and this a blog about retirement the book seemed like a good fit and after reading the book I can say it will be of interest to many of the readers of this blog.

Many financial books, especially ones about retirement, can be dry and difficult to read. The author avoids that by making the book a story about a young journalist who is interviewing retirees about the mistakes they made in retirement. Looking at these mistakes, one can see which of the seven deadly retirement sins caused the retirees problems in their retirement.

I won’t give away all of the retirement sins, but some of them are retiring too early or living above your means, improper investment allocation, and collecting Social Security at the wrong time. The author, Ryan Zacharczyk, is a certified financial planner and that experience is reflected in his investment advice. The story takes up the first two thirds of the book and the last third is financial advice from the author based on the stories shared in the first part of the book. This method makes retirement planning advice more interesting than it normally would be. This book would be a good pick for those who have trouble staying interested in more typical retirement books.

U.S Retirement System a Success

May 16th, 2013  |  Published in Retirement  |  5 Comments

You have probably read a lot of posts and articles lately detailing how the U.S. retirement system is failing retirees.  The Frontline documentary, “The Retirement Gamble“, detailed how high 401k fees are making it difficult for many Americans to save enough for retirement.  In the wake of the article there were many other posts and articles stating how difficult it was for workers to save enough for retirement in the U.S.  I do believe that 401ks have mostly been a failure but a recent report from the Investment Company Institute (ICI) states that the U.S retirement system is a success.

ICI states that their research indicates that the U.S retirement system has successfully provided adequate retirement sources to generations of Americans.  They also state that more recent generations of retirees have been better off than retirees in previous generations.  As an example they state that “the poverty rate among people aged 65 or older has declined from nearly 30 percent in 1966 to 9 percent in 2011.”  Maybe things are not as bad as they seem.

The research does also show that Social Security provides a substantial portion of most retirees’ retirement resources and provides the primary retirement resources for workers with low lifetime earnings.  Although the system may be successful so far it seems that any reductions to Social Security could undermine the success of the retirement system.  Also the ICI indicates that the shift from defined benefit plans to defined contribution plans is unlikely to reduce retirement preparedness.  I am not entirely sure of that.

Even if the U.S. retirement system is  currently a success there are improvements that can be made.  And the uncertainty of future Social Security benefits and the shift from pensions to 401ks could certainly have an impact on whether the retirement system continues to be successful.  What do you think?  Is the U.S. retirement successful?  Will it be successful in the future?  What changes, if any, should be made?

What Legal Protection do you Have if you can’t Care for Yourself?

May 2nd, 2013  |  Published in Retirement  |  3 Comments

Making a decision regarding what’s right for your own well being can be a difficult task at the best of times, but the thought of being unable to make that decision owing to mental or physical incapacity is an altogether more worrying state of affairs.

If you are unable to care for yourself, there are a number of legally protective steps that you can take as a means of ensuring the correct decisions are made on your behalf, should you not be capable.

 Advanced directives

The British government specifies that every adult who is deemed mentally capable has the right to refuse or accept whatever medical treatment is prescribed by a healthcare professional. So there exists an advanced directive or living will: a set of instructions that you are able to dictate which describes your future wishes with regards to medical care.

If it is deemed that you ‘lack capacity’,  as defined by the 2005 Mental Capacity Act, your advanced directive – made when you are deemed mentally capable – takes precedence over any decisions that you make in your mentally deteriorated state. Advanced directives are invoked by a designated healthcare proxy, which you will appoint, who plays a role similar to that of the executor of a will.

Advanced directives allow you to make decisions regarding a wide range of treatment possibilities, and are increasingly being used by those suffering from terminal illnesses where one’s mental faculties are known to deteriorate.

The decisions covered by an advanced directive relate to: the use of intravenous fluids, cardiopulmonary resuscitation, life-saving treatments where brain functionality is inherently impaired (such as in the case of a stroke) and other specific procedures, such as blood transfusions.

 Untimely death

 If you are suffering from a long-term illness, or potentially fatal condition, making a will is an essential undertaking.

A will is the only legally binding means you have of ensuring that the beneficiaries of your estate are those who you intended them to be. A well-written will, made up by a reputable solicitor, such as those found at Co-operative Legal Services, enables you to give one final gift to your loved ones, at an extremely difficult time.

Failure to make a will, however, means that your estate will become subject to the rules of intestacy.

The rules of intestacy

 The rules of intestacy are very clear and well documented, strictly laying out the order of priority in which your family will inherit your estate. While this may be acceptable to some, the inherent, traditionalist nature of the rules means that cohabitants and friends have no legal claim to your estate.

If you wish the beneficiaries of your estate to be a friend, girlfriend, boyfriend, or even a charity, making a will is the only way of legally ensuring that your wishes are adhered to.

 Don’t leave it to chance

 If you’re currently in a state of ill-health, or your health is slowly deteriorating, the only means of ensuring that your desires are carried out is to contact a professional body, such as Co-operative Legal Services, to help you draft an advanced directive and/or will.

With these articles prepared, you can rest assured that you are legally protected if you reach a stage where you can’t care for yourself.

Can One Retire on Social Security Alone?

April 18th, 2013  |  Published in Retirement  |  5 Comments

Yes, one can retire on social security alone.  According to the Social Security Administration, benefits make up 90% or more of the income of 36% of the people receiving benefits.  So it is obviously possible to retire on Social Security alone, but it is less than ideal.  If you are nearing retirement age and looking at Social Security make up almost all of your retirement income there are some things you can do to make living on just your benefit check a little easier.

The following items are based on what my own mother is doing.  Social Security won’t be 90% of her income in retirement, but it will probably be at least 75% of her income.

  • Paid Off Home/No Debt – My mom will have her house paid off and no monthly debt payments when she retires.  That will free up a lot of room in her budget for other expenses.
  • Live in a Low Cost of Living Area – The rural Midwest is a very cheap place to live.  That is how my mother was able to buy a brand new home for $70,000.  The low cost of the home made it possible for her to pay off the loan before she retires.
  • Delay Retirement – Not retiring as soon as you reach the minimum age to draw Social Security benefits allows your monthly check to build up.  My mom likes her job and is working a couple years past her retirement age to increase her check and finish paying off the house. This won’t be an option for everyone but if you are able to delay retirement you can reap the reward of larger monthly checks.
  • Good Health – This is an item you can’t completely control.  If you are healthy, do your best to remain healthy by eating right and exercising.  Health care can easily kill a monthly budget when you are only drawing Social Security so do what you can to stay healthy.

Those are the main things you can do to help increase your chances of living comfortably on Social Security benefits alone.  Of course, it is best to not have to live on just Social Security benefits.  Opening an IRA or other investment account to save for retirement with can help you have a more comfortable retirement. Right now you can take advantage of the Motif Investing $100 Referral Bonus to help kick start your retirement investing. Just click on one of the affiliate links to open an account and get your bonus.

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Recycling My MacBook Pro: Why It Was Worthwhile

March 19th, 2013  |  Published in Retirement  |  Comments Off on Recycling My MacBook Pro: Why It Was Worthwhile

If you’ve ever been in a situation where you have an unused or unwanted piece of technology, it’s not always easy to know what to do with it. The two easiest answers seem to be to either throw it away or sell it on as a second-hand device, if possible.

However, I instead wanted to focus on the benefits of recycling. In addition to the environmental benefits and other factors, this still allowed me to sell my macbook pro. If you haven’t considered the benefits of recycling already, this should hopefully help change your mind.

Retail Value

The first thing one can easily notice when trying to sell an old device is the change in retail value. Even if you’ve only had it a year, its value is not what it was when you picked if off the shelf. Of course, no second-hand item is ever worth its shelf-value brand new, but the rate in which the value disappears can surprise some. Yet it makes sense when you consider the rate in which new, better, options hit store shelves.

Likewise, selling this item on to a second-hand retailer is nowhere near as valuable as you may think. In addition to the costs of running a shop, such a business has to buy off you at a price even lower than the second-hand value; they have to sell it for a profit after all. As such, this is arguably one of the worse places you can go to sell an unwanted Macbook.

Recycling Value

The value when recycling, however, is not based on age or popularity. You don’t need to be a computer expert to understand that the inner workings of any computer device are more or less the same. The cards may change and it may look different, but when it comes down to individual resources and materials, things rarely change. A motherboard alone nearly always has the likes of zinc, copper and gold; all important materials in the technology industry.

As such, recycling puts a high value on any unwanted gadget. As such, the Macbook Pro suddenly became yet another valuable resource. No matter how old or unwanted it was as a usable gadget, its recycling potential ensured it was always able to sell for a reason value.

An Environmentally Friendly Option

Additionally, as a final incentive, if you’re one of those people that care about the environment and the world around you, then recycling older gadgets definitely has even more advantages. In addition to the financial profits, you’re doing the right thing by putting the unwanted computing device to better use.

Recycling is the opposite to throwing it away. My Macbook Pro didn’t end up in a landfill taking up space. Instead, it was broken up into smaller parts and materials. That one Macbook now might exist as any number of modern gadgets and electronics. Likewise, re-using these resources means less is needed to be dug up and extracted from the earth. It’s not much but, in addition to being paid, you can’t argue with a little extra piece of mind knowing you’ve done your part.

I’m Caroline Jordan and from as long as I can remember, I’ve been obsessed with technology. Shortly after I decided to sell my macbook pro in favour of a new Windows laptop, I grew to love writing about tech too. This is something I do, even now, blogging about all the various aspects of technology.

No More Paper Social Security Checks

March 11th, 2013  |  Published in Retirement  |  Comments Off on No More Paper Social Security Checks

If there are persons who are still getting paper checks for their federal benefit payments such as Social Security and others, it means they are not in compliance with the law which stipulates that if Social Security benefits are applied for anytime after the May 1, 2011 date, beneficiaries should receive their payments electronically. This directive was issued by the authorized Treasury Department.

If individuals did not ask that their payments be sent electronically when they made the application for benefits, they are strongly advised to immediately make that request. As of March 1, 2013, there will be no more paper Social
Security checks issued and to prevent any interruption in regular payments, the beneficiary’s funds may be sent by the Treasury Department to the Direct Express Card system.

In addition to being simple, this direct deposit program is known to be an effectively secure and safe method of receiving benefits. Beneficiaries can request that their funds be directed into a personal credit union or bank account. The requirement for this process is that information regarding the account number, the type of account (savings or checking) and the routing transit number of the financial institution is provided to complete the transaction.

Another reason for the switch from paper Social Security checks involve the fact that it decreases the possibility of checks being misplaced or stolen. With the Direct Express Card, if it is stolen or lost, the money will be safe, especially if the matter is reported immediately. The money on the card account is insured by the FDIC and cards are replaced without any trouble if they are stolen or lost.

Other beneficial features of the electronic system for Social Security benefits when compared to paper Social Security checks include ease and convenience. That is, there is no more need to wait for long periods for the arrival of the mail as the money is posted automatically to the account of the individual each month on the pre-arranged payment day. In addition, there is no requirement to make the journey to cash the check or make a deposit. The card can be used at all the ATM machines, banks and retail locations in the country when the individual requires cash.