Ease Into Retirement With a Smart Pre-game Strategy
Ease Into Retirement With a Smart Pre-game Strategy
Retirement is a major milestone — a moment to turn a new page to a chapter you’ve probably dreamed about for decades. People look forward to unencumbered schedules, freedom to travel, spending more time with relatives or moving to a dream home on the beach. Retirees often have big expectations about what a life of leisure may bring only to find out that they miss the routine and camaraderie of going to work each day. Or that moving to their favorite vacation destination means leaving all their friends behind.
It’s not uncommon for retirees to experience a surge of well-being and happiness directly after retirement, followed by a decline in life satisfaction as time passes. But you can avoid some of the stress and anxiety that retirement can bring with a smart pre-retirement strategy to help smooth out the transition.
Dip Your Toe in Retirement Waters
The day after you retire might seem like plunging into the deep end of the pool – your daily work-life routine suddenly stops cold. So, instead of jumping in, consider wading into retirement with a transitional job. Maybe your current employer will let you step down to part-time work for several months — or you can explore a new opportunity with a bridge job that keeps you in the workforce (and keeps your retirement account growing) while lightening your schedule. Your WellCents financial professional can help you figure out how much income you’ll need in order to make a gradual transition into retirement.
Retire to Something Else
Prior to your last day at work, make plans and lay the groundwork for what you’ll retire to — not just the job you’ll retire from. Join a community or volunteer organization now. Get to know them and what the possibilities are so that when you retire you’ve already found a group you like, and are ready to fully engage in — or ramp up — your participation.
Relocate With Confidence
Moving closer to children and grandchildren or relocating to a favorite vacation destination can sound like the perfect retirement plan. But it can also lead to disappointment — family may be busy with other activities or your vacation spot might be lonely without a group of friends. Invest in your new community before you make the big move. Plan longer trips to the area so that you can take part in local activities, meet people, start new friendships and have something to do outside of your family circle.
Understanding Life Insurance Basics
Understanding Life Insurance Basics
It’s not a topic anyone particularly enjoys thinking about, but life insurance can be a crucial pillar of financial protection for those who mean the most to you. It helps ensure your loved ones are better able to meet their future expenses — no matter what should happen to you.
In return for your policy premium payments, the insurer promises to pay a predetermined benefit upon your passing. Your beneficiary can use the money toward whatever financial needs they may have at that time — or in the future. Depending on the provisions of your policy, your beneficiary may receive their benefit as a single lump-sum payment, a series of installment payments or by some other means. Here are some things the payout from a life insurance policy could be applied toward:
- Paying off the mortgage on a family home.
- Sending your children or grandchildren to college.
- Supporting a favorite charitable cause.
- Paying estate taxes.
- Covering funeral expenses.
- Helping your spouse pay everyday bills.
- Providing for long term care.
- Paying off student, credit card or other debt.
- Protecting a business.
- Supplementing retirement income.
But you have a number of decisions to make before you purchase a policy. First, you’ll have to choose between the two basic types of life insurance: term life and permanent life.
Term life insurance provides protection for a predetermined period of time: That could be 10, 20 or 30 years, for example. If the loss occurs within the period you’re covered for, your designated beneficiaries receive the benefit. If not, no benefit is paid out. You might be interested in this type of policy for income replacement prior to retirement or to provide care for your children until they become financially self-sufficient.
And you also have two options when it comes to permanent insurance: whole life or universal life insurance — with either able to provide lifetime coverage. Permanent life generally costs significantly more than term life policies, but it also accumulates cash value that you may even be able to borrow against should the need arise.
Whole life insurance coverage is more predictable as the premiums, rates of return and amount of benefit are guaranteed and fixed. These policies can be useful to help provide for longer term needs such as ongoing care for an adult child. Universal life insurance, on the other hand, can offer an adjustable death benefit as well as premiums, within certain parameters. Cash value growth is dependent on the interest rate climate, so it’s important to consider that potential impact when looking at this type of coverage. Finally, look into fees, no matter what type of policy you select.
Life insurance can be an important foundation of financial protection for your family. And while it may seem complicated, it doesn’t have to be. Your financial professional can explain the options available and help you determine which type of insurance best meets your needs and budget.
Source
How Working from Home Could Impact Your Retirement Plan
How Working from Home Could Impact Your Retirement Plan
If you’re working from home during the pandemic, and the “new normal” becomes permanent, you should contemplate how this change could affect your retirement strategy.
First, it’s important to consider the difference between working from home (WFH) and working from anywhere (WFA). In a WFH arrangement, employers may still expect workers to come to the office from time to time. But in a WFA arrangement, employees have the flexibility to live and work from wherever they choose.
A WFA scenario offers maximum freedom and may allow a worker to relocate to another part of the country (or even outside of it altogether) to take advantage of a lower cost of living.
WFA is not nearly as common as WFH. In 2019, few companies based in the U.S. offered WFA arrangements, with about 95% of remote employees required to work from a set location. However, Household Pulse Survey data collected by the U.S. Census Bureau shows that more than 35% of U.S. households have engaged in more frequent telework than prior to the COVID-19 crisis.
Remote Work Can Be a Retirement Game-Changer
Working anywhere other than the office may reap significant cost savings for employees in a variety of areas, including:
- Cheaper housing
- Lower transportation costs
- Fewer socializing and entertaining expenses
- Reduced purchases and upkeep for work attire
- Greater ability to handle child and adult caregiving duties
Retire sooner. With a substantial drop in housing or caregiving costs, you may find that you can retire sooner than you’d hoped. Taking advantage of a lower cost of living can bend the retirement timeline significantly. You may not have to move very far for this to make a big difference, particularly if your job requires you to reside in a major city, where the cost of just about everything is often much more expensive.
Work Longer. On the other hand, WFH may give some the flexibility and desire to continue working past retirement age. For example, if an employee has health or mobility limitations, working from home may make it easier to stay in the workforce longer. Additionally, employees nearing retirement may have parents who require assistance, and having the kind of flexibility that WFH or WFA affords them may allow them to fulfill their family obligations while remaining on the job.
The pandemic has created significant hardships and burdens for many families. The possibilities for continuing remote work may constitute a bright spot in the darkness.
The Benefits of Estate Planning
The Benefits of Estate Planning
It’s the one personal finance topic people often try to avoid, even though they know they shouldn’t. Estate planning refers to a number of activities dealing with how decisions are made and assets are handled and disposed of just prior to and following death or incapacity.
While far from the most upbeat of topics, it’s a very important one to contend with nonetheless. But rather than focus on specific estate planning strategies, let’s consider the potential benefits of addressing this issue at all.
Leave a legacy. Many people want to leave something tangible to those they love, whether to their children, grandchildren and great-grandchildren, nieces, nephews or friends. Knowing that your lifetime of hard work and saving can make affording college, buying a first house, a car, or starting a business easier or possible for someone you love can be gratifying. A final will and testament spells out the specifics of how your assets are disposed of. And you can also leave an explanatory letter to your beneficiaries to let them know what they meant to you, why a gift was made and how you hope your bequest will help enrich their lives.
Unburden your loved ones. Making difficult end-of-life medical decisions can be stressful and anxiety ridden for those who care about you. But this is a burden you can take off their shoulders by putting in place advanced directives — otherwise known as a living will — that express your wishes for continuation of life-support and other medical decisions if you aren’t able to make them for yourself. And it’s a very loving thing to do for your children or other family members
Support a charity. Do you have a charity that means a lot to you? You can leave a lasting gift by remembering that nonprofit organization in your will. Whether you want to support curing childhood diseases, environmental efforts, animal welfare, or a church, synagogue or mosque, you can take comfort in knowing that you’ll help support the causes that matter most to you even after you’re gone.
Take control. Estate planning in some ways, is the ultimate assertion of control over your final destiny. Whether through the establishment of a trust, the creation of a will or the documentation of your advance directives, you’ll be able to maintain greater control over important decisions throughout your life and beyond.
Remember, estate planning isn’t only for the wealthy. Everyone will have to make end-of-life decisions that have tremendous consequences for themselves and their loved ones. Once you have all the essential documents in place, you most likely will not have to revisit these decisions very often. And with an appropriate estate plan in place, you can get on with enjoying your life in the here and now.
Source https://www.nolo.com/legal-encyclopedia/how-write-explanatory-letter-your-will.html
The Blueprint for Better Banking
The Blueprint for Better Banking
In many ways, banking is the foundation of your personal finances. A bank can be your hub for managing daily expenses, paying household bills and housing your emergency fund.
But what type of bank is best for you? Brick-and-mortar banks have long kept the funds of community members safe and secure, but online banking is a modern and convenient way to manage money. Both have their advantages, so the best choice is the one that fits your specific needs.
The Rise of Online Banking
While the coronavirus pandemic pushed online banking to the fore, the trend was already there. In fact, four in five customers prefer to manage their finances digitally rather than in person according to the 2020 Chase Digital Banking Attitudes Study.
People go digital for many reasons, including:
- Convenience of 24/7 access to account management, allowing you to schedule transactions whenever you want, rather than be subject to “bankers’ hours.”
- Easy to access when you’re on the road for work or for fun.
- Potentially higher interest rates on savings accounts.
On the other hand, it’s important to be aware of the potential downsides, including that it could take longer to access your funds. You also might have more limited products and services to choose from. There are also risks of technology disruptions, and you may have more restricted — or expensive — ATM service.
Familiarity of Brick-and-Mortar Banks
The local branch of your bank houses a business relationship that might span generations. During your childhood, your parents may have taken you there to open a passbook savings account. You might even have warm feelings and memories of milestones like buying your first car or signing the mortgage to your first home. There are lots of reasons many people prefer a physical bank, including:
- Interaction with people who know your needs as a customer.
- Services like safety deposit boxes and notaries.
- Local, low-cost or no-fee ATMs.
- In-person assistance when you need it.
- Greater sense of security “knowing where your money is.”
On the other hand, physical branches generally come with downsides such as generally lower CD and savings account rates, limited hours and typically higher fees.
Best of Both Worlds
Both physical and internet banks can offer FDIC insurance, which protects your deposits up to $250,000 in the event of a bank failure. Additionally, many brick-and-mortar banks offer digital banking services like online bill pay and mobile check deposit. This lets you access online banking while still retaining many of the benefits of physical branches, including access to fee-free ATMs and personal attention when needed.
Neither option has to be a one-stop shop for all your banking needs. You can keep your household checking account at the bank down the road for the personalized service and your emergency fund in an online bank for the higher yield it may offer. As you review your choices, your Well Cents financial professional can help you find the best fit for your in-person and online banking needs.
Sources:
