10 Steps to Take to Retire in 10 Years

10 Steps to Take to Retire in 10 Years

Everyone dreams of retiring early. However, it usually stops there. If you are serious about early retirement, you need to consider what steps to take to make it happen. So, if you plan to stop working in the next decade, here are 10 steps to take to retire in the next 10 years.

10 Steps to Take to Retire in 10 Years

1. Assess your budget.

The first step is to evaluate your budget. You can figure out your current budget by calculating your monthly take-home and expenses. Once you know where you stand, then you can take measures to ensure you are living below your means. Find ways to trim your budget and increase the amount you save every month to retire early. The more you save, the more money you can contribute toward your retirement goals.

2. Determine your retirement budget.

After you know your current budget, the next step is to determine your monthly budget after retirement. You’ll need this figure to help you set a goal for how much you will need to last you through your golden years. Once you calculate what you expect your retirement budget to be, you can plan accordingly.

3. Calculate your cost of living.

To help you figure out what your retirement budget should be, you need to decide where you want to live and what kind of lifestyle you want to lead.

Do you want to stay in your own home, or would you prefer to move somewhere smaller? Would a retirement community offer more benefits? Or, could you afford a better quality of life somewhere else? Once you answer this question, you can easily estimate the fixed expenses for housing, property taxes, utilities, and inflation.

However, don’t forget to account for variable expenses like food, transportation, health care, repairs, and entertainment. These will also be important factors that affect your cost of living and quality of life.

If you aren’t on track to retire in 10 years, you may need to consider ways to cut your cost of living.  This could mean finding ways to downsize, moving to a tax-friendly state, or even moving to another country to maximize your retirement income. And don’t forget, the earlier you retire, the more you will need to save.

4. Review your income streams.

Even though you are retired, you will need to have money coming in to pay your bills. Therefore, you should review your income streams during retirement and adjust your budget accordingly.

To do this, you can start by tallying up all your sources of income. This should include your Social Security benefits and all your savings from retirement accounts and pension plans. Don’t forget to include any additional cash flow you will receive when you sell off valuable assets like your home. And, you will need to include any passive income streams as well.

5. Figure out your Social Security income.

Although it won’t be enough to fund your entire retirement, your Social Security benefits will be an important source of income. The amount you receive largely depends on how much you contributed over the years and when you start taking your benefits. If you don’t know how much you have contributed or expect to receive, you can calculate your estimated benefits here

While you are eligible to start taking them at 62, you will receive more if you put it off. However, the benefits max out at 70. And keep in mind that spouses can take their benefits at different ages as well.

6. Optimize your retirement contributions.

Before you retire, squirrel away as much as you to give your savings plan a boost. Be sure to max out your retirement contributions, especially if your employer offers matching contributions. And those over 50 can contribute even more with “catch up” contributions. Optimizing these investment vehicles will afford you a more comfortable lifestyle post-retirement.

7. Adjust your investing strategy.

Not everyone wants to pay someone to manage their portfolio. But if you take a more hands-on approach to investing, you need to regularly check your portfolio’s performance and make adjustments when necessary.

One of the most critical times to do this is when you are preparing to retire. Many people become more risk averse as they near retirement. It makes sense though since you have less time to recover your money if you experience losses. So, they often adopt a more conservative strategy to preserve the nest egg. Sometimes, investors choose to sell off high-risk investments. Others decide to buy into funds that offer more diversification and distribute the potential risk. Both methods help mitigate the risk and protect your funds.

8. Pay off your debts.

Getting out of debt is hard enough when you have a salary. However, it becomes even more difficult if you are living on a fixed income. If your retirement expenses exceed your income, you could wind up outliving your savings. Therefore, don’t take on any new loans and work to pay off existing debt before you retire. It will be much easier to manage your finances if don’t have these liabilities.

9. Plan for long-term medical expenses.

For many workers, retirement benefits and pensions are becoming a thing of the past. Many jobs only offer water-downed health insurance, especially after you retire. So, it may be a good idea to look into long-term care insurance to assist with medical expenses.

This will be especially important for those with chronic illnesses and conditions that require regular treatment. Long-term care insurance will help cover assisted living and in-home care, if necessary. You could also use an HSA to help offset your healthcare expenses. Planning now could save you and your loved ones from medical debt.

10. Set clear goals.

No matter what you are trying to achieve in life, you need to have clear goals. They will help you focus on what matters most and motivate you to continue working toward it.

The same is true when you are planning for retirement. Start small and make saving money a habit with regular contributions to your savings, retirement, or brokerage accounts. The sooner you take action, the more time you have on your side.

It’s possible to retire in the next 10 years if you start saving now, but it will take a lot of effort and discipline. Talk to your financial planner to determine your most promising path forward.

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What Are the Benefits of a Simple IRA for Small Business Owners?

The Benefits of a SIMPLE IRA for Your Small Business

As someone who is self-employed, my retirement plan looks a little different than most. Employee-sponsored 401(k)s and pensions plans are not in the cards for me, and there are a few more tax considerations as well. So, I need something easy to implement, that will offer substantial tax breaks, and allow me to maximize my contributions. Now that I’m looking for a new retirement vehicle to add to my portfolio, a SIMPLE IRA may be the answer to my problem.

What Is a SIMPLE IRA?

A SIMPLE IRA, or Savings Incentive Match Plan for Employees, is an Individual Retirement Account that is specifically designed for sole proprietors and small business owners. It works well for smaller employers who want to offer retirement benefits since it is easy to set up and maintain. Like other retirement plans, both the employer and employee can make contributions and receive tax benefits.

What are the Benefits of a SIMPLE IRA?

This type of retirement plan offers many benefits to both the employer and the employee.

1. It is to set up and maintain.

The first benefit is the convenience and easy process to set it up. There are fewer reporting requirements with a SIMPLE IRA than with other types of retirement accounts such as a 401(k). So, there is less paperwork involved to set up and maintain it.

2. There are fewer fees.

In that same line of thought, there are also fewer administrative fees to set them up. In general, the overall costs are lower when compared to the other alternatives. This makes it easier for small businesses to offer retirement benefits and attract more skilled employees.

3. It offers significant tax breaks.

Although you can’t claim your contributions as a deduction, you can defer part of your salary into these accounts. Since they would qualify as pre-tax income, any contributions you make to a SIMPLE IRA will lower your overall taxable income. And, your balance will continue growing, tax-deferred. The compounding interest will help you to maximize your earnings.

Additionally, it allows you to avoid the capital gains tax when you buy and sell within the account. The account is tax-deferred, so you won’t have to worry about this until you start receiving distributions.

And if your gross income is below a certain threshold, you may also qualify for the saver’s credit if you made contributions to your employer-sponsored retirement plan.

Employers also receive tax benefits as well. They can claim a 50% tax credit for up to $500 to offset the start-up costs for the first three years. The incentives make it more enticing for small business owners to set up these plans as well.

4. It has instant vesting.

With some employee-sponsored plans, sometimes there is a vesting period. This requires the employee to stay with the company for a set number of years to receive the matching contributions. However, with a SIMPLE IRA, any money deposited into the account is immediately yours, no waiting.

5. It increases the amount I can contribute.

As a sole proprietor, I can maximize my contributions as both employer and employee. In theory, it allows me to contribute double the amount that is allowed with a traditional IRA. As an employer, the contribution threshold for 2022 is $14,000. However, the maximum total is $20,500. If I can max out my contributions, it allows me a greater capacity to save for my retirement.  

Are There Restrictions on a SIMPLE IRA?

No retirement plan is perfect. So, it is important to be aware of the restrictions and requirements that are associated with a SIMPLE IRA.

Eligibility Requirements

As an employer, you must have 100 employees or less. And, you must make annual contributions to the account. You can do this in two ways: by electing to match their contributions with a limit of 3% or with a non-elective contribution of 2%. You can switch between matching or non-elective with notice.

To be eligible as an employee, you must have received at least $5,000 in compensation for the calendar year. Furthermore, you must have received at least the same minimum during two previous years as well.

Limitations

First off, a SIMPLE IRA is not available as a Roth account. It also has different thresholds for maximum yearly contributions. For 2022, you can make a maximum contribution of $14,000, or $17,000 for those over 50. The total contribution is $20,500, or $27,000 for 50 and older. You also can’t max out this account if you have already reached the limit on another employer-sponsored retirement account.

The other feature of this tax-advantaged account is that you won’t pay any taxes until you start taking withdrawals. At that point, it will be taxed like normal income. There is also a 10% penalty if you withdraw before age 59 1/2 and a 25% penalty if you withdraw within 2 years of the first contribution. However, there are some qualified exemptions for early withdrawal.

Account Setup

If you choose a SIMPLE IRA, it is fairly simple to get started. You can partner with a financial institution to offer employers an individual account. Or, you can create the infrastructure and allow employees to set up their own accounts with their chosen institution. Employees who choose to participate will fill out the SIMPLE IRA adoption agreement, and then they can open the account with the designated custodian.

Is a SIMPLE IRA Right for You?

Any time an employer offers a retirement plan, it’s a good idea to participate. Otherwise, you are leaving free money on the table. It is also a great benefit for small businesses if they want to offer retirement benefits because it’s easy to set up and manage.

However, each situation is different. For me, a SIMPLE IRA gives me another investment vehicle and increases the amount I can contribute as both employer and employee. Therefore, it’s a no-brainer when compared to a 401(k) or traditional IRA. But what works for me may not be the best solution for everyone. So, you should review your options with your financial advisor to determine which is most beneficial for your specific circumstances.

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Estate Planning: Checklist Of The Basics

No one likes to think about their own death. It is the one topic we are biologically engineered to push back against. Which is why so many people do absolutely no estate planning until it is urgent. When they are terminally ill or in an accident, suddenly they can see that they should have done their estate planning long before.

The one universal truth is that everyone dies, yet it is tough to internalize that. When you sit down to write a will or do any other kind of estate planning, you are acknowledging that fact. It is way more difficult than just signing a piece of paper.

Still, without estate planning, your estate will go into probate when you die. Your loved ones will struggle to make sense of your financial situation while dealing with their grief. For their sake, and for your own peace of mind, estate planning as soon as possible is ideal.

But how do you start estate planning? To help you out, here is a checklist of the basics you need to get done.

1.List everything you own

In order to do proper estate planning, you need to know what you have and what you owe. You may be able to get your account balance easily enough, but that does not include all your physical possessions or even your non-physical assets. Start your estate planning by creating a spreadsheet.

One page of your spreadsheet should be dedicated to all of the material possessions you own. Go through your home and put everything you come across into the spreadsheet.

Another page should be dedicated to your non-physical assets. These include things like retirement plans and life insurance policies. You should include all your other insurance policies as well.

2.List everything you owe

Just about everyone owes money in some form, whether as credit card debt or a long-term mortgage. Add a page to your spreadsheet and list everything you owe to anyone, whether they are an individual or company. Include any credit cards on which you have a zero balance but are still open.

3.List any memberships

Any associations you are part of may have benefits that your loved ones can collect when you die. List your memberships, including organisations like AARP, veterans associations, and professional accreditation associations.

4.List your charitable contributions

You can use the same page as the one with your memberships list to include any charities you support. This will help your loved ones if they want to continue donating on your behalf.

5.Assess your retirement accounts

Most people do not think about their 401(k) or other IRA very often. Once they have started working and have a retirement plan in place, they simply leave it be. However, your financial needs change over the years, and the kind of account and contributions that suited you at the start of your career may no longer be suitable. Assess your retirement accounts to decide whether they need an update.

6.Assess your life insurance

Do the same with your life insurance policy. What once seemed perfect for your loved ones may no longer be enough, especially if you have had children or started looking after an elderly parent.

7.Transfer on death designations

Most assets and policies go through probate when you die and are distributed by court instruction. This may make life hard on your family immediately after your death. By assigning transfer on death designations on accounts like bank accounts and investment accounts, you can ensure they get funds as soon as possible without waiting for them to go through probate.

8.Choose an estate administrator

Choosing someone to administer your estate is tough but important. Without choosing an estate administrator, your loved ones may get into conflict over who will take care of it. Your instinct may be to choose your spouse if you are married, but consider that they will be going through a lot, and will also struggle to remain impartial. Try and find the balance by choosing someone without stakes and who will be best-suited to get things done.

9.Write a will

Wills are easy to get done. You can use an online will maker if you don’t want to splash out on an attorney. Everyone should have a will, as it gives all the instructions for what to do when you die. It will save your family a lot of confusion and grief.

10.Print and sign your lists

Print and sign at least 3 copies of your lists. One should go to your partner or another loved one and be placed in a safe deposit box. Another should go to your estate administrator. The last one you should keep for yourself. It is also worthwhile to send your lists via email to your estate administrator.

11.Update your lists

You should update your lists at least once every two years, as your assets and debts can change a lot in that time. Some people have the capability to update their lists as their circumstances change, but most people prefer not to think about their estate except when absolutely necessary.

12.Set up power of attorney

Finally, power of attorney is a related document you should complete. You will write one for financial purposes and one for health purposes. They assign who you want to take care of your decisions if you are incapacitated.

The above should get your estate planning started. Go through the checklist and remember to update your lists regularly.

How to Prepare for Future Funeral Expenses

How to Prepare for Future Funeral Expenses

One of the things that keep me up some nights is worrying about what comes next. Beyond the metaphysical question of it all, I also worry about those I’m leaving behind. Having witnessed it firsthand, it can be a huge financial burden on your loved ones.  While death and funerals aren’t favorite topics of conversation, there is no avoiding it. Death is the great equalizer and comes for us all in the end. Therefore, I’m trying to arrange things ahead of time and prepare for future funeral expenses, leaving no questions or obligations behind.

Why You Should Prepare for Future Funeral Expenses

Coming from a large family, death is a fairly common thing. I attended my first funeral when I was about 5, and we have laid many grandparents, aunts, and uncles to rest over the years. We view it as a celebration of life, sharing stories and comforting each other through the loss. Unfortunately, complications with finances can taint the services and make the grieving process so much worse.

Although some relatives planned better than others for funeral expenses and burial costs, they all had one thing in common: they were expensive. Today, the average funeral cost is about $8,000. This figure continues to rise as you add to the services or if the deceased has specific requirements for the funeral.

The burden of carrying out your wishes will fall to the person you name as executor of your will. This can be a heavy burden and a huge financial burden if you haven’t taken any steps to prepare for it. Even if you allocate funds from your accounts or estate, it could take months or even years to access the funds.

So, making arrangements to prepare for future funeral costs is a final gift I’m going to leave them. I’ll rest at peace knowing they won’t have the added stress of worrying about how to pay for it all.

5 Ways You Can Prepare for Future Funeral Costs

1. Pay for your own funeral arrangement.

Ideally, I’d like to lift the burden from their shoulders completely by planning the funeral myself. My goal is to have everything paid in full.

Although some think it is macabre, it ensures that not only can I save for it now, but I can include all the details I’d like for my arrangements. From the casket and service to the outfit and music, you can plan every detail. And, your loved ones won’t have to guess about what you would have wanted since you can tell them. I know I’ll rest easier knowing that I’m not leaving a financial mess behind.

2. Prepay for funeral services.

Prepaid funeral plans are a popular option for those who still want to make arrangements ahead of time, but have trouble with the details. You can choose a local mortuary to work with, and they will step in to help your family attend to things when you pass.

And when you prepay, you can lock in the current rates. This protects you against rising costs of inflation and land shortages which will drive the price up. However, they don’t usually offer refunds if you change your plans or move out of state. And if they go out of business, there’s no recourse to get your money back.

If you are considering this route, compare plans to determine what’s best for you. Be clear on the terms and fine print, and ask about refunds and cancellation policy. When you spend this much, make sure you know exactly where your money is going.

3. Purchase funeral insurance.

Although life insurance in intended to support your family after death, you can purchase funeral insurance to prepare for your future burial and funeral costs. Funeral insurance functions like many other plans, but with one key difference: you need to estimate your final expenses to determine which policy to purchase.

The funeral expenses will be the largest cost. But, there are other bills to consider such as healthcare, legal fees, and any outstanding debts. The most common plans include burial insurance, funeral insurance, and final expense insurance which can range from $25k to $40k, depending on your plan. If you think that these insurance policies could benefit you when it comes time to think about your funeral, be sure to research “what is final expense insurance” to understand just how advantageous this can be to you and your family during what will be the toughest time of your life.

4. Set up a dedicated funeral fund.

If you know that it will be difficult to pay for your final expenses, you can set up an account and start funding it now. There are traditional savings accounts, or a Totten trust which offers better interest rates and pay the designated beneficiary who the trust will pay on death (POD). Rather than having to wait to access your accounts once your affairs are settled, the beneficiary can receive the funds by presenting your death certificate.

This is a good option for low-income earners or people who have no other way to prepare for future funeral costs. Even if you don’t save enough to cover all your final expenses, everything helps. And, if you start planning while you’re still here, you can use the compounding interest to your advantage. The sooner you open the account, the more interest it will earn.

5. See if you qualify for burial benefits.

Finally, I would check membership benefits to see which accounts or affiliations may offer assistance with burial costs. For example, my credit union offers $1,000 towards my final expenses just for being a member.

Veterans are also entitled to certain arrangements as well. They can be buried in the national cemetery with no cost for the site or marker. However, you’ll need to find out if they are eligible since space is limited. But, the VA offers other benefits as well to lessen the financial impact.

When the Final Bell Tolls

The bills never seem to stop, even in death. However, before your final bell is rung, you can ease the pain for your loved ones and prepare for future funeral expenses. Death and debt are heavy enough burdens on their own. So, I plan to do what I can now to ensure it brings us all some peace in the end.

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The Best Retirement Accounts to Start Saving

The Best Retirement Accounts to Get Started

Like so many other people, I was not concerned about saving for retirement in my 20s. I was already struggling to pay bills and avoid crushing student loans. Planning for retirement was the least of my concerns. Now that I am in my 30s and settling into my career, I am kicking myself for not starting sooner. However, it is never too late to begin. If you are late to the game, here are some of the best retirement accounts to help you start saving for the future.

The 5 Best Retirement Accounts for Beginners

If you don’t know where or how to begin saving for the future, it is always wise to seek professional advice. When I sat down with my financial advisor, he clearly explained the different investment vehicles available to me. After reviewing loads of information, these five types of retirement accounts seemed to be the best place to get started!

1. Employer Matching 401(k)

The easiest place to begin saving for retirement is through your current employer. Many companies offer employer matching 401(k) retirement plans for their employees. These are retirement savings plan to which your employer also makes annual contributions.

How much you earn depends on the amount you contribute and your employer’s matching program. Some companies match a percentage of your contribution, up to a set portion of your salary. The best plans match up to 100%. However, employers typically choose partial matching scheme. In other instances, the employer’s contribution is based on a pre-determined dollar amount, regardless of the employee’s earning.

While the level of benefits varies, you should always take advantage of employer matching 401(k)s. If you don’t utilize these accounts, then you are missing out on free money.

2. Solo 401(k)

Also referred to as one-participant-k, a Solo 401(k) is great for people who own their own business. Since self-employed individuals do not have access to employer sponsored retirement plans, it provides a great alternative savings vehicle.

To qualify for this type of retirement account, you have to be self-employed and the only employee. The rules state you can’t contribute to these accounts if you maintain any other full-time employees.

However, since you are both the employee and employer, a greater amount of your savings is tax-deferred. Furthermore, you can contribute more to a Solo 401(k) than other types of accounts such as SEPs and Simple IRAs. When options are limited, this is one of the best retirement accounts to get you closer to your retirement goals.

3. Traditional IRA

Traditional IRAs are retirement accounts that offer several tax advantages. Since you put in pre-tax dollars, your contributions are not considered taxable income. Any money you park in these accounts also continues to grow tax-free until you begin taking withdrawals.

These accounts give you incredible flexibility in how much and what kind of investments you can purchase. However, it does require you to manage your own retirement accounts and determine how you invest your money.

4. Roth IRA

When I asked which accounts best suited for my personal goals, my financial advised that I begin by setting up a Roth IRA. It is another retirement account that provides significant tax benefits and more flexibility in your retirement planning.

Since contributions come from after-tax dollars, you pay no taxes on your contributions or earnings once you begin taking withdrawals after retirement. Even if you take money before you are 59 1/2, there are no penalties or taxes if you take money from your original contributions. Unfortunately, you can only contribute $6,000 annually to these accounts.

While there are strict limits, Roth IRAs are a solid foundation to begin building your retirement savings on. Not only does this give you greater adaptability, but also more control over your money.

5. Life Insurance Plans with Cash Value

There are many types of life insurance available to you. In fact, your employer may offer life insurance benefits that have cash value. Investing in these accounts protects you against several kinds of potential risks as well.

Not only do Cash Value Life Insurance plans provide death benefits, but they also allow you to build its cash value that could help supplement your retirement accounts. Initially, your withdrawals first come from the premiums you paid, so they are not taxed. However, be careful not to let policies lapse because you could end owing a ton in taxes.

Life insurance plans are a good option for people who have already maxed out there annual contributions on other retirement accounts. It offers another way to build your nest egg and diversify your portfolio.

Why Should You Start Retirement Accounts

Although you will likely receive Social Security benefits after retirement, most financial advisors tell you not to rely on it as your sole source of income. Some analysts doubt there will even be any money left when millennials reach retirement age. However, one thing is certain. There are no guarantees that your benefits will cover all your expenses after retirement. So, it is important to start planning now and building your savings to fund your retirement.

There is no single correct approach to retirement planning. Your specific strategy will likely be determined why which types of accounts are available to you. As someone who is self-employed, I have fewer options and require more direct involvement. However, it is best to discuss your specific circumstances with a professional to determine the best course of action. Once you choose the best retirement accounts for your situation, max them out every year. Regular contributions can help you catch up and get you closer to your retirement goals.

While I will always regret not starting my retirement planning from an early age, it is never too late. The most important thing is to recognize that you can start saving now. The more time your money has to accrue compound interest, the more tax-advantaged funds you have to last you through your golden years.

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Fun Jobs after Retirement

Fun Jobs after Retirement

Although we all look forward to relaxing after retirement, many retirees are choosing to return to work during their golden years. In fact, 55 percent of Americans plan on working after retirement according to a recent study. Whether it is to earn extra cash to supplement your income, preserve your retirement funds, stay active, or simply because you miss social interactions, there are many fun jobs available to you after retirement. Here are a few low-stress jobs that cater to a wide variety of interests.

Solo Pursuits

Repair Work (Computer, Car, Home)

If you have honed technical repair skills, there is a high demand for your expertise. In particular, there is currently a huge market for cheap computer repair skills. Since there will also continue to be a need in the years to come, these jobs are also a fairly reliable source of income. Service and simple repair jobs are also a good outlet for those who like to work with their hands. The luxury of repair work is that you can scale back or increase your workload based on what you feel you can handle.

Freelance Writing

If you have a knack for composition, freelance writing is a great way to earn extra income after retirement. Not only can you work from anywhere, but it also allows you to apply your knowledge in a new way. You can browse through the different contracts online to see if your skill set matches their needs. If you find something that piques your interests, put in a bid and see if writing jobs are right for you.

Landscaping and Gardening

For those who enjoy the outdoors, landscaping and gardening are a great way to stay active and enjoy nature. You could check with local companies for openings or start a garden if you have a green thumb. There are plenty of opportunities to sell your home-grown produce at the farmers market or set up a roadside stand. Of course, you should check local regulations, but it is a good source of fresh vegetables and cash.

Arts and Crafts

If you are the creative type, you can try selling your works of art as a side job. It lets you turn your hobbies into fun jobs after retirement. Online marketplaces like Etsy allow you work from home and reach a wider customer base through their websites. You can also attend local or seasonal craft shows to help you sell what you make. When it comes to selling arts and crafts, your revenue potential is only limited by your own imagination.

Social Jobs for Retirees

Teaching

If you have an advanced degree, teaching jobs could be a employment option after retirement. Many educational institutions seek out instructors who have a wealth of real-life experience. Reach out to schools or local learning institutions that you would be interested to work with.  There are also ways to earn income by developing and selling course content based on your career expertise. Sites like Udemy.com help you earn more passive income after retirement.

Driving

One job will always have great security, because there will always be a need for drivers. With ride share and delivery apps like Lyft , Uber, and DoorDash, there are more options to earn money from side jobs than ever before. All you need is a car, a valid driver’s license, and the time to do it. The best part is that you determine how often and when you want to work. For the social butterflies, it is also a great way to meet new people from all walks of life.

Caretaking

Caretaking is a great option for both temporary and long term income revenue. You can look for part-time jobs that offer flexible hours or more permanent positions with steady income. Search for babysitting jobs if you enjoy spending time with children. There also find positions to assist with elder care to ensure they receive the attention they need. Animal lovers can offer services to pet owners who want to avoid expensive kennel fees. Caretaking jobs are a great way to meet both your social and financial needs.

Retail

If you want to work in retail, there are many fun jobs for you after retirement. Check for part-time or seasonal positions at your favorite stores. Retail jobs can help keep you sharp and meet new people. Although they are physically taxing at times, they also have many social benefits. The bonus of working in sales is that stores usually offer an employee discount as well.

Fun Jobs for Travelers

House Sitting

Since you have plenty of free time to travel after retirement, you have flexible hours that are perfect for housesitting. There are several websites posting positions to watch people’s homes while they are away. Some are temporary positions for only a week or two, like annual vacations. Others are seeking more long-term employees for vacation homes and rental properties. You can also search out these jobs in vacation destinations and help cover your travel expenses.

Tour Guide

Tour guides have fun jobs after retirement. It is the ideal job for those who live in places that attract many tourists every year. It does require a combination of skills, but these types of jobs allow you to teach, socialize, and get outdoors. You also get to do something you enjoy while getting plenty of physical exercise. Working as a tour guide could also be an interesting way to learn more about where you live.

Consultancy Jobs after Retirement

The best paying job for retirees are usually consultancy positions. For those who are highly trained or have years of professional experience, you can contract out your special skills. You could use your knowledge to find business solutions or develop structured frameworks for businesses to follow. Since these jobs are largely dependent on your networking and technical skills, there is more variation in how much they bring in. However, you have more marketability if you are familiar with software applications. The greatest draw to consulting work is that you can choose which clients to work with and determine your own schedules and fees.

If you are seeking new job opportunities after retirement, there are many opportunities available to you. Depending on your interests, needs, and skills, there are many fun jobs after retirement that could provide extra financial and social benefits during your golden years.

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What Are Your Retirement Options after Employment Termination?

What Are Your Retirement Options after Employment Termination?

When you leave a job, there are several loose ends that you will need to tie up. One important consideration when you leave your position is what to do with your employer-sponsored retirement accounts. If you are new to investing or not well-versed in financial matters, you may be wondering what your retirement options are after employment termination. You have a few choices. But, some are better than others. Before you make any major decision, you must evaluate eligibility requirements, know the tax implications, and compare the fees and investment options available to you.

Options for Your Retirement Plans after Employment Termination

1. Leave it where it is.

Depending on how much you have invested in the employer-sponsored 401(k), you may be able to leave your money in the current account. If you have more than $5,000 invested in the old plan, most companies allow you to maintain your retirement account. Even if you are no longer work for the employer, you may be able to leave your money parked in the account.

This will be most beneficial to you if the old plan has low fees, good investment options, or you have a large balance. If you go in this direction, you could always roll it over to a different account in the future as well.

However, if the balance is less than $5,000, your former employer might require you to move it after employment termination. For balances under $1,000, the company could force you out by simply writing a check. But, for balances between $1,000 – $5,000, your former employer must assist you in setting up an IRA if they are forcing you out of their plan.

When considering you retirement options after employment termination, this may not the best one for you. You may want to consider alternatives if you are likely to forget about it, let the account sit dormant, or you are not impressed by the terms. Your former employer’s plan may have more limited options when compared to various IRA offerings or your new employer’s retirement savings program.

2. Roll it over to a plan with your new employer.

Another possibility is to roll over the balance to your new employer’s retirement plan. Most companies will allow new employees to enroll in their retirement savings plan once they have reached the minimum length of employment. It is a fairly simple process, and only requires some paperwork to complete a direct transfer. The administrator of your former plan can deposit the balance of the previous account into your new one.

Rolling your retirement plan into a new one prevents you from paying any taxes on the balance. If you do not want the direct transfer, you can also have your former employer issue a check for the balance. Then, you can deposit the funds yourself. However, you must do so within 60 days. Otherwise, you will pay income tax for the entire lump sum. Before you close the first account, make sure the new 401(k) is set up and able to receive balance transfers.

This option is cost-effective because you can defer taxation. Additionally, you can consolidate your funds into a single account rather than keeping track of several different retirement accounts after employment termination. It also makes things easier down the line for family members or heirs when they need to handle your financial affairs. Just be sure to compare the available options and fees. Once you transfer the balance, you cannot go back to your old plan.

3. Roll it over to an IRA.

If your new employee does not have a retirement plan for its employees or the options are not ideal, you should consider rolling it into an IRA. Whether you choose a traditional or Roth IRA, the account will be in your name. Therefore, you have greater control over the account and can choose any financial institution you like. Since you are not restricted by your employer, you have freedom to decide how and where you invest your money.

There are few restrictions or limitations on these kinds of transfers. Furthermore, both traditional and Roth IRAs provide a wide range of low-cost offerings. Consolidating your investments into a single account also makes them easier to track.

If you go this route, you will have to include the untaxed amount in your gross income for the fiscal year you completed the rollover. But, if you meet certain qualifications, future withdrawals could be tax-free.

4. Begin taking distributions.

If you are nearing retirement age, you may want to begin taking distributions from your accounts. You can begin receiving distributions at age 55. But, you may have to pay the penalty on the taxable portion of it. Most retirement accounts dictate that you must be 59 ½ to receive distributions without the 10% tax penalty on early withdrawals. However, those who retire between the ages of 55 and 59 ½ do not need to pay this penalty.

Many people avoid this option because of the taxation and penalty fees. Moreover, when you begin receiving distributions from a traditional 401(k) you will need to pay income tax. On the other hand, distributions from your IRA will be tax free as long as you meet the age requirements and had the account a minimum of five years.

5. Cash out the balance of the account.

The last resort is to cash out your retirement accounts. However, if you liquidate your retirement accounts early, you will have to pay taxes on the full amount in addition to the 10% penalty. Most financial advisors warn against this because you are depleting your retirement savings. Unless you need the cash now, it is better to leave it in your accounts until the balance and distribution payments are tax-deferred.

Explore Your Retirement Options

Before making any major financial decisions, you should explore all your options. Weigh the pros and cons and determine which route gets you closer to your financial goals. There are many online resources that can help you make informed decisions. However, there is no shame in admitting you need help if you are in over your head. When in doubt, it is always wise to seek professional advice.

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How to Plan for Retirement When You Lost Your Savings

The sad truth is that most Americans are not properly prepared for retirement. According to a 2019 survey, 64% of Americans expect to retire with less than $10,000 in their accounts. Whether this is a result of medical expenses, poor investments, or outstanding debts, you must remember it is never to late to plan for retirement. It is also possible to start over and rebuild your nest egg. Here are five things you can do to get back on track when you have lost your savings.

How to Plan for Retirement When You Lost Your Savings

5 Ways to Help You Plan for Retirement

1. Ramp Up Your Savings Plan for Retirement.

While it may seem obvious, the first step to plan for retirement after you have lost your savings is to begin again. You must also be realistic and admit that your current savings plan is likely not enough to rebuild your nest egg. It will require a great deal of sacrifice, discipline, and lifestyle changes to regain what you lost.

First, carefully evaluate your monthly budget and see what you can do without. This means cutting out unnecessary expenses like entertainment expenditures, buying the latest electronics, and going out to eat. Create a minimum budget where you are only spending money on what you need to survive. Once you know what you need to meet your monthly bills, put every extra penny towards your retirement funds. Additionally, utilize employer-sponsored 401k plans and max out your IRA contributions. This includes catch-up contributions for those over 50. Make no mistake; it is difficult to do without the things you enjoy. However, supporting yourself after retirement is a much more important goal.

2. Delay Your Retirement.

Another option is to delay your retirement date. Not only does it allow more time to save, but also to see more gains on your investments. If you are still living off your wages, it will postpone when you must begin drawing from your retirement funds. Furthermore, it reduces the number of years that your savings must sustain you. Working a few more years may  prevent you from running through your savings too early.

Prolonging your retirement also increases your Social Security benefits. You are able to claim retirement benefits from 62, but you can maximize the amount if you work until 70. Your monthly check increases approximately 7-8% every year you hold off retiring. The income you earn during those years is also calculated into your monthly benefits which could increase the amount you receive. Unfortunately, there are no increases beyond age 70. Keep in mind that most workers retire sooner than expected due to layoffs, health issues, or caring for a family member or spouse. Although this is a good strategy to help plan for retirement, don’t bank on working till 70. You never know what surprises life may throw you that could put your savings plan off course.

3. Adjust Your Retirement Lifestyle.

Another hard pill to swallow after losing your savings is that you may not be able to live as lavishly as you had planned for retirement. You must create a new retirement budget by trimming the fat. This means tightening the purse strings and finding ways to lower monthly expenses after you retire. Some suggestions would include downsizing your home, eliminating travel plans, or moving to an area with a lower cost of living. Living on a restricted budget will help you stretch your savings and catch up to your retirement goals.

4. Understand How You Lost Your Savings.

Another important step when starting over is to understand where things went wrong. Some matters are beyond your control, but other lost their retirement savings due to poor investing decisions. If this includes you, you should evaluate your investing strategy and examine why your portfolio suffered such extensive losses. If you invested too heavily in one area, diversifying will reduce future market exposure and personal risk. Many are tempted to invest more aggressively to regain their savings, but this could backfire and cause a second major loss.

5. Seek Professional Advice.

The most important thing is to remember there is always hope. However, if you are unable to find your own solution it is very easy to fall into despair. If you feel like there is no way out, seek professional advice from a financial planner. They will assess your situation, explain the options available to you, and find solutions you may have overlooked. Also, choose someone who is fee-only. This means they only earn a commission if you make money. It may eliminate any concerns over conflicts of interest or doubts that they are making the best decisions for you. Even when you must go back to square one, there is always a path forward.

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