retirement

What You’ll Need to Know About Traveling in Retirement

Jenny SmedraLeave a comment

Here's What You'll Need to Know About Traveling in Retirement

Most people dream of having the chance to travel. I caught the bug early and was lucky enough to spend more than 10 years living and working overseas. Even though I’m currently back in the US, I still have big travel plans for my future. My husband and I have even talked about retiring abroad. However, there are many things about international living you have to consider. If you have similar plans, here’s what you need to know about traveling in retirement.

7 Things You’ll Need to Know About Traveling in Retirement

1. You have to account for it in your retirement planning and monthly budget.

Unfortunately, traveling requires money. And if you are looking at luxury or international travel, it will get even more expensive. Even if you are a budget traveler and hunt for discounts, it won’t offset the costs of traveling in retirement. Therefore, you will need to estimate and account for these expenses in your budget.

Affording travel on a fixed income may be difficult, but it isn’t impossible. If you research the costs, plan well in advance, and are realistic with your budget, you can make it happen. However, if you feel like it is too much of a strain, you can also consider partial retirement or consulting jobs to finance your lifestyle.

2. You can overlook your health and physical limitations.

The chance to explore new cultures and remote places has deepened my desire to travel. But the sad reality is that it will be harder to access rugged hiking trails or handle steep staircases at 65 than it was at 25.

As you get older, you have to factor in your health and physical capabilities when you choose travel destinations. International standards for accessibility also vary. So, you want to make sure you go somewhere that allows you to fully enjoy the sights. If you have specific needs that can’t be accommodated, it’s probably a good idea to adjust your itinerary.

Even now, I leave room for flexibility in our schedule for downtime, especially if we plan strenuous excursions. Having time to relax and recover can reduce the risks of injury and illness. While these will become more common the older we get, you can take precautions so it won’t interfere with your travel plans.

3. Your health insurance may not offer coverage in other countries.

Since we’re on the subject of health, it’s also important that you understand the limits of your healthcare coverage. Private insurance usually has allowances for international coverage, but may still require you to pay upfront and send in receipts for reimbursement.

However, basic Medicare plans won’t be much help if you are traveling internationally. You will need to purchase gap coverage or travel insurance if you will be spending significant time outside the country. And, you will have to make room in the budget for it as well.

4. Travel insurance isn’t a waste of money.

To reiterate an important point, you need more flexibility with your travel plans as you get older. Reservations changes, health issues arise, and emergencies come up at the last minute. And the more you travel, the more likely it will happen to you.

Therefore, it’s smart to purchase travel insurance so you aren’t at the mercy of service providers. Many people think it’s a waste of money. But, they probably haven’t gotten stuck somewhere due to weather conditions, service failures, theft, poor health, or simply bad luck. I would much rather pay a little extra for more financial protection and greater peace of mind.

5. Other people have the same retirement plans.

If you plan on traveling in retirement, remember that there are many like-minded people out there who want to visit the same places you do. If you stick to popular destinations, you will have to contend with bigger crowds, limited space, and higher prices.

The solution is to book early and plan ahead to secure your reservations. Or, you could also look at vacation destinations that are off the beaten track. Not only will this allow you to get away from the crowds, but also gives you more solitude to enjoy your surroundings.

6. You can find cheaper ways to travel.

While it should be common sense, the easiest way to book isn’t always the cheapest. We’ve had several packages through third-party websites only to find cheaper deals later on. Sure, they conveniently bundle what you need in a single reservation. But, that doesn’t guarantee the best rates.

Instead, I go directly through the service provider and start looking a few months before our travel dates. I compare prices, set alerts, and scan for daily discounts and flash sales. This has gotten me some killer deals over the years. But even if they aren’t advertising any discounts, they may still offer special rates for senior citizens or members of AARP, AAA, and Costco.

Here are a few other ways to cut corners in your travel budget to help you save:

  • travel in the off-season
  • be flexible with your dates
  • use reward miles and points
  • look at other types of accommodations
  • use public transportation
  • plan your trip around free attractions and activities

It’s also wise to pay attention to the exchange rate if you are traveling internationally. When you are deciding on your destination, look at countries where the U.S. dollar is strong. This can reduce the budget for daily expenses and help your money go even further.

7. Have your paperwork in order before you leave.

Perhaps the most important thing to remember when traveling in retirement is to always get your paperwork in order before you leave. I’ve known several people who have shown up at the airport only to cancel their travel plans because they didn’t have the proper documents.

That’s why I created this checklist to take some of the stress out of the preparations.

  • Confirm your reservations. I always call ahead, check online, and save copies of everything on my phone. Then, I know I’ll always have what I need.
  • Check your IDs. This has been the main reason I’ve seen last-minute cancellations. Before you book, make sure your IDs are valid. If they are close to expiration, apply for a new one as soon as possible or renew your passport online.
  • Apply for your visas. The American passport grants you many landing visas. However, sometimes you will have to apply for a visa. It can be a hassle when they don’t offer it online. But, you can still fill out the application and have it ready when you land.
  • Notify your credit card companies. This is one lesson I learned the hard way. If you have fraud protection, your credit card may lock your account if they see international charges. You will want to call ahead to notify them of your travel plans so it doesn’t happen to you.
  • Make a list of your medications. Many people don’t think of this, but it’s good to have a list of your medications if customs officers ask questions. It is also helpful to your traveling partners and healthcare professionals if you have a medical emergency.

Final Thoughts

Traveling has been one of the most rewarding experiences of my life. But, you can’t predict what will happen or plan for every possible outcome. However, knowing what to expect can make traveling in retirement more affordable and less stressful. Even on a fixed budget, anything is possible with some creative planning.

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Estate Planning: Checklist Of The Basics

Susan PaigeLeave a comment

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.

Finance Lessons from Professional Athletes

Calvin Ebun-AmuLeave a comment

professional athletes finance

Many athletes have come and gone. Many have made unthinkable amounts of money and many have lost unspeakable amounts of money. A lot of professional athletes, lacking time and the right advisors end up losing the fortunes they make. Oftentimes, they lose their fortunes and end up in significant debt. Their experiences serve as great lessons for the rest of us who would like to make and keep a sizeable nest egg. Professional athletes finance lessons provide a treasure trove of information. Continue reading →

Changes in Life that Affect Retirement Planning

Calvin Ebun-AmuLeave a comment

Changes that affect retirement planning

Retirement planning is a challenging endeavor. With so much uncertainty in life, it pays to give enough thought to retirement plans. Many events take place which we do not expect. Such events can unfold new opportunities and challenges. The right plan and execution can allow one to leverage the resources one has to improve their future. But what life changes affect retirement planning? Continue reading →

Should You Roll Over A Retirement Plan Distribution

Calvin Ebun-AmuLeave a comment

retirement plan redistribution

Different circumstances arise that call for one to rollover their retirement plan. You may be left with little time and tough decisions to make. The decisions you make on whether you rollover your retirement plan and how you rollover your retirement plan distribution can have profound effects on several areas of your life, including how much you are taxed. Whether or not you rollover your distribution is not a decision to be taken lightly.  Continue reading →

Using Real Estate to Fund Your Retirement

Calvin Ebun-Amu1 Comment

With the right assets, one can ensure they have sufficient cash flow to not only fund their retirement but also to fund the lifestyles of their children and grandchildren. While 65 is a common age to retire, real estate could lower the age for many to retire. Continue reading →

2019 Roth IRA Contribution Limits

Budget and InvestLeave a comment

Fall is quickly approaching.  Every October the IRS (Internal Revenue Service) releases their updated retirement limits for a number of accounts.  The Roth IRA is one particular account that many will be looking at.

For 2018, the contribution limit for a Roth IRA is $5,500 with an additional $1,000 catch-up for individuals over the age of 50.  The 2019 Roth IRA contribution limits will be announced by the IRS in less than two months.

Image result for 2019 roth ira contribution limits

The government uses inflation numbers to determine when and by how much to raise retirement limits.  When it comes to IRA’s, any annual increase in contribution limits will be in $500 increments.  Meaning that there are only two possibilities when it comes to the 2019 Roth IRA contribution limits.

Either the limits remain the same at $5,500 ($6,500 for individuals 50 or older) or it is increased to $6,000 ($7,000 for individuals 50 or older).  It is expected that the 2019 Roth IRA contribution limits will increase to the latter amount.

So what does an increase in $500 a year for a Roth IRA account mean?  Well, for starters, instead of being able to contribute an awkward $458.33 per month to the account, you will now be able to contribute an even $500.  Of course this only applies to individuals under the age of 50.  Contributing on a consistent basis has proven time and again the best way to invest.  You can take advantage of the market when it hits various highs and lows.

Are you worried that you won’t have the additional funds to contribute an extra $500 a year to a Roth IRA?  Then now is as good of a time as ever to go and create your very own free budget.  The best way to see where you are spending your money every month is to track it.  Although it might seem like a challenge at first, you will most likely be able to find a way to contribute the additional $41.67 per month to your Roth IRA.

Why choose a Roth IRA?  There are many benefits to having one.  First and foremost, the money you put into it will grow and compound tax free through the years.  Additionally, when you do decide to withdraw from the account, you will not be required to pay any income taxes on the withdrawals.  It’s an especially good account to have in order to help offset tax burdens brought on by 401k’s and social security.

With the official numbers for the 2019 Roth IRA contribution limits less than two months away, we will have to wait a little longer, but we can predict that more than likely the amounts will increase.

Budget Smart, Invest Wise

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2018 401(k) Contribution Limit Unveiled

Budget and InvestLeave a comment

Death and taxes.  The two things that most say are certain in life.  Well now at least when it comes to taxes you might be able to avoid some because of a recent decision by the Internal Revenue Service (IRS).  The IRS recently came out with the guidelines for 2018 when it comes to tax-advantaged retirement accounts.  Although none of the changes were dramatic, they made a few tweaks that will allow individuals to boost retirement savings in certain tax friendly accounts.

Image result for 2018 401k contribution limit

 

 

 

 

 

 

The 2018 401(k) contribution limit is being pushed slightly upward to $18,500 per year.  This is a $500 increase on what it used to be.  Individuals who are 50 and over can still save an additional $6,000 meaning some can contribute as much as $24,500 into a company 401(k) plan.  While an increase in the 2018 401(k) contribution limit came about for the upcoming year, other retirement plans such as IRA’s and Roth IRA’s remain unchanged.  You are still only able to contribute $5,500 per year to both traditional or Roth IRA.

IS CONTRIBUTING TO A 401(k) A GOOD IDEA?

The short answer is absolutely!  While not all companies offer 401(k) plans for employees, a lot do.  It is highly recommend that you put in at least the minimum amount required to get the full match your company offers.  Once you have done this, see if you can contribute a little bit more and further increase your retirement savings.  At my first job, I began contributing 6% which was what I needed to do to get the entirety of my company’s match; however, I began to increase it over time.  Get a 3% raise?  Try increasing your 401(k) contribution by 2%.  This was a simple and easy method I did each time I’d receive one, and the best part was I never missed the money at all.

IS IT EVEN POSSIBLE TO CONTRIBUTE $18,500 OR $24,500 TO A 401(k)?

Yes again.  Is it hard?  Sure it can be, but is it doable?  Absolutely.  How do I know it’s possible?  Because I myself max out my retirement account for my 401(k).  I never see the money.  It’s taken directly out of my paycheck, so I never miss out on spending it.  The recent increase of the 2018 401(k) contribution limit is something that I will take advantage of.  A small percentage bump can make a lasting impact during one’s retirement.

In closing, the increase of the 2018 401(k) contribution limit won’t have much of an impact on most people.  Very few actually max out their retirement accounts.  But if you’re like myself, then you welcome the news with open arms.  While 2018 saw an increase to the 401(k) contribution limit, 2019 has a very good chance to see an increase for contribution limits to both traditional and Roth IRA’s.  Only time will tell.

Budget Smart, Invest Wise

FIRECalc Review

Budget and InvestLeave a comment

20 years ago, if you were interested in planning your retirement you had to sit down with a financial professional. Back in the 90’s and early 2000’s, meeting with someone with such financial experience was commonplace and expected. Fast forward to today and now people planning for retirement have a plethora of options to choose from. You can sit at your desk and pick stocks, you can set up an online investment profile, you can open a retirement account in as little as five minutes! With the ease of picking a retirement plan simplified, you can also simplify the math through several apps and online calculators. This FIRECalc review will show you that you, the investor, now have access to almost all of the tools that were once reserved for professional money managers.

What is FIRECalc?

FIRECalc is a new type of retirement calculator that factors in historical volatility into one’s retirement projection. Many used to think of retirement projections as the following: I have a $1,000,000 portfolio which I draw 4% from on an annualized basis, therefore I have $40,000 I am withdrawing. Unfortunately, retirement projections like this don’t always pan out. Think of the most recent financial disaster where many portfolios were slashed in half. What FIRECalc does is allow you to see all of the possible outcomes of your portfolio, whether it’s a market rally or another collapse.

The Benefits of FIRECalc:

FIRECalc can let you see a projected path of possibilities for retirement. The picture below uses the following example: Bob has a portfolio balance of $1,000,000. He needs to withdraw $50,000 a year for 30 years in retirement. The lines below indicate the vast array of possibilities that his money will last through all 30 years. With the red line signifying “Zero” you can see that the majority of lines end above. This means that based on historical factors, Bob more than likely will have enough funds to cover his spending requirement in his retired years.

What Else Can FIRECalc Do?

The premise that FIRECalc was built on was in dealing with historical market averages. FIRECalc uses this basis and expands it to many other calculator offerings. Around a third of all Americans rely on social security as their main source of income in retirement. Will your social security payments be enough for your retirement? FIRECalc will let you know what your chances of success are. Other calculators they have include ones for people who are looking to set up a future retirement, various spending models, along with a portfolio allocation model.

Conclusion:

I hope this FIRECalc review shows you the many benefits the site can offer. While it is not entirely user friendly (it looks very simple and plain), it does provide you with something all other retirement calculators lack. Most retirement calculators assume a specific return every year during the duration of your investment horizon. FIRECalc is different in that it presents you all of the possibilities. Markets can go up by 20% in a year, and they can also go down over 30%. There are many fluctuations to take into account and that is exactly what FIRECalc does.

One Easy Way to Slash Taxes

JW SteinertLeave a comment

Slash Taxes

Reduce your taxes and increase your savings.  Sounds almost a little too good to be true right?

It’s possible, it’s easy, and I just did it and so can you.

Today is the final day for you to file your taxes for this year.  Did you pay more in taxes than you would have liked?  Do you want to lower your tax bill for next year?  If so, then here is how to do it:

Increase your 401k contribution to your company’s plan.  What percentage of your salary are you contributing to your 401k currently?  Bump it up.  By increasing your pre-tax 401k contribution to your plan you are in effect reducing the amount of income you take home, thus reducing your tax burden.

I recently increased my pre-tax contribution percentage by 8% and found that I will save roughly $1700 this year on my taxes.  It’s that simple.  Increase your savings, reduce your tax burden.  This offers 3 key benefits.

Benefit 1:

You lower the amount of taxes you will be paying for the year.

Benefit 2:

You increase the amount of savings you will have at retirement.  The more you save now, the more you will have later.

Benefit 3:

Because you don’t see the additional money you put into your 401k plan on your paycheck, you won’t spend it, and most likely you won’t miss it.

 

Budget Smart, Invest Wise