Tag: retirement (page 1 of 2)

Are you ready for a long retirement?

Following is a great article on funding a long retirement:

http://www.marketwatch.com/story/how-to-fund-a-long-retirement-2017-01-10

We typically plan for our clients to live until age 100.   An interesting fact from the article, the average life expectancy for a 65-year-old male rose from 84.7 in 1950 to 87.8 in 2010 and average life expectancy for 65-year-old woman rose from 86.6 in 1950 to 89.7 in 2010.

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How Much Do You Need For Retirement

Most people wonder how much they need to save for retirement.   We calculate a custom target for our clients.   Following is an interesting article that has some general targets:

http://www.cnbc.com/2016/12/08/heres-how-much-most-americans-think-they-need-to-save-for-retirement.html

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What Will You Pay for Medicare in 2017?

What Will You Pay for Medicare in 2017?

The Centers for Medicare & Medicaid Services (CMS) has     announced that in 2017, most Medicare beneficiaries (about 70%) will pay $109     per month on average for Medicare Part B. This is up from the $104.90 monthly     Part B premium that has been in effect since 2013.

If you fall into this group, you face only a modest Part B     premium increase in 2017 because your Part B premium is deducted from your     Social Security benefit, and you will be receiving only a small Social Security     cost-of-living increase next year (0.3%). Due to a provision in the Social     Security Act called the “hold harmless” rule, Medicare premiums for existing     beneficiaries can’t increase faster than their Social Security benefits.     Because your Medicare premium increase is based on your actual Social Security     benefit, you may pay more or less than the $109 average premium. The Social     Security Administration (SSA) will tell you the exact amount of your Part B     premium in 2017.

Approximately 30% of Medicare beneficiaries are not subject     to this provision, and may pay substantially more for Medicare Part B. You fall     into this group if:

  • You enroll in Part B for the first time in 2017.
  • You don’t get Social Security benefits.
  • You have Medicare and Medicaid, and Medicaid pays your
  • Your modified adjusted gross income as reported on your federal income tax return from two years ago is above a certain amount.*

The table below shows the Part B premium you’ll pay next     year if you’re in this group.

Beneficiaries who file an individual       income tax return with income that is: Beneficiaries who file a joint       income tax return with income that is: Beneficiaries who file an income       tax return as married filing separately with income that is: Monthly       premium in 2016: Monthly premium in 2017:
$85,000 or less $170,000 or       less $85,000 or less $121.80 $134
Above $85,000 up to       $107,000 Above $170,000 up to       $214,000 N/A $170.50 $187.50
Above $107,000 up to       $160,000 Above $214,000 up to       $320,000 N/A $243.60 $267.90
Above $160,000 up to       $214,000 Above $320,000 up to $428,000 Above $85,000 up to       $129,000 $316.70 $348.30
Above $214,000 Above       $428,000 Above $129,000 $389.80 $428.60

 

*Beneficiaries with higher incomes have paid higher Medicare     Part B premiums since 2007. To determine if you’re subject to income-related     premiums, the SSA uses the most recent federal tax return provided by the IRS.     Generally, the tax return you filed in 2016 (based on 2015 income) will be used     to determine if you will pay an income-related premium in 2017. You can contact     the SSA at (800) 772-1213 if you have new information to report that might     change the determination and lower your premium (you lost your job and your     income has gone down or you’ve filed an amended income tax return, for     example).

Changes to other Medicare costs

Other Medicare Part A and Part B costs will change in 2017,     including the following:

  • The annual Medicare Part B deductible for Original Medicare will be $183, up from $166 in 2016.
  • The monthly Medicare Part A (Hospital Insurance) premium for those who need to buy coverage will cost up to $413, up from $411 in 2016.     However, most people don’t pay a premium for Medicare Part A.
  • The Medicare Part A deductible for inpatient hospitalization will be $1,316, up from $1,288 in 2016. Beneficiaries will pay     an additional daily co-insurance amount of $329 for days 61 through 90, up from     $322 in 2016, and $658 for stays beyond 90 days, up from $644 in 2016.
  • Beneficiaries in skilled nursing facilities will pay a daily co-insurance amount of $164.50 for days 21 through 100 in a benefit     period, up from $161 in 2016.

To view the Medicare fact sheet announcing these and other figures, visit Medicare.gov.

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Year End Tax Tips

It is time to make some year end tax planning moves.    Following is an article with some tips that I think will help most people.

https://www.yahoo.com/finance/news/5-things-to-do-by-new-years-eve-to-get-a-bigger-tax-return-185655740.html

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Early Returns: How U.S. Markets Reacted to the Presidential Election

On November 8, 2016, Republican candidate Donald J. Trump won a closely contested election for president of the United States.

Late on election night, when it became evident that Trump was likely to win despite consistently trailing in the polls, foreign markets went into a deep dive.1 Many observers expected a similar reaction when the U.S. stock market opened on November 9, but after an initial drop, the S&P 500, Dow Jones Industrial Average, and NASDAQ rose throughout the day, and all three indexes closed up more than 1%.2 Although this was unexpected after the late-night surprise, it actually continued a two-day upsurge that began when Democratic candidate Hillary Clinton was expected to win the election.3

The market was mixed but steady the following day, November 10, with the Dow again up more than 1%, a small increase in the broader S&P 500, and a moderate decline in the NASDAQ, which tends to be more volatile due to its inclusion of smaller, technology-driven companies. On November 11, the NASDAQ recovered its loss, the Dow was slightly higher, and the S&P 500 was slightly lower — not unusual after a week of rising stock prices.4

On the other hand, bond prices fell steeply the day after the election, and the yield on the benchmark 10-year Treasury note, which rises as prices fall, jumped more than 2% for the day. This, too, was a surprise because Treasuries are generally seen as a safe haven in times of uncertainty. But on the day after the election, investors were more interested in selling Treasuries than buying them.5 The Treasury sell-off continued on November 10.6 (Bond markets were closed on November 11 in honor of Veterans Day.)

The conciliatory tone of Trump’s acceptance speech, Clinton’s concession speech, and remarks by President Obama all indicate there will be an orderly transfer of power, which may have helped calm the markets. Here are some additional implications that might be drawn from the initial market reaction.

First, although the Trump presidency was unexpected and his economic policies are untested, rising stock prices suggest that investors may be optimistic that his promised pro-business agenda could help continue the upward market trend of the last few years. Investors like clarity and consistency, and the fact that the same party will control the White House and Congress might create a more productive and predictable working relationship.7 At the same time, fundamental differences between the president-elect and the Republican Congress suggest that any changes may be more measured than originally anticipated.8

Second, in this initial transition stage, money flowing out of Treasuries suggests that bond investors may see a Trump presidency as leading to higher inflation and higher interest rates due to a combination of more protective trade policies and heavier government borrowing in order to fund infrastructure spending and reduce taxes for individuals and corporations. Declining bond prices might also reflect a belief that the Federal Reserve may raise rates at its December meeting despite the political surprise.9

Of course, these are just first impressions, and there could be many market ups and downs as investors try to understand what the new president’s policies might be, how much support they may have from Congress, and how they might affect the broader economy. Moreover, government policy and political debate are only two of many factors that can create market volatility.

Is the U.S. economy strong enough to withstand any headwinds that arise from a changing administration? That remains to be seen, but fundamental economic indicators have been solid, and overreacting to political events is unwise. The most stable approach in changing times is generally to maintain a well-diversified portfolio using a strategy appropriate for your time frame, personal goals, and risk tolerance.

Diversification does not guarantee a profit or protect against investment loss. The principal value of stocks and bonds may fluctuate with market conditions. Stocks, when sold, and bonds redeemed prior to maturity may be worth more or less than their original cost. U.S. Treasury securities are guaranteed by the federal government as to the timely payment of principal and interest.

The performance of an unmanaged index is not indicative of the performance of any specific investment. Individuals cannot invest directly in an index. Past performance is not a guarantee of future results; actual results will vary.

Investing internationally carries additional risks such as differences in financial reporting, currency exchange risk, as well as economic and political risk unique to the specific country. This may result in greater share price volatility.

1) CNNMoney, November 9, 2016

2, 5, 7) MarketWatch, November 9, 2016

3-4) Yahoo! Finance, November 11, 2016

6) MarketWatch, November 10, 2016

8) The New York Times, November 9, 2016

9) CNBC.com, November 9, 2016

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Facebook and Your Retirement

I don’t use facebook very much, but I can understand seeing your friends on vacation would make you want to go as well.  This article looks at this situation in depth.    I really like the do’s and don’ts listed at the end of the article.    Be happy with what you have and be happy for your friends.

http://www.usatoday.com/story/money/columnist/powell/2016/11/16/retiree-facebook-travel-jealous-retirement-risk/90740868/

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Retirement Planning Tips

There are a lot of great tips in this article.    The ability to donate money using your RMD is an opportunity a lot of retirees miss.

http://money.usnews.com/money/retirement/401ks/articles/2016-11-14/6-end-of-year-retirement-planning-tips-that-will-save-you-money

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Fear of Spending

I frequently meet with clients that do not believe they can afford to retire.   Even after working when their financial goals show that they have more than they need.    Once they retire, they are reluctant to spend their money and it takes some time to feel comfortable spending.   Following is a great article on the subject.

http://time.com/money/4560067/retirement-fear-of-spending-budgeting-income/

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IRA and Retirement Plan Limits for 2017

IRA contribution limits

The maximum amount you can contribute to a traditional IRA     or Roth IRA in 2017 is $5,500 (or 100% of your earned income, if     less), unchanged from 2016. The maximum catch-up contribution for those age     50 or older remains at $1,000. (You can contribute to both a traditional and     Roth IRA in 2017, but your total contributions can’t exceed these annual limits.)

Traditional IRA deduction limits for 2017

The income limits for determining the deductibility of     traditional IRA contributions in 2017 have increased. If your filing status is     single or head of household, you can fully deduct your IRA contribution up to $5,500 in     2017 if your MAGI is $62,000 or less (up from $61,000 in 2016). If you’re     married and filing a joint return, you can fully deduct up to $5,500 in 2017 if your     MAGI is $99,000 or less (up from $98,000 in 2016). And if you’re not covered by an employer plan but your spouse is, and you     file a joint return, you can fully deduct up to $5,500 in 2017 if your MAGI is     $186,000 or less (up from $184,000 in 2016).

If your 2017 federal income tax      filing status is: Your  IRA deduction is limited if your MAGI is      between: Your deduction is eliminated if your MAGI is:
Single or head of household $62,000 and $72,000 $72,000 or more
Married filing jointly or qualifying      widow(er)* $99,000 and $119,000 (combined) $119,000 or more      (combined)
Married filing separately $0      and $10,000 $10,000 or more

 

*If you’re not covered by an employer plan but your spouse     is, your deduction is limited if your MAGI is $186,000 to $196,000, and     eliminated if your MAGI exceeds $196,000.

Roth IRA contribution limits for 2017

The income limits for determining how much you can     contribute to a Roth IRA have also increased for 2017. If your filing status is     single or head of household, you can contribute the full $5,500 to a Roth IRA in     2017 if your MAGI is $118,000 or less (up from $117,000 in 2016). And if you’re     married and filing a joint return, you can make a full contribution in 2017 if your     MAGI is $186,000 or less (up from $184,000 in 2016). (Again, contributions     can’t exceed 100% of your earned income.)

If your 2017 federal income tax      filing status is: Your Roth IRA contribution is limited if your MAGI      is: You cannot contribute to a Roth IRA if your MAGI is:
Single or head of household More than $118,000 but less than $133,000 $133,000 or more
Married filing jointly or qualifying      widow(er) More than $186,000 but less than $196,000      (combined) $196,000 or more (combined)
Married filing separately More      than $0 but less than $10,000 $10,000 or more

 

Employer retirement plans

Most of the significant employer retirement plan limits for 2017 remain unchanged from 2016. The maximum amount you can contribute (your “elective     deferrals”) to a 401(k) plan in 2017 is $18,000. This limit also     applies to 403(b), 457(b), and SAR-SEP plans, as well as the Federal Thrift     Plan. If you’re age 50 or older,     you can also make catch-up contributions of up to $6,000 to these plans in 2017. [Special catch-up limits apply to certain participants     in 403(b) and 457(b) plans.]

If you participate in more than one retirement plan, your     total elective deferrals can’t exceed the annual limit ($18,000 in 2017 plus     any applicable catch-up contribution). Deferrals to 401(k) plans, 403(b) plans,     SIMPLE plans, and SAR-SEPs are included in this aggregate limit, but deferrals to Section     457(b) plans are not. For example, if you participate in both a 403(b) plan and     a 457(b) plan, you can defer the full dollar limit to each plan—a total of     $36,000 in 2017 (plus any catch-up contributions).

The amount you can contribute to a SIMPLE IRA or SIMPLE     401(k) plan in 2017 is $12,500, and the     catch-up limit for those age 50 or older remains at $3,000.

Plan type: Annual dollar      limit: Catch-up limit:
401(k), 403(b), governmental 457(b),      SAR-SEP, Federal Thrift Plan $18,000 $6,000
SIMPLE      plans $12,500 $3,000

 

Note: Contributions can’t exceed 100% of your     income.

The maximum amount that can be allocated to your account in     a defined contribution plan [for example, a 401(k) plan or profit-sharing plan]     in 2017 is $54,000, up from $53,000 in 2016, plus age 50 catch-up     contributions. (This includes both your contributions and your employer’s     contributions. Special rules apply if your employer sponsors more than one     retirement plan.)

Finally, the maximum amount of compensation that can be     taken into account in determining benefits for most plans in 2017 is     $270,000 (up from $265,000 in 2016), and the dollar threshold for determining     highly compensated employees (when 2017 is the look-back year) is $120,000, unchanged from 2016.

Is 70 the New 65? Why Americans Are Working Longer

Roshan Loungani is sharing a great video on retirement.   Please click on the link below:

Is 70 the New 65? Why Americans Are Working Longer