The Halfway Point: Saving For Retirement In Middle Age


A midlife crisis is worsened when the notion of money comes into play. The worry about a lack of finances or nothing in terms of pensions once you have passed the age of 45 can make you anxious, and if you haven’t thought about where to begin at this stage in the game, now is the time to start. You may have led a life of self-employment, or you have not been able to put money aside for your future due to your children, and in the modern financial climate it is much harder to save, but it is achievable. Let’s look at your options.

The ideal amount to save is roughly 2/3 of your final salary, which sounds a lot, but here we are going on the assumption that you are 45 to 50. The standard retirement age is around 65, but this is the first option, if you defer your retirement by 5 years it can give you the springboard that you need to earn the funds you need. On a salary of $10,000 a year, that means you would need to save approximately $6,666! Breaking that down into a weekly salary will make it more manageable. The other thing to point out at this stage is that you need to think about your retirement plans, if you plan on downscaling your property to a home without a second floor, your outgoings will be a lot less. Post-work, depending on your overall needs, they may be a lot less than what you need now. You need to take into account things like your health and so forth and factor into this whether you need additional care. So you may need to invest in a fund towards spending your remaining years in a retirement village. This is becoming a more viable option for people as they get older, but it is something you need to start thinking about now depending on your needs.

Other methods to save would be to start an independent savings account (known as an ISA in some countries) where you are unable to access the money unless you pay a fee. It is a simple way to prevent you from dipping into your finances when you need a little extra money. There are high-interest ISAs available, so it’s worth shopping around for the best value ones. Don’t forget the tax relief you are entitled to. Depending on where you live and how much you are starting to contribute towards your pension, it means that you can be entitled to a higher rate of relief which can be very attractive.

The other option to think about is if you are in a marriage or a partnership, saving money independently instead of as a couple means that you are able to get more money tax-free. And while it can prove difficult, the goal of saving 2/3 of your salary can be easier in this respect. It isn’t easy to do to at such a late stage in the game, but if you are prepared to make sacrifices, it will mean a much more comfortable future.

Sources of passive income for retirees – Keep building your financial safe

Passive income is the stream of income which almost everyone dreams of because it lets you generate income either after working at your day job or without working at any job. It often needs enough effort and time to create streams of passive income but once you get to know such sources, they serve you well for many years to come. Passive income is generated by a rental property or by a business which you own but in which you don’t participate actively. If you’re an investor, you may already be investing money and whenever you make good investment choices, you get back the money that you invest. Here are few ways in which retirees can generate passive income.

  • Rent your property if you have more than what you need

Irrespective of whether you purchase a second property or you rent out unused space in your home, transforming into a landlord can definitely be a good way of generating passive income. However, you should also keep in mind that becoming a landlord can definitely be an active endeavor. You may have to put in considerable amount of work when you find out renters and when you got to maintain your rental property.

  • Opt for a side business

When you’re retired and yet you create a side business, this can be a good investment for the years to come, especially when you can successfully start your business with a plan to turn it into a passive income stream. Whichever business you start off with, make sure you have the goal of hiring other people who can later on run your business. Start hiring writers if you have an online website for your business so that they can write professional business content for your website to be seen on the web.

  • Invest in dividend stocks

How about continuing with investment through several decades of retirement? You can keep a close watch on your portfolio in order to ensure that it’s performing well. Dividend stocks offer current income and they also have the potential to make capital gains. Dividends pay you right away and they can definitely be a good and effective way of generating extra income during retirement. When the company doesn’t perform well, the dividend payments can even be reduced and eliminated.

  • Social Security benefits

In case you work in America, then you’re paying into the social security program through your payroll taxes. The SS benefits many include disability income, retirement income, Medicaid and Medicare. Retirement benefit can start off at an early age of 62 and the total amount is dependent on the amount you’ve earned over all the working years.

So, that’s just some of the most common ways of generating passive income even after being a retiree. However the only problem with this is that it takes lot of time and effort to keep the money flowing. Nevertheless, you shouldn’t let boredom come in as that is the biggest obstacles which can keep you from making money.

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Retirement In The Future Could Be A Disaster

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When you retire, it’s the end of your fixed income. This means you will have to survive on whatever you have saved over the years or whatever the government provides. But there are a few issues here. First, it’s fair to say that the money people have for retirement from the government could run out as social security is being stretched to its limit with a growing elderly population. Second, people aren’t saving as much as they should and when they are they dip into their pension pot long before they retire. Need a home renovation? Crack open the pension pot? Want a luxury holiday? There’s more than enough money in the pension fund. This is a dangerous way to live as it can leave people with nothing when they finally do retire. So, how can you make sure that your finances are still strong when you do finally throw in the towel.

Invest A Little Now, Save A Lot In The Future

You should be looking at investments as early as your twenties. It’s important that you do think about how to make your money fund grow, no matter how small it might be. One of the best investments to consider would be penny stocks. Penny stocks are great because while they are cheap to buy, they also have massive potential for the future. You do need to know which company stocks to invest in, though. To find out about that, you should think about speaking to a stock broker.

Another possibility for a simple yet effective investment would be to ask your employer about their pension scheme. They should have one, and if they don’t, you can encourage them to set one up. An employer controlled pension pot might be the best option to ensure you can retire comfortably twenty or thirty years from now.

Keep Working

You can continue working after you retire. There’s no set rule that says you need to stop working completely. After the 2008 crash, a lot of people who were retired went back to work full time to right their financial situation. But that’s not what we’re suggesting. Instead, you can think about completing side hustles in your spare time. You can use these jobs to earn yourself a little extra cash and keep your financial situation healthy. This one of the extra ways to make money in retirement. An example of this would be working as a tutor. Tutors can make quite a comfortable part time income with more than enough money to guarantee pleasant years after you retire.

Get On That Property Ladder

Finally, you should think about buying some property as this is one of the easiest ways to keep your money safe. When you own property, you can invest in it and improve it, increasing the value. As the value increases, you’ll find that you’re sitting on a nice pot of cash that you can use at any time. In fact, if you have a large enough property this can amount to the money you need for your pension. Sell it, move to a smaller home and you can use the money you make in the sale to get by.

Formulating the best strategies to withdraw your Social Security benefits

Life always gives us many opportunities to rectify our mistakes. What if we marry the wrong person? We file a divorce, sign on some papers and then you’re free enough to walk down the aisle as many times as you wish. But as long as your Social Security benefits are concerned, you just get one chance of taking back what you did and then do it again in the near future. Still, you would be left with a narrow window of chance. As per the state rules of Social Security Administration, in case you have second thoughts about reaping benefits after you apply, you are easily allowed to withdraw your claim and apply later on but you’ll only get 12 months to change your mind. Otherwise you would have to repay all the benefits which you received.

This is why it is important for you to claim your Social Security benefits at the right time so that it can impact your life in a good way. Check out few strategies that can help you get the maximum value out of your SS benefits.

? ‘Take it ASAP and continuous working’ strategy

As per the rules of the Social Security Administration, you may start receiving benefits at an age as early as 62. This is indeed a good option for those who require a lump sum amount of cash during the early stage of their retirement or who wish to keep their money in tax-favored accounts for a longer time. If you wish to tap on to your Social Security income early and support it with income from a secondary job, this could reduce your benefits.

? The ‘wait for it’ strategy

Although it is attractive enough to claim your due from the IRS the moment you retire officially, yet you would definitely wish to hold on to the amount for a few years. It goes without mentioning that the advantage of waiting is a bigger pay amount. The only risk associated with this is death as the longer you wait, the fewer checks you will get before you expire or retire from life.

? The ‘early claim and early invest’ strategy

It is even true that if you claim Social Security at 62 years of age and live well till 80s, you will get less in total lifetime benefits than what you would by claiming later. But this is said assuming that you are actually spending your benefits instead of investing them. If you are clever enough to invest the benefits of Social Security, they could even grow further and the benefits you would get at 70 would be huge and a bigger one. However, before investing, be sure you’re going to receive a decent benefit on the investment.

Therefore, if you’re trying your best to ensure that you withdraw enough money from your Social Security benefits, you should follow the above mentioned strategies. The more you follow specific techniques, the more will be the amount that you can gather without being taxed.

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Mushrooming financial wellness programs in 2017 – Trends retirement advisors should know

It has been studied that with the onset of 2017, more and more employers have started addressing their financial wellness beyond retirement to produce a happier and healthier life beyond retirement. Although there is increased participation in workplace retirement accounts like 401(k), yet they don’t seem to be satisfied with their employee savings rates. This is a finding which has come from one of the latest studies by Aon Hewitt. The firm also revealed that 92% of the employers are worried about whether or not their employers have a clear understanding of how much the employees should save.

There are predictions of an increase of financial wellness programs beyond retirement decisions in 2017 to include things like budgeting, financial literacy, financial planning and debt management. Take a look at some points which retirement plan advisors should keep in mind.

Growing interest among employees

As mentioned above, Aon Hewitt’s report found 60% of the employers to already offer assistance in at least a single category which falls under the category of financial wellbeing. By the end of 2017, this percentage is predicted to grow to about 85%. More than half of the employees show tendencies of being extremely concerned about their financial well-being and this figure saw a 10% increase from 2015 which topped employer initiatives in 2016. As more employers bring physical wellness initiatives in their program.

Interest among financial advisors are also growing

For some financial advisors, offering financial wellness programs to companies has become the main factor that can cause differences in doing business. As per a survey from ADP, it was found that while just 24% of advisors work along with employers with regards to financial wellness programs, yet another 48% are already considering it. Financial advisors need to stay in tune with the focus of the client. When an advisor is measuring the success on the replacement income ratio of the participant, not being able to adopt some kind of wellness initiative can hurt your performance rating.

No matter how much the financial advisor helps the employees, can they prove that such initiatives are all worth the effort of investing in them? When you assume a particular company’s benefits, this can automatically persuade the CFO of a company to adopt some program in either 6-12 months and the CFO will probably seek proof of his payoff. How well is the financial well-being program working? How are participants adopting it? Is it changing the way in which employees behave?

So, we see that the employers are gradually making retirement readiness one of the vital parts of their fiscal wellbeing strategy by offering modelers and tools to help workers understand everything realistically how much exactly they would need to retire. Aon Hewitt’s 2017 Hot Topics in Retirement and Financial Wellbeing surveyed around 250 US employers who represented around 9 million workers to analyze the priorities and the possible changes with regards to retirement benefits.

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Are millennials more serious about their retirement today?

Millennial money has always been under the scanner – irrespective of whether it has been about concerns regarding their saving habits or retirement planning. However, it seems that 2017 is going to spell a fresh start for them. Let us explore why it is so.

The Natixis 2016 Retirement Plan Participant Study

As per the Natixis 2016 Retirement Plan Participant Study the average millennial, who has a defined contribution plan had actually starting saving from the age of 23. Needless to say, the defined contribution plan that we’re talking about here commonly refers to 401(k). The number (the age mentioned here) is equivalent to 31 years for Baby Boomers and 27 years for Generation X. Now, who actually can deny the benefits of these extra years’ savings? Going by the expected market returns, a person’s average salary (hikes included) and his deferral, it might as well be said the Millennial stands to retire with around $600,000 dollars.

Why they should save more

However, it has been opined that though millennials are saving early, they aren’t saving enough. While it has been found out that around 66% of them give around 1 to 5%of their salaries to the retirement plan of their company, the figure needs to be somewhere around 10%.

Millennials surveyed by Natixis think that they would need least something around $869,662 when they retire. The numbers should ideally increase given the chances of inflation in the next 40 years, illnesses or other inabilities to work or a major market correction.

If there is marked inflation in the next 40 years then let us tell you that $869,662 will not really be enough of purchasing power.

Don’t rule out chances of a possible market correction just before you’re about to return as well. With around ten to fifteen per cent decline in your portfolio you wouldn’t really be happy even if your portfolio is worth a million dollars!
Then there are these chances of developing diseases like diabetes or any other chronic illness. What happens when you’re battling with these health irregularities? Your healthcare cost increases!

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Retirement trends seen among baby boomers – Bracing yourself against all odds

You seem to be a baby boomer when you were born between 1946 and 1964 which means you’re now in between the age of 51-70. There’s good news for this entire gang of baby boomers as you’re probably going to live longer and not only that you will probably also lead a better life than your grandparents and your great-grandparents. In other words, you need to arm yourself to face issues and decisions which your grandparents and parents never faced before. Did you save enough to finance yourself and your spouse during your retired life? Were you someone who has been saving throughout his life both in his workplace retirement fund and emergency fund? Or are you preparing yourself for a financial doom once you’re retired?

Baby boomers are the unusually large generation which is soon to enter into their retirement and reinvent what it actually means to be retired. The trend of retirement is changing here in America and if you want to see the drastic changes of the present generation than what they saw before, here are some retirement trends to check out in 2017.

Higher life expectancy rate: All those men who are going to turn 65 in 2030 can definitely predict 6 years of more life expectancy rate than those who turned 65 in 1970, as per the Urban Institute research of Social Security Administration information. At the same time, the life expectancy rate among women at the age of 65 increased by 4 years throughout the same period of time. Previously, there was enough gap in between 2 genders with respect to longevity but now this gap is gradually shrinking. But something that needs to be understood is that longer life expectancy rate will definitely mean that you have to save even more for your retirement years since you may live for a longer time now.

Improved health conditions: Another new trend that has been noticed is that majority of the people are not only living longer but they are also enjoying perfect health conditions during their lifetime. There has been a steep fall in the proportion of adults who reported poor health after aging and this clearly implies that health conditions have improved among the Americans. With better health, you can also curb your out-of-pocket medical expenses and you may even see a rise in income as you can still keep on working even after reaching old age. However, one disease you should protect yourself from is diabetes as this is eating up majority of the Americans.

Retirement planning, the DIY way: Majority of the baby boomers will rely heavily on the savings which they have racked on their workplace funds like 401(k) or Roth IRAs rather than their traditional pension plan. The conventional pension plans constitute over 30% of adults who were born in 1940s but these plans are expected to cover only 10% of the adults who were born in 1980s. Therefore it seems that 401(k) accounts are pretty more generous and huge and with the perfect kind of nest egg and by taking the right steps to adjust your investment portfolio, you can save a considerably large amount. Avoid spending, invest wisely and reduce fees as much as possible.

Therefore, if you’re keen enough on spending a hazard-free retired life, you need to be careful about the ongoing trends in the industry. In case you’re a baby boomer, make sure you follow the trends mentioned above and accordingly adjust your finances so that you don’t make a wrong financial decision for your long run.

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Millions freak over retirement but don’t take any noteworthy steps – Word of caution

Currently the young workers can’t even dream of retiring at the age of 40-50 years. Prospect of weak investment returns and extended mortality rates probably mean that millennials will require saving money as compared to their parents. The sooner they start saving, the easier it will be for them to accumulate nest egg. Yet, what the millennials think is that it’s tough to sacrifice their present for something that will only happen until the 2060s.

Retirement is the biggest priority for the millennials; at least they say so when they’re asked. As per a recent survey, retirement was by far the top most concern of all age groups. Millennials even give higher priority to saving for retirement, much ahead of saving for student loans, job security and credit card debt.

If millennials are so worried, why don’t they do something about it?

Yes, this is the million-dollar question which arises after seeing the way in which millennials simply waste their time in doing nothing about saving for retirement. Do they need a hard nudge to make the best financial decisions? Millennials don’t seem to be seriously thinking about retirement. There are numerous companies which run 401(k) style plans for around 1.9 million people. But when it comes to getting started, filling out all the documents to enroll yourself in a retirement plan of your employer becomes a big obstacle. It is indeed shocking enough to see that when the employees are left to their own, only 30% of the young adults end up signing themselves for 401(k)s.

There are many companies which have automatically signed up workers for their 401(k)s. Employees are allowed to deny participating but the main idea is that very few of them will even bother about saving money. Among the workers aged between 20-something, 85% of them go with being auto-enrolled in a retirement plan. Young workers contribute a very small percentage of their salaries to their workplace retirement funds. This is a good sign as workers who save early don’t require saving as much as their older workers. Young workers typically pay less than their elders and usually have a tough time in finding money that they can put away.

Are some millennials taking smarter decisions than the old savers?

There are some areas in which millennials are taking smarter steps than their older counterparts. For instance, workers under the age of 40 are more likely using Roth IRA and Roth 401(k) accounts, as per recent survey. Roth accounts take away after-tax money and hence they don’t offer similar immediate tax break as conventional accounts which take away pre-tax money. Investment profits in a Roth aren’t usually taxed and on the other hand, retirees need to pay income taxes when they withdraw money from their 401(k) accounts.

Only 7.7% of all contributions from workers went to Roth accounts in 2015 but that figure is up by 45% within just 2 years. Employees in their 20s make 8.2% of contribution to Roth options. Moreover millennials are less likely to raid their 401(k) accounts as they have different other kinds of savings as well. Workers above the age of 40 have taken out more 401(k) loans and young workers borrow less often.

The younger workers are usually more lured to cash out their 401(k) balances when they switch from one job to another. Although early withdrawals are attached with a 10% penalty, yet they feel like withdrawing money. However, now it is seen that more and more workers go through the obstacles of rolling balances into new 401(k)s and IRAs. The share of 20-something participants who cash out their 401(k) is already down by 10% since the last 2 years.

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New changes to the retirement account rules to know of – Retire debt-free

Did you know that contributing a portion of your income to retirement accounts can help you qualify for tax breaks and sometimes even for employer contributions? Another new and lucrative perk which retirement accounts like 401(k) or IRA will now have is a legal necessity for investment advice which isn’t biased. Apart from this one, there have been some more tweaks and changes to retirement account which is definitely going to have an impact on the people who are eligible to contribute and how big or huge their tax savings are going to be. If you’re a baby boomer, you should know about the recent changes that may affect your tax savings. Check them out.

Change #1: Legal unbiased advice in your best interest

This new rule is all set to start in April 2017 and according to it, a financial professional who makes recommendations on investment about your IRA or 401(k) is legally obligated to offer you advice in your best interests. He should recommend you the funds which provide highest compensation to the financial advisor. This is a part of the fiduciary level of care where the advisor is asked to act as according to the best interest of the client. However, this new rule will only be applicable to retirement account and advice on any other kinds of tax or financial issues won’t be held under this rule.

Change #2: Charitable contributions on IRA

Withdrawing money from the conventional IRA account is necessary after attaining the age of 70 and half and income tax remains due on every single contribution. But in case you donate a portion or the entire part of the distribution to a qualified charity organization and you’ve crossed 70 and half years of age, you won’t be liable to pay taxes on this transaction. Such IRA tax-free charity contributions have always been a temporary feature of IRAs since the year 2006 but it was recently that it was made permanent.

Change #3: Income limits of Roth IRA become higher

You can easily earn an added $1000 in the year 2016 and yet save for retirement. The eligibility of Roth IRA will phase out for people whose gross income is between $117,000 and $132,000. Usually it is a rule that Roth deposits are done with after-tax dollars but the earnings that you make every year aren’t taxes. Withdrawing money after attaining 59 and half years of age from Roth accounts which are more than 5 years old are also considered as tax free. Though it won’t help you with the present tax picture but it will definitely assist you in the long run.

Change #4: The new retirement account, myRA

There’s a new retirement account, the myRA which was launched throughout the nation in November, 2015. This new account has been targeted at people who don’t have access to 401(k) plans. Individuals who want to save can contribute $5500 per annum to this new Roth account and if they’re more than 50 years of age, the amount can be $6500. There’s only 1 investment option, a variable interest paying Treasury savings bond. However, as soon as you hit the maximum balance that you can maintain on your myRA account ($15,000) or if the account turns more than 30 years old, the money will automatically be transferred to the private sector Roth IRA.

Hence, if you’re a retirement investor, you need to be up to date with the changes that are happening within the industry. Take into account the above mentioned changes brought about to the retirement accounts and measure your steps according to the rules.

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Crucial Retirement Planning We All Need To Do

Crucial Retirement Planning We All Need To Do

Sooner or later, we will all be at work on our final day and about to retire. As we get older, many people get excited about retirement and being able to spend so much free time on hobbies and with family. However, it isn’t all fun and games. If you don’t prepare yourself fully, you may find that you get very stressed through your later years. To make it easy here is a list of some crucial retirement planning that we all need to do.



It is super important to get life insurance over 70. Even if you retire well in advance of turning seventy, it is important to get this organized sooner rather than later. It can be tricky finding a sustainable life-insurance policy as we get older. So take your time to look for the perfect policy. Don’t leave it to the last minute. You will end up rushing around and may even run out of time. You should also think about increasing your pension payments as you approach retirement age. The more you can pay into your pension pot while you are still working the better. You’ll then have more money to live off once you have finished work.

Consider Housing

Many people consider their housing options as they get closer to retirement. Downsizing is high on many couple’s to-do lists. Now that their children have left and they don’t need such big houses, they move into a smaller property. This is also easier to manage as they get older. If some people are particularly sick or frail, they may prefer to move into a retirement community. These are made up of individual bungalows or apartments to create a community of retirees. Everyone looks out for one another, and there is a strong social aspect to living in this kind of housing.


Write Up A Will

It is never too late to write a will. Many people wait until they have retired to do so. However, it can be very beneficial to create a will while you are still working. If it looks like you might not leave a lot of cash behind for your family, at least you will be in a strong position to change that while you are still working. Don’t forget to include any property and assets that belong to you in your will. It shouldn’t be restricted to the money in your bank accounts.

Use Online Investment Tools

Just because you are getting old doesn’t mean that you’re too old to use snazzy online tools! There are now many websites and software programs aimed at people who want to save for retirement. They are very easy to use and require little set up at all. You don’t just have to use them for retirement planning. Most are extremely handy when it comes to looking after your finances overall.

Worried about retirement? You don’t have to be now that you have all these useful retirement planning tips. You’ll be able to enjoy your free time to the fullest!

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