Results for "On Retirement"

Jul 31, 2018, 9:23 AM EST

7 surprising facts about the Social Security earnings test

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By Mary Beth Franklin

Questions from InvestmentNews readers tend to run in cycles. This month, the Social Security earnings test seems to be a popular topic with financial advisers and their clients who want to claim benefits early but plan to keep working. That combination can result in some nasty surprises.Benefits can be temporarily reduced or wiped out if you claim Social Security before full retirement age and continue to work. Full retirement age is 66 for anyone born from 1943 through 1954, and gradually increases to 67 for those born in 1960 or later.Not only will your benefits be reduced by 25% or more if you file for Social Security at the earliest eligible age of 62, you will temporarily forfeit some or all of your Social Security benefits if you earn too much money.1. Earned income is defined as wages or net-self-employment income. The earnings test does not apply to other government benefits, investment earnings, interest, pensions, annuities... Read full post

Jul 25, 2018, 12:38 PM EST

Working longer is best way to boost retirement income

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By Mary Beth Franklin

Working a few years longer has a much bigger impact on improving retirement income security for older workers than boosting 401(k) contributions during the last decade of work, according to new research published by the National Bureau of Economic Research.In fact, working a little longer and postponing the start of Social Security benefits can raise annual retirement income by as much as a modestly higher saving rate over several decades of work, according to NBER, a prominent nonprofit public policy research organization.The biggest impact of the working-longer strategy applies to older workers because the benefits of traditional retirement strategies, such as increasing savings or switching to a lower-cost portfolio, diminish with age. For example, a 36-year-old who boosted his 401(k) contributions from 6% to 7% of his pay (assuming a 3% employer match and 5% annual return) would get nearly four times more benefits from his... Read full post

Jul 24, 2018, 3:48 PM EST

Intriguing snapshot of HSA users

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By Mary Beth Franklin

If financial advisers were asked to create a profile of the ideal prospective client, many might list young, college-educated workers with above-average incomes so they could help them grow their wealth over several decades. If that sounds like a river where you'd like to fish, the bait might surprise you: health savings accounts.A new survey of more than 1,400 U.S. health care consumers found that HSA enrollees are generally healthier, wealthier and wiser than the average worker.In fact, more than half of HSA enrollees are between the ages of 25 and 44; more than 60% are college-educated with at least one degree; and nearly 90% claim to be healthy or very healthy, according to the 2018 HSA Participant Profile survey published by Aegeus, one of the largest administrators of health care benefit accounts. The average household income for an HSA enrollee tops $72,000, according to the Alegeus survey.HSAs offer a triple tax break:... Read full post

Jul 17, 2018, 4:36 PM EST

Small businesses face a big retirement challenge

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By Mary Beth Franklin

Here is an amazing statistic: Small businesses account for 99.7% of all U.S. firms and employ more than half of all American workers, according to the Small Business Administration. Collectively, small businesses drive the economy, but many of those small business employees are missing out on a key benefit of full-time employment: access to a retirement savings plan at work.Freelancers, consultants and other part-time and on-demand contractors are in an even more precarious situation when it comes to saving for their future.All told, about 55 million American workers — more than one-third of the U.S. workforce — don't have a retirement savings plan, jeopardizing their financial future and potentially straining an already overburdened Social Security system when they reach retirement age. And that just doesn't make sense when solutions are readily available."Small business owners want to offer the kind of benefits that... Read full post

Jul 10, 2018, 10:27 AM EST

Improved health outcomes can boost retirement savings

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By Mary Beth Franklin

What would you say about a planning tool that quantifies how improved management of a chronic health condition can reduce a client's medical expenses, increase their life expectancy and boost disposable income? What if you took it a step further and used the tool to show clients how investing those savings in a 401(k) could bolster their retirement security and allow them to delay claiming Social Security benefits until a later age?How about: Show me the money?That's what HealthyCapital, a joint venture between the Mercy health care system and HealthView Services, a provider of health care cost data for financial services firms, did. The results are impressive. The firm studied how providing 401(k) plan participants with specific health care cost data could encourage them to manage their health conditions and increase retirement savings. The findings are detailed in a new report, "Health & Retirement Savings: Leveraging Healthcare... Read full post

Jul 5, 2018, 4:12 PM EST

New ways to estimate and fund long-term care costs

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By Mary Beth Franklin

Nothing strikes fear in the heart of retirees more than the three letters: LTC. The potentially crushing costs of long-term care in a nursing home, memory care unit or even at home — most of which are not covered by Medicare — can easily destroy a retirement plan.But the unpredictability of who will require costly care and the diminished availability of traditional long-term care insurance policies create a challenge for even the savviest financial advisers.An estimated 70% of people 65 and older will need some form of long-term care as they age, according to the Department of Health and Human Services. The national annual cost for a private room in a nursing home is $97,452, according to the 2017 Genworth Cost of Care Survey, which includes a state-by-state breakdown of costs for various levels of care. The average length of a nursing home stay is 2½ years.The traditional funding choices for long-term care expenses... Read full post

Jul 3, 2018, 5:12 PM EST

Divorced women declare financial independence

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By Mary Beth Franklin

It's fitting that as the country celebrates Independence Day this week, a new study documents the experience of more than 1,700 women going through the process of divorce. While many face financial obstacles in living on their own, nearly half of them view it as a positive opportunity to reinvent themselves.Both the source of the study and some of the recommendations are surprising.Worthy, an online auction marketplace for pre-owned diamond jewelry, joined forces with Laurie Itkin, a certified divorce financial analyst, to survey more than 1,700 women from across the country about their financial experiences before, during and after divorce. Participants in the Financial Fresh Start study were divided into three age groups (18-34, 35-54 and 55+) and three stages: divorce on the horizon, in the midst of divorce and "divorced and determined."When asked about their financial priorities during marriage, 51% of the women said they focused... Read full post

Jun 26, 2018, 3:55 PM EST

The black hole of financial planning: Health care costs

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By Mary Beth Franklin

Affluent older adults are worried about what health care costs, including long-term care expenses, could do to their carefully laid retirement plans. Yet only about half of those who work with a financial adviser have discussed their fears because they consider health care a personal matter, according to a new survey.Nearly three out of four (73%) older adults list out-of-control health care costs as one of their top fears in retirement, and 64% of future retirees say they are "terrified" about what health care costs may do to their retirement plans, according to the annual health care survey from Nationwide Retirement Institute released Monday. The results were based on a Harris Poll online survey of more than 1,000 adults over age 50 with a household income of at least $150,000. Although this is the sixth year of the Nationwide health care survey, it is the first time that the Nationwide Retirement Institute has focused on affluent... Read full post

Jun 25, 2018, 4:39 PM EST

Checking one off the bucket list

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By Mary Beth Franklin

For years, I dreamed about taking a European river cruise, salivating over television ads showing luxury cruise ships floating past ancient castles and iconic windmills. I finally convinced my husband Mike that a river cruise would be the perfect way to celebrate our 40th wedding anniversary and "test the waters" on our retirement travel dreams.We spared no expense booking an eight-day Viking river cruise on the Rhine, including upgraded airline reservations, a stateroom with a balcony, and a couple of days in Amsterdam at the end of our trip. I figured the eye-popping price tag would become a standard feature of our future retirement budget, but it looks as if we may be able to save some money.Apparently, I'm in good company. A new study from MassMutual finds that pre-retirees often overestimate their retirement income needs. Overall, 60% of pre-retirees expect to need at least two-thirds or more of their pre-retirement income to live ... Read full post

Jun 21, 2018, 3:15 PM EST

Social Security benefits lost 34% of their buying power since 2000

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By Mary Beth Franklin

Social Security benefits have lost more than one-third of their buying power since 2000, according to a new study released Thursday by The Senior Citizens League, a nonpartisan advocacy group."This is the biggest loss of buying power recorded since 2012, and that was the biggest loss that The Senior Citizens League's study has recorded to date," said study author Mary Johnson, a Social Security policy analyst for the organization.The study's findings represent a significant one-year loss in buying power of 4% from January 2017 to January 2018, boosting the loss since the beginning of the decade from 30% last year to 34% this year. The loss in buying power occurred even though Social Security recipients received a 2% annual cost-of-living adjustment in Social Security benefits this year. Housing and medical costs — particularly home heating expenses and Medigap premiums — were among the fastest rising costs over the past... Read full post

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