Posts Tagged ‘Retirement’

Let’s Talk About the Pros and Cons of President Obama’s “myRA”

Monday, September 28th, 2015

myRA pic 3

(image credit to The Monday Face)

In the State of the Union of January 2014, President Obama announced his plans to introduce a program called “myRA” which stands for My Retirement Account. It’s specifically built for workers who may not have a current retirement account, but would like to start building a nest egg. Here are a few of the specifications for opening a myRA.

How does it work?

The account is essentially a Roth IRA, so the contributions that you make each month are made tax-free, and through direct deposit (which means that your work will first have to offer the program). Your contributions are made automatically on whatever day works best for you, like a certain day of the month, or multiple paydays within a month. If/when workers switch jobs, the account stays with you since your employer isn’t administering the account, so no worries on that front.

The funds that you deposit are invested in government savings bonds, and backed by the U.S Department of the Treasury, so savers can never lose their principal investment. The cap on myRA contributions are $5,500, a year under current limits, just like with regular Roth IRAs.

Who’s eligible?

This new program is mainly aimed at low to middle-income americans who don’t have access to employer-sponsored retirement plans. With no fees to maintain the account, and no fees to open the account, it’s ideal for the target demographic. But all workers may invest in a myRA, including those who would like to supplement an existing 401k plan, as long as their household income falls below $191,000 a year.

What are the downsides?

One of the main downsides is that it’s not a long-term retirement plan. The myRA plan is mainly meant as a kickstarter for your retirement, because once a participant’s account balance hits $15,000, or the account has been open for 30 years, they will have to roll it over to a private sector Roth IRA, where the money can continue to grow tax-free. Another downside is interest that the account will gain, you’re not going to have a huge amount of earnings on this account. The White House said the accounts will earn the same rate as the Thrift Savings Plan’s Government Securities Investment Fund that it offers to federal workers. That fund earned around 1.5 % in 2012, and had an average annual return of 3.6% between 2003 and 2012.

The lack of investment control that the account holder has might also be a downside for some. As we said above, the funds are invested in government savings bonds, and so subsequently, the opportunity for workers to have some investment freedom is out the window unfortunately.

The truth is that no one thinks this alone will fix the fact that millions of Americans have little-to-no retirement savings, but retirement advocates are cheering on the new program as an important step in the right direction.

Author: Tanya

Financial Mistakes Retirees can Still Make in Their Golden Years

Thursday, September 10th, 2015

golden years 2

Unbeknownst to a lot of people, some, well into their golden years, still have some financial issues when it comes to their retirement. There are still mistakes to be made, there are still some downfalls and hard times, and there are ways to navigate around those issues unscathed.
We’re here today to talk about some of the issues retirees may encounter, and how to solve them with the know-how and tools you already have in your belt.

Keeping old debt

This seems like an obvious point to make, but it’s one that not many retirees take to heart. Not getting yourself out of debt before retirement is one of the biggest mistakes one can make, your retirement funds should never go towards your credit card debt, or car payments, those will burn through your retirement funds faster than you think.
Paying off your mortgage before retirement should be a huge priority, as it is for most people, but it cannot be emphasized enough since a mortgage is most likely to be the biggest purchase you’ll make in your life. Focus on paying down as much as possible before retirement, or even downsizing to a smaller home where the mortgage is manageable, the utilities won’t be outrageous, and the money you save goes right into your pocket.

Stopping investments

Keeping up with your investments and wherever else your money is going is an extremely important factor when it comes to financial-wellness, especially at retirement. Some retirees look at investing as a hobby, others as a necessity.
Whether you invest through more traditional routes like the stock market, or invest in real estate with your self-directed IRA, or even invest in a chicken farm, just keep your money moving, and working for you.

Relying on a single source of income

Don’t depend on a single source of income for anything, including your own retirement income. Social Security will not pay enough by itself, stocks hold the possibility of crashing, and do on occasion, bonds currently don’t keep up with inflation, and loans have to be paid back. This is where diversification comes into play, and why it’s crucial.

Living outside of your means

Most retirees don’t monitor and control their spending by having even a simple budget. For any situation, that’s a recipe for disaster. To just spend and spend, and then have an unexpected expense pop up, like a medical bill, or car repair, can cause serious financial damage. Keeping yourself realistically reeled in is imperative if your goal is to keep yourself afloat for 20+ years after retirement.

In reality, there will always be obstacles to hertel no matter what, whether they’re financial or not is up to you, and the decisions that you make today. A self-directed IRA gives the IRA holder the power to invest in what best suits them. Opening a self-directed IRA can be beneficial to almost all retirement strategies, so get in touch with Accuplan today to find out if a self-directed IRA is what’s missing from your retirement portfolio.

Author: Tanya

What Experts Are Saying About Investing in Gold

Monday, August 31st, 2015

Gold Investing 3

Gold, of all commodities, has had its hectic ups and downs, so it’s needless to say that investing in precious metals isn’t for the faint of heart. Or is it? There’s a lot of misinterpretation when it comes to precious metals, especially gold. Let’s shed some light on the matter, and see what the pros are saying about investing in gold in the 21st century.

About interest rates

Some analysts are saying that the on-going threat of the Federal Reserve rate hiking is a big reason to avoid investing in precious metals. The reality is that it remains to be seen whether or not the Fed will follow through on this rhetoric of a hike in September 2015. But nominal interest rates do not determine whether precious metals are more or less attractive than interest-bearing debt instruments.

As a retirement option

A gold-backed IRA as a retirement option, is a self-directed IRA that holds precious metals, namely, gold. By diversifying, it adds more stability to your IRA. Adding gold and other precious metals to your portfolio lowers risk by diversifying from paper assets, consequently hedging against the economy and inflation.

Buying low, selling high

Everyone’s heard this term before, and its meaning still holds true today, and frankly, those are words to live by with gold investing. When the Stock Market is uneasy, and starts to take a downturn, a lot of reactions are the same; sell. Sell it all. It is difficult to suppress these reactions, but we all need to do what is counter-intuitive, and that’s when we should be buying. The reason for this is that value price of gold and our economy are inversely related. Our economy is based on currency that is known as fiat, meaning that it is worth only the value of the actual paper it is printed on. So when we experience market decline, stocks and the dollar move downward. They become less desirable. Gold then becomes more desirable and according to the law of supply and demand it’s value increases as well.

Bottom line is that gold is recognized as the true standard of value across the globe. It is a standard for world wide exchange, and has been since the dawn of time. It maintains its value from one country to another, and is not subject to the same systematic risk that the stock market has been known for.

How Much Money Should You Have in Your Retirement Accounts?

Monday, February 17th, 2014

How much do you need to retire

Saving for retirement can seem so frustrating and out of your hands. There are so many things you can do to make sure you are involved with your own retirement. You can even invest your retirement how you want with a with a self directed account. Self directed accounts can be IRA or 401Ks. What is great about a self directed account is that you can invest in things like real estate and gold. There is plenty of other things you can use your IRA to invest in with a self directed account. If you are worried about invest in the stock market then a self directed account is a great option. Once you have a self directed account then what? Start investing!! Even when investing with a self directed account it is important to remember about your end goal of securing a great retirement.

We have extensively gone over retirement and how to prepare for that ever so exciting, yet potentially stressful time. The more you are prepared for retirement the less stressful it will be. Why is it stressful? It is stressful because if you haven’t prepared well enough then you may be wondering if you have enough money in your retirement accounts? This is what most of us worry about. With a self directed account it isn’t always about how much money is in your accounts but what are your assets worth?  Either way knowing you have enough to get through your retirement without running dry is important. Today we will be discussing how much money you will need when you actually do retire.

As knowing a perfect figure can be quite tricky and each situation can rule different outcomes it is wise to sit down with a financial planner to make sure you are on the correct track for your situation. A few of the factors that need to be considered when looking at your situation are:

When You Retire

When you retire can have a huge impact on your retirement income. Just speaking of when you will start collecting social social security between 62 to 70 can be dramatic. Say you earned $50,000 a year and turned 62 in 2013. You could collect roughly $1,011 a month as a single. If you waited until 66 you would be able to collect roughly $1,420 a month (in today dollars). If you started collecting at 70 you would collect roughly $1,972 a month (as before it is in today dollars).

Where you Retire

$300,000 can go a lot farther in places like Daytona Beach, Florida, Pocatello, Idaho, Greenville, S.C. than it can in San Francisco, California, or New York, New York. Make sure you know the cost of living where you are retiring. You may find that you need to adjust your savings plan depending.

What You Plan To Do While Retired

This is an obvious but often overlooked aspect of retirement. If you plan to continue the same lifestyle that you typically had before retirement you should be ok. If you plan to travel and do things that you never did while working you may need to boost your retirement savings plan.

How Long You’ll Live

This is another huge thing to be aware of when retiring. Of course we never know what is going to happen but you should plan for the long haul. There are different ways you can judge how long you will live. There are expectancy calculators and the IRS has a table to guestimate how long you will live. Using those guestimates you’ll be able to know how long you’re going to need money which will be a great insight to figuring out how much you’ll actually need.
With so many variables that go into figuring out how much you actually need is it even possible to have any idea what I should be saving now? Yes, it is very possible to have a good idea of what you need. There are plenty of calculators that help you with your retirement. There is also a general rule of thumb that can give you a good starting point.
  • Age 35: Have saved as much as your current salary.
  • Age 45: Have three times your salary saved.
  • Age 55: Save at least five times your salary.
  • Age 67: When it’s time to retire, a great goal is to have saved at least eight times your ending salary.
This is a great starting point and if followed can give you a very solid basses for your retirement. It still doesn’t beat out getting as detailed as possible though. Look at every aspect of your life and figure exactly how much you spend and do your best to figure out future spending. Again, the more detailed detailed the plan the better. If you follow that detailed plan you are much more likely to be able to go through retirement lasting on your own money. you need to very wise to dig as deep as you can and to get as detailed as possible.

Author: