Every election, Social Security and Medicare grab headlines as presidential candidates debate cuts for solvency or tax-based funding changes. Retirement Genius discusses three ways your money could be affected here.
Every election, Social Security and Medicare grab headlines as presidential candidates debate cuts for solvency or tax-based funding changes. Retirement Genius discusses three ways your money could be affected here.
For generations, Americans have relied on Social Security; now, experts like Retirement Genius tackle potential issues for Trump in the upcoming election from interviews that hint at Social Security cuts.
Many Americans think that managing money in retirement is easy, but most end up underestimating how much they will spend. Retirement Genius addresses this issue and more in this article.
Some people think that in retirement, you will just watch your savings decrease. With a good budgeting plan, Retirement Genius discusses how you can actually build more wealth in retirement.
As you near retirement, it’s incredibly important to have a wise investment strategy in place to ensure financial security during your golden years. During retirement, you’ll rely on your investments to provide a steady stream of income that covers your expenses and maintains your desired lifestyle. A carefully crafted investment strategy can make a significant difference in how well you can meet your retirement goals. Let’s explore how to choose the best investment strategies for retirement so you can prosper in the later chapters of your life.
One of the most important reasons you need a thoughtful retirement investment strategy is that you want to prosper during the years you’re not working. Having an investment strategy is one of the smartest ways to grow your wealth so you can have the retirement you’ve always dreamed of. Read on to determine how to create an investment strategy that’s right for your retirement goals.
Choosing the right investment strategy can be complex, but there are a few key things to consider: your risk tolerance, retirement goals, and timeline. Let’s explore how these considerations can create a well-designed investment strategy that manages risk and maximizes returns.
Your risk tolerance can set the pace for your investment strategy. Some people are more comfortable with risk than others. Start by assessing your risk tolerance to help determine the appropriate mix of assets for your portfolio.
In addition to your risk tolerance, your timeline for retirement can impact your investment strategy. The longer you have to retire, the more risk you can afford to take because you have more time to recover from market downturns. Alternatively, if you have a short timeline, you may want to focus on more conservative investments to protect your principal.
Before finalizing your retirement investment strategies, you need to determine your retirement goals. Things you’ll want to factor into your retirement goals:
Knowing what you want out of retirement can help you set the pace for a retirement strategy that aligns with your specific needs.
Finally, as you begin to craft your retirement investment strategy, remember this: working with a financial professional can unlock insights you may not realize were possible, such as income annuities, life settlements, reverse mortgages, and more. Reach out to a trusted financial professional to ensure your investment strategy aligns with your retirement goals.
There are several income strategies to consider during retirement, including passive investment income and withdrawing funds from investments over time. Take a look at the strategies below and consider incorporating these ideas into your retirement income strategy. And, as always, be sure to consult with a financial professional before utilizing any of these strategies. The ideas below are meant for educational purposes only and should not be used as professional advice.
Passive investment income refers to the income generated by investments that require minimal effort or time to maintain, such as rental properties, dividend-paying stocks, and ETFs. However, passive investment income can also come from the interest and dividends generated by your investments.
One of the primary benefits of utilizing investment interest and dividends as a source of passive income during retirement is that it provides a reliable income stream without the need to sell investments. Instead, you can reinvest the earnings generated by your portfolio to grow your nest egg or use them to cover your expenses during retirement.
To maximize the passive investment income generated by your portfolio, it’s essential to invest in high-quality assets that offer a steady stream of interest and dividends. This can include bonds, dividend-paying stocks, and mutual funds or ETFs that focus on income-producing assets.
Another income strategy is to withdraw funds from investments over time, rather than relying solely on interest and dividends. This approach involves selling investments as needed to supplement your retirement income. The advantage of this strategy is that it provides flexibility to adjust your income needs based on market conditions and your personal financial situation. However, managing withdrawals carefully is essential to avoid depleting your portfolio too quickly.
Retirement accounts such as IRAs and 401(k)s can provide a reliable income stream during retirement. These accounts offer tax benefits and can help you accumulate funds over your working years, providing a reliable income stream during retirement.
In addition to the income strategies mentioned above, there’s a little-known income strategy called a life settlement. It works for people who no longer want their life insurance policy and who are interested in selling it to a third-party buyer, typically a life settlement provider. The life settlement provider purchases your life insurance policy and assumes responsibility for the premiums (meaning you no longer have to pay premiums). They provide you with a lump-sum payment that’s typically four times the cash surrender value. Upon your passing, the life settlement provider receives all or a portion of the death benefit instead of or in addition to your beneficiaries. You’re free to use the life settlement proceeds on whatever you’d like, including retirement expenses.
Planning your retirement investment strategy can feel like a daunting task, but it’s a critical process to make sure you can live your retirement dreams.
Here’s how you can get started:
It’s important to remember that investing for retirement is a long-term process that requires patience, discipline, and careful planning. By taking the time to define your goals, assess your risk tolerance, and choose an investment strategy that aligns with your objectives, you can build a retirement portfolio that provides financial security and peace of mind. Reach out to Retirement Genius for more tips, tricks, and retirement solutions today!
Disclaimer: Retirement Genius does not offer financial advice. This material has been prepared for informational purposes only and should not be relied upon for financial advice. Retirement Genius urges you to consult with your own tax or legal advisors before entering into any transaction.
The idea of building passive income has become a popular wealth-building strategy in recent years, though the concept has been around for generations. As you prepare for retirement or if you’re currently retired, passive income can be an excellent strategy that provides you with extra income during your golden years. Learn more about passive income, including what it is and how to begin generating your own streams of passive income so you can enjoy retirement to the fullest.
Passive income is a financial strategy to earn money without your active involvement. Instead of getting paid for your time spent, a passive income strategy makes money regardless of how many hours you spend on it. From owning rental properties to receiving dividends from stocks, there are many ways to make money without getting paid for your time. While passive income doesn’t require as much effort as typical earned income, you still need to keep tabs on your ventures to ensure they perform the way you want them to.
For retirees, building passive income can provide additional streams of income that require less of your time. Most folks entering retirement are ready to work less and live more. Passive income can provide more financial stability and flexibility, and even help you retire early so you can live out your retirement dreams. Let’s dive into why you should start building passive income streams before — or even during — retirement.
One of the main reasons people decide to build passive streams of income is to have financial stability. Passive income streams provide a steady source of income that’s not tied to a traditional job, which can provide financial consistency during recessions, job loss, and other unexpected life interruptions.
It’s important to note that passive income can require time, effort, and even financial investment upfront to set up. However, if done successfully, passive income earners reap the rewards by making money while they sleep.
In addition to financial stability, passive income can also provide flexibility in your life. Whether you want more flexibility in how you earn a living or you want to spend more time pursuing your life passions, generating passive streams of income can help you create more time and financial freedom to live the life you want. Here are a few ways that passive income can give you more flexibility:
Another major reason to pursue passive income streams is that they could lead to early retirement. By building enough passive retirement income streams to cover your living expenses, you can retire from traditional work earlier than you might have thought possible.
However, to build passive income for early retirement, it’s important to have a clear understanding of your living expenses, how much passive income you will need to cover them, and what streams of passive income you can create to cover those expenses. You’ll also need enough time to set up streams of passive income, so the sooner you start the earlier you’ll see returns.
When it comes to how to generate passive income, there are several strategies to consider. Here are some ways retirees generate passive income.
One way to generate passive income during retirement is through annuities. An annuity is a financial product that pays out a fixed sum of money at regular intervals. They’re designed to provide you with guaranteed income for the rest of your life. Annuities are a strategic way to earn passive income with extra benefits, such as tax-deferred arrangements, premium protection, and the ability to customize your contract to fit your specific needs. While there are other passive income streams with higher rates of return, annuities can be a steady, secure way to supplement your retirement income.
Another popular way of earning passive income is by investing in real estate. While this strategy is more of a long-term play, it can pay off in the long run if you start early enough. Here are a few real estate strategies that can earn you passive income:
Dividend-paying stocks are another way to create a reliable source of passive income in retirement. Dividend stocks are stocks of companies that distribute a portion of their earnings as dividends to their shareholders. When you buy a share of a dividend stock, you become a part-owner of the company and are entitled to a portion of the company’s profits.
Dividends are typically paid out quarterly, though some companies choose to pay monthly or annually. The amount of the dividend payment is determined by the company’s board of directors and can vary depending on the company’s financial performance and other factors.
Companies that pay regular dividends are often more established and stable, which can make them a safer investment option for retirees.
Private equity investments can provide passive income in retirement through regular distributions from the fund’s profits. Private equity investments involve buying shares in privately held companies that are not publicly traded on a stock exchange. Private equity firms typically purchase these companies to improve their operations, increase their profitability, and then sell them for a profit. These kinds of investments tend to be high risk, high reward.
Since private equity investments can have a higher payout, it’s important to keep in mind that they carry higher risks — and sometimes higher fees — than other investment options. Since these investments cannot be easily bought or sold on a public market, they’re not liquid; they’re typically held for a longer period of time (compared to publicly traded stocks), and the success of your investment depends on the performance of the underlying company. There’s no guarantee that the investment will generate a positive return. For these types of investments, make sure to talk with your financial advisor for their advice.
Now that you’re aware of a few passive income strategies that may work for you in retirement, it’s important to understand additional tips and tricks to maximize your passive earnings.
The earlier you start generating streams of passive income, the sooner you’ll begin to see the fruits of your labor. Starting early and investing even small contributions to dividend stocks, REITs, or rental properties can add up over time. Starting early also allows you to take advantage of the power of compounding, which can significantly increase your returns over time. The biggest benefits of starting streams of passive income early is not only the ability to retire sooner, but also the financial freedom you’ll experience during your golden years.
The only thing better than a passive income stream is multiple income streams! Diversifying your portfolio across different asset classes can help reduce risk and maximize returns. Consider investing in a mix of stocks, bonds, real estate, and other alternative investments to spread out your risk and increase your chances of generating passive income.
Consulting with a trusted financial professional can help you identify opportunities to maximize your passive income streams and create a customized investment plan that aligns with your financial goals and risk tolerance. They can also help you monitor your investments and adjust your strategy as needed to ensure that you are on track to meet your retirement goals.
When it comes to prospering in your later years, passive income can be a brilliant tool for financial freedom and flexibility. As you approach retirement, take advantage of the effective strategies outlined above for growing your assets through passive income. From annuities and real estate investments to dividend stocks and private equity, diversifying your portfolio across different asset classes can help you maximize your returns and minimize your risks in retirement. By taking a proactive approach to generating passive income, you can enjoy a comfortable retirement and achieve your financial goals.
Get in touch with a financial advisor to create a passive income strategy that works for you, or connect with us here at Retirement Genius for more tips and tricks. Remember, it’s never too early or too late to start building passive income streams. Start building more wealth for retirement today!
Planning for retirement is like getting ready for a long road trip. You meticulously plan out the routes you’ll take, the cash you’ll need for your adventures, and, if you’re truly prepared, you’ll make sure to add extra time and resources for unexpected bumps along the way.
As you begin thinking about the retirement road ahead, your mind may be buzzing with questions: Do I have enough saved? How much is enough, exactly? And how will I afford the big expenses in retirement? As you ponder these questions, allow us here at Retirement Genius to provide some encouragement and enlightenment. Let’s explore some of the most common and pressing questions to ask when retiring so you can plan the adventure of your life. Let’s go.
While you likely have dozens of questions about retiring, let’s start answering the most pressing ones surrounding finances and healthcare.
How much you’ll need for retirement depends on many factors: what living expenses will you have later in life? What health costs will you need in the future? Do you own your home? What financial obligations — like utilities, property taxes, transportation, and insurance — will you have as you age?
Since retirement is not a one-size-fits-all journey, it’s difficult to provide a recommendation on how much you should save for retirement. However, to give you a ballpark figure, experts generally recommend having 7 to 13 times your salary saved by the time you turn 65. This percentage works best under the assumption that you’ll only draw 4% throughout a 30-year retirement.
As you begin calculating how much you may need for retirement, remember that these figures are meant to serve as a recommendation, not a rule. You may need more or less for your particular circumstances. If you don’t already have an estimate of retirement expenses, you may want to work with your financial planner to create a realistic and personalized retirement plan. Factor in the following common retirement expenses when putting together your estimated retirement costs:
One of the most common fears retirees have is running out of money during retirement. It makes sense that retirees are concerned about depleting their life savings. Inflation, rising healthcare costs, and expensive long-term care options are sure to make anyone nervous about the nest egg they’ve saved for decades.
To ease your worries, you can put the following strategies to work:
Just like there’s no one-size-fits-all savings target for retirees, there’s no retirement bracket for taxes; each retiree is taxed differently, depending on their retirement income.
There are a few key considerations to keep in mind as you determine how much you’ll be taxed during retirement:
Work with a savvy tax advisor and/or financial planner to stay up-to-date on the latest tax changes, understand how your retirement finances will be taxed, and avoid being taxed more than necessary during your golden years.
Retiring alongside your spouse can be a beautiful goal to work toward. However, before you both leap into retirement, there are a few logistical factors to work through.
The first is your age. If you and your partner are different ages, you may consider staggering your retirement dates to ensure that you both qualify for Social Security, pensions, retirement withdrawals, and more.
Healthcare is another important — and expensive — factor to consider when planning your and your spouse’s retirement. Depending on your health, one or both spouses may need to continue working to maintain health insurance until you qualify for Medicare to cover medical costs.
Finally, you’ll want to consider your financial readiness. If one spouse feels more anxious about the finances, they may want to continue working a few more years before jumping into retirement. This can add money to your retirement savings and delay withdrawing too much from savings for another few years.
As you enter into conversations with your spouse about timing your retirement, keep an open mind and know that flexibility is the key to a successful plan.
While being debt-free is certainly ideal when entering retirement, not everyone can feasibly eliminate their debt before it comes time to retire.
A great place to start is to analyze your debt and determine what, if anything, to do about it before retiring. For example, many folks on the brink of retirement still have their mortgage to pay off. Keeping the mortgage — or even refinancing it — can make sense instead of dipping into your savings to pay it off before you retire. Work with your financial planner to assess and manage your debt before retiring.
There are a few options for health insurance when you retire: COBRA, Medicare (plus Medigap), private health insurance, VA health benefits, or Medicaid. Depending on your eligibility for these programs, you may have to pay for coverage, so it’s important to factor those costs into your retirement budget.
There are a few financial strategies you can use when paying for large expenses when retired:
1. Rely on retirement savings.
If you feel comfortable with the amount of money you have saved up for retirement, then paying large expenses shouldn’t be a major issue — even after you stop working.
2. Consider selling your life insurance for a payout.
If you no longer want or need your life insurance policy, you could sell it to a licensed life settlement provider for a one-time cash payout. Life settlements can provide a windfall of cash — on average, four times the cash surrender value of a policy. There are typically no restrictions on what you can use the cash for, making it a viable option for retirees needing to pay for a large expense.
3. Use investment income.
Income generated from investments — like dividends from stocks or interest from bonds — can help cover expenses.
4. Dip into your retirement emergency fund.
As you put together your retirement plans, make sure to have an emergency fund established for large ticket items you’ll need after you retire.
5. Consider annuities.
Annuities are financial products that offer a guaranteed income stream for a specific period (often the remainder of a senior’s life). They can serve as a source of income for larger expenses in retirement.
As you meticulously plan for every twist and turn on the road to retirement, it’s increasingly important to ask as many questions as possible before you quit working. Asking the right retirement questions — and getting answers from qualified experts — can help you plan for every swerve and detour during retirement. As always, Retirement Genius is here to answer any questions you may have about retirement. Whether you want to better understand how life settlements work or explore reverse mortgages, we’re here to share retirement wisdom. Finally, remember that as you plan for this exciting chapter of your life, the journey to retirement can be as rewarding as the destination itself. Enjoy dreaming — and planning — the adventure of your life that’s waiting ahead.
As the golden years approach, many seniors find themselves reviewing their financial standings and wondering if they’ve saved enough to retire comfortably. One important factor when evaluating personal finances is understanding your personal net worth.
For folks who are making retirement plans, it’s an important time to take stock of your personal net worth to help you gain a clearer picture of your financial health. In this guide, we’ll dive into how to calculate net worth and why it matters to know your personal net worth. Let’s get started!
First, it’s important to address this pressing question: what is a personal net worth statement? A personal net worth statement shows the difference between what you own (your assets) and what you owe (your liabilities). It’s commonly used as a financial metric to provide a snapshot of your overall financial health.
You may be wondering, “What is my personal net worth?” Here’s a very simple formula to help you calculate your net worth:
Net Worth = Total Assets – Total Liabilities
While there are no hard and fast rules to determine whether you have the “right” net worth, having an estimate can help you make informed decisions about your retirement planning, investment strategies, and debt management.
Knowing your net worth is like having a financial compass that guides you on your journey to a comfortable, enjoyable retirement. Here are a few key reasons why understanding what your net worth is can help you in your 50s, 60s, and beyond.
One of the most important reasons you should know your net worth — especially as a senior — is for retirement planning purposes. Your net worth is a critical component of the retirement planning process. It helps you estimate whether you have enough savings and assets to retire comfortably. If your net worth falls short of your retirement goals, you may need to adjust your financial savings methods.
Another critical reason to know your personal net worth is for an investment strategy. Your net worth can influence your investment choices. A solid net worth might allow you to take more calculated risks or explore additional investment opportunities. On the other hand, a lower net worth may warrant a more conservative approach to protect your retirement nest egg.
Part of knowing your personal net worth is understanding how much you owe on assets. Getting ahold of how much debt you have can motivate you to prioritize debt reduction before retiring.
Understanding your net worth can help you evaluate potential estate tax liabilities and determine how your assets will be distributed to your heirs and beneficiaries.
Keeping track of your net worth can help you set and monitor financial goals. From paying off your mortgage to building an emergency fund, your net worth serves as a benchmark for measuring your progress.
As you gear up to calculate your net worth, it’s important to gather the value of your assets and liabilities. Taking stock of everything you own and owe can take some time. To save you some trouble, here’s a list of what you should include in your personal net worth:
Liquid assets are a type of financial asset that you can readily convert into a case or use for expenses. These typically include:
In addition to liquid assets, you should gather the value of your investments. Investments have the potential to grow in value over time and should be considered assets. Here are some examples of investments that fit in this category:
Calculate how much physical property you own to gain a full picture of your net worth. Here’s a list of physical property assets to include in your net worth calculation:
Finally, you’ll want to evaluate how much debt you have as you calculate your personal net worth. Here is a list of loans and debts you should include:
As you’re gathering the value of your assets and debts, it’s important to be as accurate as possible. You may need a professional appraisal for real estate, jewelry, and/or vehicles. Consider consulting an expert for valuation.
Now that you have an understanding of what to include in your personal net worth, here’s the best way to calculate your personal net worth.
First, you’ll want to gather the financial values of every asset you own. Consult the list above for a comprehensive checklist of what to count as assets, or take a look at this cheat sheet:
Next, compile a list of outstanding debts and financial obligations (also known as your liabilities). This should include any mortgage loans, auto loans, credit card debt, personal loans, student loans, outstanding medical bills, etc.
Finally, subtract your total liabilities from your total assets to get the value of your personal net worth. If you need help calculating your personal net worth, you may want to use an online personal net worth calculator that can guide you every step of the way.
Your net worth will either be positive, indicating that your assets exceed your liabilities , or negative, suggesting that your debts surpass your assets. By understanding your net worth, you can make informed decisions about retirement planning, investment strategies, and debt management, ensuring that you are on the right financial path as you prepare for retirement. Now, the next time you find yourself asking, “What is my net worth?” you’ll have a better understanding of how to calculate it.
As you set out on your journey toward the golden years, understanding your net worth can help you gain financial clarity and allow you to pivot before retirement. When calculating your personal net worth, remember that Retirement Genius is here to help. Whether you have questions about calculating your assets or want to learn more about selling your life insurance policy to gain a financial windfall, Retirement Genius has the resources to point you in the right direction. Give us a call today, and we can chat about your future: 866-602-5000.
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