Don’t touch that money!

Taking drastic measures against your retirement assets can put a crimp in your renaissance, says the chief of the financial industry regulation agency.

Mary Schapiro, chief executive of the Financial Industry Regulatory Authority, said recently Americans should think twice before taking out reverse mortgages, 401(k) loans and other retirement plan withdrawals just because times are tough now.

“They may raise cash quickly, but each also carries long-term consequences that can undermine financial security in retirement and pose the potential for losing a significant, and sometimes irreplaceable, asset,” Schapiro said.

Medicare cuts mean more planning

Congress is moving forward in cutting funding for Medicare Advantage. The House voted this week 355-59 to pass a bill, H.R. 6331, that would cut $13.8 billion from the program over 5 years. Seniors can expect to pay more of their share of doctor bills because of the cuts. This is another example of how planning for medical costs in retirement is a necessity, as the further off you are from retirement the further the chances of changing laws that could mean more out of your pocket. Make sure you consult with your financial planner about health care planning in retirement. 

 

Social Security scam alert

As the U.S. Department of the Treasury’s Financial Management Service debuts a prepaid debit card for Social Security payments and other federal benefits, be aware of scammers. The Direct Express® Debit MasterCard® card – designed as a safe, convenient alternative to paper checks that people without bank accounts may choose – is currently being introduced nationwide.

Consumer protection advocates are trying to get a head start in the education since as with anything new, crooks will try to scam folks with this. They might try to call and get personal information from clients, and ‘threaten’ them with not receiving their payments, unless they give them social security numbers or bank accounts. Please look out for any scams involving this and report them right away to AARP ElderWatch (1-800-222-4444), your local law enforcement or District Attorney’s office.

Rollover the right way

An article in Saturday’s Wall Street Journal points to the growing “stiffiness” of the IRS when it comes to IRA rollovers. Used to be you could appeal the 60-day rule that requires you to withdraw IRA funds and deposit them in a new IRA within 60 days. Hardships during that period left some forgeting to make the new deposit on time. But no more, the IRS is being firmer on the 60-day rule. The lesson: Transfer IRAs from trustee-to-trustee instead of having the check sent to you. This is the fail-safe method and also avoids the 20 percent withholding. When it comes to the IRS, don’t look for sympathy.

More second guessing on annuities

I’ve heard this story before from confused seniors. So here’s another article on why you need to get a second opinion on annuities:

http://www.sltrib.com/business/ci_9587483

 

Why you need to check insurance quotes

Life insurance can be a good vehicle for saving for retirement if not only used properly but shopped around. I received a letter from my agent offering an annual premium of $1,700 for a Universal Life policy if I converted from my term policy. First, the agent did a poor job in recommending Universal because he never asked my current situation, so how does he know I need it? Next, the premium was 35% higher than the same policy with another reputable insurer. Fortunately, at RWA we have access to a  program that searches for policies at the best rates so we can compare policies and recommend the best one to clients. This is just another example of how an independent advisor can save you money by looking out for your best interest, especially as you enter retirement and every penny counts. 

Why gas prices may fall

For retirees, and anyone for that matter, rising gas prices eat into income like a parasite. It’s an example of why retirees need to have investments that keep up with inflation. One way to avoid becoming a victim of gas inflation is to wait it out. What goes up must come down, right? Therefore, why not take a vacation from a vacation this summer, which not only will help keep expenses in check but help bring gas prices down. If we cut back on use, demand goes down and so does the price of gas.

Forecasters at Kiplingers said this week they expect gas at $3.45 by the end of the year because of demand already weakening just like it did in 1979 and 1980. Americans drove 4.3% less in March alone, it said, and was down during Memorial Day week, too.

More of us have also been shunning pickups and SUVs. Four-cylinder engines made up 45% of May sales, up from 30% in 2005.  That means less gas will be purchased, further shrinking demand.

So I, like others, have hope that by becoming more energy efficient, gas prices can stop going up. Let’s just take a break. Vacation closer to home this year for the good of all Americans

3 keys to your renaissance

What does it take to create a retirement that allows you to celebrate a rebirth without burdens? Three keys, adopted from a recent article I read, are:

1. Attention to savings: Taking the initiative to save is half the battle.
2. Working hard: The rewards will mean more available to save and a more enjoyable career.
3. Being thrifty: The less money you waste the more you’ll have available to grow for the future.

Tell me what you are saving by following these three keys and I can tell you if you will reach your goals.

How to fix Social Security, Medicare

Raise taxes by 7% or cut Social Security and Medicare benefits by 7%, that’s what the government needs to do to keep its retirement system working, says William Sharpe, the Nobel Prize winning economist. Speaking at an adviser conference in New Orleans, Sharpe said we better plan on higher taxes or getting smaller benefits. Of course, Congress will determine the answer. For now, all we can do is make sure our personal savings are growing to help us head off these changes in the future. Depending on your age, certain strategies can be implemented now to keep you ahead of those higher taxes or fewer government benefits. It’s up to you to take action now. Contact me if you would like a personal evaluation.

Will divorce sidetrack your retirement?

Read my latest article, published in the Miami Herald, about how the emotions of divorce can throw us off track now and when planning for the future. Don’t let it ruin your renaissance!