Investing and Spending – Enjoying Your Retirement

Written by Sally Perkins

Retirement and the associated saving is a source of anxiety for many people. You spend an entire lifetime working and trying to take the stress out of retirement funding; so, where’s the fun in continuing to stress and worry once you’re actually there? Of course, it’s never actually as simple as stopping your worry.

This article will shed some light on the best ways to build and manage your retirement fund to reduce your anxiety over saving to the absolute minimum level. Then, keep reading to see some of the best ways to spend your money to really enjoy the years of job-free freedom – without breaking the bank – and whilst also keeping yourself healthy.

Preparing – How To

The United States has basic retirement benefits available for those once they reach the prerequisite age. These reach up to around $15,000 and provide a basic income to those in need. However, the federal government recommends you aim for 80% of your income in retirement. So, if you’re someone who earns $100k a year, you’ll need $80k to continue our quality of life. How do you achieve that?

Unlike some other countries in Europe, the USA has no mandate of employers to provide pensions. This leads many employers to offer up-front salary improvements and bonuses in place of pension contributions – which is a good or a bad thing, depending on your self-control. The AAA Credit Guide (https://aaacreditguide.com) suggests vehicles such as the Roth IRA provide a far superior saving environment – and one you control – as opposed to many company led pension schemes.

The big benefit of the Roth IRA is that it takes away future tax burden and obligations, which can give relief when you’ve reached retirement age. You can super-charge your pension by taking out personal investment plans in addition to the IRA, or running one alongside an employer-sponsored 401K.

Enjoying Yourself

Once you hit retirement and have access to your fund, either as a lump sum or as a dividend-style trust arrangement, it falls on you to moderate it properly. This is where some stumble finding themselves unable to exercise the correct level of self-control when adapting to 100% free time from a 9-5 job or similar. For this purpose, consider employing the dynamic spending and saving strategy to keep a firm grip on your economic situation.

With that in mind, you might be thinking – what can I enjoy? What hobbies exist that will bring enrichment and stimulation whilst remaining relatively frugal?

Model Construction

Airfix planes and LEGO style buildings may seem to be things of your childhood. However, the companies touting these products are actually targeting and directed towards generations above just ‘kids’. In fact, LEGO attribute some success to ‘mature’ sets following the downward trend of their brand. These sets aren’t bank-breaking and the customization can offer years of enjoyment for minimal outlay. Models and airfix-style can even benefit your health. The tasks are often relaxing, stimulating your mind and demanding concentration. They can also help with motor skills, which can fall by the wayside in retirement.

Geocaching

Geocaching is a very 21st century hobby that involves little more than a set of maps and any rudimentary GPS device. People all over the world have spent time to hide trinkets and treasure around their countries, posting treasure maps online to lead fellow community members on an entertaining trail. Many contributors specifically pick picturesque trails or tricky clues and navigation methods, and encourage the treasure hunters to detail their journeys and share them online.

These digital treasure hunts mean that you can get involved with a community and make new friends online. Furthermore, you’ll probably earn a good bit of exercise getting to the remote places and if you have a camera in hand – likely as geocaching can be done with your phone – get some spectacular shots of nature.

Martial Arts

Finally there is martial arts. Martial arts is often free, if not subject to small donations to your chosen place of practice. They are again a great way to get out and about, and don’t require a huge level of physical fitness. Martial arts are typically about turning force against itself – acting as a pivot against the strength of other people. Getting involved is a great way to stay healthy physically, and most disciplines have an edge of mental well being too, integrating their rigorous martial arts mentality with strengths plucked from eastern spiritualism.

The financial planning aspect of retirement can be time consuming – even boring. However, the options are there for you to make a success of yourself. And once you retire, there are many inexpensive ways to enjoy yourself and build skills whilst maintaining your health, leaving your hard-earned career cash for the rainy days and big trips ahead.

Make Your Retirement a Healthy One

Guest Post by Joseph Byrne, Founder and CEO of EmpoweredAge.com, a service that connects highly-skilled retirees to part-time or short-term consulting projects in various industries. Below, Mr. Byrne offers his insight into working after retirement and the gap he aims to fill.

Our idea of retirement has changed with each passing generation. Many people count down the days until they can relax with no time-constraints, play golf, visit family and friends, and take the trip they have put off for years. Others find their true passion in their work, committed to continue working as long as their health allows. Still others look forward to volunteering, taking on a second-career, or pursuing a passion project that has eluded them. Often, these visions change during our retirement years after finishing the initial “retirement honeymoon” phase. Retirement can have many different visions to different people; but it does not have to have just one.

As the baby boomer generation is retiring in record numbers (some 10,000 per day), there are millions who are contemplating their next move. Financially, many retirees are not prepared to completely discontinue a regular income, but do not need their full annual salary to feel comfortable. For many, working in retirement is not a burden that interferes with more desirable activities. On the contrary, working in a capacity that allows retirees flexibility, the chance to keep their skills sharp, an opportunity to maintain continued connection with colleagues, all while earning additional retirement income, is a highly fulfilling and prosperous endeavor.

According to research by Merrill Lynch and Age Wave, 47% of retirees say they are either working or plan to work in retirement. This figure increases with people who are actually still working full-time: 72% say they plan to work in some fashion in retirement. Millions of retirees with years of experience, contacts, and expertise are underutilized; their knowledge simply sits on the sidelines. Part-time, value-added work opportunities seem to only exist for the select few via personal networks.

As I spoke with many highly-educated and highly-trained retirees, this stalemate seemed to be a common thread. There was certainly no shortage of useful experience, and furthermore, after a number of conversations with Human Resources representatives, many firms actually sought out this arrangement to help complete short-term and/or particularly challenging projects. It was after a number of these interactions that my team and I decided to create Empowered Age. We formed our hypothesis around this inefficiency and our directive was simple: bridge the gap between retirees and firms who desire to tap into their wealth of experience. After some market research and testing, Empoweredage.com was born.

There are a number of websites that cater to retirees looking to work after their “formal” retirement. Many of these services, however, list mostly hourly or manual labor openings. Empowered Age aims to take this a step further, targeting retirees with years of highly skilled experience that can provide exceptional value to a growing firm. Many of these arrangements are projects to help launch a new product, oversee a new office opening, or advise on a new sales strategy.

In our experience, the feedback we have collected has overwhelmingly confirmed our suspicions. First, that there are a significant number of firms looking to engage in this sort of employment arrangement. But more importantly, the retirees or semi-retirees who are eager to fill these roles report a deep renewal of value, continued social status that was familiar during their full-time working years, and a satisfaction in using their knowledge to help drive growth in their organization. In addition, although we did not initially anticipate, firms have been eager to support initiatives that drive inclusion and diversity as it relates to age. This has been an unexpected by-product that we proudly boast.

Moreover, there are encouraging studies that suggest working later in life – and past the “typical” retirement age – can actually be a significant health benefit. This New York Times Article quotes Columbia and Harvard University Professors regarding the mental and physical health benefits of working in retirement as well as the delay of negative retirement consequences such as fatigue and loss of concentration. In fact, researchers from Cornell and Syracuse Universities found that people who continued to work after formal retirement grew their network of family and friends by 25 percent! On the other hand, social networks of retired non-working people actually shrank during the 5-year study period. The study continues, “Work offers a routine and purpose, a reason for getting up in the morning. The workplace is a social environment, a community.”

In this article for The Today Show, author Jean Chatzky writes that researchers from Oregon State University studied a large group of individuals age 50 and over. The researchers found that people who worked past the age of 65 had an 11% lower chance of death from all causes. Ms. Chatzky continues to quote a survey of 80,000 participants from the National Health Interview all over the age of 65: “People in the workforce (particularly those with white-collar jobs) were significantly more likely to report their health was good, very good or excellent than those who were unemployed or retired.” In the countless hours of research we have conducted as noted above, this completely matches what we have found.

Whatever your idea of retirement may be, planning will be an important part. Whether that be financially, geographically, professionally, or socially, be aware to engage in activities that provide value to you. Look for opportunities that benefit your intellectual as well as your physical health. Wherever your journey takes you, we wish you health and success. If part-time consulting work is in that journey, Empowered Age will help you along the way. Visit us at Empowered Age for more information.

Joseph can be reached at joseph.byrne@empoweredage.com. Please follow on twitter @EmpoweredAge.

Get Your Property to Do More for Your Retirement

Written by Sally Perkins

The economic crisis of ten years ago put a lot of things in perspective. One of the ways it changed retirement is by putting property assets on the same level as stocks and bonds because investors regard property as more stable. You can get properties to work harder for you in your retirement but be prepared, 43% of spending for those aged 75 years or older is on annual home-related expenses.

It can be difficult, but there is a lot of potential for return on investment if you manage your property intelligently. Whether you are a real estate mogul with several rental properties or just working with your home, there is more you can do to bolster your retirement funds.

Refinancing

For those with mortgages, it can be worth looking at refinancing to get a better interest rate. After so many years in the work force, those retiring or soon to retire often have much better credit scores than those they had when first mortgaging their homes.

Once your payments are down, you can use the savings to help pay off the principle. The sooner you can pay off the mortgage the sooner you can put the property to work increasing your income. To find out just how much money you can save try using a mortgage calculator.

Downsizing

Leaving a home that you have lived in for years can be tough, but scaling back to a smaller home has some serious advantages financial and otherwise. As we retire, our needs change and the homes we live in are no different. Maybe the kids have moved out, you don’t use the pool much anymore or your knees just don’t appreciate those stairs.

Not only can downsizing your home better meet your needs, but you’ll save a lot of money on maintenance and utility costs not to mention a reduction in property taxes. You can use the money that you save to reinvest and increase your income or just use it to prepare your new home for your new way of life.

Take Action Early

Many mortgages have strict lending requirements about work. Typical requirements include having to show that you have been employed for the last two years. You can explain away some of these requirements or find mortgages that aren’t so strict but those might be more expensive options. The easiest way to avoid that headache is to take action before you stop work if you have the opportunity.

Make Your Retirement Investments Help Each Other

Mortgage companies usually require higher down payments and interest rates for properties that the owner does not plan to occupy. Down payments can reach 30 percent of the price or more. Perhaps you don’t have the funds for a down payment of that size but you can use your IRA funds to help. Since the money in a Roth IRA has already been taxed, if you use it to buy property all of the equities and earning from it can grow tax-free.

Do the Homework

With all the extra time afforded by retirement, you can do valuable additional research. Finding out potential costs like insurance, mortgage fees, taxes and possible maintenance costs will help you make informed decisions about the viability of individual properties. As in business, income properties are about balancing expenses and revenue.

Research can also help you decide on an area or property in which to invest. Learn the local occupancy and price trends. Area real estate agents, publications and even small local banks are all excellent sources of information. You might even find that getting loans from local banks is a better route than the big banks because the smaller banks have more knowledge and interest in their area.

Gifting Equity

Gifting property equity to your children, their spouses or grandkids can be an option that helps you avoid some tax situations. It is possible to move real estate equity to your kids year by year with no tax liability. There are annual limits but with enough management and recipients you can transfer quite a bit every year and it adds up. It is best to refer to a tax professional to be certain what will work best in your situation.

Diversify

While it is true that property investment can add to your retirement, it shouldn’t be the only thing working for you. Diversification of your funds into 401(k)s, IRAs and the like is still sound advice even in these uncertain economic times. Trust in real estate is high but diversification can prevent you from losing all of your income should the market fall in a particular sector.

Maximize Your Property’s Output

Retirement is a time to relax and enjoy life, but if you want to keep your income high to support your new lifestyle, a little bit of work is required. Property investment, in particular, requires some doing. Using a bit of time, effort and the advantages of being retired you can put your property to work funding your retirement.