Finance - HL 228 (1)

Helpful miscellaneous articles regarding our retirement plan and planning.  Like you, I review my retirement nestegg and plan from time to time.  Recently, I went though some continued education for some credentials I maintain and it occurred to me that we all could use a review about these issues.  So with your help, we will share and post articles and info that may be helpful and of interest to many of you in this section.

Myths of Retirement

By TIAA-CREF
More and more financial advisors are recommending that women plan for their retirement savings to get them to age 100 or older. Sometimes, by knowing what not to do, you can keep yourself on the right track. Check out these common myths about retirement, and make any needed adjustments to how you manage your accounts.

Myth: You should stop earning and saving when you are retired.

Fact: Retirement is a journey, not a destination. The goal is to provide income in retirement that supports your desired standard of living; it isn’t to build the biggest nest egg for the day you decide to retire. Depending on when you retire and how long you live, retirement can last 30, 40 or even 50 years. It’s a good idea to continue to build wealth by working part-time in your early retirement years, and to include stocks for potential growth in your portfolio. Please note that stocks are subject to investment risk, including possible loss of the principal amount invested.

Myth: You’re too old to start saving for retirement.

Fact: Although it’s always better to start saving early, it’s never too late: If you take saving seriously from now on, you can make a big difference in your retirement accounts. Calculate what you have and consult with a financial advisor to see how much you’ll need to put away to meet your retirement goals. If you’re over age 50, you can legally contribute more now than you could at an earlier age to your 401(k) and IRA to help you catch up.

Myth: Moving to a location with low housing prices helps your money last longer.

Fact: It may be tempting to move to a warmer climate that has no income tax, such as Florida or Texas, but a lower price tag doesn’t necessarily mean that your expenses will be reduced. Sales taxes can be high, and many local governments are now contemplating raising property taxes to offset budget shortfalls.

Myth: You’ll pay fewer taxes when you retire.

Fact: While it’s possible that you’ll be in a lower tax bracket because you’ll be making less, it’s more likely that you’ll pay a higher percentage of your income to taxes after retirement. As you lose deductions and exemptions, your state and local taxes will continue to increase.

Myth: Long-term health care is covered by health insurance or Medicare.

Fact: Health insurance companies don’t cover nursing home or in-home care, and the government usually won’t cover it unless the patient has already gone through his or her savings. To keep such expenses from running out of control, many financial planners recommend considering long-term care insurance as a way to pay for these expenses.
However, many insurance companies will only pay long-term care costs for two to five years, according to HHS. Very few companies offer to cover you for as long as you live. Therefore, it is important to build into your plan how you will pay for long-term care expenses, based on your needs and budget.

Myth: You should put saving for the kids’ college ahead of saving for retirement.

Fact: While it’s understandable to feel the need to fund your kids’ college education first, you have to realize that while your child can get a loan for college (with you as a co-signer), you can’t get a loan for retirement. We’re not encouraging you to give up saving for college entirely – but you should make putting money aside for retirement your top priority.
However, if you’re funding retirement and you decide to also put money away for college, opening a 529 College Savings account is a good start.¹ Most U.S. states have 529 plans, each with their own features. Although most plan contributions are not deductible and come from after-tax money, some states allow residents to deduct contributions to their own state’s plan. When you’re ready to pay for college, withdrawals are tax-free.²

Myth: You won’t ever want to retire.

Fact: While you are to be applauded for your work ethic, life can bring the unexpected; you could run into health issues or job layoffs, or you may need to care for a loved one. It pays to plan for retirement – even if you love what you do.

Fact: You can plan your dream retirement.

Retirement is, for many, the ultimate golden age. Planning for it requires keeping a keen eye on your investments and taking risks into account. It can be a lot of work, but when you finally decide to retire, you will thank yourself for all of your efforts.
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¹Before investing in a 529 plan, consider whether the state you or your beneficiary reside in has a 529 plan that offers favorable state income tax or other benefits that are only available if you invest in that state's 529 plan.

²Withdrawals are tax-free for qualified higher education expenses. Nonqualified withdrawals may be subject to federal and state taxes and an additional federal 10% tax.

The material is for informational purposes only and should not be regarded as a recommendation or an offer to buy or sell any product or service to which this information may relate. Certain products and services may not be available to all entities or persons. Please note that investing involves risk.

TIAA-CREF Individual & Institutional Services, LLC, Inc., member FINRA, distributes securities products.

The tax information in this article is not intended to be used, and cannot be used, to avoid possible tax penalties. It was written to promote the products and services the article describes. Neither TIAA-CREF nor its affiliates offer tax advice. Taxpayers should consult an independent tax advisor for advice based on their own particular circumstances.

Investment, insurance and annuity products are not FDIC insured, are not bank guaranteed, are not deposits, are not insured by any federal government agency, are not a condition to any banking service or activity, and may lose value.

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(As with any of these informative articles, anyone who needs someone to talk to about

this very subject contact me and I can direct you to a knowledgeable advisor).

 


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