Working In Retirement? Here’s 3 Reasons Why You Should

It might sound a little crazy but there are many benefits to working even though you no longer need the money for your living or retirement needs.

These “retirement workers” have discovered that part-time jobs or volunteer positions allow them to keep a nice pace in life and find a balance among using their talents, enjoying recreation, traveling, and spending time with family. Some of our most ambitious clients even start brand new companies in retirement.

Here are three important benefits of working in retirement that might persuade you to clock back in a couple days every week.

Working is good for you.

Retiring early is a very popular goal right now. But while it makes sense to want to enjoy your assets when you’re younger, a recent study links retirement with decreased mental and physical activity and higher instances of illness.

Working keeps your mind and body active. It makes you engage in problem solving and creative thinking. It keeps you mindful about your health and appearance so that you make a good impression on colleagues and customers. It challenges you to keep achieving and rewards you when you do.

And, if nothing else, it keeps you from vegging out on the couch all day and driving your spouse crazy!

Work can give you a sense of purpose.

Many retirees struggle with the transition to retirement because their sense of purpose and identity is so tied to their work. Without that familiar job and its schedule and responsibilities, some retirees struggle to find a reason to get out of bed in the morning. A part-time job can restore some of that sense of structure and drive.

In fact, you might find that working in retirement gives you an even greater sense of purpose than your former career did. You might have worked a job you didn’t 100% love in order to support your family. Now that you no longer need to worry about that, you can take that community college teaching position. You can work a couple days every week at that non-profit that’s making a difference in your community. You can set up regular volunteer hours at a charitable organization that’s close to your heart. You can feel like you’re making a contribution to society without worrying about the size of your paycheck.

Work can improve your connections to other people.

Early retirement can be a period of isolation for some folks. Your friends and family might still be busy working and raising children. The familiar social interactions you enjoyed at work are gone. You and your spouse probably share some common interests, but you can’t spend every single second together.

It’s important for retirees to be open to making new personal connections in retirement. A new workplace is a great place to start that process. You’ll meet new people from different walks of life. You’ll work with and help people who can benefit from your personal wisdom and your professional skill set. You might meet other retired seniors who, like you, are trying to stay active and put their talents to good use. And the more involved you are in your community, the more curious and adventurous you’re going to be about trying new restaurants, shopping in new stores, and interacting with more people.

Of course, working in retirement can affect other aspects of your financial planning even if you don’t need the money, such as taxes, withdrawal rates, and your relationship with your spouse. If you’re considering a new part-time job, let’s schedule a conversation to discuss any adjustments we should be thinking about so that you get the best life possible with the extra bit of money you’ll soon have.

For more on working in retirement, check out this cool article from Nerd Wallet that gives you a few things to consider.

How To Test Drive Retirement

Want to Retire? Take It for a Test Drive

There are many reasons why people who could retire are hesitant to do so. Some people think they need to wait until they’re 65 or older. Some are worried about running out of money. Many parents want to keep supporting their children through some major life transition, like college, marriage, or buying a first home.

Maybe the most common reason we see for a retirement delay is folks who just can’t imagine their lives without work. That’s understandable. A routine that’s sustained you and your family for 30 or 40 years can be a hard routine to shake.

But retirement doesn’t have to be all or nothing right away. If just thinking about retiring makes you jittery, use these tips to ease into retirement a little at a time.

1. Talk to your family.

Clear, open communication is an essential first step to approaching retirement. Be as honest as possible about what you’re feeling. What worries you about retirement? Does the idea excite you? What do you envision your days being like? Where do you want to live? What does your spouse want retirement life to be like?

2. Talk to your employer.

Many companies have established programs to help longtime employees transition into retirement. You might be able to trim back your hours gradually to get an idea of what days without working will be like. You’re also going to want to double-check how any retirement benefits you may have are going to work. Discuss any large outstanding projects with your supervisor. Make a plan to finish what’s important to you so that you can leave your job feeling accomplished.

Self-employed? Give your favorite employee (you) less hours and fewer clients! Update your succession plan and start giving the soon-to-be CEO more of your responsibilities. Make sure you have the absolute best people working for you in key leadership positions so that your company can keep prospering without your daily involvement.

3. Make a “rough draft” of your retirement schedule.

What are you passionate about? What are some hobbies you’d like to develop into a skilled craft? Do you want to get serious about working the kinks out of your golf swing? Are there household projects, repairs, or upgrades you want to tend to? A crazy idea you kicked around at work you’d like to build into a new company? A part-time job or volunteer position you’d like to take at an organization that’s important to you? New things you want to try? New places you want to visit? Grandkids you want to see more often?

Try filling out a calendar with some of your answers to these questions. As you start to scale back your work hours, take a few lessons or volunteer shifts. Sign up for a class. Leave town for a long weekend. See what appeals to you and what doesn’t.

Remember, you don’t have to get your schedule right the first time! A successful retirement will involve some trial and error. Learn from things you don’t like and make a point to spend more time doing the things you do like.

4. Review your finances.

This is where we come in!

Once you and your spouse have settled on a shared vision for retirement, we can help you create a financial plan to help ensure you are financially fit for (semi)-retirement. We’ll go through all of your sources of income, retirement accounts, pensions, savings, and other investments to lay out a projection of where your money is coming from and where it’s going.

We can coordinate all aspects of your situation and collaborate with you on the best course of action. You don’t have to face retirement alone and make big decisions without expert guidance.

Coming in and talking to us about your retirement is a great “Step 1” option as well. So if you are dreaming of those days when work is optional, give us a call and we can help you through this phase of life.

For more retirement resources check out some of our other blog posts.

For more help with retirement, the AARP website can be a great resource as well.

Did You Inherit Your Beliefs About Money From Your Parents?

Lou Desepoli, Heritage Financial Advisory Group

Parents know that children hear, see, and pick up on everything that is going on with the adults in their lives. And when you were a child, you were no different.

Our attitudes about money are formed at an early age, as we absorb how people around us deal with money. Some of these beliefs, such as a commitment to disciplined saving, are positive. Others, like skepticism about the stock market, can be more harmful than helpful as we try to build wealth in our own lives.

Answering these four key questions can help you look at your financial upbringing with a fresh perspective. When you’re done, think about which money beliefs you want to pass on to your own kids, and which might be preventing you from living the best life possible with the money you have.

What was money like growing up?

Your childhood experiences of money are a composite of details both big and small.

You probably compared the comforts of your home to what you saw next door and drew some conclusions about how comfortable your family was.

Did your parents get a new car every couple years or drive around the same station wagon until it died? Did you take frequent vacations? What were holidays and birthdays like?

Watching mom and dad carefully balance their checkbooks or set next week’s grocery budget also might have made a strong impression. And at the more serious end of the spectrum, an unexpected job loss, debilitating medical condition, or death could have had a profound impact on your family’s finances.

What was money like for your parents growing up?

Many baby boomers were raised by parents who had to tighten their belts during the Great Depression and World War II. The Greatest Generation probably impressed upon your parents the value of the hard work, the importance of saving, and perhaps some real apprehension when it comes to money. Your parents may have passed on these same values to you, or swung in the opposite direction and tried to make money as stress-free as possible.

How much do you know about your parents’ childhoods? If they’re still living, ask some questions that will fill in your family’s history a little more clearly. You might learn something surprising. And you might gain some insight into how their experiences of money are still affecting you.

What specific lessons were you taught that you have continued?

People who grow up in working-class households often learn negative lessons about wealth. Their parents may view affluent people with suspicion or even resentment. Sometimes there are valid reasons for these views. In other cases, hard-working adults see greener grass on the other side of the fence. They underestimate how much hard work and discipline really go into wealth-building. Their kids learn to do the same.

On a more positive note, your parents also made decisions that taught you what was more important. Perhaps they sacrificed their own leisure and comforts so that you could attend a good private school. A parent might have earned a modest living as a teacher or working for a nonprofit that made your community better.

What was the best thing you were taught about money?

As a child you probably rolled your eyes whenever your parents doled out maxims about money or started reminiscing about what money was like when they were growing up.

Now that you’re the one doing the earning, some of those lessons probably ring true. “Live on less than what you make” is hard to hear when it’s used to explain why you can’t have a new bike or take a big vacation. No child wants to sacrifice their weekends or summers working part time because their parents insist on it. But the lessons that were hard to swallow when we were young. These are the lessons that often create attitudes and habits that benefit us as adults.

The sum of all these memories, the positive and the negative, is a blueprint to your financial thinking. It’s also the schematic that we use to build your life-centered financial plan. Come in and share your blueprint with us so that together, we can lay a strong foundation for your family’s future.

For more information about this topic or any others, reach out to us by clicking here.

3 Ways to Know When You Are Ready to Retire

Mike Desepoli, Heritage

There’s a pretty good chance that your parents and grandparents retired just because they turned 65. Today’s retirement is a bit more complicated than that. While age is still an important factor, your ability to connect your financial resources to your lifestyle goals is what will truly determine if you’re ready to retire.

Here are three important markers to cross before you crack open your nest egg:

You’re financially ready.

The most common question we field from our clients is, “How much do I need to retire?” While there’s no magic number to hit, a few key checkpoints are:

You have a budget. Many clients who are preparing to retire tell us they’ve never kept a budget before. Time to start! If you have any big plans for early in your retirement, like remodeling your home or a dream vacation, let us know so we can discuss front-loading your annual withdrawal rate.
Your debts are paid. No, you don’t necessarily need to pay off a fixed-rate mortgage before you retire. But try to reduce or eliminate credit card balances and any other loans that are charging you interest.
Your age, retirement accounts, and Social Security plan are all in-sync. If you’re planning on retiring early, be sure that your retirement accounts won’t charge you any early withdrawal penalties for which you’re not prepared. Also keep in mind that the earlier you take Social Security the smaller your payments will be. Can you afford to live without Social Security until age 70 to maximize your benefits?
You and your spouse have a health care plan. Medicare insures individuals, not families. If only the retiree is 65, the younger spouse will need to buy health care elsewhere.

You’re emotionally ready.

We spend so much of our lives working that our jobs become a large part of our identities. Rediscovering who we are once we stop working can be a major retirement challenge. To prepare for this emotional transition:

Talk to your spouse ahead of time. Don’t wait until your last day of work to discuss how both of you feel about retirement. What do each of you imagine life will be like? What are the things you’re excited to do? What are you afraid of? What can each of you do to make this new phase of life as fulfilling as possible?
Make a list. What are the things you’re passionate about? Something you’ve always wished you knew more about? A skill you’d like to develop? A cause that’s important to you? An ambitious business idea that was too ambitious for your former employer?
Check that your estate plan is in order. It’s understandable that many people avoid this part of their retirement planning. But putting together a legacy that could impact your family and community for generations can have tremendous emotional benefits. The peace of mind that comes from knowing the people you care about are taken care of can empower you to worry a little less and enjoy your retirement more.

You’re ready to do new things.

Ideally, the financial piece of this conversation should make you feel free enough to create a new retirement schedule based on the emotional piece. Plan your days around the people and passions that get you out of bed in the morning. Some ideas:

Work at something you love. Take a part-time job at a company that interests you. Turn that crazy idea you couldn’t sell to your old boss into your own business. Consult. Teach. Volunteer.
Keep learning. Brush up your high school French by enrolling in an online course. Learn some basic web design so you can showcase your photography portfolio or create an online store for your crafts. Sign up for cooking classes and get some new meals in your weekly rotation.
Get better at having fun. What’s the best way to lower your handicap or perfect your backhand? Take lessons from a pro. The second best? Organize weekly games with friends and family.
Travel. Planning out a big vacation can be a fun project for couples to do to together. And while you’re looking forward to that dream trip, take a few weekend jaunts out of town. Stay at the new bed and breakfast you keep hearing about. Visit your grandkids. Go on the road with a favorite sports team and enjoy the local flavor in a different city.

If you’re nearing retirement and struggling with these issues, working through the Return on Life tools with us might provide some clarity. Let’s discuss how we can help get you ready for the best retirement possible with the money you have.

For more retirement resources visit the AARP website.

5 Next Steps When You Are Concerned About Aging Parents

As your aging parents begin to settle into their final phase of life, their health, residence, and finances could become a factor in your retirement planning. This is especially true if you are the person your parents have tasked with settling their estates.

There’s no simple way to tackle all the logistical and emotional challenges associated with caring for an aging parent. But these five steps will help you get the help you’ll need to make sure your parent is safe, cared for, and financially secure.

Call a family meeting.

No two families are the same, but in most cases, you’re going to want to gather together all siblings and close family members for an open and honest discussion. If your parent is dealing with a serious and potentially debilitating health issue, don’t sugar-coat the truth. Hiding the facts now will only lead to hurt feelings, resentment, and poor planning.

Depending on the parent’s condition, you might consider dividing up a caregiving or visitation schedule. Even pitching in on small day-to-day tasks like helping mom or dad buy groceries can be a big help.

If you’re contemplating a more serious decision, like assisted living, make sure you give everyone space to voice an opinion. Try to keep the conversation as positive and solution-focused as possible. Employing a mediator or family counselor to facilitate might be a good option if you’re concerned old family issues could boil over and prevent a solid resolution.

Don’t try to parent.

Shifting from the role of adult child to caregiver is going to be a difficult transition for both you and your parent. Don’t try to do too much too soon. Seniors who feel like they’re being “babied” are prone to depression or dangerous outbursts of independence, like grabbing the car keys or refusing to take medication.

A better approach is to try to frame your caregiving as a way of being more involved in your parent’s current routine. Take a seat at dad’s weekly card game. Put the grandkids’ sports and performance events on the calendar and offer transportation. Bring an extra dish to a dinner party. Drive mom to the movies … and let a sibling know the house will be unoccupied for a few hours if there are any cleaning or hoarding issues that need attention.

Gather the essentials.

If your parent doesn’t keep all important documents in one location, now is the time to collect, copy, and file things like:

Identification (driver’s license, passport, birth certificate, marriage certificate, etc.)
Bank records
Home deeds and vehicle titles
Insurance records
Investment and retirement account records
Wills and trusts
Power of attorney
End of life directives
Login information for important online accounts (banking, subscriptions, social media)

There may be other documents that are unique to your parent’s living or financial situation. We can help you make a comprehensive list.

Tag along.

Start attending doctor’s appointments. Don’t be afraid to ask questions that will help you familiarize yourself with your parent’s medical condition and aid with any at-home care like prescription drugs.

Also ask your parent to introduce you to his or her financial advisor and attorney. Make sure the relevant professionals have all important information about changes to your parent’s health, mental capacity, or living situation.

Plan for the next steps.

At some point, your aging parent may no longer be self-sufficient. The earlier that you and your close family members decide upon an action plan, the better. Do you or anyone in your family have the room, the time, and the means to take in your parent? How can non-caregiving siblings or other family members chip in on associated costs of living?

In many cases an assisted living facility is a more realistic option. But be aware that your parent’s Medicare plan probably will not cover those costs. If your parent does not have retirement funds earmarked for end-of-life care, you and your close family members may need to hold another meeting to discuss how to pay for a facility.

None of these steps are easy, and none of the associated options your family settles on will be perfect. The sooner you loop us in on how caring for an aging parent might affect your financial picture, the sooner we can get to work on the money side so that you can concentrate on giving your family the love and support it needs during this difficult time.

How to Have More Fun and Meaning When You Retire

How to Have More Fun and Meaning After You Retire

Lou Desepoli, Heritage Financial Advisory Group

A blank calendar filled with nothing but free time can be every bit as stressful as a packed work week.

That’s the surprising fact that many people who retire confront after a few days of hitting the snooze button and puttering around the house. This is usually when the reality of retirement sets in. This is your life now. What are you going to do with it?

Whatever you want!

The only thing better than sleeping in is jumping out of bed early because you’re energized and excited for the day ahead. This is the kind of active and fulfilling retirement that we love to help our clients prepare for.

Here are some ideas for creating a new retirement schedule that will keep you growing, learning, experiencing new things, and making meaningful connections with your community.

Travel.

Taking all those trips you couldn’t squeeze in around work meetings and kids’ baseball tournaments tops many retirements wish lists. And with good reason. After all that hard work, prudent planning, and disciplined saving, you deserve to treat yourself, do things you never had time for, see places you’ve always wanted to see.

Why not try to be your own travel agent? Planning a few big trips scattered throughout the year can be a fun activity for you and your spouse to do together. And in between those big destination vacations like a river cruise in Europe, you can sprinkle in some long weekends visiting the grandkids, and a few separate getaways to give each of you space to pursue your personal passions.

Work or volunteer part time.

No, “working in retirement” is not an oxymoron. More and more retirees who can afford to stop working are taking part-time jobs and volunteer positions. This can give your week some welcome structure and provide an outlet for things you’re passionate about.

That non-for-profit job you couldn’t afford when you were raising kids and paying a mortgage? Take it. Do some good in your community and make a little spending cash on the side. Put your cultural expertise to work as a docent for an art gallery or museum. Volunteer at a church or charitable organization that’s close to your heart.

Upgrade your living situation.

Whether you’re handy and enjoy doing the work or just like picking out new colors, patterns, and fixtures, take care of all those lingering household projects. Your comfort is important, especially as you age. Don’t let minor inconveniences like leaky faucets and spotty heating turn into major problems. Get rid of that lumpy mattress and hard couch you’ve been torturing yourself with for a decade. Map out the deck and pool you’ve always wanted and turn your backyard into a central hangout for your family and friends.

Of course, that’s assuming you want to “retire in place” at your current residence. A permanent change of scenery can be invigorating as you enter this new phase in your life. Just make sure you talk to us if you see a new beachfront condo in your future. We’ll make sure to incorporate the move and all the necessary tax, health care, and cost of living adjustments into your financial plan.

Get really good at something you love doing.

Been a frustrated weekend golfer your whole life? Sign up for lessons and get that handicap down for good. What better time than when you retire? Or better yet, set up a weekly tee time with a group of retired friends. No more rushing through meals on your way to and from work and school, so let your inner foodie have the run of the kitchen. Dust off your college French lessons before that dream trip to Paris with an online class. Clear out that back bedroom no one uses any more and make a study. Paint the pictures you’ve always wanted to paint. Finish the novel hiding in the bottom of your desk drawer.

The possibilities for an exciting and fulfilling life in retirement are bound only by your imagination and the financial resources you have available to you. Let us help you take care of the money part so you’re free to focus on the fun.

For more retirement resources check out our YouTube Channel

Should I Sacrifice My Retirement to Support My Children?

Mike Desepoli, Heritage

Most parents will say that they want to help their children as much as they can and give them every advantage. But what if “every advantage” comes at the expense of the parents’ retirement savings and investments?

According to a survey by NerdWallet, 80% of parents are covering or have covered an adult child’s expenses after the child turned 18. That generosity can cost parents up to $227,000 of their retirement savings.*

Can you afford to press pause?

Some parents who are still supporting adult children rationalize the expense by telling themselves they’re “just pausing” their retirement plan. This is especially common of parents who want to help with a major life transition, like college tuition, a first home, a first car, or a wedding.

However, while your adult child can apply for scholarships, sign a lease, or take out a mortgage, there are no “scholarships” for retirement. If supporting an adult child causes you to slip below your baseline budgetary needs or savings goals, it can be difficult to catch up.

Even smaller expenses add up in the long run. You may think you’re “only” giving your young adult $30 per month as they continue to piggyback on a family cell phone plan. But if that $30 would have gone into an IRA, 401(K), or investment account, you’re not just losing $30 every month – you’re losing out on potential capital gains and compounding interest that can add up to thousands of precious retirement dollars.

Check their budget.

If you do decide to help an adult child, it’s a good idea to take steps to ensure your helping doesn’t turn into a lifestyle subsidy.

Depending on the nature of your financial support, it might make sense to get a good understanding of your child’s spending patterns. Chances are they don’t have a budget you could look at but ask them what their typical expenses are each month. You have every right to make sure that your child’s financial need isn’t the result of unnecessary creature comforts, lavish vacations, etc.

By getting a sense for their spending, you might be able to help your child find ways to economize, which could help limit your own expenses.

Set terms.

Another way to make sure your child doesn’t remain reliant on you is to set terms. Much like asking to understand your child’s spending, hammering out an agreement strikes some parents as intrusive, or even cruel. But it’s important that you and your child both understand each other’s expectations going forward.

For starters, are you giving your child a gift or a loan?

If it’s a gift, exactly how will the money be used? Are you helping your child solve a problem for good, or will this gift only lead to more problems, and more pressure on your retirement savings? Again, asking for specifics isn’t mean, it’s responsible giving.

If it’s a loan, what are the terms? Are you charging interest? When will your child pay you back? Maybe establishing a monthly payment plan as part of the child’s budget is a good idea.

Don’t be afraid to say no.

Saying no to your children never feels good, not even when they’re grown. But sometimes that’s the best thing you can do as a parent.

If you look at your child’s budget and the intended use of your money and decide a loan or gift is not in your child’s best interest, or could potentially damage your retirement plan, then saying no is an option.

There are more ways to help a child than writing a check. Maybe you have a connection who could help your child find a better job. Offer to go with your child to the bank and help with loan applications. Do some online research into scholarship and government grant opportunities that your child can take advantage of.

Many of our clients introduce their adult children to our life-centered planning team. Our advisors can be an excellent resource to help your child move towards financial independence and start planning for their own future.

Remember: your child has his or her entire working life to figure out how to balance their checkbook. But your retirement will be here much sooner than you think. Think long and hard about providing your child with a short-term fix if it’s going to set yourself up for long-term financial stress.

*Source: https://www.nerdwallet.com/blog/study-lifetime-cost-supporting-adult-children/

Trump Tax Reform Plan

Trump Tax Reform Plan Released

Just days before the 100-day mark of the Trump administration, we were presented the outline of what is being called “the biggest tax cut” in US history. Trump’s tax reform calls for big cuts in federal taxes for businesses and a simplified basis for individuals.

But what exactly does this big news mean for investors?

Even a minor decrease in tax rates on businesses can have a big benefit on their bottom line. Rather than use the extra money for expansion or other projects, it is likely that companies would use those dollars to increase stock buy-back or raise their dividend. The end result: more wealth for shareholders.
With more favorable tax rates on corporations, foreign companies will be more inclined to increase business within the Unites States. More companies will begin production domestically rather than seeking international options, which in turn will drive U.S. economy upwards.
Personal tax rates are projected to become a whole lot more simplified changing the existing seven brackets down to three; 10%, 25% and 35%. Income ranges for these amounts have yet to be announced, however; the proposed rates would ease the tax burden on most Americans, freeing up dollars to be invested.
In addition to lower personal tax rates, Trump wants to double the standard deduction for individuals. This would look like a deduction of $24,000 for a married couple. Essentially this means that the first $24,000 earned is not taxed. This creates yet another tax savings for individuals, and more dollars in the pockets of tax-payers.
The proposed plan lowers the capital gains tax from 23.8% to 20%; eliminating the portion that is used to fund the Affordable Care Act. This reduction makes investing in the stock market much more attractive.

While companies begin to save money on taxes and drive their market share, it is going to force investors on the sidelines to take part in the market gains. Extra money in the consumers pocket due to having a smaller tax burden will also contribute to a market up rise; while having a smaller burden on the backend when it comes to capital gains.

About the Author

Kristi Desepoli is an associate financial advisor at Heritage Financial Advisory Group. Heritage specializes in investment management and financial planning for business owners and executives.

A 5 Step Plan to Retire Early

A 5-step plan to Retire Early

Cut spending, invest carefully, live simply — and comfortably

Wish you could retire right now? Give up the rat race, embrace a life of independence, reduce your stress, and have more time for what you value most — your family, education, travel? That might seem like a fantasy but to retire early is within reach of most Americans, if they would only take the steps to make it happen.

That’s not a sales pitch. It’s true. You, too, can retire the way you want, when you want.

While many think of retirement planning as a complex process, it doesn’t have to be. Below, we outline the key strategies learned by people who have done it — people who, without being millionaires, managed to retire in their 30s, 40s and 50s. If you’re eager to join the ranks of the financially independent, get going by following the steps below.

Step 1: How much do I need to save?

These days, a better term for “retirement” might be “financial independence.” That is, retirement isn’t connected to a specific age, and it may entail continuing to work or volunteer. It’s all about doing what you want, when you want.

And anyone can do it. Financial independence, after all, is a simple concept: you need enough money to create income to support your lifestyle for the rest of your life. That points to the crux of retirement planning: How much you need to save depends entirely on how much you spend. Your spending rate is the single biggest factor determining when you will be financially able to retire.

The first step to financial independence is figuring out where your money is going now. Monitoring and, if possible, reducing, your current spending has two important benefits: it frees up more money to be put aside in savings, and it reduces the amount you need each year to live on, thus lowering the total amount you need to save.

To track your spending and savings, check with your financial advisor to see if they offer an online service that can help you with this. At heritage, our clients utilize Heritage CFO to monitor and track their finances in real-time.

Certainly, your spending will change once you retire. You’ll stop sending money to savings. You won’t be spending money on commuting. Other costs may rise. Perhaps you’ll want to travel more, or you may encounter higher health-care costs.

Step 2: How do I invest?

Just as reining in spending is a recurring theme among early retirees, so is the idea of investing. Successful retirees use the funds they have accumulated to generate growth and additional income by investing. Not all investment strategies are created equal, so make sure you find a strategy that is suitable for your goals and objectives.

Step 3: Housing costs in retirement

A key piece of retiring early is keeping your housing costs low. If you plan to live in the U.S., the ideal situation is to pay off your mortgage before retiring. But as noted in No. 1 above, the key to retiring early is a simple function of how much you spend versus how much you have in income. If you save enough such that you can cover your mortgage costs after retiring, then there’s no inherent problem with holding on to a mortgage.

Many retirees cite the significant psychological value of carrying no debt when they quit working. However, with interest rates as low as they are, others argue that holding the mortgage and investing in the financial markets the cash that otherwise would pay off the mortgage can be a smart financial move.

Step 4: Paying for health care

Early retirees deal with the issue of health insurance in a variety of ways. Individual costs will vary widely, depending on the situation. Certainly, the availability of health insurance in the U.S., thanks to the Affordable Care Act, has made it easier for individuals to quit jobs they might otherwise have kept for the health insurance.

Step 5: Manage your taxes

Just as when we’re working, taxes are a consideration in retirement, whether you retire early or not. It’s crucial to include an estimate of your annual tax bill in your “total savings needed” amount.

Your tax bill may come in a variety of flavors. If you’re pulling your income out of a taxable brokerage account, you’ll most likely owe capital gains on those distributions.

Also, your Social Security benefits are taxable if your income exceeds a specific amount.

Keep in mind that, if you continue to do consulting or part-time work after you retire early, then any Social Security benefits you’ve claimed will be temporarily reduced.

About Heritage Financial Advisory Group

Heritage Financial Advisory Group’s mission is to inspire our clients to achieve true wealth through education, communication, and service which exceeds their expectations. We offer a comprehensive suite of investment management and financial planning solutions, serving families, business owners, executives and institutions. Contact one of our financial advisors to request a complimentary consultation. Visit us at Long Island Financial Advisor .

Retirement Strategies: 4 Things You Can Control

4 Things You Can Control In Retirement

Retirement is supposed to be an exciting new chapter in our lives. We’d like to think we can live well within our means once we stop working. But when we hear that most Americans will never be able to retire, our alarm bells go off – even when the rational side of our brain tells us to stay calm, that things will work out.

It doesn’t help to realize how much of the situation is completely out of our hands: Ordinary individuals can’t change the direction of interest rates or stock prices. All the same, we have more control over how our retirement will play out than many people think, even as it’s about to start. Four decisions you can make yourself can have a huge impact on how comfortable you will be in this next chapter of your life. They have nothing to do with the stock market or the economy.

Timing for Retirement Success

Knowing where you stand financially, then using those data as a starting point, will help you figure out when to trigger each of these four events. Timing is everything.

When to quit working

Work out the math, or consult a fiduciary financial advisor who specializes in retirement income planning, to determine when or if you can stop working. Work doesn’t have to be a grind if you do something you truly enjoy. It doesn’t need to be full time either. The longer you can bring in outside income, the longer you can leave your own savings alone to grow. Deciding to work an extra two or three years can add as much as 30% to your total income once you do stop working.

When to start tapping your nest egg

It’s bit like trying to land an airplane at just the right spot on the runway. Most retirees don’t know precisely when to start withdrawing from their savings and investments. The Wall Street Journal reported in 2005 that many start withdrawing at the age of 62. For most people, that’s too early. Many experts now use age 95 for financial forecasting purposes. It all depends on how much you have saved and what types of outside income sources you have. Even at age 65, most people probably have another 30 [years] to support themselves after they stop working.

When to start taking Social Security to get maximum benefits

Understanding how Social Security works before you’re eligible to start taking is important. Right now, the earliest age you can start taking Social Security is 62. However, full retirement age is usually 66. Every year you can hold off on taking benefits between the ages of 62 and 70 increases your monthly check. The Social Security Administration’s website explains how retirement ages work. If you have complicated financial family relationships – or you’ve lost a spouse or have remarried – it can be worthwhile to get some solid advice. A qualified fee-based fiduciary advisor can run “what if” scenarios using sophisticated software. That can help pinpoint the optimal time to start taking your benefits.

Investment & Wealth Management

10 Best Cities for Retirement

Prescott, Arizona

If you love the outdoors and a vibrant cultural scene, one of the cities you should consider retiring in is Prescott, Arizona. Located in the north of Arizona, this old mining town experiences a cooler summer than southern Arizona. As a result, this helps you steer clear of sweltering summer temperatures. A booming economy, rich history, and low housing prices make this city a real contender for retirement.

Venice, Florida

Venice is a small retirement community found on the Gulf of Mexico in Florida. Named after Venice, Italy, this community has many canals and rivers that run through it and has been designed with architectural influence from Italian renaissance. Calm traffic and low prices mean peaceful retirement and it’s particularly well suited to slightly older retirees. Parks, beaches, golf, tennis, and proximity to the beach will keep you busy, and proximity to nearby Sarasota will mean you have everything you need.

Augustine, Florida

The historic community of St. Augustine, Florida, is a perfect retirement location for history buffs. The local economy is driven by tourism. Consequently, if you’re keen to volunteer and stay an active part of your community, this might be the city for you. On the north east coast of Florida, this city experiences cooler temperatures than other options in the state.

Beaufort, South Carolina

The quaint, charming southern community of Beaufort, South Carolina, is a prime retirement spot. This old river town offers plenty of golfing and fishing during the mild winters and hot summers. The military installations in the city solidify the economy and diversify the population. Also, Beaufort is home to a growing retirement community. There are lots of families here as well

Myrtle Beach, South Carolina

Whatever you are looking for in your retirement locale, from downtown living to a planned community, Myrtle Beach has what you need. Some of the highlights are the Grand Stand. Also knows for a huge stretch of pristine sandy beach, trendy shopping and restaurants. A low cost of living, great theater, excellent medical care, and enough golf courses to keep things exciting are just a few reasons to visit. Due to all these reasons, how could you not love your retirement life in sunny Myrtle Beach.

Abilene, Texas

If you’re looking for an affordable retirement, head to Abilene, Texas. With cost of living over 10% below national average, this old railroad shipping town has a growing retirement community within the city. Year round warm weather and excellent recreational and social opportunities for senior citizens of Abilene will keep you entertained and in good company all year round.

Austin, Texas

This big city offers plenty of activities to keep the retiree busy and engaged. Home to the University of Texas, this cultural hub boasts a terrific economy, warm weather, plenty of volunteering opportunities, open air art markets, galleries, museums, performing art theatres, low crime, and it’s the live music capital of the world. With so much going on, this city would be best suited for energetic retirees who aren’t looking for too much peace and quiet!

Boise, Idaho

Boise, Idaho makes one of the great retirement destination cities for active adults. Into biking? This city was rated one of the best cities to live and ride. Love the outdoors? The mountains are at your doorstep, and the river offers whitewater adventures for the daredevil retirees out there. In downtown Boise, there are many shopping, eating, and cultural opportunities. Consequently, walking paths and low crime rates mean that you will feel confident stepping out into this great retirement city.

Palm Springs, California

Located in the Coachella Valley, Palm Springs is one of world’s most famous retirement cities. The breath taking landscape and rich culture draw people from all around the globe to retire here. Active retirees can enjoy the golf scene and the nearby Joshua Tree Park, and everyone can enjoy the 350 days of sunshine a year. Most of all, summers here are so hot you’ll have to retreat to the air conditioned indoors!

Salt Lake City, Utah

Nestled into the Wasatch Mountains of Utah and next to the Great Salt Lake, the beautiful Salt Lake City is a picturesque place to retire. Perfect for the active adult, you can enjoy golf and winter sports galore. Clean air, booming economy, and plenty of volunteering opportunities. Also, an above average doctor per capita rate make this city a prime retirement spot! Salt Lake experiences cold winters and hot, dry summers, so skip this city for retirement if you can’t take the cold!

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10 Tips to Boost Your Savings

Looking to boost your savings? Here are a few strategies to focus on to get on the right track.

1. Focus on starting today!

Time is your best friend when it comes to growing your savings so don’t wait any longer and get to it!

2. Contribute to your 401(k)

If your employer offers a 401k plan that allows you to contribute pre tax money, ENROLL IN IT! Your future self will thank you for this.

3. Contribute enough to get a “match” from your employer:

If your employer offers to match your 401k contributions, make sure you contribute at least enough to take full advantage of the match….IT’S FREE MONEY!

4. If you don’t have access to a 401k, open an IRA:

Consider establishing an Individual Retirement Account to help build your nest egg. You will be saving for your future and you will also be eligible for a tax deduction. Double WIN!

5. Take advantage of catch up contributions if you are age 50 or older.

6. Automate your savings and pay yourself first:

Make your retirement contribution automatic each month and you’ll have the opportunity to potentially grow you nest egg without having to think about it.

7. SPEND LESS:

Examine your budget and evaluate what is a want, versus what is a needs. Rein it in.

8. Set GOALS

9. Create a rainy day fund

10. Consider delaying social security as you get closer to retirement:

For each year you delay taking social security, your benefit will increase up to a certain point, consult your advisor or accountant for help.