Should I Purchase Long-Term Care Insurance?

A 55-year-old friend, Jen, recently asked my opinion about long-term care insurance. Very few Americans, about eight percent, have long-term care insurance policies. Jen, who is at the age when many are weighing the pros and cons of long-term care insurance, had thought about buying a policy but didn’t feel like she had the money to do so. Recently Jen received an inheritance, as Muriel, her mother, passed away at age 87. Now Jen has the funds to pay for long-term care insurance (LTC) but is having second thoughts about it based on her experience with mom. Muriel had purchased

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How to ‘De-risk’ Your Retirement Portfolio So it Doesn’t Take a Big Plunge

Anybody who has lived in a cold climate knows what de-icing a car is like. If you’ve ever deiced a car you’ll get a chuckle out of this story, and see how you can apply it to de-risking your retirement money. When I lived in Colorado I was in a hurry one morning and scraped only a small peephole in the ice on my windshield. I made it about a mile down the road when an officer pulled me over. He poked his head in my car and with an exaggerated slow twist at the neck he made an attempt to

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Should You Be a Landlord in Your Retirement?

In 2005, everyone I knew was buying real estate. With no experience and no money, they bought properties they couldn’t afford and were convinced they were going to make a fortune. Unfortunately, it didn’t work out that way, and most of them now have a foreclosure or short sale in their past. Does that make real estate a bad investment? No. It’s an investment. The good or bad part comes from how you approach it. What’s good for one person can be bad for another. To find out how to make real estate investments work, I decided to talk with a few experienced

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Taxes in Retirement. Tax Rules That Await You in Your “Golden” Years.

Retirees face new tax issues when they stop working (or start working part-time). And it affects you whether or not you change tax brackets. Once retired, many of us will have somewhat lower income than in prime working years. And that implies lower taxes, but most also will have multiple sources of income. And that complicates tax payment for those who are used to a single source of income. There will be Social Security income, minimum required distribution income from tax-advantaged retirement accounts and perhaps other income from investments, property, freelance or part-time work, etc. So, instead of getting a single paycheck

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How to Build a Retirement Portfolio

A portfolio is a mix of investments that you put together in an intentional way to accomplish a goal. When working and saving, the goal is to earn as high a rate of return as you can while not taking so much risk that it will scare you into pulling out of the market during a downturn. Once retired, the goal changes. Different goal = different portfolio. A retirement portfolio needs to produce reliable cash flow that is projected to last the rest of your life regardless of the variety of market conditions that may occur over your retirement years. There

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At What Age Should I Start Making 401(k) Withdrawals?

The 401(k)suffers from a branding problem. If the name were more descriptive or catchy, people would pay closer attention to these savings tools. They are hugely beneficial–often including free money (yes, free) –and are currently the bedrock for most retirement savers. However, despite the benefits, two-thirds of workers do not take advantage of their company’s employer-sponsored 401(k)plans. Before we review the optimal ages for 401(k) withdrawals, and when you are required to make them, let’s look at the history behind 401(k)s. The basics 401(k) plans are employer-sponsored, retirement saving vehicles. They provide some tax advantages: they reduce your taxable income in the years

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When can I retire? Two simple calculations (and a little bit of philosophy) to get you close to an answer.

The question people are really asking when they ask “When can I retire?” is “When can I retire so I don’t run out of money in my lifetime?” Wouldn’t it be great if there were a simple answer to tell you how much you need to retire without financial worry? Everyone is different, and the right amount for you will be different than the right amount for your neighbor. However, there are calculations each of us can make to determine the optimal time to retire and live the life we want. However, there are calculations you can make to determine if

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How Do You Rebalance Accounts in Retirement?

Smart investors follow a plan; specifically an asset allocation plan. An asset allocation plan tells you how much of your total investments should be in stocks versus bonds and then gets into additional detail, such as how much should be in large company U.S. stocks (or index funds) vs. international vs. small cap. You maintain investment ratios by rebalancing on a predetermined basis, such as once a year. In a 401(k) plan, rebalancing is often accomplished automatically by checking a box that says something like “rebalance every x months to this allocation.” In general, while you are saving, rebalancing can be easy. If

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Hidden Estate Planning Mistakes That Have Horrible Consequences

Imagine your spouse is ill, and you meet with an estate planning attorney to get your family affairs in order. Your attorney drafts a trust document and a will. You and your spouse sign it. You think everything is fine. Your spouse passes, and shortly after that, you find that the accounts are not set up to transfer the way you both intended. Everything is not fine. Can this happen? Yes, and it happens all the time. The situation described above happened to a client couple that I’ll call Ralph and Sue. It was a second marriage, they had no children in common,

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Does the New Fiduciary Rule Matter to You?

Not all financial planners or advisors have to consider what is in your best interest when they make investment recommendations. A large number of them make recommendations that they think are appropriate, but they don’t have to have supporting documentation or research to show why this recommendation is in your best interest. In many cases, these advisors are trained sales people and are unaware of other options that may be a better fit for your financial circumstances. However, a new law may begin to change this. A “fiduciary” is someone who legally and ethically must act in their client’s best interest.

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