Sunday, August 26, 2012

Women Over 50 - 5 Tips For Financial Independence

Financial independence is the goal of most people especially as we approach retirement. Once we can see that turning 65 is just around the corner, thoughts of financial independence seem to become more frequent. Unfortunately some of these thoughts are more than that. They are mild forms of panic attacks especially if the retirement nest egg isn't looking great.

While these concerns affect all people, women over 50, especially those who are single, becoming financially independent is important for their survival, if they are desiring a comfortable retirement. And why shouldn't they be.

Working for most of your life, retirement should be a reward for your hard work. But if the coffers are a bit empty, what can you do to fill them so that your senior years are not on struggle street.

For women over 50, here's 5 tips to help you create financial independence:

    Create More Income
    Yes it is easier to create wealth by having more income or a higher paying job. But for women over 50 it is sometimes harder to move into a higher paying job based on age and or qualifications. You could look to undertake a higher education course at Uni or TAFE but again you might face the age issue. Perhaps a partime job or home based business could provide some extra cash.

    Invest Your Surplus
    There are many courses and associations to assist women over 50 to learn how to invest their surplus income to provide for a better retirement. Look for such associations in your local area and start taking an interest in the share market, cash management funds and real estate. With time this surplus correctly invested will compound to build you a nice nest egg.

    Money Is Taxing
    Make sure you have a good accountant or tax advisor to give you good advice on the best investments offering the best tax advantages. While women over 50 need extra income to invest, it is also important to cut your expenses especially by paying lower taxes.

    Get More Out Of Your Time
    Having more time is a dream of most people. But there is only 24 hours in a day. How do you maximise your time especially with earning money. You engage the power of leverage. If you get a partime job over and above you main job' you will create more income. But you are still exchanging your time for money. And there is only one of you. What if you could 'employ' a team of people whereby you could earn a percentage of their income. As well as leveraging people you can also leverage time - more specifically time zones. Why not have your team not only where you reside but also in different states and countries. So when you are asleep, your team members in another country are working and you're earning as well. Home based businesses can offer such an opportunity.

    It Takes Two To Tango
    Going solo in life does have some advantages. But it can also have it's limitations. And creating wealth or extra money can be one of those limitations. Women over 50 and men for that matter seem to do better in all facets of life if they have a loving, supporting partner or spouse. Doing things together including making money is more enjoyable when you're not on your own. If you have someone special in your life, why not make it more permanent and create a wonderful life together; especially in retirement.


Sunday, August 19, 2012

Retirement Planning - You Are Never Too Young To Think About This

If you are the type of person who wants to plan for his future, then it's quite possible that you plan ahead even while you're still young. Too many people nowadays find it hard to live their senior years because they don't have money to spend. They enjoyed their teenager years, spent money when they were earning like there were no tomorrow and just about did everything while they were young that they have nothing left to spend as old men and women. The lesson in this is that you should invest in retirement planning so as to not be a burden later on in your life.

Typically you will want to seek advice from experts. We are not all financial advisers in nature so we need to other people to help us with these tasks. It's absurd to think that by just opening a bank account like we teach our kids in their junior we can already count it as investing money. That is not how it works in the real world. You need stocks and bonds that will grow bigger and bigger, you need to buy properties that you can later on sell and generate money with. You need a lot of serious thinking before anything else and you can't do them all by yourself. Expert advices are not free but it's a must.

You don't have to look far actually, searching online will give you a lot of choices which can work to your advantage. Do not be too paranoid that financial advisers will run away with your hard earned money, as long as they have the right papers and the right licenses, they will not fail to do the job you want them done. Be sure to be attentive to what they say to you, obviously they will do most of the job themselves but knowing the things they are about to do is better than being in the dark. Knowledge so power right?

So heed investment advice from experts and ensure that your future be comfortable. With the right decisions we have early in life our granny days won't be that harsh. Sure don't forget to enjoy your current days but don't ignore the fact that you have to save for your future too. Many people in their old age have wished for that to have been so and while you're young now and you know of what to do then don't make the same mistakes they did. Make your future a stable none and don't think that "the now" is the only most important part of your life.

Sunday, August 12, 2012

BEWARE: Traditional Pensions Have Changed - The Current Format May Affect Your Retirement Plan By Connie Wesley

We all have family members or friends who are approaching their retirement years. There's no shortage of stories of those who have planned to retire at 62 or 67 only to learn they have to work beyond their target retirement age simply because they do not have enough money to retire. Fast food restaurants and department stores are filled with seniors who have been forced to seek employment just to make ends meet. One of the biggest fears seniors have is outliving their savings. Failing to start planning during their youth is at the top of the list of regrets. We would be wise to learn from the examples of our seniors and take advantage of the years ahead of us and plan early.

According to the Office of Personnel Management (OPM), "rather than being a near retirement event, retirement financial literacy and education is a career-long process." The earlier you start to plan the harder your money can work for you. Let the young you take care of the older you. Many people live the first part of their lives unhappy with their jobs. Don't live the second part of your life unhappy with your retirement. Start planning now.

Even if you don't have thousands of dollars lying around each month, you can still set your plan in motion. The key is to adjust your thinking today. Remember, if you continue to do what you've been doing, you'll keep getting what you've been getting. Ask yourself how close are your current financial habits getting you to your retirement goals?

Numerous books on the subject leave readers with unanswered questions. Many claim to be experts and charge thousands of dollars for consultation and other fees. Often, we become overwhelmed with information about how much we should save, and the best means by which to do it. The experts give you so much information that planning for retirement may seem unattainable. However, there are key tools that when used will aid workers of every economic level in planning for a luxurious comfortable retirement. This luxury is available to all. The time to start is now.

Each individual's circumstance is unique. Your financial planning should be as well. Take time to evaluate your spending habits. Could you accommodate your mobile needs and save money by sharing minutes with family members, for example? Would a smaller cable or Internet package fit your needs and allow you to save money? When we evaluate our spending, most of us can identify ways to trim $50 to $100 a month to contribute to retirement savings, which would be a great start!

IF YOU ANSWER "NO" TO ANY OF THE FOLLOWING QUESTIONS YOU NEED A FREE BENEFIT ANALYSIS

1. Are you sure you are maximizing the value of your employee benefits?

2. Will your Retirement Annuity actually be enough to retire on?

3. Do you know what happens to your health insurance when you leave your job?

4. Do you know that your Employee Life Insurance increases every 5 years?

5. Do you know why it is so important to have an emergency fund?

6. Are you aware of the importance of protecting your paycheck?

7. Have you received a review and estimate of your 3 sources of retirement income?

8. Do you have a date scheduled for your next annual review?

Sunday, August 5, 2012

Retirement Planning - A Bliss!

Ever since a person enters teenage he is told stories about successful people with name, fame and most importantly, money! People achieve a lot but in that process, go beyond their own expectations and lifestyles too and get on with their life, planning for family in the same manner. The once-called-luxuries become necessities and financial wizards have shown the benefits of leverage too which of course, may be understood and misunderstood in one's own wisdom.

But, we forget during this luxurious and leveraged life span that the journey which had started from being dependent -> independent -> inter-dependent ->?.. Could end at again being 'dependent'! This is realized when your HR informs you that you are retiring next month and then you start calculating your expected retirement corpus. "Wish I had 5 more years of working!" "Wish I had the right spectacles to see through a few years back!"

Life in retirement is as long as career itself and some times even more. Retirement means no salary on the last day of every month, no increments, no medical reimbursements and no bonus! It also means inflation could be hurting more than ever with increased lifestyle and health care costs but limited/no income at all. All your investments could be subject to 'market risks' and irrespective you could have to liquidate some portion to meet current expenses.

If not planned well, you could have to live a life of compromises.Travel and recreation could seem to exist for the affluent. After living a lavish life, would you be able to compromise on the standard of living? And a few more developments which make retirement planning more critical in the Indian context are absence of any kind of social security for majority of people, rapidly decreasing career span due to long study time or want to retire early, increased longevity and reducing joint family system.

Let's see the other side of the coin; what if the planning was done properly? Instead of you working for money, you make your savings/investments work for you; annuity, pension, interest, dividends, capital gains, less taxes; enjoy senior citizens' concessions by increased deduction in computing taxable income, lower train fare/air fare; no milestones, targets except the one given to you daily by your new boss (Spouse!). You would rather Google a new place to explore than ways of earning more money to do so!

For a carefree retirement at least as good as the working span, you must start planning now as it is never too early to plan for retirement!

3-Step process for Retirement Planning:

    Assess the cost of post retirement life based on current lifestyle net of inflation. Add increased healthcare costs, vacations, other family celebrations and reduce costs like children's education and rent, if you own your home.

    Estimate the amount you would need to save regularly from now to build the retirement corpus which if accumulated at that time should be sufficient to substitute your pre-retirement income or a little more than anticipated post-retirement expenses.

    You must start early and systematically to experience the power of compounding and top up such an investment whenever possible. While investing for retirement, parameters like diversification, portfolio balancing, risk, taxation, estate planning should also be managed.Most importantly there should be ample liquidity to tide over any contingency. The investments must be capable of protecting one from inflationary pressure at the same time should be wealth protectors.


Wednesday, August 1, 2012

What You Don't Know Can Hurt Your 401(k)

"If I'd only known" is a lament that can easily become "You should have told me." Employees at two major companies who suffered big hits to their retirement accounts, however, found no sympathetic judicial ear for their final appeal.

Earlier this week, the Supreme Court declined to hear two separate but related cases regarding defined contribution retirement plans. Employees from Citigroup Inc. and McGraw-Hill Companies Inc. claimed in their respective suits that the companies had violated their fiduciary duties in offering their own stocks without disclosing information that suggested those stocks could soon lose a great deal of value. It in the case of Citigroup, this information was the extent of the company's subprime mortgage exposure; for McGraw-Hill, it was problems at the company's Standard & Poor's unit.

The fiduciary responsibility that the plaintiffs cited was specified under the federal Employee Retirement Income Security Act of 1974 (ERISA). The 2nd U.S. Court of Appeals in New York, however, said in a pair of rulings last year that the companies were under no obligation to disclose nonpublic information to employees participating in the 401(k) plans, regardless of whether the plans offered company stock as an investment option.

The Supreme Court did not comment on its decision, but it left many who had hoped for a stricter interpretation of employers' duty disappointed. Helaine Olen, a contributor to Forbes, wrote that "perhaps the time has come for us to acknowledge that most have little clue about what they are doing when it comes to 401(k)s and need protection." (1)

On the other hand, some attorneys expressed concern that, had the Supreme Court reviewed the cases and found the companies at fault, the result would be many employees who wanted access to some employer stock losing that choice entirely, as companies proactively covered their own liability. There were also concerns about creating an overly litigious atmosphere for concerns related to stock performance. Scott Macey, president and CEO of The ERISA Industry Committee, said, "We don't want our courts clogged every time a stock goes down, unless there is a reason." He added, "You can't hold people liable for not knowing. We all know that stocks can go down." (2)

But while the courts have held that it is not a violation of ERISA for employers to offer their own stock in 401(k)s, despite knowing about company risk that might not be evident to all employees, it still unwise for employees to over-invest in that offered stock.

There are a variety of reasons why holding large amounts of employer stock is a bad idea. These cases are a reminder of one: Even though ERISA holds employers to a certain level of fiduciary duty, your employer is not your financial adviser. The employer's first priority isn't to oversee its employees' private financial decisions. While it may be convenient to offer employees compensation as company stock, that doesn't mean the company is necessarily doing you a favor in its offering.

Within a 401(k) plan, it's especially important to remember one of the cornerstones of investment: Past performance doesn't guarantee future results. Even if it may not feel that way, the principle holds for your own company as much as for any other.