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In the past year, many have spent more time in their homes than ever before. This has gotten some thinking about moving or a second home. Building your dream home for retirement is not an uncommon goal many Americans have. However, just because it’s a common dream doesn’t mean it’s an appropriate dream for a large portion of the population. Sure, you may have several hundred thousand or a couple million in your retirement accounts but you’ll still want to think before you build your retirement dream home. 

Think Location

Three of the most important considerations to take into account before building a dream home are location, location and location. You’ll want to ask whether the location you’re looking to build on is an up-and-coming destination or one that’s had a downturn for several years. No one knows what the future will hold but a home in a desirable location is more likely to sell than one in a depressed area.

If your chosen destination, even if it’s near a beach or ski resort, has had stagnant or declining home prices for years, it’s a sign that it might not be a good place to build a home. Another concern would be the average length of time properties stay on the market in a given community. If there’s a low supply of houses and a short turnaround when they go on the market, your chosen location might be a good fit. If houses stay on the market for a year or more, it might be a good idea to look elsewhere. 

Think About the Kids

Most people who retire want to spend time with their kids and grandchildren. This might make it seem like buying or building a dream home near the kids would be a good idea. Think again. People move for jobs every day. Sometimes, that move will be from one building across the street to another. Other job moves will require a move across a state or across the country.

Building a dream home close to your kids today does not guarantee it will be close to your kids five years from now. Additionally, dream homes tend to be on the upper end of the price scale and this can mean that they’ll sell less quickly than more affordable homes. Therefore, if your main reason for building a dream home is to be close to your children, it might pay to ponder the decision a bit longer. 

Think About Cash Flow

No matter how big your nest egg happens to be, you always need to think about cash flow. This goes if you’re 30 years old or 60 years old. Overspending on a home is bad for cash flow whether you’re making $50,000 a year with no money in your nest egg or making $150,000 a year with $750,000 in your nest egg. If you have a nice chunk rolling in from a pension or Social Security, this might work in your favor for building your dream home. Keep in mind that you might want to downsize your dream home a bit to keep more cash working in your favor regardless of your current financial situation.

It’s also a good idea to remember that most people decline physically over time. This means that a multistory dream home will be less accessible in a few years. If you need to hire some help, that will put additional strain on your cash flow as well.

There’s nothing inherently wrong with building a dream home as long as you can afford it. However, there can be some pitfalls that come from building one for retirement. Most people will eventually have to downsize and having too much equity tied up in a home can make it more difficult to do so quickly. Taking all facets of building a new home into account is an important step to take before you ever sign on the dotted line to start your build.

With all of the day to day demands on your finances, sometimes it is difficult to have a strong grasp on what your overall financial picture really looks like. While many people may be very in tune with one segment of their financial life, you may be inadvertently neglecting other parts. One often overlooked financial aspect is retirement savings. In fact, you may be surprised to know that according to the Motley Fool, 42% of baby boomers cannot answer the question of “How much have you saved for retirement?” While this revelation may seem shocking, it is a reality that for many, immediate financial needs tend to take priority and retirement savings gets put on the back burner.

One reason for this may be that saving for retirement is complex. Many people know that they have spent their work life contributing to an employer-sponsored plan and/or IRAs, but they may set their monthly and quarterly statements aside, never really looking at how much their account has grown to. Others may have multiple 401(k)s and other plans with previous employers that they have never combined into a rollover IRA or that they have lost track of. For this reason, it is imperative that those who are approaching retirement start taking control of their retirement savings by working to create a definitive retirement plan.

Retirement planning allows you to dig deep into what you have saved and calculate your total amount of retirement savings. It also allows you to get an educated estimate of what your expenses in retirement may be, as it would be impossible to know if you have saved enough if you don’t know what you will be spending. If you are an organized and motivated person, you may be able to easily calculate this information on your own using an online retirement calculator. If you need more assistance or have a complicated financial picture that requires in-depth expertise, then working with a personal financial planner may be more appropriate for you.

Once you have an estimate of what you currently have in retirement savings and what your projected spending during retirement may look like, you will be able to determine if you are ahead of the game or far behind when it comes to additional savings required. You may see that the only way to retire on time is to start contributing more to a retirement plan now and cut back on some unnecessary expenditures. You may also find that you will need to stay in the work force longer than you had wanted or anticipated. Whatever your situation is, starting to work on your retirement plan earlier will give you more time to make up the difference that you need.

If you find yourself in the category of someone who responds with “Um..” or “I’m not sure” when asked how much you have saved for retirement, know that you aren’t alone. Many other people are in the same boat. Luckily, you can start taking control over your retirement savings today by beginning the retirement planning process and getting yourself on track to meet your retirement goals.

Tax season is once again in full swing. While many concerned taxpayers file tax returns to meet the required deadline, criminals work harder to cash in and take advantage of the hectic tax season. Tax fraud remains a growing concern nationally and counterfeit scams cost millions of dollars. Individuals who take a proactive approach can deter fraud and protect their identity, information and their finances. Here are a few recent scams catching the watchful eye of the IRS.

TAX PREPARATION SCAMS

The IRS just released notice IR-2019-09 to alert taxpayers of unscrupulous tax preparers. Deceitful tax preparers file erroneous tax returns for many unknown taxpayers. The law requires all preparers who receive payment for preparation of federal tax returns to have a valid Preparer Tax Identification Number (PTIN). The tax preparer must include their PTIN and sign the return. For e-filed tax returns, a dishonest preparer will omit his electronic signature. Additionally, they may falsify tax information to increase the refund while directing the refund into their bank account. Taxpayers must review their tax returns for accuracy of income and deductions. Ensure the tax preparer signs the return and includes their PTIN. Make sure the bank account and routing numbers are correct. The IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications provides an excellent resource to locate established tax preparers with the IRS.

CHARITABLE GIVING SCAMS

Counterfeit websites disguise themselves as other well-known established charities to deceive generous individuals to donate money to a dire cause. Additionally, some individuals receive solicitations from fraudulent charities promising a nice tax deduction in return for your donation. Don’t fall victim to their schemes. Donors can prevent thousands of dollars from falling into the wrong hands. The IRS provides a tool to help prevent against charitable giving scams. Donors can verify if a charity is legitimate by utilizing the IRS search tool Tax Exempt Organization Search. Never give to a charity who solicits a donation without first verifying the authenticity of their organization.

EMAIL PHISHING SCAMS

In IRS notice IR-2018-226, the IRS alerts taxpayers to a recent spike in email phishing scams. While fraudulent emails and phishing scams have been around a while, data thieves continue working diligently to improve new tactics to steal valuable information. Emotet is the infected malware of choice in many email scams and Emotet remains well-known as the most damaging and expensive to fix. Many of these scam emails display tax account transcripts in the subject line of the email and include infected attachments with similar wording. These emails appear legitimate. They often disguise themselves as representatives with banks, financial institutions and the IRS. The IRS logo and other well-known bank logos appear real and many unsuspecting individuals open the infected email attachment. The IRS does not contact individuals through email. The IRS warns individuals to not open suspecting emails. The IRS remains diligent to combat fraud. If you suspect a suspicious email, you can also forward the email to phishing@irs.gov.

Everyone has different ideas of what it is like to retire. However, their ideas may be based solely on what they assume or what they have heard. The only way to know for certain is to ask people who have gone through it. Here are several facts and myths that you should learn more about regarding the retirement planning experience. 

Boredom 

A lot of people assume that boredom is a common occurrence for people without jobs. This is not an issue for those who have their days planned out. Many retirees claim that they have very few boring days. They say that they simply have more time to invest in things that they enjoy doing. Those who are struggling with boredom are encouraged to create their day-to-day schedules and list the activities that they now have time for. 

Expenses 

Many people worry about the high costs of covering a retirement. They automatically assume that without having a steady income, they will run out of money quickly. However, some retirees claim that their lives have become simpler with fewer responsibilities. They have given up the activities that they did during their workdays and now spend more idle time at home. 

Work 

Retirement does not have to mean no work forever. There are numerous retirees who have taken on part time jobs or gigs to make a supplemental income. They do this to supplement a meager retirement income or to cover costs for vacations or recreational activities. Other people continue working just to remain occupied. For every retiree, there is a work activity that he or she can do to stay active. 

Planning 

Planning is a task that few people look forward to in terms of retiring. Without a well-detailed plan, any retirement is not guaranteed to go smoothly. An injury or accident could happen unexpectedly and cause major losses to a person’s budget. People should plan their retirements carefully like they are planning their careers. 

Long-Term Process 

Retirement does not have to be figured out in a short period of time. You could learn more about planning for retirement while you are retired. For many retirees, the most helpful experiences are faced firsthand. Do not stop learning about the retirement process before you begin it and remain open to gaining more knowledge. 

Health 

Declining health is an obvious concern for retired seniors. Young retirees in their 30s or 40s also worry about their health because they are more idle after quitting their jobs. Retirees are less active and more likely to become lazy or overweight than employed workers. Regardless of age, it’s important that one keeps track of his/her health until the last days of retirement. 

Retirement is one of the most unpredictable events in life. Many people plan for years but still face challenges that surprise them. While people may assume that retirement is boring, some retirees claim that it’s the most exciting period of their lives. It’s important to plan well for the retirement experience and make the most of it from this period in your life.

Student loan statistics never cease to disturb. Just in the United States, there are 44 million borrowers with $1.3 trillion in outstanding debt. With that kind of debt burden on new graduates, it’s no wonder that many parents want to try and find a way to save for both their children’s college expenses and retirement.

It may not be possible for every parent to do that and even those who manage should not expect to save all the money their children need, but they can certainly help reduce the amount their children need to borrow by learning to balance their savings.

Start by Maxing Out Your 401(k)

Borrowing from a 401(k) to fund college costs is a plan that can quickly backfire. With early withdrawal penalties and taxes, it’s an expensive option that should probably be avoided. But a saver can make sure to max out their employer matching contribution to increase the amount that’s saved toward retiring and reduce their personal savings burden.

Check Out Your State’s 529 Plan Options

Planning for college is hard when tuition costs keep rising but in some states, a 529 plan can help by allowing you to prepay tuition costs, locking in today’s prices. However, not every state sets up their 529 plans that way. In some states, the plan acts as a normal savings account.

Get Help with Financial Aid

Taking on the entire burden of school costs without looking into financial aid is a huge mistake, especially since about 66 percent of full-time students in the 2014-2015 school year qualified for some financial aid. Have your child work with the school’s financial aid counselors to determine which programs, grants and scholarships they might qualify for.

Automate Savings Deposits

Planning to save money and really saving it are two different things. One way to ensure you actually save for both your retirement and your kids’ tuition is by automating your savings deposits. In addition to automating your 401(k) through work, you can automate transfers from your checking account to your kids’ tuition funds and your IRAs every week or month. There are also some bank programs and apps that can allow you to regularly save $1 with every debit card purchase or save the change difference between your sales totals and the next rounded up dollar.

Open an IRA

Every year, you can deposit a good chunk into an individual (non-employer) retirement account called an IRA. You can choose between a tax-deferred Traditional IRA or a tax-free Roth IRA. If you’re in a high tax-bracket now, the Traditional IRA can help you reduce your tax burden, which may leave you with more cash to save toward your dual goals. Choosing a Roth means you can take tax-free distributions later on which reduces the amount you need to have saved.

Even if you can’t fully fund your kids’ tuition costs, the savings you amass can reduce the number of loans they need, putting both you and your child in a much more secure and comfortable financial position during your future golden years.

Student loan statistics never cease to disturb. Just in the United States, there are 44 million borrowers with $1.3 trillion in outstanding debt. With that kind of debt burden on new graduates, it’s no wonder that many parents want to try and find a way to save for both their children’s college expenses and retirement.

It may not be possible for every parent to do that and even those who manage should not expect to save all the money their children need, but they can certainly help reduce the amount their children need to borrow by learning to balance their savings.

Start by Maxing Out Your 401(k)

Borrowing from a 401(k) to fund college costs is a plan that can quickly backfire. With early withdrawal penalties and taxes, it’s an expensive option that should probably be avoided. But a saver can make sure to max out their employer matching contribution to increase the amount that’s saved toward retiring and reduce their personal savings burden.

Check Out Your State’s 529 Plan Options

Planning for college is hard when tuition costs keep rising but in some states, a 529 plan can help by allowing you to prepay tuition costs, locking in today’s prices. However, not every state sets up their 529 plans that way. In some states, the plan acts as a normal savings account.

Get Help with Financial Aid

Taking on the entire burden of school costs without looking into financial aid is a huge mistake, especially since about 66 percent of full-time students in the 2014-2015 school year qualified for some financial aid. Have your child work with the school’s financial aid counselors to determine which programs, grants and scholarships they might qualify for.

Automate Savings Deposits

Planning to save money and really saving it are two different things. One way to ensure you actually save for both your retirement and your kids’ tuition is by automating your savings deposits. In addition to automating your 401(k) through work, you can automate transfers from your checking account to your kids’ tuition funds and your IRAs every week or month. There are also some bank programs and apps that can allow you to regularly save $1 with every debit card purchase or save the change difference between your sales totals and the next rounded up dollar.

Open an IRA

Every year, you can deposit a good chunk into an individual (non-employer) retirement account called an IRA. You can choose between a tax-deferred Traditional IRA or a tax-free Roth IRA. If you’re in a high tax-bracket now, the Traditional IRA can help you reduce your tax burden, which may leave you with more cash to save toward your dual goals. Choosing a Roth means you can take tax-free distributions later on which reduces the amount you need to have saved.

Even if you can’t fully fund your kids’ tuition costs, the savings you amass can reduce the number of loans they need, putting both you and your child in a much more secure and comfortable financial position during your future golden years.

As we get closer to getting back to normal after the COVID-19 travel pause, we need to think about a travel budget. This inevitably means that trips simply do not happen or that financial stress makes them less enjoyable. Learning how to budget properly for your trips is essential if you want to enjoy them fully.

Add Traveling Expenses to Your Budget

The first step to take when planning for trips is to properly fund them. One of the easiest ways to accomplish this is to incorporate traveling expenses into your regular budget. Many retirees create an annual budget and they break this down into a monthly budget. Even when retirees incorporate a line item for traveling expenses into their budget, they often fail to budget enough money for these experiences. Depending on your plans for various trips, a single trip may easily cost you several thousand dollars or more. If you plan to travel at least a few times per year, your budget will need to be adjusted accordingly.

Prioritize Your Trips

If you are like most retirees, you may have a lengthy list of desirable amazing destinations. However, you may only be able to visit a few destinations each year. Prioritize the trips that you want to take so that you can cross those off your list first. Remember to factor in costs for your trips to visit family with your recreational trips. Determine which trips you want or need to take each year. This is essential if you want to properly allocate funds in your budget for all of your planned trips.

Research Expenses

The expenses for each of your planned trips will vary substantially. For example, you may have plans to drive to a few national parks and to take a trip to Europe a few months later. The Europe trip will be much more expensive. With both types of trips, you need to essentially create a detailed itinerary. Research accurate costs for each aspect of your trip so that your budget is realistic. Remember to factor in funds for food and gas.

Look for Savings

Seniors often qualify for special savings at restaurants, theaters, stores, hotels and more. When you begin planning each of your trips seriously, spend time analyzing all discounts available. Look for alternatives, such as staying at a different hotel that may offer a senior discount. Take advantage of senior discounts and be aware that other discounts and savings may also be available. For example, you can travel during a non-peak season to save a substantial amount of money. You can buy plane tickets on non-peak days or in the very early or late hours of the day. These are only some of the many ways that you can potentially save hundreds or thousands of dollars on your trips.

Traveling may be one of your primary goals in retirement but your dreams of taking amazing trips will not happen if you do not have money available. As you can see, you will need to budget properly for them in various ways in order to have funds available for your trips. You can get started today by adjusting your budget and researching desirable destinations that you want to visit within the next year. By doing this, you can get the wheels in motion for taking exciting trips to amazing locations.

Source:  https://money.cnn.com/2018/02/05/retirement/budget-travel/index.html 

Many retirement investors have a considerable percentage of their investment in stocks and this has generally served them well. Stocks have recently been on a roll – indeed booming – at or near all-time highs. Some pundits think the market is a bit extended. So what should you do to prepare your retirement nest egg for the next downturn? 

How a Market Crash – or Even a Downturn – Can Wreck Your Plans

Here’s a scenario that may be more common than you think: Sam, aged 54, has been working for 30 years and is closing in on his retirement. He has been lucky in that he was able to save a little of each paycheck and put that money into a qualified plan. He followed the general recommendations given by the plan administrator and therefore has a fairly high percentage, about 70%, of his total in stock mutual funds and individual issues. Consequently, over the years, his account has blossomed into a very nice six-figure sum.

Early 2018 was relatively rough for some investors and Sam took notice. He became more than a little concerned that his money was evaporating before his very eyes. He decided to re-evaluate but exactly what should he do?

A scenario such as this shows why it is critical to plan for any downturn, especially one that might occur in your post-working years. Take effective steps now that will safeguard your hard-earned savings, especially if you are near or in your golden years.

Steps to Take Before the Next Downturn

• Review Your Stock Holding Allocation
  You may be too heavily weighted in stocks. Many advisors recommend a high percentage of stocks in your investment mix when you are young and just starting out, say 60 to 70 percent. Perhaps it is wise to begin with that allocation but as you near or are in your post-working life, a smaller percentage may be much more prudent. There is no single stock/fixed-income mix that is best for everyone. However, when the bear growls, cash is king. Having a nice percentage of your investment mix safely in cash will not only dampen the volatility of your portfolio but will give you some dry powder to buy if stocks become really cheap.
• Tweak Your Budget
  While you are at it, create a “golden-years” budget. It can be as simple or as elaborate as you like. Pay special attention to things such as health care and insurance, as well as prescriptions drugs, which may cost more as you get older. Conversely, the amount of money you spend on clothing for work or gas for commuting may decrease.
• Can You Generate Other Income?
  If your evaluations indicate you may not have enough saved, consider a side-gig after leaving full-time employment. Many folks find that freelancing, advising or other such endeavors not only bring in extra dollars, but they are fun and keep the mind sharp. 
• Remember: Patience is a Virtue
  Finally, don’t panic if the stocks head south. Position your portfolio well and realize all down markets are followed by the inevitable upswing. Having some cash will give you the ability to purchase quality issues cheaply.

Tanking stocks can have a big negative impact on your nest egg. Planning now makes good sense.

A few weeks into a New Year and many think about various aspects of their lives. One of the primary areas that are commonly reviewed is personal finance. If you are thinking about retiring within the next few years or longer, you may want to create a resolution or two so that you can plan better for your non-working years. However, some people believe that it is simply too late for any type of plan to be effective or beneficial. While it is better to start preparing for non-working years early in your adult years, starting now is better than not making any preparations. These are some of the areas that you can resolve to address in the near future.

Set Retirement Goals

Everyone has some dream about what their life may be like after they stop working in a full-time position. For some, the goal is to continue working on a part-time basis, others want to travel and some may simply want to be closer to family. A primary resolution should be to define your goals. Without specific goals, it is not possible to plan properly for the future. After all, maintaining your lifestyle if you travel frequently may be much more expensive than if you stay close to home.

Eliminate Debt

Another resolution should involve eliminating debt. Debt cannot usually be paid off quickly, so resolve to create a feasible debt reduction plan. When you pay debts off now, you can reduce the amount of income that is needed after you retire. For example, if you pay off your mortgage, car loans and credit card balances, you may be able to live on several thousand dollars less each month. By reducing the income that is required to live comfortably, you can feasibly retire with less money saved up.

Prepare a Budget for Retirement

In addition to making a plan to eliminate debt from your life over the course of the next few months or years, you also need to prepare a budget for your non-working years. This budget will include estimated income from all sources after you quit working. It will also include reasonable estimates for expenses. Your planning should focus on cost-of-living adjustments related to inflation. If you plan to relocate to a new town after you retire, your budget should be realistic for that specific area.

Update Insurance Coverage

Many people who are preparing for the future fail to take into account changing insurance needs after leaving the workforce. As you get closer to retiring, determine if you will continue to need life insurance. Analyze your need for different types of medical insurance and long-term care insurance. Each retiree is in a different position, so there is no catchall rule regarding how much or what types of insurance you need to have. Remember to update your budget with the premiums for these various insurance products. It is also wise to take into account deductibles that are associated with each policy when determining how much money you will need.

Some people are so discouraged by their late start at planning for this stage of life that they simply throw in the towel. However, you can see that your initial efforts in each of these areas can help you get on the right path. Even though you think that you may be far behind others who are your age, you may be in a better position than you appear to be at first glance. When you make these important resolutions and start acting on them quickly, you can move forward with confident footing as you approach your non-working years.

As we look ahead to a new year, we think of our goals and priorities. Some of these goals can involve getting an Estate Plan together. If you want to leave part of your estate to your stepchildren, you are required to specify that in your will. If a stepparent dies without a will, the children will not get any part of the estate even if the deceased stepparent wanted them to. Stepchildren do not have automatic inheritance rights possessed by adopted and biological children.

Legally speaking, stepchildren are not entitled to any inheritance unless they are specifically named on the will. This fact can be traced back to the colonial days when America was under the British common law. Due to the prevalence of negative stepparent stereotypes at the time, the centuries old legal system did not encourage strong legal relationships between stepchildren and stepparents.

Blended Families and Estate Planning

What are blended families? The term blended families refers to a family situation where either the husband or the wife has kids from a previous marriage. Blended families can take any of the following forms:

• Families where both spouses have children from a previous marriage.
• A family where both husband and wife have children from previous marriages in addition to their own biological kids as a couple.
• Married couples where either the husband or the wife has kids from a previous marriage.

Blended families often have to deal with complex issues when it comes to estate planning. Problems can arise between the parents or the children and their spouses. Some of the challenges individuals from these families face include:

• Scuffles over the division of responsibilities or authority.
• The need to protect their estate from previous spouses.
• Potential delaying of the stepchildren’s assets perhaps until the death of the parent’s spouse.
• The possibility of stepchildren being disinherited by the living spouse.

Estate Planning Asset Protection Strategies to Protect Stepchildren

The number of blended families continues to rise as divorce rates in first marriages and remarriages rise. On average, about 50 percent of marriages and 60 percent of remarriages always end up in divorce in the US. With the help of an estate planning attorney, these families can come up with some form of asset protection to make sure that the surviving offspring remain a part of their estate.

Stepparent Will

The stepparent should make sure they have a will which specifically names the stepchild/children as a beneficiary. If a stepparent dies without a will, his/her estate will be inherited by the legal spouse or the closest living relative but not the stepchild.

Irrevocable Life Insurance Trust (ILIT)

ILITs allow stepparents to provide for their children through life insurance and use the remainder to provide for their spouse. The parent purchases a life insurance policy using the name of the child and pays the premium for the rest of his/her life. The child will receive the inheritance upon the death of the parent. An irrevocable life insurance trust is a good way to ensure that stepchildren are not disinherited.

Bloodline Trusts

A bloodline trust is intended to benefit your child and his/her offspring. The trust protects a child from creditors and former spouses by keeping the money in the family. The child is the trustee.

Sources

https://www.huffingtonpost.com/news/us-divorce-rate/

https://www.forbes.com/sites/rbcwealthmanagement/2015/06/23/estate-planning-tips-for-your-blended-family/#9dc54944f4a2

https://www.n-klaw.com/the-blended-family-dilema/

https://www.kwgd.com/estate-planning-for-blended-families