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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 

According to Wikipedia, “A hobby is considered to be a regular activity that is done for enjoyment, typically during one’s leisure time, not professionally and not for pay. Hobbies can include collecting items and objects, engaging in creative and artistic pursuits, playing sports, or pursuing other amusements.”

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Happy New Year! The start of a new year is a great time to make financial moves that benefit your life in 2021 and beyond. Let’s get started. Starting the New Year with these 15 tasks in process or completed can make a financial difference to you and others:

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If you do a Google search for financial wellness, you will find many definitions or explanations. Financial wellness doesn’t have just one meaning because it means something different to each person. Financial wellness is a broad term that encompasses these key areas:

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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.

The IRS released its breakdown of marginal tax rates for 2021 in December 2020. Consistent with the previous year’s notifications, tax rates adjust almost yearly basing on inflation. Check out these smart tax planning tips.

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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

As we watch 2020 in the rearview mirror, we look ahead with the scars from the year. And while many people spend years dreaming about the day they will retire, for some, this vision may not become a reality as soon as they would want. If you have a sneaking suspicion that you may be a person who needs to delay retirement, then here’s what you need to know. Many factors contribute to a delayed retirement. Here are three of the most common ones.

1. You Have Too Little Money Saved

If you retire at age 67 and live until age 95, then you’ll need roughly 28 to 30 years’ worth of income saved up in order to retire. So, assuming this is true, just how much money would you need to have saved if you do live that long? A CNBC article says that a 30-year retirement requires at least a million dollars to fund it.

In order to get ahead of this trend, it’s necessary to create a plan for the retirement years. It’s impossible to hit a target that you don’t have.

2. The Amount of Education You Have Plays a Role

Retirement is delayed among those who have advanced degrees. The reasons behind this are at least two-fold. For one thing, those who took the 10 or 12 years necessary to get advanced degrees stay in school longer and therefore, join the workforce later in life. This delays their ability to contribute to retirement savings accounts and to save the money necessary to retire.

The kind of work that people in this demographic do also contributes to their decision to stay in the workforce for a longer amount of time. The work isn’t physically demanding and often pays a higher salary. As a side benefit (and another related contributing factor), this demographic of workers usually work at jobs that they actually like. For them, retirement isn’t much of a motivation. They like what they do, so they stay in the workforce for a longer time. Thus, they choose to delay their own retirement. 

3. You Have Too Much Debt

According to Market Watch, having too much debt can take a big bite out of your retirement savings. The more debt you have to pay down, the less money you have to contribute to your retirement savings.

One of the biggest contributors to debt during a person’s retirement years is the cost of healthcare. Healthcare costs eat up over a quarter of a million dollars on average during a person’s retirement years. Some of this debt comes from illnesses like diabetes or cancer. Some of the expense comes from having to pay for healthcare out of pocket. If those healthcare costs come before retirement, say in the case of a catastrophic illness, then retirement will be delayed for an indeterminate amount of time.

Final Words on Delayed Retirement

If you’re one of those lucky people who love what you do, then you may not care that your retirement gets delayed by 5, 10, 20, 30 years or more. However, if you count yourself among those who either has not saved enough or who has too much debt, then you need to take a serious look at your finances. The only way you will be able to retire is to take control of your finances and to create a plan for retirement. If you find yourself in that boat, then your best bet may be to talk to a financial planner about what you can do to turn the tide of your finances.