Monthly Archives: February 2011

Secrets to Retirement Planning

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Secrets to Retirement PlanningEveryone wants to have a comfortable retirement. A healthy retirement and to be able to take advantage of the free time they now have.  Like everything else, you can increase your chances of achieving these goals if you plan for retirement. The Secrets to Retirement Planning are pretty simple once you understand them. Plan financially, emotionally and look after your body as well. The fundamentals of meeting these goals are pretty straightforward:

  • Sufficient funds to do the things you have always wanted to do
  • Healthy bodies and minds
  • Interesting and challenging things to do

If you have these three things, chances are all the details will work themselves out, and you will have a wonderful retirement. Sure, there will be challenges along the way, family issues, and surprises you could not predict. However, if you have dealt with the retirement planning issues of money, health, and interests, you should be able to weather these small storms.

Secrets to Retirement Planning

Let’s take a look at these three areas in more detail.

Sufficient Funds

The answer for everyone is, of course, different. You need sufficient funds in your retirement to meet your basic needs for a safe and healthy life. Beyond that is what you really need to enable you to meet your retirement goals.  Starting when you are younger and setting aside at least 10% of your salary every year in savings should get you to where you want to be when you retire.

Of course, you will have to save more if you have lofty goals. Develop a plan based on your current lifestyle and spending habits. Calculate how much money you need to save based on the year you retire and the expected life span. Assume a conservative interest rate as well, forcing you to save a bit more. With these basic tools and plans, you should find yourself in a good position come retirement.

Follow the basic rules of diversifying your investments, never put all of your investments in one basket, if it sounds too good to be true, then it probably is, and try not to chase speculative investments; invest for the long term.

Healthy Bodies and Minds

This is probably the easiest for many people. All you need to do is exercise the body and mind to stay sharp and enable you to enjoy all of the things life offers well into your old age. Too much of a good thing is also bad, so 3 days of exercise for 30 minutes each week is probably sufficient for most people. Overdoing it, as in seven days a week marathon running, for example, will probably wear out your joints well before you usually would. Who wants to go through knee or hip operations with the associated immobility?

Swimming is an excellent low-impact exercise and is great for sore knees and hips. Even if you are not a good swimmer, just getting out and being active in the pool is great exercise. Consider some of the swim gym classes as well, where you exercise in the water.

You also need to challenge the mind and keep it sharp. Working will help with this as long as your job requires some thought. Experts indicate that doing crossword puzzles, playing games, and working on various projects will also help to keep the mind sharp. How about doing math to keep your mathematical skills high? You can impress the kids at the store by adding up your costs before they can punch it into the cash register. Did you ever notice that when the cash register is not working, most have no idea how to add it?

Interesting and Challenging Things to Do

If you become a couch potato, you are probably headed in the wrong direction. When asked what he was doing in retirement, one friend of mind answered by saying he gets up in the morning, has his coffee, reads the paper, and watches the grass grow! This indicates someone who has no outside interests and is bored. Needless to say, his friends were appalled. Fortunately for him, he was able to land some small contracts which will keep him going for a while; however, he needs to find something exciting and challenging to occupy his time.

It does not matter what it is. Go back to work, take up some hobbies, volunteer, travel, do something. The only essential criterion is to make sure you look forward to getting up in the morning to tackle what you have planned for the day. Of course, if travel is on your list, you also need to be able to afford it.

Don’t wait. Start planning for your retirement when you are young, and you will be sure to have a very successful, enjoyable retirement lifestyle! Comments are welcome!

A Will In Your 20’s or 30’s!

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A Will In Your 20'sMany young people think of estate planning and financial planning as something only seniors must do. A Will In Your 20’s? The truth is, if every adult with a spouse, child, or business, regardless of age, had solid plans in place when they were young we would all be very well off during mid-life and into our senior years. People with A Will In Their 20’s and 30s are in the prime of life. They have a lot of years to set aside money for later. If you start early then you do not need to set aside very much each year. You can end up with a really nice nest egg.

Young people marry, start a family, and buy a home. Some will also start or buy a business so there are a lot of pressures on the financial side of life. This can be made easier if you have a solid financial plan, an estate plan, and a will to protect you and your young family.

A Will In Your 20’s or 30’s

Whether we realize it or not we all need to think about the following as we take steps in our lives:

  • Getting married
  • Having Children
  • Buying a home
  • Saving for retirement
  • Buying life insurance
  • Starting a business
  • Preparing a will

A Will In Your 20’s! And Having children

Once you have children, you have taken on a huge responsibility that goes on whether you are alive or die in an accident. One of the ways to ensure that your child has the life you had hoped for them is to have a will that states how your assets will be used to support them and who will look after them. If there is no will, someone in the government will decide who will raise your kids and how the money will be used.

Your will can also state how the funds will be used to support the kids when they have access to the funds and who will manage the funds until they are old enough to manage the funds themselves.

Buying a home

When you buy your home, most couples will do so in a joint tenancy which means that if one dies, the other takes over the ownership of the home automatically, called a right of survivorship. The house remains out of the estate and probate is not required for its transfer to the surviving owner meaning you pay less probate or death taxes as a result.

Without joint tenancy, you have tenancy-in-common which doesn’t provide a right of survivorship. The half of a house owned by a deceased tenant-in-common falls into the deceased’s estate, where it’s subject to creditors, claims, and delays.

Saving for retirement

Savings plans for retirement should start early in life. Investors should consider how these assets will be handled in probate. Plans in some situations can be transferred to spouses tax-free. In the early years when you do not have a lot of savings, many people will take out insurance coverage to protect their families should something happen to them.

Buying life insurance

Leaving a life insurance policy to a spouse directly also keeps the insurance proceeds out of the estate. This ensures that there are funds in the spouse’s hands no matter what is going on in the estate. This is better for the spouse. On the other hand, there are excellent reasons to name the estate as the beneficiary of a life insurance policy. The main benefit is that it provides cash in the estate that can be used for paying taxes. Or paying debts (such as paying off the mortgage on the couple’s home).

Life insurance can also be used to provide money that can be distributed to one of the children. For example, the deceased was leaving his or her major asset – a business or farm, for example – to one child. If they didn’t have enough assets to give a similar amount to another child. Another use of life insurance is to create funds for holding property such as a cottage in trust.

Life insurance is much cheaper at younger ages than it is when people are older. Young people should consider the various ways that life insurance can be used to their advantage. It can replace income. It can pay out a mortgage, leaving the widowed spouse with a clear title to the home. Also, it can provide funds to leave in trust for the children. It can provide cash flow to be used to pay taxes and expenses.

Starting a business

Finally, young people are tying up a great deal of time, effort, and capital in a business. They must plan right from the start to protect their families in the event they pass away prematurely. If the business is incorporated and there are other shareholders, there should be a buy-sell agreement put into place. It should clearly state what happens to the shares of a deceased shareholder. Often the agreement provides that the other shareholders will buy back the shares. In a fledgling company (and often in more established ones, for that matter), this probably means that a life insurance policy owned by the company will be taken out on the shareholder’s life.

Start your planning today. Talk to a financial adviser and assess what your next steps should be. Enable a high quality of life during retirement as well as high quality of life for your family should something happen to you.