Author Archives: ernie

How can I retire early?

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Almost everyone at some time in their lives wonders, how can I retire early? They might be having a tough day at work. Or perhaps they are envious of someone who is retired and the life they are able to leave. When you ask yourself this question, how can I retire early, the next step is critical. If you want to retire early, consumers need to put a plan in place and answer the following questions. Then they must work towards these goals to achieve their objective. Unless you are lucky enough to win the lottery, most of us will just have to work hard to make it happen.

Questions to Help Answer – How can I retire early?

These are the questions that will get you started and help achieve your plans. Work with an expert to ensure that you are considering the right questions and making the correct assumptions.

  • How much should I save
  • How should I invest
  • What will my housing cost in Retirement
  • How much will health care cost
  • Manage your tax liabilities

How much should I save – how much income will you need? What interest rate will you assume? How many years do you have to save towards retirement? What pensions will you receive?

How should I invest – Most experts will tell you focus on blue chip, diverse investments that will protect you from catastrophic losses. The market will go up and down.  Over the long term it should continue to increase providing growth in addition to your savings and help with your retirement goals.

What will my housing cost in Retirement – Will you stay where you are, downsize, move in with the kids or live in a seniors home. Each one of these has different costs and must be factored into your planning.

How much will health care cost – this is a huge assumption with huge impacts. What health coverage will you have? What is your co-pay? How will you afford your medical costs.

Manage your tax liabilities  – taxes are present in life and death. Focus on minimizing your taxes. Leave more money in your pocket.

Best Way to Avoid Boredom in Retirement

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Many people find they do not have enough hours in the day during retirement. At the same time, others are looking for help. They want to find the best way to avoid boredom in retirement. With so many people retiring these days, many are struggling, especially after the first year. They spend the first year traveling, completing projects around the house, and visiting friends they have not seen for several years. They did not have time when they were working. Suddenly they have all of this free time, and they make the most of it. But what happens after the first year when all projects are completed? The budget has been maxed out, and your friends are also traveling. Now what do you do?

Best Way to Avoid Boredom in Retirement

There are three essential elements that consumers need to consider to avoid boredom in retirement. They are:

  • Sufficient budget
  • Good health
  • A purpose to your life

Having only one or two of these is not sufficient. Having a purpose in life is probably the most important of them all. If you do not have a reason for getting up in the morning, it does not matter how healthy you are or how much money you have. You can survive on less money and varying degrees of health. Having a purpose in life keeps you going, challenges you, and makes life interesting.

Everyone is different. Your purpose in life will be different from everyone you know. Whether it is a second career, pursuing hobbies, looking after the grandkids, or volunteering, it is something that you look forward to each day. Find what works for you. Try different things until you have that interest in life that makes you get up in the morning looking forward to the day.

 

Big problem for new retirees

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problem for new retireesInitially your really busy catching up on all of the things you have been ignoring or delaying until your retirement. You knew that there would be time for these things once you finished work so you put them off. Many retirees find themselves very busy during the first few months or even the first year, but then something happens. It is the typical Big problem for new retirees. Initially they enjoy sleeping in, they get to travel on their schedule and there is a lot less stress in their lives. This new found freedom is actually pretty nice. But over time they run out of things to do around the house. Travel budgets get depleted and while it is nice to sleep in, you have the rest of the day to fill!

Many people suddenly find themselves missing the social interaction they had with people at work. They miss the fulfillment, achievement, and recognition they got from doing their jobs. They try to keep busy, but keeping busy is just not fulfilling any longer. Now what do they do for the rest of their retirement years?

Big problem for new retirees – Boredom

The B word comes into their vocabulary. They are bored and do not know what to do with their time. There three things you need to enjoy retirement. You need your health, you need a good financial plan that matches your lifestyle plans and you need the most important thing, a purpose in life.

For some consumers finding a purpose in life means looking after the grand kids. For others it means returning to the work force in a new career. Many start hobbies which turn into jobs. The most important element that these thing s must have is that they look forward to getting up in the morning and pursuing their purpose.

Everyone has something different. Each person needs to find out what works for them. Their purpose could change over time as well. They might start out on a hobby which leads to other things that they find more interesting. Whatever it is, try many alternatives until you find the one that works for your personal situation at your time of life.

For more senior life style ideas and topics, click here.

Financial Independence in Retirement 

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Financial Independence in Retirement Much was made of the slogan freedom 55. At the time, it signified that a person could retire at 55, living the quality of life they wanted on the savings they had accumulated. Unfortunately, many people lost a lot of money during the recessions in 2000 and 2008/09. Freedom 55 has been set aside for the time being. We all want to have financial independence in retirement. More importantly, we want to be financially independent at a certain point in our lives so that we can make our own decisions about work vs retirement.

In fact, wouldn’t it be nice at age 45 to have sufficient income to allow you to make a decision about continuing to work, changing jobs, or traveling for a while without worrying about money? There is a way to do this, and it is just simple mathematics.

Financial Independence in Retirement

All consumers need to do is invest 10% of their incomes in a diversified group of stocks, regardless of how much they make. They need to be blue-chip stocks, and they need to pay dividends. They should have an excellent record of paying dividends and increasing their dividends. While it is slow and tedious, it is like the race of the tortoise and the hare. The tortoise won because he kept going and finished the race, while the hare fooled around and did not focus on the race.

As your income increases, so should your savings commitment. As your savings grow, there will come a time when the dividend income is larger than the money you add to the account every year from your salary.

If you begin later in life, you must save more to achieve the same result. You might have to work longer as well. But this approach will ensure you are financially independent at some future point.

Remember, save 10%, don’t touch it, invest in blue chips only, diversify, reinvest the dividends, and watch your savings grow!

How to Feel Richer in Retirement

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Feel Richer in RetirementMany couples have no idea if they will have enough money when they retire. They worry and want to feel richer in retirement but do not know what to do. They have not taken the time to assess their situation regarding income, expenses, and savings to know if they will be comfortable or not. This is the only way to know if you have saved sufficiently and will have enough pension income. They can stop worrying once they set up a budget and assess their financial situation. But there are always ways to feel richer in retirement regardless of income. Here are a few steps to take.

How to Feel Richer in Retirement

Always ask for discounts – there is nothing wrong with asking for discounts. Many places offer 10% off for seniors or even as much as half-price. That’s a pretty good deal when two people can eat for the price of one.

Stay healthy – avoid expensive medication, trips to the doctor, and worse. Exercise, eat well, and not only will you feel better, there will be more money in your pocket.

Look for supplemental income – if you are short of money, get a part-time job. Many seniors work a couple of days a week. They like the extra income and the social aspect of being around people.

Work longer – once you have completed your assessment, you may need to work longer. That’s ok for many people. Again, they enjoy the social aspect and can build their savings even further.

Save early – start as soon as you get your first job. Set aside 10%, invest it well, and forget about it. Amazingly you will have sufficient savings and income by the time you are 50 to retire or do something different than your current career. It will be your choice.

Invest well – forget the quick rich schemes. Most people lose money. Focus on blue chip stocks that not only pay dividends but increase them regularly as well. You will be amazed at how fast your savings will grow.

How Couples Sabotage their Retirement Plans

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How Couples Sabotage their Retirement PlansThere are lots of ways that couples sabotage their retirement plans. When they do they have to resort to solutions that are brought out in the picture. Some have to down size, some have to move in with their kids. Many have to cut back on their lifestyle drastically. They even need to keep working well past their retirement years just to maintain the standard of living they like to have. There are lots of reasons why this sort of thing occurs, however we are going to focus on how couples sabotage their retirement plans in this post.

How Couples Sabotage their Retirement Plans

There are lots or reasons, however most can be narrowed down into three main categories. The first one being one of the most important.

Lack of Communication – do both partners have the same objectives about retirement? Travel, annual vacation, spending time with the grand kids? What do you want to do in retirement and does your spouse agree? These are just a few of the items that many couples just do not talk about these things and receive a surprise. Set some joint goals now and begin to make plans on how you will achieve them.

Savings in the Wrong Account – Are you placing your savings in the right account? do you obtain the appropriate tax advantages which help save even more funds? A regular savings account is to easy to access, generates too little income and is taxable. Consider a retirement account that protects your gains and income from the tax man.

Not Matching Savings with Dreams – Planning for a new car, saving for travel, matching your retirement income with your retirement plans? These are just a few of the ideas that need to be considered. Develop a plan around when you want to retire. How much money you will need saved and when you will achieve this goal.

A financial advisor can help you with all of these questions. You may need to spend a few sessions with them as you develop your plan. Make adjustments based on the reality of your situation.

Retirement or Independence

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Retirement or IndependenceGone are the days when consumers expected to retire at age 65! Many are working far past this age to make ends meet. Many are forced to retire due to health issues or layoffs at work. They are all struggling to live and have enough money even to put food on the table. If you are 55 to 70 and reading this post, it is probably too late to benefit from the concepts expressed further in this post. You will need to keep working and learn to live on what you can earn and what you have managed to save. Younger consumers still have time to reach financial Retirement or Independence and decide when or if they retire.

Retirement or Independence

Fundamentally, consumers should aim for financial independence by the age 45 or 50. This means they have sufficient funds to live comfortably for the rest of their lives. It does not mean they need to retire or will retire.

They might be pleased doing the jobs they are doing. They may decide to pursue their dreams, whatever that might be. The point is that they can make these decisions and not worry about saving enough money when they stop working. How do they do that?

Start saving and investing as soon as you begin working. Invest at least 10% of your income, manage it, and reinvest the dividend and interest income. Let it grow, and if you do an excellent job at saving and managing, you will reach financial independence by the time you are 45 or 50.

By all means, keep working if that is what you need to do. The important thing is you can decide on your next career or lifestyle without worrying about earning money.

How do I know if I have enough Money to Retire

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how do i know if i have enough money to retireHow do I know if I have enough money to retire? This is the big question that many people ask themselves as they near retirement. Should I work for a few more years? Or can I retire now? What quality of life will I have in retirement with the money I have? There are so many questions that we all have and it all comes down to money for many people. But there is much more to it than just money. Sure you need to have sufficient savings to allow you to live comfortably. You also need to have friends, family, and things to do. Your activities will need to be interesting, perhaps challenging, and give you something to look forward to every day. But let’s get back to the main question, how do I know if I have enough money to retire?

How do I know if I have enough Money to Retire

Start with developing a budget. You will need to know how much savings you will have when you retire and how much income it will generate from interest, dividends, and mutual fund payments. Next, you need to calculate your income from private company pensions and government pensions. When will you receive these pensions?

Your expenses are next. Add up all of your regular monthly and annual expenses for everything that you have. Utilities, food, rent, taxes, clothing entertainment, etc. Compare your annual income with your annual expenses to get the first indication of whether you will have enough in retirement.

You may need to make some adjustments. This could include working longer to save more money. It could also include reducing your expenses. Perhaps you will need to eat out less. Maybe reduce your utilities or downsize to a smaller less expensive home. You also may need to make adjustments to accommodate the objectives you have with regard to travel, etc.

Work with an expert to gain help with this process to answer the question and plan your future retirement.

Are You on track to a secure retirement

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Are You on track to a secure retirementThe question, are you on track to a secure retirement is a common one that many people have. They may be nearing retirement or their company is about to provide a special retirement plan. They wonder if they should take it and whether they will be OK financially in retirement. Whether you are retired or about to retire or have a few years yet to work it is never too late to assess whether you will be comfortable in retirement.

Are you on track to a secure retirement?

One of the best ways to answer this question is to build a retirement budget. First, you should identify where your income is going to come from. Your income may include company pensions, government pensions, income from investments, and other miscellaneous income that is on a recurring basis.

Next, you must consider all of your expenses. Your expenses will include all of the regular monthly expenses such as heat, Hydro or electricity, and utilities such as cable TV, telephone, etc. You should also include your taxes and mortgage payment if you have one. Your home is going to need maintenance over the years and you should budget an amount each year for maintenance of your home. The same applies to your car and whether you have a car payment or car maintenance, insurance, etc. this should be part of your budget.

Once you have totaled up all of your income and expenses you will have some idea as to whether you will have sufficient money during your retirement. You may find that your expenses are going to be greater than your income. You will either have to work longer or cut your expenses. You may also decide that you will increase your savings if you have time.

Another area that we did not mention is all of your expenses associated with your free time. You now have a great deal of free time to pursue hobbies, travel, and even go back to work. Depending on what you decide he may need to budget for this activity.

A good plan developed early, reviewed regularly, and adjusted as needed will help to ensure a secure retirement.

How much do I need to save to retire a millionaire

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How much do I need to save to retire a millionaireEveryone sometime in their lives asks the following question? How much do I need to save to retire a millionaire? The answer is not that hard to come up with. It really depends on how old you are and how much you have already saved for retirement. Consumers who start early and stick to it, have an advantage. Their savings work for them and their investment income continues to build towards their retirement objective. In the following paragraphs, we will give you some examples. You decide where you are and whether you can meet the objective of having a million dollars by the time you retire.

How much do I need to save to retire a millionaire?

Assuming a 10% average annual rate of return which is the historical average of the S&P 500. Assume you are going to be 40  years, a 25-year-old could build a $1 million retirement nest egg by saving just $175 a month in their investment accounts. Their total contributions over those 40 years would amount to less than 10% of that total, just $84,000. All the rest would come from the income from your investments.

If you are 35 years old and starting from scratch, your monthly contributions would have to be more than twice as great as a 25-year-old’s. Saving $470 each month in your retirement investment accounts over the next 30 years will yield $1 million, assuming the average 10% annual rate of return. Your total contribution over the years would be $169,000.

At 45, if you’re starting from scratch, then your monthly payments will need to be significantly higher. To reach $1 million by age 65 with 10% annual growth, you’ll need to contribute $1,330 a month. Your total contribution will be about $319,000.

As you can see it pays to start early! During your 40s and 50s, it can be your prime earning time when you make the most money. However what if you get laid off or there is a health issue? Or perhaps you don’t like your boss. Would you not like to have the flexibility to make your own decision regarding when you retire? Start saving now!