Carrying a Mortgage into Retirement

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Carrying a Mortgage into RetirementThirty percent of Americans 65 years and older are carrying a mortgage into retirement. They are also trying to figure out how to handle the payments. No one really wants to carry a mortgage into retirement. However in many cases it can just not be avoided. There may be health issues that take a lot of money. There might have been a divorce or separation. Also there may be children’s education to pay for. Or maybe you just spent too much and did not plan properly.

In many cases, consumers have been laid off from a well paying job. They find themselves unable to find another job. Effectively putting them into retirement. Whatever the reason, carrying a mortgage into retirement can be difficult for some. At the very least it will limit the things you plan to do during your retirement.

Cash flow is all-important in retirement. The bottom line is that there is only so much money coming in each month, your expenses will eat into that income. Your mortgage that you carry into retirement will eat into this cash flow along with your expenses for living, visiting the grand kids etc. If you are young enough to plan in advance, make every effort to repay your mortgage in full prior to retirement.

You will have all of the cash you need to live your life. Many people will use a line of credit to help them deal with situations where they do not have the cash to handle various situations. While these are excellent tools, there is the danger of using them and then finding that you cannot pay them off quickly since the cash is just not there.

Carrying a mortgage into retirement

Folks in this situation have much less flexibility in spending due to the cash flow impact. That $400 or $800, whatever the mortgage payment is, is money that you don’t have to enjoy in your retirement.

Other pressures such as putting students through university, unemployment, retiring early, health expenses, etc. can affect your ability to repay the mortgage. Even if you have a line of credit against your home which you consider a loan, make sure that it is fully paid before you retire. We see lots of people spending a lot of money in the years before they retire to upgrade the house, buy a car, major repairs to their home, etc. If you have the cash to pay these major expenses great, if not make your cash last as long as possible to avoid serious cash flow issues.

Pay off high-interest loans first, then focus on low-interest mortgages. By taking this approach you can at least minimize the amount of interest you are paying each month.

For more lifestyle topics, click here.

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Mutual funds are Expensive

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Mutual funds are ExpensiveThe chart on the left illustrate just how expensive mutual funds can be particularly when you look at them over a 40 year period in your retirement plan. In this example mutual funds are expensive to the tune of $159,000 over this period. Why are they so expensive? The answer is pretty simple once you begin to look at some of the details. The MER or expenses charged by the mutual fund company are really what is costing consumers all of this money. These charges are billed to the mutual fund to cover management fees as well as trading fees. They vary a great deal depending on the country you are in and of course the mutual fund. In Canada for example the fees can approach 2% in many cases while in the US they are smaller, closer to 1%.

This is always in addition to any fees that you might be paying your financial adviser to manage your overall account. These fees are charged to the mutual fund whether the manager has a good year or not. We have seen situations where the mutual fund has declined year over year and they still get paid their 2%. Almost like adding insult to injury in a situation like this.

Mutual funds are Expensive Compared to What

Consider that you will always be charged the expense fee regardless of how well your mutual fund actually does in any given year. Let’s assume that the investments your mutual fund is invested in provides a return of 5%, which is an aggressive return in today’s markets. We will leave that issue for another post. If your mutual fund and your investment adviser charge a combine 2% management fee, then your return on your mutual fund investment into your account will only be 3%.

Next consider, what happens in a down year. Lets say that investments do not do well and even though the investments in the mutual fund generate 5% income, the value of the stock portfolio declines and brings the net return into the negative territory. The MER is charged even though your fund loses money which adds to the overall loss.!

Mutual Fund Fees

It is these fees that contribute to the $159,000 loss in the graph above. If you manage your own portfolio you can eliminate the management fees. You will still have some fees for trading but hopefully these will be kept to a minimum.

Since you have chosen blue chip stocks with a history of paying dividends each and every year.

Since you have high quality stocks there is also no need to rebalance. Or do a lot of trading each year which further decreases you overall fees.

Your fees can be significantly reduced leaving money in your account for your retirement. Something to think about!

Simple Web Design

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Simple Web DesignSome web sites look so complicated and even difficult to read that you just move on to another site. Ever stop to wonder how much time it takes to develop and maintain a complicated website? Something with lots of graphics, links to other pages both on and off-site, updating of content that is related to current events or activities within your company. These topics all take a lot of time compared to simple web site design criteria. If you are just starting your business or perhaps just getting started with an online presence, you probably should follow the KISS principle – Keep it simple silly! You can always add more detail later and pretty up the site later when you have the time or the need. Your customers will not care provided that the basic information is available and easily found. It still needs to look professional, easy to navigate, and provide the information they are looking for, however, this is easily completed even on a relatively simple and straightforward web site.

Simple Web Design – Basic Web Sites

What are the basic things that customers and readers are looking for on company sites? They are easy to consider if you think about your business for a minute. Here is a partial list, although we think it is pretty comprehensive :

  • Contact information that is accurate and works e.g. email
  • Who you are and where you are located
  • Products and services that are offered
  • How to purchase the products and services
  • FAQ’s which are up to date and really do answer all of the standard questions
  • Shipping information if applicable
  • Information about ordering products and services
  • Note that ordering and processing is not considered part of a basic site

If you cover the above in five or six pages that are easy to navigate, then you probably have a pretty simple web design. As you add more products or services, you may need more pages as well.

Updates to your site should be relatively easy and straightforward. You should be able to perform these changes yourself providing minor edits, adding pages as needed and updating content as needed. Adding functionality such as taking and processing orders online takes you beyond the simple web site design. There are widgets available that will also handle these functions for your customers.

If you need more information or would like a web site set up for your company contact us today be sending an email. For more web design topics and ideas, click here.

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Five Big Retirement Mistakes

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Five Big Retirement MistakesWe all make mistakes in our lives. However as we near retirement age, we really want to be cognizant of the mistakes that can affect us during retirement. There are many mistakes we can make. This post is focusing on the five big retirement mistakes that many people about to retire make.

We are assuming that you have the rest of your life in order. We will just focus on the preparation for retirement. Company downsizing, health issues and accidents can also have huge impacts on people during retirement or while you are working. Let’s focus on some of the things that we have control over and not on those that we do not have control over.

Five Big Retirement Mistakes

Leaving money on the table that may be offered to us in a variety of ways. For example dividend reinvestment plans where your company matches contributions to the plan, either as part of your retirement plan or a company savings plan is a good example. Always take advantage of these offers to augment your savings. Another example is leaving a company too soon and not being able to take your retirement plan with you. This is your money and you need to make sure that your money comes with you or gets locked in by a 3rd party.  Anytime you leave money on the table, you impact your overall financial situation.

Not saving enough money for retirement is another big mistake. Most people do not even know how much money they will need. The right thing to do is to meet with a financial adviser and work with them to calculate just how much money you will need. The simple way and not too accurate is to make your own calculations. If you make $50,000 today and want to have the same amount in retirement, you will need to have $1.0 million that generates 5% income every year to sustain your retirement. We happen to believe you need less than that, but that is a much more complex calculation.

Saving on auto pilot is a great way to make sure you have saved some money for retirement, but most people do not follow this approach. All you need to do is have your bank or financial company deduct from your account a fixed amount every month and place it in a savings account, financial investment etc. It is a form of savings and it is a start towards saving for retirement.

Paying Fees

Paying high fees for banking services, for financial advisers, for trades on investments etc. Anytime you can reduce these fees means more money in your account. With compounding over the years these fees can add up and make a real difference in your retirement.

Retire too early before you have saved enough to last your remaining life time. Follow the first step and find out how much you need to save for retirement. Once you reach that objective you will know that you can safely retire and know you have enough for retirement.

These Five Big Retirement Mistakes can make a huge difference in your lifestyle during retirement.

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Write Original Researched Interesting Content

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write-original-researched-interesting-contentGoogle and in fact all of the search engines have been improving their search algorithms to provide better results to their customers when they are searching for information online. Over the years various websites have tried a variety of schemes to arrive at the top of the search results so that online readers will click on their links. Original Researched Interesting Content is the mantra that we should all follow.

Google has launched a variety of programs, nicknames Panda and Penguin along with earlier releases to improve these results so that bloggers and webmasters cannot game the results. The upshot of all of this is that bloggers and website designers are now focusing on providing better-quality content. This is a good trend for everyone since everyone benefits. Readers get better quality content, web owners get better results and web designers can focus on a quality website rather than try to adjust websites each time Google updates its algorithm.

Original Researched Interesting Content

The next time a web design company promises that they will place your website on the first page of the search results for a given term, take the time to understand exactly what they are saying and promising. Writing original researched interesting content about your products and services is pretty easy to do, but will anyone find you when they are searching?

How will they ensure that your content appears in the top 10 search results? What happens when Google or Bing or Yahoo updates its search algorithm? Chances are they will skate around this issue and talk about needing to do more work to keep your site well up in the search results. This is the code for spending more money.

We happen to think that you need to be adding new content all of the time that is fresh and interesting to your clients and readers. We also believe that you need to review your older content from time to time to make sure that it is still accurate and describes your products or services accurately. As you add more and more content there will be more and more information for your readers.

Google Objectives

This is what Google is aiming for, originally researched interesting content that is current and up to date. This content remains that way regardless of what release of search software Google throws at it. The next thing that website owners realize is that they also need to have multiple advertising strategies to help their customers find their websites. Links on Facebook links on business cards and invoices, traditional advertising, and links on all emails that are sent to customers and suppliers. The point is to make sure that your website is well-advertised and provides the kind of information your customers are looking for.

For more information on this topic and others check out other posts on our website about building and maintaining websites.

Website Ideas

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Website IdeasContrary to what many companies put in their sales material  we are providing a dose of reality about Website Ideas. Where they talk about gaining a huge amount of traffic from SEO engineered sites, we discuss specific areas to focus on. There are three  and only three ways to garner traffic from the web through search engines. Do not believe any of the companies that try to offer first page results for search results. Google, Bing and Yahoo have this all figured out. They are focused on quality web sites with original content. So what are the three things that every web site must do extremely well?

Website Ideas – Well Designed

First the web site must be well designed. Pleasing to the reader, easy to navigate. Provide the information that the customer or reader is looking for. It must also adhere to all of the standards in terms of web design that will help with ranking and will help your readers find you. If your reader or customer cannot easily navigate your site or find the information they are looking for, they are going to move on to another site. When readers remain on your site for a longer period of time, it tells the search engines that you have something interesting.

Website Ideas – Original content

This is probably the most important of all. Duplicate content is frowned on and to be discouraged. Don’t copy other people’s content and do not even copy your own content. Keep it original, keep it fresh and focused on what the customer is looking for. Regularly browse your old content and update it to reflect your companies current products, services and thoughts about whatever you are blogging about. Old content gets stale and readers will just ignore it. Search engines will rank you much lower in the search results if you do not keep it fresh and original.

Advertising

Tried and true, advertising does work provided that it is also focused on your customer segment and location. There is no use advertising in Canada if you only sell in the states for example. Make sure advertising is focused where your market lives. Before considering advertising, the first two steps need to be completed. When a reader clicks on your ad, he or she is taken to your site and offered the services or products that they are looking for. Conversions from reading to becoming a customer is what will make your company successful.

Focus on these three areas and you will be well on the way to meeting your goals of attracting customers to your business.

Plan to Retire: Start a New Career

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Plan to Retire: Start a New CareerMany baby boomers retiring now and in the next 20 years. They are wondering what they are going to do with their time once they no longer have to go to work. For some it is a planned retirement others are pushed out due to downsizing or a reorganizing. Regardless of the reason it is time to take stock of their skills and their interests to plan the next stage of their lives. For some it will be finding another job or possibly starting a new career. This post is aimed at those people who plan to retire: start a new career.

Plan to Retire: Start a New Career

A friend of our family was forced to leave his company after a very productive and rewarding career prior to the time that he was planning to retire. His first few weeks were fine. He had lots of social engagements and projects to work on around the home. My friend had a mindset that he was really just on vacation. After the first couple of weeks this sense of vacation began to wear off. His wife who was also retired had her life established with lots of volunteer work and of course the grandchildren. This was not enough for him to keep him occupied and challenged. He really needed something more and began to cast around for ideas about what he could do next.

Challenging Activity

My friend needed to be challenged, he needed a purpose. He also wanted to be with people or talk to interesting people during the day. In effect he wanted a job that fit those conditions. He is not the type to take a part-time job working for Home Depot or something like that. My friend would like something that would really challenge him. Something that he could talk about to his friends. He settled on getting involved with a start-up company taking it from the ground up. It is consuming him at the moment. He is probably working just as hard as he did before retirement.

He is not being paid. His expenses are being covered and he will get stock options for his efforts. But deep down I don’t think he cares about being paid. He just needs something to do during the day and this has fit his requirements.

While starting a new career may not be for everyone, it is one option for those of us who are retiring and looking around for something to do in our spare time.

For lots more information about retirement planning, click here.

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Small Business Needs

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Small Business NeedsSmall business needs never seem to end. The owner / operator can be stretched really thin in terms of time as well as financially. They need to keep their business going and expand it to grow sales. They must also provide support to existing customers. It can be tempting to develop your own website yourself and interesting as well. But is this something that you really want to take on in view of all of the other things that your small business needs to address? If you do not have the knowledge, you have to learn it and still invest the time to do all of the other things a small business start-up needs.

We ask this question because we can add a small business web site for you with little expense. We can have you up and running quickly and provide the right structure to allow future expansion as your time permits and company success demands.

Small Business Needs – Basic Website

We can add a small web site with five pages covering the basic information all companies need to get you started. These include the main company web page that describes who you are and the services and products that are offered. Next we have an “about” page that provides a little more information about you and your company. A contact page for people who need to get in touch by phone, email or even snail mail if desired.

We also include two more pages or posts that can be used to describe products or services in more detail. These pages can be used for anything that is desired. Of course you are not limited to just 5 pages. You, your employees or ourselves can add more posts as needed to the web site and needed. Many customers will have a page providing a list of frequently asked questions. This helps their customers find the information they need without having to contact you and take both their time and yours as well.

As your company grows or you add more products, you or your employees can add pages as needed. If you would prefer we can add additional content as well on your behalf. We just need the basic information and instructions regarding anything specific that you need. Adjustments are easy to perform and can be accomplished by either party.

Feel free to contact us about setting up you small company web site today. We can have one set up for you in no time at all with your company logo, pictures and text etc.

Retire Successfully – 10 Steps to Focus On

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Retire Successfully - 10 Steps to Focus OnThe following are the ten major things that every baby boomer and anyone who is planning to retire in the near future should look at. We will provide a few comments about each on, however obviously you will need to apply your own personal situation to this list. Also you may want to get the assistance of an expert financial planner to help with the details and calculations. Once you properly go through each of these steps you will have an idea of your situation when you retire. The next step then is to take action to improve each area and then reassess once action has been taken and every year there after.

Retire Successfully – 10 Steps to Focus On

Prepare a pre-retirement budget – what income will you have and what will your day-to-day expenses be? You may need to take steps to re-balance your expenses to ensure that your cash flow is sufficient to meet your needs.

What tax bracket will you be in – knowing this number will help with your budget. How much tax will you be obligated to pay and what action can you take to lower your tax obligation?

Plan a mix of growth and income investments – a financial planner can help with ensuring that there is the right mix of income investments, growth investments and what changes you need to make?

Figure out your real estate situation – is your mortgage paid off, should you downsize, what improvements do you need to make to sell your home or make it comfortable for you during retirement. These decisions will have a large impact on your budget.

Refinance your home before you retire – if you need to refinance your home, do it while you are still working. The finance companies will re-evaluate your income etc and risk profile once you retire.

Verify your car situation before retiring

Do you need to update your car, pay it off, downsize from two to one car or complete major repairs before you retire?

Audit your health insurance now and after – what health insurance will you have once you retire a

Retire Successfully - 10 Steps to Focus OnThe following are the ten major things that every baby boomer and anyone who is planning to retire in the near future should look at. We will provide a few comments about each on, however obviously you will need to apply your own personal situation to this list. Also you may want to get the assistance of an expert financial planner to help with the details and calculations. Once you properly go through each of these steps you will have an idea of your situation when you retire. The next step then is to take action to improve each area. Then reassess once action has been taken and every year there after.

Retire Successfully – 10 Steps to Focus On

Prepare a pre-retirement budget – what income will you have and what will your day-to-day expenses be? You may need to take steps to re-balance your expenses to ensure that your cash flow is sufficient to meet your needs.

What tax bracket will you be in – knowing this number will help with your budget. How much tax will you be obligated to pay and what action can you take to lower your tax obligation?

Plan a mix of growth and income investments – a financial planner can help with ensuring that there is the right mix of income investments, growth investments. they can help decide what changes you need to make?

Figure out your real estate situation – is your mortgage paid off? Should you downsize? What improvements do you need to make to sell your home or make it comfortable for you during retirement? These decisions will have a large impact on your budget.

Refinance your home before you retire – if you need to refinance your home, do it while you are still working. The finance companies will re-evaluate your income etc and risk profile once you retire.

Verify your car situation before retiring and Retire Successfully

Do you need to update your car, pay it off, downsize from two to one car? Or complete major repairs before you retire?

Audit your health insurance now and after – what health insurance will you have once you retire and w

nd what changes do you need to make?

Give yourself a health assessment – while still working, have a complete health checkup. Take action to improve your health, whether it is more exercise, diet etc.

Update your living will and your regular will – talk to your lawyer and make sure that these two documents reflect your current requirements.

Develop a game plan – summarize all of your actions that are needed, prioritize them and take steps to complete them. Re-evaluate once a year or after any major changes in your life style. Finally once you do retire, adhere to your budget and re-evaluate everything annually!

Stock Market Volatility and Retirement

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Stock Market Volatility and RetirementWe decided to select our first topic, Stock Market Volatility and Retirement, based on what is going on this week in the world’s stock markets because the volatility affects so many people. We are not stock market experts, just a writer that is informed and giving our own opinion.

The market has seen some pretty wide swings both positive and negative in the world’s stock markets. In fact the markets have been declining for the past few weeks, and now they are on the upswing as we reach the end of the year. Some groups blame it on the downgrade of the US Governments ability to pay their debt, while others blame it more on European Union difficulties, particularly with Greece, Italy, Spain and Ireland.

In our opinion it is really none of these. It is a combination of speculation and fear, along with an ongoing proven inability of our worlds politicians to manage their budgets and perform in a reasonable business like manner. Was that a mouthful or what. Lets look at each issue in some more detail. If you disagree that is fine. We would love to hear your opinion as well.

Stock Market Volatility and Retirement – Speculation

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