• Facebook
  • LinkedIn
  • Twitter

Life Settlement Advisors
November 25, 2019

For aging individuals in need of continuous care, retirement communities provide a more comfortable alternative to a hospital setting. These senior living units are built to promote independence and make sure the retiree feels comfortable living their best life. However, a recent study found that there are nearly 19,000 of these retirement communities across the country. Deciding on which one to move into takes some careful background checking. If you’re considering a transition in your living situation, the following questions are important to ask when sitting down with a retirement community manager. 

What is the retirement community cost breakdown?

Most continued care communities charge a monthly rate for their residents. Beyond room and board, this fee is used to pay for the care offered in the homes, like utilities or dining. However, there may be hidden fees for additional services, so it’s important to ask for specific pricing information. Also, be sure to check what amounts are covered by insurance, and how much you  will ultimately pay out-of-pocket.

How will I retain my independence?

While seniors may need additional care, they certainly want to retain their sense of freedom. According to a recent study, the most common fear for seniors is a loss of independence. This concern ranked higher than death or loss of family and friends. Retirement communities should be providing residents with an ability to remain independent and comfortable. Ask about how dining works, or whether there are onsite shopping options, fitness center, or entertainment options like movies or ballrooms. You can also take a look around the grounds to see how other seniors are living.

What emergency response services do you have onsite?

Retirement communities that specialize in continuous care offer residents important medical treatments to seniors in need. Though they may not have hospital-level care on the grounds, there should always be a nurse available, as well as comprehensive health monitoring systems. In the private residences, you’ll want to confirm that there is a way to alert the staff should you experience an emergency. In addition, 24-hour security is paramount in making sure seniors feel safe in the community.

What are other residents saying about their retirement home experience?

No one is a better source of information on the retirement home experience than the individuals who live in it. These retirement communities often conduct surveys of the residents to ensure their standards and needs are being met. You should ask the community managers for recent survey data. It may also be helpful to ask for the two most recent surveys in order to compare the results. If there’s been a dip in overall quality of care, it may be best to consider other options. Additionally, check to see if you can join the residents for a dinner or social activity. A first-hand experience can be a great insight into the quality of life and care.

A retirement community is a wonderful way for seniors to retain independence while still maintaining their ongoing healthcare needs. It also helps seniors to socialize with other residents and build those bonds of friendship. However, the costs of retirement communities may require additional financial resources.

Did you know you can sell all or a portion of a life insurance policy, even term insurance? Selling an unwanted life insurance policy is no different than selling your car, home or any other valuable asset that will create immediate cash. Contact us today to learn more.

Leo LaGrotte
Life Settlement Advisors
llagrotte@lsa-llc.com
1-888-849-0887

For more postings by Life Settlement Advisors, click HERE

Website:  https://www.lsa-llc.com/

WealthCare Connect may receive a referral fee from Life Settlement Advisors for purchases make through these links.

Taxbot
November 22, 2019

What is a Solo 401K, you ask? Good question. Most people never heard of this. This allows you to put away more money than a typical SEP or other defined contribution plan. Here is the “skinny” on a solo 401K

With a normal defined contribution plan, you can put the lesser of 25% of your wages (or net income if you are self employed) or $56,000. In contrast, an employee participating in a traditional 401K plan can make an elective deferral contribution to the plan with the annual limits and the employer may patch part of the contribution, usually up to a single digit percentage of your salary.

A solo 401(k) offers even more. For 2019, you may defer up to $19,000 of compensation to your account, plus an extra catch-up contribution of $6,000 if you are age 50 or greater. This is the same as with elective deferrals for a normal 401(k). However, here is the kicker: Elective deferrals to a solo 401(k) don’t count towards the 25% cap. So you can combine an employer contribution with an employee contribution for greater savings.

Let’s take an example:

Let’s say that you are a sole employee of your company and under age 50 and you receive an annual wage of $125,000. The maximum deductible contribution to a SEP would be $31,250, which is the lesser of 25% of your salary or $56,000. If, however, you set up a solo 401(k), you can defer $19,000 to the account in addition to keeping the maximum $31,250, which would be the employer’s contribution. Thus, your total contribution would be in this case $50,250. Moreover, if you are the only employee of the company, you don’t have to worry about making contributions for anyone else. 

Note: If your business isn’t incorporated,such as being self employed, the 25% compensation cap is reduced to 20%. because of the way contributions are calculated for self employed. Thus, if your self employed net income is $125,000, you can stash away $49,000 which includes the $19,000 deferral plus another 20% of net income which is $30,000.

So what’s the catch? There is always some gotcha. First, if your business has any other employees, you may have to cover then under the plan. Secondly, you have to deal with the hassle and cost of running the plan. However, due to the increased number of business getting into managing these plans, such as Fidelity and Smith Barney, the cost of setup is only about $100 and the annual cost of administration is from $50-$250.

Bottom line: Very few people are aware of this new solo 401(k). It can be a great plan for self employed folks such as Realtors and owners of home based businesses and other independent contractors. Please pass it on to your friends and family.

By Sandy Botkin
Co-founder at Taxbot
Sandy is a CPA, Tax Attorney, and former IRS trainer. He has authored many helpful books on the subject of taxes

For additional postings by Taxbot, click HERE

Taxbot is also listed in the DIY Marketplace

Website:  https://spendingtracker.isrefer.com/go/2019package_ns/wcc/

WealthCare Connect may receive a referral fee from Taxbot for purchases through these links.

Life Settlement Advisors
November 19, 2019

Retirement is a time that brings a lot of change to life, and one of the most positive changes can be adopting a pet. Just when you might be feeling like there’s less to do than ever, a pet means having something to take care of, that loves you unconditionally. Animals have amazing physical, mental, and social benefits to our lives, and for older individuals, these benefits can be even bigger. Here are some of the reasons a retiree should consider getting a pet.

Physical Benefits of Owning a Pet for Retirees

The first and most well-documented benefits of pet ownership are physical. Getting a dog leads by necessity to more walks, and dog ownership has been closely linked to reduced risk for cardiovascular disease, as shared by the American Heart Association and others. Dog owners in particular also have a higher one-year survival rate after heart attacks.

But that’s just the beginning, and limited to one type of pet. Have you ever considered a rabbit? Exposure to many kinds of pets and even farm animals was associated with reduced risk for two types of lymphoma in a 2008 study at the California Pacific Medical Center Research Institute. Interacting with therapy animals also helps fibromyalgia patients report less perception of pain. It’s even been seen that owning a dog or cat can lead an older person to eat more and get more nutrition.

Mental Benefits of Owning a Pet for Retirees

One of the main ways owning a pet can help certain older individuals is with illnesses like depression or dementia. According to a study by the Cleveland Clinic, just petting an animal decreases our stress hormone cortisol, and increases happy neurochemicals like serotonin. Because animals are friendly and non-threatening, they are a living creature that someone with Alzheimer’s or dementia may feel more comfortable interacting with. One Alzheimer’s special care unit saw a decrease in problem daytime behaviors after they got a dog, all the way back in 2002, making these benefits well-documented.

Social Benefits of Owning a Pet for Retirees

There are two levels of social benefits to owning a pet for the elderly. One is interacting with the pet itself. For those who are living alone especially, an animal provides a constant companion that lives entirely in the present. This can help retirees feel more grounded in the present too. There’s also the social element of caring for the pet, whether that means walking a dog, taking a cat to the groomer, or just the social interaction provided by going to buy food and pet supplies regularly. Don’t discount these small wins as they can be big improvements in quality of life. 

What Pets are Best for Older Individuals?

Of course, a pet is not a cure-all for bad habits, and should not be thought of just as a tool to achieve these benefits. You should only adopt a pet if you are willing to disrupt your lifestyle for a time to learn how to live with them and give them a great, healthy life. What that means for each animal is different.

Dogs will be loyal, playful, and cheerful, but require some of the most maintenance of the pet world. You could consider adopting an older, well-trained dog versus welcoming the total chaos (and mess) of a puppy.

Cats are cuddly and don’t require lots of maintenance at all, except daily playtime to get out their energy. Even a young kitten can be a great companion.

Birds are beautiful and easy to care for in their cages, and when handled regularly become affectionate and friendly. With their wings trimmed every so often, you won’t have to worry about them flying away.

Rabbits are another pet that can thrive indoors, and even use a litter box. Like cats, some may be friendlier than others.

An animal companion can be an exciting fresh start during a phase of life where it seems like everything is changing too much. Interacting with your animal will bring all the benefits listed here, and your pet’s unique personality will give you even more reward once you get to know each other.

Did you know you can sell all or a portion of a life insurance policy, even term insurance? Selling an unwanted life insurance policy is no different than selling your car, home or any other valuable asset that will create immediate cash. Contact us today to learn more.

Leo LaGrotte
Life Settlement Advisors
llagrotte@lsa-llc.com
1-888-849-0887

For more postings by Life Settlement Advisors, click HERE

Website:  https://www.lsa-llc.com/

WealthCare Connect may receive a referral fee from Life Settlement Advisors for purchases make through these links.

International Living
November 5, 2019

 

By Jim Santos

I was a little choked up on stage at the amount of applause when I proclaimed to the audience, “Hooray, I’m fat.”

Maybe I should explain a bit here. I was giving a talk at a recent International Living conference. It was an overview of the healthcare system in Ecuador, with personal descriptions of visits to clinics, doctors, and even hospitals taken from real-life experiences that I and my wife, Rita, have had during our almost four years as expats. It also included a very personal look at how living in Salinas, on the Pacific coast of Ecuador, has impacted my health.

You see, before we moved to Ecuador, I weighed 319 pounds. I was in the weight range colorfully described as “morbidly obese.” I was taking one medication for high blood pressure, and two for Type 2 diabetes. My doctor in the U.S. told me to get used to the idea that in a few years I would have to start insulin injections.

Then we started our new lives in Ecuador, and something unusual started to happen: I started losing weight. After six months, I was down 25 pounds. After the first year, I had lost 50 pounds, and had to reduce the dosages on my medication. The weight continued to drop, along with the medication, and I was now in the “obese” category as my BMI passed under 35. Finally, in June of this year, I was able to announce that I have lost over 100 pounds (and still dropping), and that my BMI has now slipped under the 30 barrier, so I am now no longer even obese—I’m just fat.

That’s why “Hooray, I’m fat.” was such a happy statement for me. Even more so, because I was also able to announce that I now no longer have to take any medication at all.

So what changed? I had been over 300 pounds for years, why did coming to Ecuador make such a difference? After all, I had dieted in the past, and tried to walk whenever I could. I would drop some pounds once and a while, but I was never able to lose weight and keep it off.

What happened for me was that living in Ecuador has allowed me to change my lifestyle completely. As I told the conference attendees, everything you need to change your life is here in Ecuador. Living in Salinas, we don’t need a car, so I naturally walk more often. The weather is always great on the coast, so I can routinely walk two or three times a day for exercise. With the day/night cycle always 12-hours each year-round, it is easier to get into the daily exercise habit, and easier to sleep regularly.

Most importantly, I can’t say enough about the quality of the fresh produce, grains, and meats that we have here in our local mercados. It seems like in the U.S., all of the healthiest foods are expensive and seasonal. The foods that are worst for you are cheap and easy to find. In Ecuador, it is just the opposite: fresh foods are plentiful and inexpensive, while processed foods are generally imported, and therefore more expensive.

We eat fresh-caught seafood. Our chicken, pork, and beef is raised locally without steroids or hormones added to the animals’ diets, and the great tasting fruits and vegetables are mostly available all year long.

Of course, it is not automatic—you don’t move to Ecuador and magically have the pounds evaporate in the equatorial sun. I had to make the decision to eat local, healthy foods like the Ecuadorians do, and to spend time outdoors. If you move here and want to continue eating burgers, pizza, chips, pasta, and so on, you certainly can—but it will cost you more money, and you will not get any healthier.

Not only do I feel better now, but my new life has also opened up new possibilities. Rita and I recently spent two weeks hiking and exploring around Quito. We hiked around the crater lake of Cuicocha near Cotacachi, took several hikes in Chugchilán south of the Cotopaxi volcano, and hiked to the beach and back to the rim of Lago Quilotoa. We racked up almost 30 miles, at altitudes between 10,000 and13,000 feet. At the end of August, we leave for Peru to hike the Inca Trail to Machu Picchu. All of these things would have been impossible for me just a few years ago.

I can’t promise you that if you move to Ecuador you will experience the same results that I have. But I can tell you from personal experience that if you want to live a healthier, happier life, everything you need is waiting for you here.

For information on the “International Living” online course, click HERE 

For more International Living content, click HERE

WealthCare Connect may receive a referral fee from International Living for purchases make through these links.

How Much
November 4, 2019

Having enough savings to afford a comfortable retirement has been an issue for a long time now. In fact, some economists have recently estimated that millennials will face even a harder challenge and should save almost half of their income if they wish to retire at 65. However, the good news is that some parts of the country are friendlier on the wallet than others when it comes to retirement. Our newest visualization shows the average amount that a person will need to retire comfortably in each state, as well as the average retirement age by state.

  • The average retirement age in the U.S. is 64 years old. At the state level, the average retirement age varies from 61 years old in Alaska and West Virginia to 67 years old  in Washington, D.C.
  • The average life expectancy nationwide is 78.6. Among the states, Mississippi has the lowest life expectancy at 74.5, and Hawaii has the highest life expectancy at 81.5.
  • Nationwide, the average yearly expenses for someone over the age of 65 is $51,624. Mississippi has the lowest annual expenses at $44,758, while Hawaii has the highest annual expenses at $99,170.
  • Taking into account life expectancy as well as yearly expenses, the average savings required for retirement in the U.S. is $904,452. States in the Northeast and the West require the highest savings for retirement, at over $1 million, while states in the South and the Midwest require the lowest savings. 

The yearly figure needed for retirement comes from the Bureau of Labor Statistics 2018 Consumer Expenditure Survey. The expenditures considered were those of the age group "65 years or more," since this is the usual age range for retirement. To account for a comfortable retirement, we added an extra 20% on those expenses, and then adjusted by each state’s cost of living index as published by the MERIC. To obtain the total amount required for a comfortable retirement, we used IHME-based life expectancy figures published by National Geographic. Then, by subtracting the average retirement year published on MoneyTalks to the previous figure and multiplying it by the state-adjusted yearly expenditures, we obtained the total amount required for a comfortable retirement.     

The map of the U.S. synthesizes and illustrates all of the above data. Each state is colored a shade of pink, with darker shades corresponding to higher savings needed for retirement. Each state also has a purple circle with the average retirement age in that state, with larger circles corresponding to older retirement ages. 

Top 5 Most Expensive States for Retirement

1. Hawaii: $1,844,556, average retirement at 66 years old 
2. California: $1,456,286, average retirement at 64 years old 
3. New York: $1,408,121, average retirement at 64 years old 
4. Alaska: $1,341,805, average retirement at 61 years old 
5. Oregon: $1,335,752, average retirement at 63 years old 

Bottom 5 Least Expensive States for Retirement

1. Mississippi: $617,661, average retirement at 63 years old 
2. Tennessee: $660,870, average retirement at 64 years old 
3. Alabama: $712,832, average retirement at 62 years old  
4. Oklahoma: $723,859, average retirement at 62 years old 
5. Arkansas: $728,010, average retirement at 62 years old

Not surprisingly, states with higher life expectancies and higher costs of living (like Hawaii) require the highest retirement savings. However, regardless of where they live, most Americans are not saving enough in order to fund their retirement. Some think that the solution could be making saving mandatory, with the government stepping in to divert a certain percentage of an individual’s earnings to a savings or retirement account. Others believe taxing the rich more is the way to go in order to strengthen Social Security, which provides the primary source of retirement income for many Americans. In addition, focusing new policies on developing affordable housing for the elderly could alleviate financial pressures for retirees. 

What steps are you taking to save for your retirement, and what policies do you think should be put in place to help Americans retire comfortably? Please let us know in the comments.

HowMuch.net is a cost information website 

For more postings HowMuch.net, click HERE

Website:  https://howmuch.net/

Money Professor
October 22, 2019

 

This blog was originally published by American Equity

Get tips on what to do if you're 10, 5 or 1 year out from retirement

What is your current retirement outlook? If you’re 10 years or less from retirement, does getting everything in order seem like too much to process? Do you know where to even start?

According to a 2018 survey by the Indexed Annuity Leadership Council (IALC), 79 percent of workers surveyed admitted to expressing worry about their retirement.1

The survey also found workers who feel unprepared for retirement lack information about retirement planning, with approximately half feeling only a little or not at all informed.1

When it comes to retirement, here are some important ages to remember:

  • 50: The age when you can defer paying income tax on more of your qualified retirement plan contributions (“catch-up contributions”)2
  • 59 ½: The age when you can begin withdrawing funds from qualified plans, such as 401(k)s and IRAs, and annuity contracts without incurring a 10 percent federal penalty (unless an exception applies for early distributions)3
  • 62: Earliest age when you can start receiving Social Security retirement benefits4
  • 70 ½: The age when you must begin taking annual distributions from your qualified retirement plans, except Roth IRAs 5

Whether you’re 10, 5 or 1 year away from retirement, here are some important tips that may help put you at ease with your planning.

10 Years from Retirement

The IALC survey reported workers regretted not saving enough when it came to retirement planning. In fact, 40 percent of workers surveyed claimed their biggest mistake in retirement planning was not saving earlier.1

Have you started to think about your retirement date, and if you can afford to retire within the next decade? If you don't think you can afford to retire in the next decade, you might need to evaluate your retirement income sources, such as your company's 401 (k) plan, annuities, or other financial investments.

During this pre-retirement period, you should consider evaluating all your potential income sources for retirement. A retirement planning tool that can help is the Social Security Administration’s website.

The Social Security Administration allows you to set up a free account where you can receive personalized estimates of future benefits based on your earnings, get your latest Social Security statements and review your earnings history.6

Five Years from Retirement

One third of workers think they will spend more during retirement on daily expenses and activities, as compared to their current expenses, while two-thirds of workers believe they will actually spend less, according to the IALC survey.1

What kind of lifestyle do you want in your retirement, and are you financially prepared to pay for it?  According to a 2014 survey conducted by the Bureau of Labor Statistics, total yearly expenses for those surveyed averaged $49,279 for households with people age 55 and older.7

It’s important to take inventory of your assets and annual expenses so you can identify any gaps between your income and expenses.

The Bureau of Labor Statistics also stated survey participants reported housing is the greatest expense for households with a person age 55 or older.7 Think about where you want to live and what type of house, condo or apartment would be best for you in your golden years, and remember to calculate that into your expenses.

Health care is another major expense during retirement. The Lifetime Medical Spending of Retirees report stated people incur an average of $122,000 in medical expenses, including Medicaid payments, between the age of 70 and throughout their remaining years.8

Next on the list is to make sure you have a plan for health insurance, especially if you retire before age 65, which is when Medicare coverage can begin.9

Five years out from retirement is a good time to review and, if necessary, update your estate plan. Have you named the proper beneficiaries or pay-on-death designees on all of your accounts and policies?

A survey from Caring.com, a company that specializes in senior care, showed only 42 percent of U.S. adults surveyed have prepared estate planning documents, including a will or living trust. In contrast, 81 percent of adults surveyed, who were 72 or older, reported having either a will or living trust.10

Another important estate-planning document is a power of attorney (POA). A POA allows you to designate someone you trust to make important decisions for you in case you are not able to do so in the future. A financial POA allows you to designate someone to make financial decisions for you. A medical POA allows you to designate someone to make medical decisions for you.

The Caring.com survey also showed 83 percent of Americans surveyed over the age of 72 have executed a health care power of attorney.10

It’s important to make sure all necessary legal documents concerning your estate are up to date. Keep in mind, estate-planning documents are important legal documents, which should be prepared by a licensed attorney.

One year from Retirement

At one year out, retirement might seem right around the corner. You’ve spent the last decade making sure your finances and savings are in order; now it’s time to make sure you’re ready for a lifestyle change. That might even mean continuing to work in some type of professional capacity. Nearly 25 percent of Americans age 65 and older without a disability are participating in the current labor force.11

Leaving one type of profession might open the door to another in your post-retirement years. You can also make the choice to stay involved in your previous workplace, just in a different role. A retired teacher might become a substitute for the local school district, and a business executive might look into becoming a management consultant.

This is a point where you can choose how you want to earn additional income in retirement. Another important decision to make is how to spend your free time.

Social networks are often built around jobs and professions. It’s important to invest time and resources into physical and mental health and building up a new social network during retirement. This could include getting a gym membership and attending group exercise classes, joining a senior center or finding other social activities outside of work.

In preparing to retire, you have to take all of your financial, health and lifestyle decisions into account. The earlier you start making decisions about life in your golden years, the better off you may be.

While it may seem like a lot all at once, a checklist can help keep your tasks in order, especially as your retirement date gets closer. Download our pre-retirement checklist  so you can start preparing for your future, whether retirement is a decade or just months away.

Footnotes

  1. Footnote 1Indexed Annuity Leadership Council “Survey of America’s Workforce: A Study of Retirement Readiness by Industry and Occupation” 2018
  2. Footnote 2 I.R.C. § 219(b)(5)(B)(i) (2018).
  3. Footnote 3I.R.C §72(t)(2)(A)(i) (2015).
  4. Footnote 4Social Security Administration “Benefits Planner: Retirement” 
  5. Footnote 5I.R.C §401(a)(9)(C)(i) (2018).
  6. Footnote 6Social Security Administration “Social Security”
  7. Footnote 7United States Department of Labor Bureau of Labor Statistics “A closer look at spending patterns of older Americans” 2016
  8. Footnote 8National Bureau of Economic Research “The Lifetime Medical Spending of Retirees” 2018
  9. Footnote 9Medicare.gov “Getting started with Medicare”
  10. Footnote 10Caring.com “More Than Half of American Adults Don’t Have a Will, 2017 Survey Shows” 2017
  11. Footnote 11United States Department of Labor Bureau of Labor Statistics “Databases, Tables and Calculators by Subject

The content is provided for informational purposes only and does not constitute advice. For specific details on how this may apply to your personal situation, contact your personal financial advisor or insurance agent for more details. American Equity contracts are only sold through independent agents. Please contact your state insurance department to see if there is an independent insurance agent in your area appointed to sell American Equity annuity contracts.
American Equity Investment Life Insurance Company® does not offer legal, investment, or tax advice. Please consult a qualified professional.

Life Settlement Advisors
September 23, 2019

 

Planning for retirement is sometimes challenging because you have to save for so long without seeing any tangible return. Some of the investments on this list represent the opportunity to purchase property that makes your retirement planning part of your life now. They also might be options to invest and get cash during retirement, even if you didn’t buy them a long time ago. One or more of these five non-traditional retirement investments could be a money-maker for you, if you’re the kind of person who is open to high risk and high reward.

Real Estate and Rental Properties for Retirement Income

Real estate is certainly a traditional method of investment, but many don’t consider it a secure or liquid enough approach for retirement. More often, those in retirement consider downsizing a home. But 50% of Airbnb hosts make $500 a month. If owners can acquire properties in desirable cities and countries, or even give up their own home a few weekends a month, real estate can represent not only an investment option but an income opportunity.

Wine Investing Returns and Risks

Wine investing requires learning a little something about wine, and some advance preparation to store the wine. If you don’t take those steps, this investment can quickly turn into a loss. However, you don’t have to be an expert in vineyards or growing conditions. The starting point is usually around $10,000 for a case, though depending on the vintage, that could also get you just one bottle. That investment can definitely pay off, like the single bottle of Cabernet Sauvignon that sold for $350,000 at auction.

Collecting Cars to Fund Retirement

The first thing most people will tell you about buying a car is that the value goes down the second you drive it off the lot. But classic or collectible cars are a different story altogether. Value is based on how rare the car is, along with the condition, make, model, and other factors. However, a classic car is not an investment to make without interest and passion. Restoring and maintaining the vehicle will be an expense over time, along with storing it. Plus, those who do make money on cars say that just investing in one isn’t enough.

Art Investing For Resale

Investing in art is nothing anyone can guarantee, but if you spot the right pieces, your money can grow exponentially. One piece by Jean Michel Basquiat sold for $17,680,936 in 2017 after being purchased for $136,367 in 1992.  While this market represents a huge opportunity to grow money quickly, investors must also remember it is a community of people to get to know. You can start with online resources but will eventually need to visit galleries and make connections. This will let you find pieces you like that also may accrue value.

Invest in Yourself in Retirement

The last strange retirement investment that just might pay off is in yourself. Retirement is a time we look forward to because it’s an opportunity to explore passions we set to the side for a career. For many, investing and training in those passions leads to a second professional existence. Whether it’s an online store that supplements your monthly outcome, a role in the gig economy, or just a better sense of self-fulfillment, the returns and reward of investing in yourself are always obvious. If you do want to start an online hobby shop or try entering a new role, just make sure to do your research before diving in.

These five investments are all more risky than a 401(k) or Roth IRA, or even a life insurance policy or other investment. But they also have appeals that make them good fits for certain types of people. When you’re trying to make this kind of strange investment, every extra dollar counts. Did you know you can sell all or a portion of a life insurance policy in a life settlement for more than the surrender value, even term insurance? If you have policies you no longer want or need, avoid the premiums and gain back more of your invested dollars through a life settlement. Then, fund your goals. If you want to see if a life settlement could be right for you, visit the Life Settlement Advisors calculator to see if you qualify.

For information on Life Settlement Advisors, click HERE

Website:  https://www.lsa-llc.com/

WealthCare Connect may receive compensation from Life Settlement Advisors for purchases make through links(s) on this website.

Andy Landis
December 27, 2016

 

Avoid retirement surprises by understanding the Social Security computation. Let’s go back to school to study the math behind your Social Security. A little understanding of the numbers goes a long way to avoiding retirement surprises and shortfalls. Like other pension systems, your Social Security is based on three factors: eligibility, earnings, and age. SSA puts its own twist on each factor. Math 101: Compute your eligibility To be eligible for Social Security retirement payments, you need 40 Work Credits (WCs). You can earn up to 4 WCs per year, so they’re sometimes called quarters. In 2015 you earn one WC for each $1220 you earn anytime in the year. So if you earn 4 x $1220, or $4880 in 2015, you get all 4 WCs for the year. (Only work where you pay Social Security taxes counts. The cost per WC generally increases annually with inflation.) 40 WCs ÷ 4 WCs per year = 10 years of part-time work needed for a retirement payment. Math 102: Compute your average earnings The second factor is your lifetime average earnings. Many pensions are computed on your best 5 years of work. Not Social Security. It’s based on your best 35 years of work. Here’s how: • SSA records each year’s earnings subject to Social Security taxes. • When you hit 62, every year is multiplied by an inflation factor to make it more comparable to today’s pay level. • The top 35 years of inflated earnings are selected and averaged together. The years need not be contiguous (in a row or block). That 35-year average determines your Social Security payment—a higher average means higher Social Security. 35 years are used, even if you don’t have 35 years of work. Missing years post as zeros, reducing your 35-year average. A little math hocus-pocus (see http://www.socialsecurity.gov/OACT/COLA/piaformula.html) converts your 35-year average into your Social Security payment. Avoid two mistakes here. • First, high late-career earnings don’t always mean high Social Security, if you had low earnings earlier. It’s a lifetime average. • Second, retiring a few years early after lifelong work won’t drastically reduce your Social Security. A few zeros have little impact on your 35-year average. Math 103: Compute your age The third factor is your age when you start payments. That’s based on your Full Retirement Age (FRA). Your FRA is between 65 and 67, determined by your birth year. (See http://www.socialsecurity.gov/OACT/ProgData/nra.html) Whatever your FRA, you can start payments any month from 62 to 70. Start payments at your FRA and you get a 100% payment. Start payments earlier and you get a small reduction for each reduction month. For example, if your FRA is 66, and payments start at 62, your 48 reduction months yield a 75% payment. Start payments after your FRA and you get a raise for each month’s Delayed Retirement Credit (DRC). For example, if your FRA is 66 and payments start at 70, the 48 DRCs yield a 132% payment. Age factors top out at 70; don’t delay filing after that. An SSA calculator at http://www.socialsecurity.gov/OACT/quickcalc/early_late.html#calculator figures the percentage for any month from 62-70. More schooling • Get SSA’s estimate of your future payments at www.ssa.gov/myaccount. • Math nerds: See a sample computation dissected by SSA at http://www.socialsecurity.gov/OACT/ProgData/retirebenefit1.html or in my book, available at http://andylandis.biz/index_files/Page403.htm. • Compute your own estimate at www.ssa.gov/pubs/index.html. Type “your retirement” in the lower search box (under the “Publications” headline), and select your birth year in the “PDF” button. It all adds up. So as always, keep on planning.