Category: Financial and taxes in retirement
January 28, 2023-- Myths, misunderstandings, and just plain faulty thinking occur in retirement, just like they do in every other phase of life. This "10 Myths That Could Sink Your Retirement" article explains that, unlike earlier stages in our careers, where there might be a second chance at recovery, a mistake in your retirement can be serious. That's why it is key to avoid these common retirement myths and mistakes. Many, but not all of them have to do with money. We welcome other people's insights on the best and worst decisions they made in retirement - please add them to the Comments section below.
Top 10 Retirement Myths and Mistakes
Assuming you will work 'til you drop. Asked when they think they will retire, most people say between 65 and 67 - and many much later, if ever. But in the actual world, a Gallup poll said the average retirement age is closer to 61. The reasons for this vary greatly, but common ones are being laid off unexpectedly, or getting injured or sick and unable to work. The ramifications of retiring earlier than expected are serious, because it usually means that expected retirement savings do not materialize.
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Published on January 28, 2023
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Category: Financial and taxes in retirement
January 20, 2023 -- The end of the year presented several gifts to well off folks with substantial IRA, 401(k), or 403(b) balances. The biggest is that, thanks to the Secure 2.0 Act of 2022, the new age for taking Required Minimum Distributions (RMDs) from those accounts now begins at age 73, up from 72. That change started on Jan. 1, 2023; beginning on Jan. 1, 2033, the age goes up to 75. People who were already required to take those distributions must continue to make them.
The Act also provided a big benefit to people who fail to take their RMDs on time. Previously the penalty was an onerous 50% of the required distribution. Now that is reduced to 25%, and 10% if corrected in a "timely manner". Catch up contributions for people over 50 and 60 also were increased, and there were other provisions to encourage employers to help employees save more for retirement.
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Published on January 19, 2023
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Category: Downsizing
December 11, 2022 -- One of the best pieces of advice we have heard is to think about downsizing in retirement. Finding a smaller, lower maintenance place to retire can unlock equity in your home so you can maintain a great lifestyle with less income. It can also simplify your life. Less maintenance and yard work, smaller utility bills, lower property taxes, and more time to enjoy retirement, are just some of the benefits. But downsizing is not always quite as easy as it seems. Here we outline some of the costs and headaches that many people do not consider when they start the downsizing process.
Costs to fix up your home for sale. Either you or the buyer might decide to make costly improvements before the sale, such as radon mitigation, roofing, HVAC, structural, etc. These expenses can cost a lot more than you imagined when you put the home on the market.
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Published on December 10, 2022
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Category: Best Retirement Towns and States
Dec. 7, 2022 -- For the people who see red when they think about paying taxes, the good news is that there are plenty of tax friendly states to retire in. There are enough choices that they can pick a state for retirement based on other factors as well, such as climate, environment, proximity of family, etc. This article will cover the states that have the lowest taxes for retirees. But first, let's discuss what kind of taxes you need to consider in retirement.
Kinds of Taxes
Unfortunately, there are multiple kinds of state taxes that can affect retirees. Some will affect different people in different ways:
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Published on December 6, 2022
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Category: Financial and taxes in retirement
December 4, 2022 -- Folks who were born in 1950 face their first Required Minimum Distributions (RMDs) from their IRAs and 401(k) type plans. The SECURE Act of a few years ago fixed the age for RMDs to kick in at age 72, starting with folks born after July 1, 1949. This first year the 1950 folks have until April 1, 2023 to take the distributions, but they will have to take their regular 2023 distribution by the end this year too. Slightly younger people born before 1950 had to start taking their RMDs at age 70 and 1/2, and they have to take their distributions by Dec. 31, 2022.
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Published on December 3, 2022
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Category: Active adult communities
Update June, 2023 - In another development, Governor DeSantis recently signed the much anticipated Surfside Glitch Bill, SB 154, into law. The bill relieves some of the ambiguity in SB 154. It also provided relief for some provisions of the law such as allowing a Milestone Inspection to be provided by a team of professionals with an architect or an engineer acting as a registered design professional in charge of the report (the supply of inspectors was an issue). Other clarifications had to do with reserve requirements. In one provision, reserves are not needed for replacement costs for items for which the estimated remaining useful life exceeds 25 years (but reserves are still required for deferred maintenance for those items).
November 13, 2022 -- Hurricanes Ian and Nicole were bad enough, destroying thousands of homes, changing the coastline, and scaring residents and real estate buyers alike. But a new Florida law, SB 4-D: Building Safety, is about to provide a potential killer wave to the Florida condo market.
The Building Safety Law is a reaction to the tragic Surfside building collapse in Miami in 2021. It has several key requirements for condominium associations that most are not yet aware of, especially how fundamentally those will affect their finances. This article will attempt to give a quick snapshot of what is now required, and how things will change. We recommend that if you are on a condo board you get familiar with the law now, because it has several new requirements. As it spells out clearly, failure to meet them is a breach of an officer’s and director’s fiduciary relationship to the unit owners. Sadly, the jailhouse humor going round is that it could cause mass resignations of board members across the state. Even if you are not a board member, you should make sure that your board is working on this issue.
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Published on November 12, 2022
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Category: Financial and taxes in retirement
Nov. 10, 2022- A disturbing statistic emerged in 2021. In that year 10.7% of America's over 65 population lived in poverty, up from 9.5% in 2020. While that is a lot better than the third of elderly Americans who were in poverty before Medicare came along, it is an alarming trend. Although poverty among the elderly in the U.S. is low by historical standards, we have one of the highest rates in the developed world, per the Organization for Economic Cooperation and Development. Unfortunately, there is a long list of reasons why so many older people face economic hardships.
The pandemic was a big reason for the poverty rate uptick in 2021. People lost their jobs and businesses. One person in the marriage might have died from Covid, or they faced big and unexpected medical expenses. But there are many other reasons beyond the pandemic too. People retiring today are much less likely to have a pension than in the past. Some might not even had had a chance to participate in an IRA or 404(k), or make enough to amass significant savings. Think of someone who made the minimum wage or just above it, how were they going to even get by, much less save for retirement? Many other workers were doing OK, only to find their jobs ending well before they wanted to retire. Debt, medical problems, having to take care of elderly parents or adult children, etc. can mean a retirement in poverty for others.
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Published on November 9, 2022
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Category: Financial and taxes in retirement
Sept. 22, 2022 -- Thanks to the pandemic, the Russian invasion of Ukraine, and other factors, inflation is raging here in the U.S. and everywhere in the world. While early estimates are the 2023 Social Security COLA will be one of highest in history at 8.7%, that will not be enough for the millions of retirees who are living on a shoestring. To help with that, we have assembled a collection of tips our Members have provided in the past. We hope you will add more of your own in the Comments section below (and thanks to Grace for suggesting this topic!) Note that these are just a fraction of the fabulous ideas our Members have posted over the years. Check out the articles listed at bottom for hundreds more!
Sell stuff. Darla suggests: Downsizing by selling stuff didn’t appeal to me, but a friend has an Ebay store. He takes care of anything I ask him to sell, and I give him 30% (the stuff would have gone to the trash or thrift store anyway).
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Published on September 22, 2022
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Category: Financial and taxes in retirement
August 17, 2022 - After reaching record highs, the stock market is down almost 12% this year. Perhaps just as bad, inflation is raging at over 8%. Both of these developments make for a terrible situation for retirees, especially for those just beginning their retirement and worried about outliving their money.
It is far easier to predict how long your savings will last in a stable environment with low inflation and friendly stock and bond markets. Unfortunately, that is definitely not the case now. Our hope is that the tips and suggestions in this article might help people better negotiate these tricky times.
Tried and true - the 4% rule
Although there are many theories on how to take distributions from your retirement portfolio, the most enduring is the 4% rule. Most experts agree you probably won't outlive those savings if you take that much out each year (and some say 5% is also a safe number). But these are only general rules, and unusual circumstances like we are having now can upend them.
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Published on August 17, 2022
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Category: Financial and taxes in retirement
July 13, 2020 -- Not everyone wants to have a roommate in their retirement, but for many they are a great solution. A PBS Newshour feature this week, "High Costs Spur More Baby Boomers to Find Roommates", highlighted how many homeowners are finding homesharing to be a great solution to high rents and inflation.
The primary motivation for getting a roommate is financial. Several of the women in the feature narrated by Paul Solman found themselves owning too much house with not enough money to maintain it, and unable to keep up with their other expenses. Bringing in someone to share those expenses proved to be a godsend for many of them. But several of those interviewed also reported being surprised by how much they enjoyed having a companion around the house. Friendships developed between very different people, and everyone seemed to benefit.
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Published on July 18, 2022
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