Let’s Talk About Retirement

Dr. Cynthia Barnett asked:


The holiday season can be exciting and fun, but it can also be exhausting or lonely for some. Retirees need to keep in mind some simple but helpful tips for making the season more enjoyable and less stressful.

1. Keep your focus on the reason for the season. The holiday season – no matter what your religious faith – is a time of celebration and spiritual refreshment. The beginning of a new year can be a time of new commitments, new beginnings and new opportunities. The season offers a reminder and a chance to reorder our priorities and make the most of each day. Adjusting our perspective in light of spiritual teachings can bring brightness and hope into our daily lives throughout the coming year.

2. Pace yourself. Many people arrive at the actual holiday too exhausted from preparations to actually enjoy the day. Many people find it helpful to limit the amount of time and energy spent on any part of the preparations for the holiday at a given time. Some people structure their days to shop for two hours, then rest for one hour, and then do another task. It is also important to pace yourself in terms of activities and events. Sometimes, what we need most is control over our time and activities. If you are becoming overwhelmed by the array of events and activities and you find that your schedule is filling rapidly, you might do well to make some choices. Limiting your activities to the most important events might help you pace yourself and prevent the exhaustion that can drain the fun from everything.

3. Don’t be alone unless you want to be. The holiday season can be very sad and depressing for those who find themselves alone. If you don’t have family or friends nearby with whom you plan to spend part of the holiday, you can still spend the day with others. Check in your community for gatherings of others who would otherwise be alone. Or – better yet – find a community opportunity to help others on the holiday. Most communities have programs that offer meals to the homeless and needy. You can be with others and feel wonderful about the way you spend the day by volunteering to help with preparation and serving of the meals.

4. Don’t lose sight of the budget. Overspending during the holidays is very easy. But it can create a lot of stress in January when the bills start to arrive. It is so much fun making purchases of gifts for children and grandchildren that the budget can easily be forgotten. Be honest and realistic about what you can afford to spend on gifts and entertaining. Then stick to the budget. Keep in mind that a modestly-priced gift that fits the recipient can mean more than the most expensive new thing available. Some families manage spending by setting clear limits on the cost of gifts for the adults in the family. This allows them to spend more on the younger children. Be creative in thinking about holiday spending and try to keep your focus on the right gift for each individual rather than the most expensive.

5. Don’t lose sight of your dietary needs. Many of us have special dietary needs as we grow older. Whether we are just eating smart or we are watching sugars, fats and cholesterol, many of us need to maintain a healthy diet – even during the holidays. In most cases, it is okay to splurge a bit at a holiday dinner or party if we adjust our diets during the rest of the day to keep our overall diet within bounds. Remember that making yourself sick by ignoring your dietary needs will not make the holiday more enjoyable for you or those around you.

I hope these very practical tips will help you get the greatest possible enjoyment and renewal from the holiday season. By keeping things in perspective and monitoring spending and diet, you will probably enjoy the holidays more. Pacing yourself and keeping a view to the meaning of the season in your belief system will help you avoid exhaustion and renew yourself as the New Year begins.



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Dr. Cynthia Barnett asked:


As Valentine’s Day approaches you might be buying or making tokens of love for the important people in your life. Don’t forget that retirees need love, and the occasional token of love, as much as everyone else.

It is all too common for people to believe that holidays like Valentine’s Day are really for children and young lovers. This is a holiday, however, offering everyone the opportunity to tell people they are special and important. Sometimes, in fact, retirees need this holiday more than others.

Many retirees are still in the adjustment stage of their retirement. They are feeling the loss of workplace relationships and the loss of the sense of purpose and fulfillment derived from work. Many other retirees are experiencing the sorrow of the loss of loved ones. Some retirees are experiencing genuine loneliness and isolation. I certainly encourage everyone to remember the retirees in their lives with a reminder that they are loved and valued on Valentine’s Day.

There are thousands of ways to tell people they are important to us. You can do something as simple as sending a card or dropping someone a note. A phone call is a wonderful way to let someone know their importance in your life. Perhaps you can drop in on a friend or share a meal with friends. One of my favorite things to do is to invite a friend to do something together that I know we both really enjoy. This is always the perfect time to tell that person he/she is special and appreciated.

As you think about others in your life, don’t forget to show a little love to yourself. In the midst of our hectic and busy lives, it is often one of the best gifts we can receive to just attend to a little self-care or self-pampering.

If you are a retiree who needs to stop and attend to some self-care, here are my top suggestions:

§ Spend some time talking or playing with a child.

§ Read an inspiring and uplifting book.

§ Visit your barber or hairdresser, try a new look, and always ask for the scalp massage!

§ Give yourself a day at the spa or the gym. Work out some of the stress!

§ Start making a concerted effort to eat healthier.

§ Reduce the amount of caffeine you are consuming.

§ If you are a smoker, start a smoking cessation program.

§ Visit your physician and find out what you need to do to be healthier, happier and more vibrant.

§ Buy a small but important gift for yourself.

§ Devote an entire day to doing something you truly enjoy

You can probably think of hundreds of ways to show a little self-love. I tend to prefer the self-care options that improve our quality of life. After all, being at our best enables us to live our best lives. Remember that the prime of your life can be the best time of your life!



Caffeinated Content

Larry Klein asked:


Under the Pension Protection Act of 2006, there are some new items beneficial to IRA owners that the average IRA owner will miss:

First, if you leave your employer and you had a tax sheltered annuity (typically the type of plan at school districts and governments), you can roll both the pre-tax and after-tax amounts to an IRA. That way, the whole account can continue to grow tax deferred.

Next, the silly requirement to first roll your company account into a regular IRA and then into a Roth IRA has been dropped. Under the new rule, when you retiree, you can roll your company account directly into a Roth IRA (of course, you pay the income tax due and then the Roth will grow tax free). This is effective January 1, 2008.

The nonsensical prior rule that a non-spouse beneficiary of a company plan could not roll over the money had been dropped. Here’s an example. Dad worked for Chevron. He listed his son as beneficiary on his 401k. If Dad dies, the son can now do a trustee-to trustee transfer of Dad’s account into an inherited IRA. Previously, only a spouse could move money from a deceased’s 401k into an inherited IRA or their own IRA. The non-spouse beneficiary still cannot take possession of the money or else it will be taxed—there is no 60 day rollover provision.

There’s more good news about the above. Let’s say Dad died in 2003 and the son was subject to the 5 year rule which required that the IRA be emptied by 2008. Now, the son can just do the rollover in 2007 (the rule is effective January 1, 2007) and take advantage of the new rule even though Dad dies a while back.

If you’re charitably inclined, it has always made sense to give IRA funds or retirement finds to charity. Since each dollar in a retirement plan is only worth 65 cents (after an assumed 35 cent tax), it’s always made sense to give retirement funds rather than non-retirement funds to charity. Previously, if you wanted to give a lifetime gift of your IRA funds, you needed to include the distribution from your IRA on your tax return and then show a charitable deduction. For limitation reasons, this was not always favorable.

Now, you can distribute up to $100,000 directly to a public charity and not show it on your tax return, provided you are also past age 70 ½ (this does not apply to transfers to foundations, donor advised accounts or charitable remainder trusts—only outright gifts to public charities). You would not show the IRA distribution or the charitable deduction.

This is really a rule for seniors because you must be age 70 ½ to use it and it helps people, typically seniors, that have the following issues/limitations: helps people who could not previously make full immediate use of the charitable deduction because of the 50% of AGI limitation, those who paid tax on social security income, those who had a limit on their itemized deductions and those that did not itemize deductions.

The best news is that these transfers to charity count toward the taxpayer’s required mandatory distribution. One more good thing—these transfers to charity are exempt from the normal “pro-rata” rule. Therefore, if the taxpayer has after—tax funds in their IRA, the transfers to charity are only from pre-tax funds and will not affect basis in the IRA. Beware, this rule is immediately effective and set to expire at the end of 2007!

Last, good for seniors, starting in 2010, the $100,000 MAGI limitation on Roth conversion is repealed. Therefore, retirees, for whom Roth conversions are most appealing, will be able to do a Roth conversion without limitation and also spread the tax so that half is paid in 2011 and half in 2012.

You can get a complete education when you attend the Advanced IRA Rollover and Distribution Training in Orlando. Details at www.iraexpert.net



retirees

Nocita Carter asked:


Good question and even better, you’re thinking in the right direction about your future which is someday retiring. If you’re one of those people who haven’t saved any or very much money for your retirement, it’s never too late for you to start now! It’s important that you do start and soon. It doesn’t take long for age to slip up on you fast if you know what I mean! So, just get started on your retirement planning now while you’re thinking about it. You may want to consider some of these tips and information to get you started:

1) If the employer you are working for offers a 401K plan wherein you contribute a percentage of your earnings towards retirement, consider signing up for this plan! In most instances, the employer may match a percentage of the contributions you make to your 401K account. Your contributions can be made on a pre-tax basis which will help your money grow faster in your account.

2) You may want to consider taking a second job to add more income for your retirement. This will assist you in increasing the amount of money for your retirement fund. If you’re able to fit a second job into your schedule, make sure this would be feasible for you and your family without causing problems.

3) Save more of your money by cutting back on some of your expenses. You may want to reduce the number of times you eat out, go to the movies, shop, and any other areas you can cut back on to save towards your retirement.

4) Consider saving your change! That’s right, save your change. You would be surprised at the amount of money you can accumulate in a small amount of time by saving your change. Your change could be set aside for your retirement fund. So, start putting your coins away for your future!

5) Reduce or eliminate your spending on your credit cards. The less you pay on your credit cards, the more money you’ll have to save towards your retirement. So, if you can pay cash for that item you need to purchase, do that instead of charging it to your credit card. You’ll not only save yourself interest charges, but, you’ll have extra money to put away for your retirement.

6) If you have a home and are using it as a cash machine or atm by taking out your home equity via loans or a credit line, stop what you’re doing! Your home is one of your largest investments and will most likely be a retirement vehicle for you. You’ll either want to have your home paid off prior to retirement or be in a position to sell your home to obtain the equity to use as retirement income. If you have your home equity tapped out, then you will not be in the position during your golden years to enjoy your retirement. You’ll probably be still paying a mortgage that you may not be able to afford and will not have much money in your retirement fund.

It’s better late than never when it comes to starting your retirement planning. So, go ahead, start working on catching up with your retirement planning today, you’ll be glad you did!



LESSIE

Dr. Cynthia Barnett asked:


There are many myths abroad about retirement, and many people who continue to believe them are being held back from fully enjoying the second phase of their lives. To help you avoid holding on to these detrimental myths, I’d like to offer my take on five more of the most widely held retirement myths.

Myth #6: Once I retire, I’ll never work again. For the baby boomer generation, and for many of the previous generation, this will not be true. Retirees work for one of three main reasons: (1) they need the income; (2) working gives them purpose and meaningful activity; and (3) working is a way to be out with other people. A growing portion of the middle class is discovering the need to work to supplement retirement income. Many of the baby boomer generation might work both for a sense of purpose and connection with others and because they need the income.

Myth #7: If I save enough money, retirement will be wonderful. This is a very popular myth; and it is not true. Happiness in retirement has far less to do with having money than with having a new lifestyle plan. The old saying is as true for retirees as for anyone else: money doesn’t buy happiness. We humans need relationship with others; we need purpose; we need meaning; we need to leave some kind of legacy. Money doesn’t create or sustain the most essential human needs in retirement.

Myth #8: Life after retirement is a time when you watch your physical and mental capabilities decline. This is only true if you make it true. By taking care of yourself and getting proper diet, exercise and rest, you can keep both your body and your mind in excellent condition. Remaining active and engaged can keep you sharp. Every retiree should talk and work with their physician to create the best diet and the right exercise program for optimal physical health. Every retiree should also keep his or her mind active with reading, learning new things, social engagement, even playing stimulating games.

Myth #9: Everyone ends up in a nursing home. Increasingly, people are choosing to “age in place” – to remain in their homes as they grow older. To be sure, the more independent of us will find it easiest to do this. But insurance companies, social security, and society are learning that it is both better for the individual and cost-effective to provide services and treatments to people over 55 in their homes. Even people with disabilities or degenerative illnesses are able to find the equipment and support they need to remain in their homes.

Myth #10: The best time to think about a retirement lifestyle is after I retire. While I do not want to imply that you can’t plan a retirement lifestyle after you retire, your transition and sense of direction at the time you retire from your job will be more focused if you plan earlier. Just as you recognize the need to start planning early for your financial needs in the second phase of life it is equally helpful to plan your lifestyle early. By planning early you can have the training, support systems, and sense of direction that will make the transition easier and your retirement lifestyle happier and more fulfilling.

If you have been holding on to any of these myths, I encourage you to shift your thinking and do a little bit of research. Moving beyond the myths allows us to step boldly into a future that is fulfilling, meaningful and happy in retirement.



ADALBERTO

Mrlee asked:


Not taking full lead of your company retirement benefits – it is wise that you lend money into your company retirement plan as much as you can manage.

Withdrawing money from your retirement arrangement – Be very aware when benefiting of loans or withdrawals, owing to by oneself from losing interest, you could kisser penalties or early withdrawal compensations.

Not heavily guiding your investments – it is extremely important to own track of your remunerations in order for you to be appreciative of a little discrepancies.

§ Relying on Social security for your retirement income – polite security may provide a considerable share of your retirement income, iced it can be of great help if you have other means of income as a back-up in tray there are extra unexpected expenses that might come up. In addition to diverting security, it would be transcendent if you have a club pension or retirement plan and particular savings.

§ Relying on your spouse’s retirement plan – this is one of the best common false step of retirement planning people do. It is possible that a helpmate with a retirement plan could improve leaving the other spouse with no income. Instances like divorce or illness can also closeout the only spouse retirement, therefore both co-workers should have a separate retirement plan to best undamaged your retirement days.

§ Forgetting to rethink your way regularly – constantly conduct periodic review of your retirement plan to ensure that you are making the most of your plan.

§ Practicing poor service allocation – poor credit allocation can sometimes be a economic *******. The closet is to broaden your horizons so that if one asset decreases in value, another will hopefully increase.

§ Not checking your leaflet/financial advisor- there are plenty of highly interested brokers and financial buttinskis who have the expertise about how your portfolio should be set-up and maintained, but there are still who aren’t and are simply ill informed. So, be aware and make sure to check up on guarantee and track records on anyone you uncanny to entrust your retirement savings.

§ Relying too heavily on your stock – your retinue stock is one of the excellent ways to defend for your retirement. But, it is also best to have a gnarly contribution mix in your retirement report.

§ Not taking retirement planning seriously – this could be the deadlier inadvertence you can make with your retirement plan. If you start early on retirement planning, you may be able to retire early and possess the lifestyle you equivalent once retired..



FRANKIE

John Trauth asked:


What is so hard about retirement? Many people have asked themselves this question. Well, if it is so easy, then why are 41% of retirees five years out depressed and say retirement was the most difficult transition of their life? Now they are unhappy and tell us their life was better when they were working!

You can avoid this fate. To learn how, you need to understand the difficulties associated with this transition, beginning with why there are so many negative psychological associations with the whole concept of “retirement” which you may not consciously understand. You also need to understand the most common retirement myths which may be preventing you from understanding what retirement really is all about and preparing adequately for it.

The word “retirement” comes from the old French verb, “retyrer” which means “to go off into seclusion.” If you look up the word today in Webster’s dictionary, some of the synonyms you will find are: (1) withdrawal; (2) retreat; (3) seclusion; (4) departure; and (5) regression.

Who would want to do any of that? So it is not surprising that we all probably have many unconscious negative associations with retirement. We don’t want to feel old and irrelevant, and we don’t want to regress, but often our parents’retirement was followed shortly by demise and death. We certainly want to deny the inevitable, and denial can become very powerful because we don’t consciously realize we are doing it! And are we going to carefully plan for something we are carefully avoiding considering?

Denial of the importance of planning for retirement has led to five very common retirement myths.

Myth #1 is that retirement is not here now, so there is no reason to think seriously about it and plan for it. “I’ll think about that tomorrow.” We call this the “Scarlet O’Hara” myth. This myth can have devastating consequences including not saving enough money and developing serious conflicts with those closest to you who have different expectations about retirement.

Myth #2 is the belief that retirement is really simple. No big deal. I’ll just stop working and everything will be fine. What’s so hard about that? We call this the “Homer Simpson” myth. Sorry, Homer, but it doesn’t work that way. Oversimplifying retirement and not understanding the enormous personal changes involved can result in disappointment and eventually depression when things do not work out as envisioned.

Myth #3 holds that retirement will be great because it will be one, long, happy vacation. Remember those three weeks we spent in Florida or Hawaii? The rest of my life is going to be just like that. We call this the “Carnival Cruise” myth. But retirees find out very soon that leisure is only relaxing and rejuvenating when it is a counterbalance to some sort of routine, and not as a perpetual escape from reality.

Myth #4 is probably the most common myth, and it expresses the belief that your retirement will be wonderful if only you have enough money. We call this the “King Midas” myth. It is perpetuated by the advertisements of many financial services companies and by the fact that, in America, we are becoming increasingly responsible for our own financial independence after work. This is not to say that money is not important. It is. But only as a means to an end and not as an end in itself. Many wealthy retirees are unhappy.

Myth #5 is the most interesting of all. This myth holds that I am just going to love spending tons and tons of time with my spouse or life partner. We have been waiting practically all our lives to have all this wonderful time together! Now finally we can do it! We call this last myth, the “King Henry the 8th myth.” Couples who have spent 20% or less of their time together pre-retirement will have difficulty adjusting to a much higher percentage. The divorce rate is now the highest for the 55+ demographic.

So now that you know what the five most common retirement myths are, what do you do with this informaiton? You need to establish a process for getting past denial and truly engage in creating a retirement that will complement your own personality and also mesh well with those who will be sharing your retirement life. It is a process which begins with understanding why retirement is such a difficult transition and then taking steps to avoid or minimize these difficulties through planning intelligently to create your ideal retirement life.

For example, the cost of denying that retirement will change your relationship with your spouse or life partner (myth #5) suggests that you need to prepare for changing the depth of your interpersonal transactions. Decisions will now go way beyond “What’s for dinner” and include where and even how to live, which can involve difficult discussions including prioritizing wishes, examining the details of your every day lives, and listening to and compromising with your partner. You can try to “wing it”, but are you prepared to be a statistic in the new divorce paradigm?

This is the intelligent way to prepare for what could either be (a) your most difficult life transition, with a significant chance of unhappiness, or (b) the very best years of your life. Which will it be for you?



ABIGAIL