Five Ways to Stretch Your Retirement Dollars Posted by: Matty Byloos | May 23,2008

Del.icio.us Digg

  You wake up in the middle of the night, drenched in sweat from the same nightmare you realize you’ve just had again. In the dream, you go to the ATM on your very first day of retirement, only to discover there’s no cash available – at all. Nothing. Your bank account is empty and you forgot to save a penny for retirement.

For some, this nightmare scenario is a bit closer to the truth. Many people have carefully planned for the day when work and income stop and reliance on savings begins. However, a great number of people are not nearly as confident. For those looking for ways to stretch retirement savings a little or a lot, there are a few methods by which this might be accomplished. For some of these steps to work, immediate action is required.

Part of the process must start right away, while you are still working. This step involves making sure that you contribute enough money to your retirement accounts, consistently and year after year. If your employer offers a matching program, then maximize your contributions to your 401k. Make sure that you hit the ceiling of the government’s annual contribution limit for both your 401k and IRA. If you are over 50, then you are allowed increased contributions as a way to catch up; you should also make sure to take advantage of this.

No. 1: Don’t Forget About the Potential Value in Your Home

If you find that in retirement, you need to stretch your savings as far as they will go, then look at your mortgage and the value potentially locked up in your home. Chances are that if you have lived in your home for a long time and have continued to pay your mortgage, then you may have substantial equity in the property. If you choose to refinance the home, you might free up a large cash reserve, and then invest that money into stocks or another less risky savings account.

With a fixed interest rate secured on your home mortgage, it may be of more value to you to use your home as cash generator, rather than to put your effort into paying it off entirely. If you are past the age of 62, consider working with a financial professional to look into a reverse mortgage, which would turn the equity in your home into tax-free income in retirement.

No. 2: Be Smart With Your Investments

While you are still contributing to your retirement accounts, take advantage of time, and put the earnings power of stocks to work for you. Investing too conservatively can put you in a position not to have enough money saved for your retirement. As you near retirement, then shift your holdings to more conservative positions. The rest of the time, get the most work out of your money and let time take care of potential ups and downs in the stock market. Sit tight on your investments, and avoid any frequent buying and selling; instead, diversify your holdings and be patient while saving for your retirement.

No. 3: Manage Your Withdrawals Wisely

It is wise to continue budgeting and managing your retirement savings after you have retired and mandatory withdrawals must be taken. The goal while in retirement is to extend your savings to match your remaining years, or even better – to outlive you. In order to accomplish this, most retirement planning specialists recommend withdrawing a maximum of four to five percent of your total retirement savings each year. Additionally, retirees need to manage their money so that they incur the lowest possible tax rates on the money they withdraw. One way to succeed in this is to spread your withdrawals across multiple accounts, taking some money from taxable accounts and some from accounts like your Roth IRA.

No. 4: Take Advantage of the Roth IRA, Even With a 401k

The financial plus side of the Roth IRA investment account is rapidly becoming common knowledge. Converting your regular IRA to a Roth IRA can help investors to see real benefits when they enter retirement. Unlike the Roth IRA, a regular IRA requires that you take minimum distributions six months after your seventieth birthday. Moving money around after retirement or selling taxable investments within your Roth IRA can also help you to avoid further tax penalties. Although you do not get to contribute to the Roth IRA without first paying tax on your income, you do see the benefits as your money grows tax-free in the account; withdrawals are also tax-free.

No. 5: Take Another Job While in Retirement

This can be a viable solution on a number of levels, beyond just the additional potential income another job might bring. When you continue to work past retirement age, you sometimes have the ability to delay the time when you must start taking mandatory withdrawals from your savings account. This might not seem like a big deal at first – after all, it’s your money, and maybe you were looking forward to spending it. However, by leaving the money in the plan to continue growing, you take advantage of additional years of compounded interest, typically under a tax-deferred status.

Congress Considers Financial Help for Veterans Posted by: Matty Byloos | May 23,2008

Del.icio.us Digg

 

Many of the financial problems associated with members of the military recently stationed overseas are not terribly difficult to figure out. With extended tours of duty, faster turn around times for redeployment and additional commitments on the rise, businesses that reservists may have been a part of are suffering back here at home in the States. Double the trouble if the military reservist is self-employed or anything close to vital for the business he was a part of – in some cases, their absence is dramatically and negatively affecting the financial health of the business.

Given the federal government’s responsibility for these service men and women and their extended stays overseas, some laws on the books do provide the reservists – and the business with which they are involved – financial assistance. However, with commitments growing in duration and scope, businesses and reservists feeling the burn have begun voicing their complaints and the government is considering additional ways that it can provide financial help.

The Current Military Financial Situation

Currently, service men and women can take advantage of loans, though they fall under a type more closely related to disaster loans, rather than business loans. This brings along its share of difficulties. Further complicating the process, there is often a quick call-up time for reservist soldiers, and saying goodbye to family is usually higher up the priority list than filling out loan paper work. In financial terms as related to their business, this can be disastrous. Add in extended delays in the filing of loan paperwork and the general lack of awareness about the loan availability, and the already negative situation gets considerably bleaker.

To counteract some of these elements, outreach programs have been enacted, and thousands of fact sheets have been mailed to reservists, informing them of special finance programs. Proposals are currently being reviewed in Congress that will institute some forms of tax relief for soldiers. Though the proposals would not directly affect reservists, the small business they run here in the U.S. would see a positive impact, as the government tax credit would effectively try to balance out for the soldier’s loss of wages while active overseas.

Other advocates are seeking to change emergency loan procedures for soldiers, shifting the programs out of government disaster types and into something closer to a business-related loan. Additionally, there is talk about including government grants and lines of credit for soldiers whose businesses meet certain specifications. Part of the current proposal also calls for improvements to the current system of loans, the establishment of grant programs and an increase in tax incentives for businesses that employ reservists.

Additional financial aid that is offered to veterans includes a Special Pension with Aid and Attendance, which allows veterans who require full time attendance from an outside caregiver to receive the help they need. This benefit extends to include assisted care in an assisted living facility, as well. Many veterans also qualify for a benefit that provides financial aid to surviving spouses, parents or loved ones.

Five Questions to Ask Your Bankruptcy Attorney Posted by: Matty Byloos | May 23,2008

Del.icio.us Digg

  When you are struggling with debt that you can no longer handle and the thought of bankruptcy enters the conversation going on in your head, relax for a minute and ponder the following. There is a lot of information that you need to consider before you engage in the process of filing for bankruptcy. Issues such as where you live, how long you have lived there, what kinds of debt you have and how much income you earn must all be resolved before filing. Since the questions are many and the paperwork is often daunting, often the best place to start is at the office of a bankruptcy attorney.

Most people, generally speaking, are unfamiliar with the essentials of bankruptcy. First, paperwork pertaining to a specific case must be filled out. When this is complete, the U.S. Bankruptcy court takes the filer’s assets and puts them in trust; from there, all assets are sold and the cash gained in the process goes to pay off (typically a very small percentage of) the filer’s debt owed to creditors. The process can be difficult and complex, and with many creditors wanting to avoid bankruptcy as much if not more than the person filing does, a person in financial trouble may also be able to consolidate debt or work out a settlement instead of defaulting. With all this in mind, it is wise to consider asking a bankruptcy attorney the following five questions.

No. 1: Exactly What Debts Are Relieved or Reduced Through Bankruptcy?

Not all of your debts will be forgiven through a bankruptcy filing. For instance, child support and alimony payments are obligations that must still be met during and after a bankruptcy filing. Other debts that won’t be included in the relief that a court offers include student loans and taxes that you may owe the government. It is essential to review your specific case with a bankruptcy attorney before you file. Bankruptcy provides little or no help for those dealing with serious financial problems in too many circumstances.

No. 2: What Will Happen to My Home?

The value of real estate continues to grow, often rapidly, in many areas of the country. While a positive thing for the homeowner, this can negatively affect a bankruptcy filing because of the considerable equity to be found in most properties. If there is significant, prohibitive equity and value in your home, you may only qualify for a Chapter 13 repayment plan, and will receive no complete forgiveness of debt. Further, your home may be considered an asset under Chapter 7 proceedings, and you will be required to sell in order to cover your debt. Though a portion of the equity in your home is protected, this figure varies in each state. Discussing the issue of home ownership with your bankruptcy attorney is of primary importance.

No. 3: What About the Money That I Owe the Government?

Deciding whether to file for bankruptcy should bring about an occasion for you to get extremely organized. If you owe back taxes, get a written statement of your account as it stands with the federal government. By and large, taxes are not dischargeable, though a bankruptcy attorney will be able to address your case to determine if this is true for you. Things like student loans, payable to the government, do not qualify under Chapter 7. Sit down with a knowledgeable bankruptcy attorney to determine the status of money you owe to the government.

No. 4: Can I Continue to Use My Credit Card?

If you find yourself in the process of filing for bankruptcy, it is highly likely that you have a history of poor spending habits. During bankruptcy proceedings, the judge assigned to your case will also look at your current spending habits and recent history. This is often to determine if a person is filing fraudulently. If you have continued to make charges on credit just because you believed that your debt would be relieved by filing for bankruptcy, oftentimes creditors will challenge your filing and demand repayment of money charged during the proceedings.

No. 5: Will My Income and Assets Be Affected by Bankruptcy?

A bankruptcy attorney will be able to determine the average income in your state, which will then determine your Chapter 7 eligibility. Earning significant income may negatively impact your ability to successfully file for bankruptcy, but an attorney will be able to show you exactly how to assess your total income after subtracting acceptable expenses. This may not be something you can do without the assistance of a professional, especially considering the fact that when you file for bankruptcy, you need to insure that all of your paperwork is mistake-free, or you risk the judge throwing out your case. In many instances, those filing for bankruptcy are able to keep their car, though the lender in that case will be notified, and will have legal reason to repossess the car if you default on payment of your reaffirmed debt.

Hot Topics Weddings on a Budget Posted by: Matty Byloos | May 23,2008

Del.icio.us Digg

  There’s nothing quite like starting a marriage with a wedding debt amounting to something the size of Nebraska. With the average wedding ending up in the neighborhood of around $30,000, and marriages increasingly suffering under the weight of financial issues, maybe there’s something important to think about here as you and your future spouse sit down to discuss and plan out your wedding together.

There are ways to create a memorable, elegant wedding without breaking the budget or charging head first into severe debt or financial crisis. After all, wouldn’t it be better to start your marriage with some extra savings, possibly for a down payment on your first home? Weddings on a budget are not only possible (with a little dose of practicality and some research), but also perhaps recommended.

Planning Your Wedding: What Gets Used Once and What Lasts?

Memories you have of your wedding day can last a lifetime, and certainly the ways in which you document the momentous occasion matter a lot. Photographs and videos can help to protect and preserve your memories of what might end up being a once-in-a-lifetime occasion. Further, though you may only wear your wedding dress one time, it will be one of the first things that any person ever sees when they look at your photos.

Similarly, the rings that you purchase and exchange last forever, and stand as symbols of your union. When you think about your wedding from a practical perspective, it becomes obvious that these things are not to be done on the cheap – spending money for quality photographs and rings, and a beautiful dress makes sense. Although every bride has an attachment to an idea of their wedding dress, often from their childhood onward, a beautiful dress doesn’t necessarily have to break the budget. A simple search online for budget or bargain wedding dresses might yield a great place to start cutting costs without sacrificing quality.

The Power of the Wedding Budget

As with a couple’s future financial concerns, it would be an understatement to say that creating a budget might help with pulling off a successful wedding. Without an overall picture of what you intend to spend on the wedding, chances increase dramatically that the costs can get out of hand in a hurry. If you plan a certain dollar figure for the cake, and end up spending less – then perhaps this savings can be added to the part of the budget for the dress, or the savings can be put aside and you will likely end up coming in under the planned budget. Either way, the idea here is to stay realistic and focused on the on the financial plan that you make. Consider making a priority list for the wedding, addressing the top three things that must be perfect, and then making sacrifices on the other details.

The Cost-Cutting Secret: Limit Your Guests

One of the greatest costs comes from the number of guests invited to the wedding. Wedding planners often factor in a price-per-guest, to account for the cost of the dinner, the bar and even the rental of the facility, which has to accommodate the number of guests you invite comfortably.

Consider making some rules when you sit down to create your invitation list. Rather than inviting people because you think you ought to, why not invite only those who you really wish to be there supporting you? Another way that you might cut costs is to consider having hors d’oeuvres rather than a complete dinner. Further, you might look at the way you handle the alcohol at the wedding; rather than an open bar all night, you might close the bar after a set time, opt for a cash bar, or eliminate alcohol altogether from your reception.

Overlooked Costs to Include in Your Wedding Budget

The services that go into making a successful wedding are many, and every player contributes an important part in making the day run smoothly. Limo drivers, photographers, the DJ, coordinators, the flower company and flower arrangers, hair and makeup people, service and food preparation or caterers – if they manage to create a beautiful, stress-free wedding day, then plan on tipping all of them. Suffice it so say, this can add up to a real expense that you might factor in to your overall budget. It’s safe to plan an extra fifteen or more percent for gratuities.

The facility that you choose for your wedding reception can be a sizable charge as well, and many places place a premium during the high part of the wedding season, from May to October. If it’s not a big concern, consider having an off-season wedding to cut these costs. Or find a reception site that is already decorated in a way that suits you, and limit the cost of decorating and flowers in your budget. The same goes for the day of the week, with Saturday being the most expensive day to have a wedding. You and your partner might choose to get married on another day, cutting expenses in the process.