by Joe Hearn | Nov 13, 2013 | Retirement
Think for minute about every building you’ve ever seen. The gas station where you fill up. The farmer’s barn. Your home or office. Or maybe something a little more swank. The White House. The Empire State Building. Notre Dame Cathedral. The Parthenon. The Sydney Opera House. Big Ben. The Taj Mahal. The Colosseum. The Pyramid of Giza.
What do they all have in common?
At first glance, not much. They were built in different time periods using different methods and different materials. They are in different countries. Some are little known. Others are celebrated. Some are massive while others are more modest.
The common thread woven through all of them, however, is design. None of those buildings just appeared out of thin air without design or forethought. Before the first hole was dug or the first block was cut, someone (or a team of someones) sat down with pencil and paper and came up with a design. It was a very intentional process that took into account things like the building site, climate, technology, cost, schedule, regulations and, perhaps most importantly, what the building would be used for.
Consider those buildings as a metaphor for your retirement. Your ideal retirement won’t just spring up out of thin air. Someone needs to design it. And since it’s YOUR retirement with YOUR plans and dreams, YOU need to be the one doing the designing. It’s your job to consider all the factors involved and decide what you want that period of your life to look like.
That might sound a little overwhelming, but fear not! I’m coming out with a great new resource that will walk you step-by-step through the process (more on that in a bit). It’s not done yet, however, so for now I thought I’d give you three critical things that you need to accomplish when designing your ideal retirement.
Three things every retirement plan should accomplish
First, your plan should be structured to accumulate the amount of money that you (and your spouse, if married) need to fund the type of retirement you want. The number one fear of pre-retirees is “Will I have enough?” Why lay awake at night worrying when you can know for sure? All it takes is a little homework. The answer is different for everyone, though, so it’s important to arrive at a number after a careful analysis of your plans, circumstances and estimated expenses.
Second, your plan needs to be comprehensive. Retirement has a lot of moving parts. Answering “How much?” is important, but retirement is more than just a math problem. Don’t forget about Medicare, Social Security, your distribution strategy, asset allocation, long-term care and estate planning to name a few. Your plan needs to cover each of those areas and each piece needs to fit together and perform its necessary function. If they don’t, your dreams will never get off the drawing board.
Finally, your plan needs to focus significant attention on lifestyle design. What’s the point of having money and time if you don’t spend those valuable commodities doing what is important to you? You need a detailed lifestyle plan that is designed to provide a fulfilling retirement doing the things you want with the people you love.
As I mentioned earlier, I’ll soon be coming out with a resource that will help you accomplish all three of these things and more. I’m calling it The Ideal Retirement Design Guide. I’ll have more to say about it soon, but if it sounds like something that might be helpful for your situation, you can add your name to our notification list and I’ll send you an email when it’s finished. There may even be an early bird discount for people on the list, so sign up if it sounds like it might be for you.
Thanks for reading. Touch base if I can ever help.
Joe
by Joe Hearn | Oct 30, 2013 | Retirement, Social Security
When it comes to retirement, your bank account is more important than your birthday. Even so, there are several key retirement ages that you will want to keep in mind as you plan.
Age 50: Once you hit the big 5-0, the government raises the contribution limits on your IRA and 401(k). For those turning 50 in 2013, you can put an extra $1,000 into your IRA and an extra $5,500 into your 401(k). That raises the contribution limits to $6,500 and $23,000 respectively. These “catch-up” contributions can be great if you still have some ground to cover in order to reach your savings goal.
Age 55: If you plan on retiring earlier than most, 55 might be a good target. That’s because there is a provision in the tax code that allows you to take early distributions from your retirement plans at age 55 without paying the usual 10% penalty. These are called 72t distributions and, as you might expect, certain rules apply. Work closely with a trusted adviser if this is an option you’re considering.
Age 59 ½: This is the magic age where the government allows you to start taking distributions from your retirement plans without paying the 10% early withdrawal penalty.
Age 62: This is the earliest date that you can elect to receive Social Security benefits. As I said in a recent article, however, claiming Social Security at age 62 is like buying a pair of leather pants: almost always a bad idea. Claiming at 62 would result in a 25% permanent reduction in your benefits. The longer you wait, the more you will get.
Age 65: This is the age that you become eligible for Medicare. If you’re already receiving Social Security benefits by your 65th birthday, you’ll be automatically enrolled in Medicare. If not, then you’ll need to actually sign up. You will have a 7-month window to enroll: 3 months before your birth month, your birth month, and 3 months after. Sign up in that window, because there are penalties if you sign up late.
Age 66: Most baby boomers can receive full Social Security benefits at age 66. Depending on when you were born, however, you might be able to get full benefits a little sooner or have to wait a little longer. Check here to see when you will be eligible for full benefits.
Age 70: Just like the Social Security Administration reduces your benefits if you retire early, they increase your benefits if you retire late. For those born after 1943, you get an extra 8% for every year you wait past full retirement age up to age 70. After age 70, there’s no benefit for waiting. Said another way, claiming Social Security benefits at 62 will result in the smallest check and claiming at 70 will result in the biggest check.
Age 70 ½: One of the key benefits of your retirement accounts is that they grow tax deferred. Uncle Sam can’t wait forever, though. Congress needs money to fund all those brilliant schemes that they’re always hatching. So at 70 ½ they start forcing you to take required amounts from your retirement accounts each year. Work closely with your adviser to determine your Required Minimum Distributions (RMD), because there is a 50% tax penalty on any amount that you should have taken, but didn’t. The RMD rules don’t apply to Roth IRAs.
~ Joe
Photo by louderthanever. Used under Creative Commons License.
by Joe Hearn | Jun 6, 2013
Joe Hearn Hi there. I’m Joe. I’m a financial planner and a writer and I live in Omaha with my wife and daughter. I love to travel, learn new things and generally do everything possible to, as Thoreau might say, “suck the marrow out of life.”... by Joe Hearn | May 31, 2013
The Bell Lap -bell lap (n): The final lap of a race, as at a track meet, signaled by the ringing of a bell as the leader begins the lap. You’ve saved, planned and dreamed for retirement, and now it’s almost here. You’re on the bell lap. As you transition into... 
by Joe Hearn | May 30, 2013 | Housing, Insurance, Medicare
“Should I buy long term care insurance?” I get asked that question at least once a week. As you prepare for retirement, I’m guessing that question has crossed your mind a time or two as well.
Well, you’re in luck. I do my best to provide useful resources for my readers (who, like those in Lake Wobegon, are all strong, good looking and above average), so I called one of the country’s foremost experts on long-term care and asked her if she’d be willing to spend some time educating us on the ins and outs of this important area.
She agreed and we scheduled a conference call for June 12 at 11:00 a.m. Central Time. You’re all invited to attend. The first part of the call will be informational and then we’ll reserve time at the end for Q&A. The purpose of the call will be to provide you with information and options. It will not be a sale pitch.
What we’ll talk about
- Preparing for when your health changes.
- How does long term care work?
- What is the range of care options available today?
- Who should consider buying a policy?
- How do Medicare and Medicaid factor into your decision?
- What types of things should you look for in a policy?
- When is the best time to apply?
- How can you protect yourself against the rising cost of care?
- How much will a policy cost?
- What percentage of people will need some form of long term care (spoiler alert: 50 percent of men and 75 percent of women)
Call in details
- The system I’m using has a limit of 96 people per call. Access will be on a first come basis.
- The information is free. Your only cost will be whatever your phone company charges you for a normal long distance call (sorry, but I can’t pick up the phone bill for everyone)
- The call will be June 12 at 11:00 a.m. Central. Call in 5 minutes early so we can get everyone situated and start promptly at 11:00.
- The call in number is (712) 451-6000.
- After calling the number, you will be prompted to enter your Participant Access Code. Enter 256869# and you will join the rest of us on the call.
- If you plan on sitting in on the call and would like a reminder, just email me at joe@intentionalretirement.com and I’ll try to send out a reminder email a few hours before the call.
If you have a specific question you’d like to make sure we cover, email it to me sometime over the next week or so at joe@intentionalretirement.com. Thanks and I hope to see as many of you as possible on the call.
~ Joe
Quick Note: The material on the call will be for general purposes only. For specific legal, financial or insurance advice you should contact your attorney or financial adviser. You can also contact the guest speaker on the call (Marlene Lund) at 402-896-9193 if you have specific long-term care questions. FYI, I refer clients to Marlene and she and I work together to help them with their long-term care needs. Because of that, if you end up doing business with Marlene, I will likely receive some sort of compensation. I just wanted to make that totally clear. Thanks.
