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7 Expenses You Can Eliminate in Retirement

Retirement PlanningNo Comments

Taxes2 7 Expenses You Can Eliminate in RetirementCreating a retirement budget is a challenge for most of us since estimating what we will actually spend in our retirement years – which can span several decades – can be almost impossible.  However, the need to plan for retirement is essential, so when making up your budget, consider these 7 expenses that you may be able to eliminate entirely:

Saving for retirement.  All those years of saving for retirement end when you actually retire, which can leave you with a significant bump in your monthly income.

Mortgage.  Most experts believe you should pay off your mortgage by the time you retire.  By doing so, you can reduce your monthly expenses – but don’t forget you will still be paying for insurance, property tax and maintenance.

Commuting.  Depending on where you live, you can increase your monthly income in retirement by eliminating what it used to cost you to commute back and forth to your job.

Life insurance.  While there are some exceptions, retirees will not usually need life insurance since they are no longer supporting dependents.

Family expenses.  Raising a family costs a lot of money, so once the children are out of college and on their own, these expenses fall dramatically.  Be careful, though – studies show that empty-nesters are apt to raise their spending once the children are gone and they find themselves with extra cash.  Better to stash it away.

Payroll taxes.  Once you are not longer earning a paycheck, you will not be paying taxes for Social Security and Medicare.

Second vehicle.  Many retired couples find that it is no longer necessary to maintain two vehicles.  Eliminating a vehicle rids you of car payments, insurance and maintenance costs.

For more insights into effective retirement planning, contact our Orange County law firm.

5 Retirement Planning Tips for Women

Retirement PlanningNo Comments

woman with thumbs up e1343422394280 5 Retirement Planning Tips for WomenAs we all know, women live longer and earn less than men, so it follows that they need to employ good retirement planning strategies in order to protect their finances.  Here are five retirement planning tips for women:

Save more.  Most women will likely depend on three key sources of retirement income:  Social Security, a pension or 401(k) and personal savings.  Since women are more likely to take time out from the workforce to care for family, their Social Security and retirement accounts are likely to be less, making it more important to increase personal savings.

Start early.  Experts recommend that women start contributing 10 percent of their salaries to a retirement plan starting in their 20s.

Keep skills sharp.  Chances are you will have to manage your own money at different times during your life, so don’t turn everything over to your spouse.  Studies show that women who let their husbands take charge of all the money matters often faced financial struggles later in life.  Keep your financial skills sharp for when you need them.

Spousal IRA.  If you are a nonworking spouse, consider a spousal IRA, which allows a working spouse to contribute up to $5,500 per year for a nonworking spouse.

Overestimate your needs.  Both men and women are living longer these days, so it will pay for you to overestimate what you will need in retirement.

For help with all your retirement planning needs, contact our Costa Mesa law firm.

Will You Still Be Working in Your 80s?

Retirement PlanningNo Comments

According to the recently released Wells Fargo Middle Class Retirement Survey, just over one-third of Americans say they will be working until they are “at least” 80 because they have not saved for retirement.

Overall, only half of middle class Americans between the ages of 25 and 75 feel confident they will have enough saved for retirement.  However, only 29% said they had a written retirement plan.  Those who do have a plan are overwhelmingly more confident they will have a good retirement (70%) than those who do not have a plan (44%).

Here are additional findings from the survey:

4q13pr wells fargo middle class retirement survey Will You Still Be Working in Your 80s?

We can help you gain confidence and peace of mind about a successful retirement by helping you create a plan.  Contact our Newport Beach law firm to learn more.


5 Reasons Retirees May Want to Keep a Life Insurance Policy

Estate Planning, Retirement PlanningNo Comments

life insurance 5 Reasons Retirees May Want to Keep a Life Insurance PolicyThe kids are grown and gone and you’re now retired.  So you may wonder if you still need that cash-value life insurance policy you purchased awhile ago.  A recent article provides these 5 reasons why you might want to hang on to that policy:

1.  Surviving spouse safety net.  When one of you dies, the surviving spouse may lose or face the reduction of important income sources like a company pension.  Or maybe you have been spending more than you thought you would in retirement.  Either way, the life insurance proceeds can provide an important safety net for a surviving spouse.

2.  Tax-free inheritance.  Inherited life insurance policy proceeds are tax-free, and can also add flexibility and liquidity to an estate that may need it.

3.  Gifting.  Naming a charity as both the owner and the beneficiary of your life insurance policy could allow you to deduct the cash value of the policy or the amount paid in premiums (whichever is less) to cut taxes.

4.  Investment tool.  Older policies may still be paying three percent or more annually, which is an attractive rate today.

5.  Borrowing leverage.  Policy holders may want to borrow against the accumulated cash value of the policy.  This type of loan is generally tax-free, and no application or approval process is necessary.

Life insurance is just one estate planning tool in an arsenal that can help you provide for your family’s future and secure your own.  Contact our Orange County law firm to learn more.

Saving for Retirement and College: How to Juggle Priorities

Estate Planning, Retirement PlanningNo Comments

Bandaid piggy bank 150x150 Saving for Retirement and College: How to Juggle PrioritiesA Wall Street Journal article yesterday pointed up what is a fundamental financial conflict for many parents:  saving for retirement vs. saving for college.  Parents feel pressure to do both, but with prices for college continuing to climb and the necessity to make retirement nest eggs last longer, which takes priority?

Here are some tips for juggling these two important goals:

Retirement saving is the #1 priority.  Financial experts agree that it is more important for parents to save for retirement than college.  Saving is the primary way to fund retirement, while college can be funded in a number of different ways.

College saving begins at birth.  The best way to start saving for college is to start early, at the birth of each child.  Putting aside $300 per month will provide a $120,000 fund once the child reaches college age.

Save on taxes.  To free up more money to sock away for retirement, find a way to minimize taxes on your college savings.  This means investing in a 529 college-savings plan, which compounds free from all taxes and funds can be withdrawn tax-free to pay for qualifying college expenses.

Explore other options.  The interest on U.S. Treasury inflation-indexed bonds (I-bonds) held for five years and then redeemed to pay college costs are free of federal taxes if your income is under $109,250 for a couple, or $72,850 for an individual.  Withdrawals from Roth IRAs to pay for college do not incur the 10% early withdrawal penalty, although they are taxed as ordinary income.

To learn more about minimizing taxes and saving strategies for retirement and college, contact our Orange County law firm.

Court Rules Banks Cannot Foreclose on Surviving Spouses of Reverse Mortgage Holders

Retirement PlanningNo Comments

gavel 2 e1319495176879 Court Rules Banks Cannot Foreclose on Surviving Spouses of Reverse Mortgage HoldersA federal court has ruled that surviving spouses of reverse mortgage holders cannot lose their homes if they are unable to pay off the mortgage.

Prior to this ruling by the U.S. District Court for the District of Columbia in Robert Bennett, et al v. Shaun Donovan, Secretary, HUD, a surviving spouse whose name was not on a reverse mortgage had to pay off the mortgage or move out.  The AARP Foundation filed the suit on behalf of three surviving spouses who faced foreclosure and eviction from their homes in 2011.

The Court ruled that HUD had violated federal law by failing to protect the plaintiffs from foreclosure as a result of the death of a spouse named on the mortgage loan.  The suit had claimed that surviving spouses were homeowners entitled by the Home Equity Conversion Mortgage law to be protected from foreclosure.  The Court ordered HUD to establish new guidelines for dealing with surviving spouses in this situation.

“The decision marks a turning point for surviving spouses such as our clients and ensures that they will receive the protections guaranteed by the law:  that they will be able to remain in their homes, despite the loss of their husband or wife,” said Jean Constantine-Davis, senior attorney with AARP Foundation Litigation.

New rules that will make it more difficult to obtain a reverse mortgage went into effect on Sept. 30, 2013.  Under these new rules:

  • There is a limit on the amount of money that can be withdrawn in the first year.  It is 60 percent of the total loan.
  • Prospective borrowers will have access to about 15 percent less home equity on average
  • A portion of the mortgage’s cost will now be based on the amount withdrawn
  • Lenders are required to ensure borrowers will be able to make the necessary tax and insurance payments over the life of the loan.  If not, borrowers will be required to set aside a reserve to make these payments

Reverse mortgages are often used to fund retirement, but they are not for everyone.  For solid retirement planning strategies for your individual circumstances, contact our Orange County law firm.

Best Places to Retire 2014

Retirement PlanningNo Comments

Money Magazine revealed its 2014 Best Places to Retire this morning on CBS This Morning; the top five best places to retire in the U.S. are:

  1. Raleigh, NC
  2. Pittsburgh, PA
  3. Lexington, KY
  4. St. Petersburg, FL
  5. Boise, ID

Baby boomers are driving changes in favorite places to retire to smaller, more affordable cities that still offer a more cosmopolitan experience.  No West Coast cities made the list because of the high cost of living.

Here is the segment from CBS This Morning:

No matter where you retire to, you need a retirement plan in place.  Contact our Newport Beach law firm for help.

Small Business Owners Face Special Challenges in Saving for Retirement

Retirement PlanningNo Comments

retirement sign e1367526898975 Small Business Owners Face Special Challenges in Saving for RetirementSmall business owners face a number of challenges when it comes to starting and maintaining their own businesses, and one of those challenges has long-term implications:  saving for retirement.  Here are some tips on how entrepreneurs can make saving for retirement a priority:

Set up a plan.  Many entrepreneurs find that saving for retirement often takes a back seat to investing in their businesses.  Because they are not part of a corporate 401(k) program that makes saving for retirement automatic, they tend to forget about it.  Small business owners need to set up a plan for contributing regularly to retirement accounts.  Don’t just think your small business is your retirement plan – you may not get what you want for it, or the business may fail before you retire.

Get a Social Security statement.  You can now get your Social Security statement online, so you can get an idea of what your monthly payments will be when you are ready to retire.  Entrepreneurs who take advantage of business-related deductions to reduce taxable income may be shocked at how low your Social Security payments will be.

Take it off the top.  One way self-employed professionals can catch up on saving for retirement is to allocate a certain percentage of what they earn for each project to a retirement account.  Small business owners who enjoy a windfall – a major deal or big project – also need to put a portion of that aside.

Choose the right savings vehicle.  Experts advise the best vehicles for entrepreneurs seeking tax-deferred investment growth include SEP-IRAs, Simple IRAs or One-Participant 401(k)s.  Check with your financial adviser to see which plan works best for your unique situation.

If you are a small business owner interested in learning more about retirement planning, contact our Costa Mesa law firm.


In Your 30s? Don’t Make These Money Mistakes

Estate Planning, Retirement PlanningNo Comments

confused woman e1346097420696 In Your 30s?  Don’t Make These Money MistakesWhen you have left your 20-something lifestyle behind and are now in your 30s, you are probably becoming more settled and are looking more seriously at your future.  Now is the perfect time for you to avoid these common money mistakes to secure that future, including a good retirement:

Tapping savings for luxuries.  When we’re in our 20s, we tend to spend like there’s no tomorrow.  When you hit your 30s, you should be planning for that tomorrow and that means not tapping your savings for vacations or other luxuries.  You need to save for an emergency fund, because you never know what tomorrow will bring.

Short-term budgeting.  Now is the time to start planning and saving for bigger expenses like buying a house or a child’s education fund.

Not assessing your housing needs.  Does owning a home suit your lifestyle?  Home ownership is not for everyone.  You’ll not only need to fork out cash for the mortgage, there’s also insurance, repairs, maintenance and other expenses you will face as a homeowner.  If you already own a home and have for awhile, you may want to look into refinancing your mortgage to put more away into savings.

Not keeping track of your retirement account.  If you have a 401(k) where you work, it’s important to keep tabs on how it is growing (or not) and adjust accordingly.

Not saving for retirement.  If your income is increasing, your retirement account should be one of the beneficiaries of your growing earning power.

Not having insurance.  Having good health and life insurance can be as important as saving if something happens to you.  Shop around and compare for the best rates on all your insurance products.

Not having an estate plan.  The key estate planning documents you need to have in place are a will, advance medical directives and durable powers of attorney.  A trust may also be beneficial to protect your assets now and in the future.

If you would like to know more about how to secure a solid financial future for you and your loved ones, contact our Orange County law firm.

AP Poll: Half of Older Americans Delaying Retirement

Retirement PlanningNo Comments

retirement plan e1326494532376 AP Poll: Half of Older Americans Delaying RetirementAn Associated Press-NORC Center for Public Affairs Research poll of Americans over the age of 50 released today finds that 47 percent of older Americans expect to delay their retirement plans, and 82% say it is at least somewhat likely they will have to work during retirement to pay the bills.

Many older workers experienced a big hit to their retirement savings during the recent recession – a hit that many say will take more time to remedy, thus delaying retirement.  Planning for increased life spans and change in the idea that retirement begins at 65 are also contributing to both the need and desire to work in retirement.  Sixty percent of respondents said they feel younger than their age, and a majority stated the belief that old age begins at 72.

However, one-third of respondents said they would not stop working by choice, although the figures rose depending on demographic groups.  Those with less format education and lower household incomes said they had no option but to retire when they lost jobs, either because of forced unemployment or for health reasons.

One-quarter of the respondents said they were not saving for retirement outside Social Security, and 12% said they had borrowed from retirement savings in the past year.

The earlier you begin to plan your retirement, the better your chances for actually taking retirement when you want to take it.  For information on how to do this, contact our Orange County law firm.

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