Why You and Your Partner Might Not Want to Retire Together

Why You and Your Partner Might Not Want to Retire Together

Are you thinking of retiring at the same time as your spouse or partner? It might not be the best idea. Staggering retirement can take advantage of higher Social Security benefits, longer access to health insurance before Medicare becomes available, and larger retirement plan withdrawals. Investopedia author Mark P. Cussen and investment advisor Morris Armstrong explain in this helpful article that “Unless couples are the same age, and in the same health, it usually makes more sense for one person to retire earlier. There can be both financial and relationship benefits,” says Morris Armstrong, registered investment advisor, Armstrong Financial Strategies, Cheshire, Conn. Financially speaking, the advantages are threefold. When one spouse works longer, the amount of Social Security benefits the couple is entitled to will increase. In addition, the continued income from the working spouse gives the couple a few more years to save for retirement. Finally, a spouse who works an extra three to five years will likely have a shorter period over which to draw on his or her retirement assets, allowing for larger withdrawal amounts each year. And, given that retirement is a such a significant life transition for most people, Cussen explains that there are often emotional considerations that should be taken into account when couples are deciding whether or not to retire together: Retirement in the modern era can be an emotionally complex proposition. Losing one’s sense of identity through work can be a major adjustment for some, while others are able to make this transition with relatively little difficulty. When a working couple retires, they suddenly find themselves at home together all the...
How to Be Prepared for Involuntary Retirement

How to Be Prepared for Involuntary Retirement

Here’s a helpful retirement planning article that I came across this morning over at cbsnews.com Money Watch. I appreciated this piece because it touches on something that I regularly bring up with our clients, which is that saving for retirement should be viewed as something much more than just a time during which one’s savings can be applied to the pleasures of life. Hopefully retirement does create such pleasures but, in many ways, retirement savings should also be viewed as the largest emergency reserve fund that one will ever accumulate. This is because, as the article rightly points out, retirement is not always voluntary: For many older workers, their retirement “plan” is to keep working as long as possible. Unfortunately, life events often intervene and force people to retire sooner than they expected. This may result from job loss, illness, disability, caregiving responsibilities or some other reason. This unanticipated situation can force people to make many decisions quickly and without a lot of forethought, leading to inappropriate choices. To put this differently, many people don’t take saving for retirement seriously because they think they’ll simply be able to work until they die. I genuinely hope that all of us are still going strong like Banana George was when he was still barefoot waterskiing at age 85 (see video below), but, for many Americans, old age will inevitably set in and they simply won’t be able to do the things they once could, which includes not only play, but work. I don’t bring up the realities of aging in an attempt to scare one into saving for retirement; instead, it’s my hope that retirement will...
Monday Quick Tip: How to Provide Housing for Aging Parents with a Family Opportunity Mortgage

Monday Quick Tip: How to Provide Housing for Aging Parents with a Family Opportunity Mortgage

Time for another Monday Quick Tip. Did you know you can buy a home for aging parents and avoid having to classify it as an investment property or second home? You can. Sometimes referred to as the Family Opportunity Mortgage, this type of loan allows you to get the lower interest rates associated with an owner occupied home, avoid the distance requirements that lenders require for a second home, and also avoid the high down payment requirements that come along with an investment property. What is more, as a child, you do not have to occupy the home with your parents (you can thank me later!). Parents also do not have to be on the loan, something which can come in handy if one or more of the aging parents do not have good credit. Want to learn more about how this fits into your overall financial plan, reach out to Dunston Financial Group...
Client Success Story: Retirement Hopes Become a Reality

Client Success Story: Retirement Hopes Become a Reality

When we first met with Phil and Nancy (clients’ names changed for confidentiality purposes), they weren’t sure if they could retire. As their financial planners, we had not yet taken them through the financial planning process, so we weren’t sure either. Phil was an IT professional who worked for the state government. He enjoyed his job, but he was ready for a change and wanted to retire. Nancy was a homemaker who enjoyed singing in her church choir. Phil was not a high income earner, but he and Nancy were frugal and did a good job saving over the years. Phil had a keen eye for details, and he asked us a lot of very good questions. One of Phil’s biggest concerns was deciding which retirement pension plan option to select at retirement. He also had questions about whether or not it made sense to purchase additional years of pension service credit and long-term care insurance. After analyzing Phil and Nancy’s finances in great detail, it became clear that their retirement plan could benefit from the purchase of additional years of service credit. We assisted them with this process, and we also helped them determine the most efficient means of funding that purchase. We further analyzed Phil’s pension, and we were able to advise him on the best pension payout option, one that would ensure that Nancy was protected in the event of Phil’s passing. Fast forward several weeks later when we met for a final review of their financial plan, and we were able to present some very good news. Not only was Phil in a position to...
7 Things Prospective Retirees Need to Think About

7 Things Prospective Retirees Need to Think About

Retirees face a variety of challenges as they enter retirement. Here are some broad talking points for retirees to consider: 1.) Daily life in retirement A big question involves how time will be spent in retirement. Retirement is no longer the “lazy boy” retirement that past generations envisaged. People are often working in retirement and spending time in a variety of productive ways. Boredom is a major concern for many retirees. 2.) Portfolio rate of return Many people don’t have a pension, so it will be up to them to design a portfolio that will generate enough return to last throughout retirement. This can be a daunting task, but one that the retiree needs to take seriously. 3.) Portfolio withdrawal rate Closely related to the portfolio rate of return is the portfolio’s sustainable withdrawal rate (SWR). The retiree needs to ascertain how much can be safely withdrawn from her portfolio in order to try to make the portfolio last for up to 30 years or more in retirement. Start out too aggressive and the portfolio could be depleted; too conservative and one could have a surplus. 4.) Life expectancy How long will the retiree live? Family background, current health, and other factors play into this discussion, but it’s important to start with a reasonable and informed assumption about life-expectancy. 5.) Inflation  Inflation is a major risk to retirees. The retiree needs to ensure that her portfolio is not eroded by inflation. Keeping a portfolio too conservatively invested can result in a portfolio being far from “safe”. 6.) Health care expenses Health care is a major concern for most retirees....
Dunston Financial Group in The Wall Street Journal

Dunston Financial Group in The Wall Street Journal

Dunston Financial Group is excited to share that we were featured in yesterday’s edition of The Wall Street Journal. The title of the article is “How Entrepreneurs Can Use IRAs to Finance Startups,” and it’s about how one can use IRA/401(k) money to fund a startup venture. Known as ROBS (Rollover for Business Startups) transactions, they definitely are not right for everyone, and they carry a unique set of risks. Nevertheless, in the right circumstances, ROBS transactions can be an effective business funding...