Retirement Isn’t Cheaper—It’s Just Different

A recent survey shared by Edelman revealed that two-thirds of retirees actually spend more after leaving the workforce. Why? Because they finally have time to travel, enjoy hobbies, and take on new experiences—all of which cost money. Add healthcare and long-term care expenses, and it’s easy to see why some retirees feel financially stretched. For a married couple, healthcare alone may cost $400,000 over their retirement years.

Edelman’s message is clear: assume expenses go up, not down. Inflation will eat away at your purchasing power, and leisure isn’t free. You need to plan for this reality and save accordingly.

Want to Start a Business? Be Realistic

Starting a business after retirement or mid-career is exciting, but it’s rarely easy. Edelman advises budgeting twice the money and time you think you’ll need to become profitable. Use personal savings, lines of credit, and even small loans from family—but don’t quit your day job right away. Ease into it. Start on the side, build slowly, and minimize your risk.

Retiring Abroad? Rent First, Buy Later

For those dreaming of retiring abroad, Edelman warns against rushing to buy property. Renting for 1–2 years gives you time to understand the local lifestyle, costs, and laws. Some countries have tight ownership restrictions or require large upfront commitments for residency.

Investing overseas? Currency fluctuations can wipe out returns. Edelman urges you to understand tax implications and consult a professional before committing your portfolio internationally.

Social Security: Wait If You Can

When it comes to Social Security, Edelman recommends waiting until full retirement unless you truly need the money. Taking benefits early—while still working—can lead to unnecessary taxation and reduced payouts. He also warned that younger generations may face future changes in eligibility or benefit levels due to national debt concerns.

Young Couples: Build Cash First, Then Invest

For young couples, Edelman laid out a priority checklist:

1. Max out employer retirement contributions.
2. Build a cash reserve that covers 6 months to 2 years of expenses.
3. Once that’s in place, move to mutual funds and other long-term investments.

This “pre-fund your future” strategy ensures flexibility and resilience no matter what life throws your way.

Why Competition Still Matters

In an insightful conversation with economist Michael Porter, Edelman discussed how competition fuels innovation, quality, and value—but only when protected by strong regulation. Too many mergers and acquisitions, Porter warned, lead to market domination, hurting consumers.

However, he also noted that the internet has leveled the playing field, empowering consumers with information and choices that help drive down prices. His advice? Be proactive and informed in your purchases. That’s how you shape the economy.

Cut Expenses When Your Income Drops

Finally, Edelman offered practical advice for handling income cuts: cut your lifestyle too. Don’t cling to unsustainable habits. Sell the second car. Cancel the vacation. Shift your priorities. It’s better to live lean now than drown in debt later.

Conclusion:

From navigating retirement expenses to launching a side business or investing overseas, Ric Edelman’s advice is grounded in realism, strategy, and long-term thinking. Whether you’re just starting out or planning your next chapter, the key takeaway is this: stay informed, stay flexible, and plan like your future depends on it—because it does.

All information provided is for educational purposes only and does not constitute investment, legal or tax advice; an offer to buy or sell any security or insurance product; or an endorsement of any third party or such third party’s views. The information contained herein has been obtained from sources we believe to be reliable but is not guaranteed as to its accuracy or completeness. Whenever there are hyperlinks to third-party content, this information is intended to provide additional perspective and should not be construed as an endorsement of any services, products, guidance, individuals or points of view outside Edelman Financial Engines. All examples are hypothetical and for illustrative purposes only. Please contact us for more complete information based on your personal circumstances and to obtain personal individual investment advice.

Neither Edelman Financial Engines nor its affiliates offer tax or legal advice. Interested parties are strongly encouraged to seek advice from qualified tax and/or legal experts regarding the best options for your particular circumstances.

The post Retiring Smarter, Investing Globally, and Managing Life Transitions appeared first on ROI TV.

Start Investing Early—or Start Now

Ric kicked off with the classic Jack and Jill example of compound interest and the math blew me away. Jack started saving $5,000 a year at age 18 and stopped after 8 years, investing only $40,000 total. Jill started at 26 and contributed $5,000 a year for the next 40 years investing $200,000.

Guess what? By age 65, Jack had $2.6 million. Jill? $2.2 million.

That’s the power of time and compound growth. Even if you’re not 18 anymore, the takeaway is clear: the best time to start was yesterday. The second-best time is today.

Max Out Your 401(k and Build Your Cash Reserves

Ric advised a newly married couple to stop limiting their 401(k) contributions to just their employer match. Instead, they should max it out. Why? Because 6% won’t cut it for a secure retirement.

He also recommended building a 12-month emergency fund. Not just the usual 3–6 months 12. And if you’re saving for a house, he said to do that after your emergency fund is fully in place.

Diversify Everything

Ric emphasized portfolio diversification not just across industries, but across geographies and company sizes. You need large-cap and small-cap, dividend and non-dividend, U.S. and international. The goal? Balance. Protection. Growth.

He also reminded us that more than half of the stock market’s historical returns come from dividends, not stock price increases. Reinvesting those dividends is where the real magic happens.

If You’re Struggling in Today’s Job Market… Shift

A 59-year-old man asked Ric about his job struggles despite having two advanced degrees. Ric didn’t sugarcoat it. The economy might be recovering, but personal circumstances vary. His advice? Change your approach. Retrain. Move. Reinvent. Don’t keep doing what’s not working and expect different results.

And yes, he quoted Einstein: “Insanity is doing the same thing over and over again and expecting different results.”

Bad Banker Advice? Ignore It.

One caller shared that his banker recommended pulling out of the stock market and putting his 401(k) into municipal bonds. Ric’s response was brutal but accurate. That banker was giving advice based on gut feelings, not data.

Ric explained: bonds pay interest, but they don’t grow. Stocks, while volatile, have historically built wealth. So when someone tells you to ditch your portfolio without solid reasoning especially during an all-time high in 401(k) balances—you might want to get a second opinion. Or a real advisor.

Behind the Scenes of Big Book Deals

Ric interviewed Bob Barnett, the legal powerhouse behind publishing deals for Barack Obama, Hillary Clinton, and James Patterson. Bob isn’t an agent he’s a lawyer. He doesn’t take commissions, but he negotiates contracts, manages rollouts, and helps high-profile clients navigate publishing.

Bob offered insights into just how tough it is to get published only 1 in 6,000 first novels make it. But he encouraged aspiring writers to start with proposals and sample chapters before committing to full books.

Never Borrow from Your Retirement Plan

Ric ended with a warning: do not borrow from your 401(k).

Why? Because when you take out a loan, you sell your shares (locking in any losses), then repay the loan with taxed income, and then get taxed again when you withdraw the money in retirement.

A $10,000 loan could cost you $100,000 by the time you retire. That’s not a small mistake it’s devastating to your future self.

Final Thoughts

Whether you’re 25 or 65, Ric Edelman’s advice boils down to a few key principles: Start saving. Don’t panic. Diversify your investments. Be wary of bad advice—even from a bank. And never, ever borrow from your future.

Want to retire with confidence? Take action today—and let compounding, consistency, and smart decisions do the heavy lifting.

All information provided is for educational purposes only and does not constitute investment, legal or tax advice; an offer to buy or sell any security or insurance product; or an endorsement of any third party or such third party’s views. The information contained herein has been obtained from sources we believe to be reliable but is not guaranteed as to its accuracy or completeness. Whenever there are hyperlinks to third-party content, this information is intended to provide additional perspective and should not be construed as an endorsement of any services, products, guidance, individuals or points of view outside Edelman Financial Engines. All examples are hypothetical and for illustrative purposes only. Please contact us for more complete information based on your personal circumstances and to obtain personal individual investment advice. Neither Edelman Financial Engines nor its affiliates offer tax or legal advice. Interested parties are strongly encouraged to seek advice from qualified tax and/or legal experts regarding the best options for your particular circumstances

The post Ric Edelman’s Best Advice on Investing, Retirement, and Financial Freedom appeared first on ROI TV.

1. Assess Your Starting Point If you’re in your 50s or early 60s, the clock may be ticking, but the game isn’t over. Many people nearing retirement believe they need $1.6 million, yet the average retirement savings for those aged 55-64 is around $400,000. That’s a big gap, but Joe and Big Al show that with the right strategy, you can still create a workable plan.

2. Spending Adjustments Make a Big Difference In a case study of a couple in their mid-50s, reducing annual spending from $100,000 to $90,000 extended their retirement savings by six years. This single tweak made their money last until age 84 instead of 78. It turns out, cutting back a little on travel, dining out, or unnecessary subscriptions could make a big long-term difference.

3. Working Longer or Delaying Retirement If you can work an extra two years, you gain twice: more money saved and fewer years drawing from your savings. In the case study, working until 66 (instead of 64) had almost the same positive impact as cutting expenses by 10%.

4. Roth Conversions and Tax Strategies Taxes don’t retire when you do. Joe and Big Al recommend using Roth conversions to shift money from traditional accounts to Roth IRAs while you’re still earning. Doing so can lower your future tax burden and give you tax-free income in retirement. Just make sure you use non-retirement assets to pay the tax bill, or you’ll lose the compounding advantage.

5. Sequence of Return Risk Is Real The early years of retirement are vulnerable to market downturns. If your portfolio drops and you’re withdrawing funds at the same time, it can cripple your future. Maintaining a balanced allocation and keeping your withdrawal rate low can protect your savings during rough markets.

6. The Triple Lindy Strategy Joe and Big Al combine four power moves: save more, spend less, delay Social Security, and work longer. They call this the “Triple Lindy,” and it could extend your savings lifespan to age 94. These adjustments may seem small individually, but together they have a massive impact.

7. Take Advantage of Catch-Up Contributions Starting in 2025, Americans aged 60–63 can contribute 150% of the standard catch-up limit. That’s $11,250 in additional contributions annually. Someone starting from $0 at age 59 could still end up with $340,000 by age 67 with diligent saving and a 6% return.

8. Plan for Health and Long-Term Care Long-term care costs can derail even the best retirement plan. With assisted living averaging $65,000 per year and skilled nursing at $100,000, make sure to include healthcare planning in your retirement strategy.

9. Understand Your Spending Patterns While many advisors say you’ll spend 80% of your pre-retirement income in retirement, Joe and Big Al warn this varies widely. Some retirees spend more early on during the “go-go” years and later face higher healthcare costs. Plan for flexible spending.

10. Use a Realistic Rate of Return Expecting a 6% return on your 401(k) is a conservative and practical benchmark for planning. Stick to a 60/40 stock-to-bond allocation and avoid emotional reactions that lead to buying high and selling low.

Final Thoughts It’s never too late to stage a retirement comeback. With the right mix of spending adjustments, tax planning, catch-up contributions, and strategic timing, you can extend your savings well into your 90s. And who knows? You might end up better off than if you’d started early but planned poorly.

Intended for educational purposes only. Opinions expressed are not intended as investment advice or to predict future performance. Past performance does not guarantee future results. Neither the information presented, nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Consult your financial professional before making any investment decisions. Opinions expressed are subject to change without notice.

IMPORTANT DISCLOSURES:

• Investment Advisory and Financial Planning Services are offered through Pure Financial Advisors, LLC. A Registered Investment Advisor.

• Pure Financial Advisors, LLC. does not offer tax or legal advice. Consult with a tax advisor or attorney regarding specific situations.

• Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

• Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

• All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.

• Intended for educational purposes only and are not intended as individualized advice or a guarantee that you will achieve a desired result. Before implementing any strategies discussed you should consult your tax and financial advisors.

The post How to Stage a Retirement Comeback: Smart Strategies for Financial Freedom appeared first on ROI TV.

If you’ve ever felt discouraged about your retirement progress, this one’s for you.

Rethinking Retirement Savings Goals

We’ve all heard it before: “You need to save 10 times your salary by the time you retire.” Fidelity suggests hitting savings milestones like one times your salary by 30, three times by 40, and so on culminating in 10x by age 67.

But here’s the truth: only 9% of Americans actually reach that goal, according to a 2025 study by Northwestern Mutual. Why? Because the system is stacked against us rising costs, student debt, inconsistent income, and delayed saving habits all make it harder to hit that number.

Aaron emphasized that it’s time to stop chasing arbitrary savings targets and start planning based on your real-life expenses.

Build a Retirement Plan Around Your Lifestyle

Instead of focusing on income multipliers or that $1 million myth, Aaron encouraged viewers to ask a more important question: What will I actually spend in retirement?

If you’re a strong saver now putting away 20–25% of your income you may be in a better position than you think. Why? Because you’re used to living on less, which means you’ll likely need less in retirement too.

Track your spending, account for healthcare, hobbies, and travel, and build a savings plan that supports your retirement lifestyle not someone else’s spreadsheet.

Social Security: A Game-Changer for Retirement Income

One of the most overlooked elements in retirement planning? Guaranteed income. That includes Social Security, pensions, and annuities sources of income that don’t rely on the market.

Aaron ran the numbers. For someone who needs $60,000 a year in retirement and expects to receive $30,000 in Social Security, they’d only need to save about $930,000 to cover the rest. For someone needing $40,000 annually with the same Social Security benefit, the needed nest egg drops to just $430,000.

And for modest couples? Social Security could cover nearly all of their retirement spending no million-dollar portfolio required.

Boosting Retirement Readiness, One Step at a Time

If you’re behind on your savings goal, don’t panic adjust. Aaron suggested:

• Increasing your savings rate by just 1–2%
• Working part-time during retirement
• Delaying retirement by one or two years
• Downsizing or trimming unnecessary expenses

These small changes can make a big difference without requiring a complete overhaul of your lifestyle. It’s not about perfection it’s about progress.

Market Volatility Is Changing Retirement Expectations

With ongoing inflation and unpredictable markets, more Americans are scaling back their retirement goals. The average target savings amount fell from $1.46 million in 2024 to $1.26 million in 2025.

But that’s not necessarily bad news. More people are embracing phased retirement, working part-time, or offering consulting services. Others are relocating to lower-cost areas to stretch their dollars further and prioritize simplicity over extravagance.

Retire on Your Terms, Not Someone Else’s

Stop letting the million-dollar myth hold you hostage.

The real strategy is to understand the gap between what you’ll spend and what you’ll receive from guaranteed income. That’s what determines how much you actually need to save. And millions of Americans retire successfully without ever hitting that $1 million mark.

If you want a retirement plan that works, start with these three steps:

1. Track your current expenses
2. Calculate your expected income streams
3. Create a savings plan that fills the gap

Retirement isn’t about a magic number it’s about living the life you want, sustainably and confidently.

All writings are for educational and entertainment purposes only and does not provide investment or financial advice of any kind.

The post Forget the Million-Dollar Myth: A Realistic Approach to Retirement Planning appeared first on ROI TV.

The Retirement Readiness Pop Quiz

1. What age do you plan to retire?

It sounds simple, but most people underestimate this. The average retirement age in the U.S. is 62, often not by choice.

2. How long will you live?

Consider current life expectancy: about 84 for men and 87 for women. A 65-year-old couple has a 50% chance one of them lives to 92.

3. How much annual income will you need?

Base it on lifestyle goals, not a vague percentage of pre-retirement income.

4. How much have you saved for retirement so far?

Roughly 46% of U.S. households have $0 saved. Where do you stand?

5. How much do you plan to spend annually in retirement?

Create a detailed budget, including discretionary and fixed expenses.

6. What are your sources of retirement income?

Include Social Security, pensions, rental income, annuities, and investment withdrawals.

7. When will you claim Social Security?

Claiming early at 62 reduces benefits permanently. Delaying increases them significantly.

8. What is your Social Security breakeven age?

This is the age when total lifetime benefits from claiming later surpass those from claiming early.

9. Are you coordinating benefits with your spouse?

Delaying the higher earner’s benefit can increase survivor income.

10. What is your retirement savings goal?

Fidelity suggests 10x your income by age 67. Is your number realistic?

11. What is your withdrawal strategy?

The 4% rule is a starting point. Will you withdraw the same amount each year, or adjust with the market?

12. What is your portfolio allocation?

Stocks vs. bonds? Domestic vs. international? Are you considering risk tolerance and time horizon?

13. Are you accounting for inflation?

With 3% inflation, $1 today will be worth $0.81 in 20 years.

14. Have you considered healthcare costs?

Fidelity estimates a 65-year-old couple may need $300,000 for out-of-pocket medical expenses.

15. Are you planning for long-term care?

Consider whether you want insurance or will self-insure. Long-term care can derail a retirement budget.

16. Have you created a tax plan?

Taxes can be your biggest expense in retirement. Are you strategically withdrawing from pre-tax and Roth accounts?

17. Are you prepared for required minimum distributions (RMDs)?

RMDs start at age 73 or 75, depending on your birth year, and apply to pre-tax accounts.

18. Do you have a written retirement plan?

Only 33% of workers do. A written plan increases confidence and retirement success.

Key Takeaways from Joe and Big Al

• Start early and save consistently $750/month from age 30 or $1,530/month from age 40 can grow to $1 million by retirement.
• Use Roth conversions while tax brackets remain low until 2026.
• Don’t underestimate healthcare or inflation plan ahead.
• Your investment vehicle matters less than your asset allocation.

Intended for educational purposes only. Opinions expressed are not intended as investment advice or to predict future performance. Past performance does not guarantee future results. Neither the information presented, nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Consult your financial professional before making any investment decisions. Opinions expressed are subject to change without notice.

IMPORTANT DISCLOSURES:

• Investment Advisory and Financial Planning Services are offered through Pure Financial Advisors, LLC. A Registered Investment Advisor.

• Pure Financial Advisors, LLC. does not offer tax or legal advice. Consult with a tax advisor or attorney regarding specific situations.

• Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

• Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

• All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.

• Intended for educational purposes only and are not intended as individualized advice or a guarantee that you will achieve a desired result. Before implementing any strategies discussed you should consult your tax and financial advisors.

The post Retirement Pop Quiz: 18 Questions to Get You Ready to Retire appeared first on ROI TV.

Building an Emergency Fund The size of an emergency fund depends on several factors, like income stability, household structure, and life stage. Generally, three months of essential expenses are recommended for those with stable salaries, while six months is ideal for those with variable incomes. Couples sharing expenses can aim for three months of joint living costs, but single high-income earners or families with a stay-at-home parent should consider saving for six months of essential expenses. An emergency fund covers unexpected costs like medical bills, car repairs, or unpaid time off, providing much-needed flexibility and peace of mind.

Cash Management for Retirees For retirees, Aaron recommended holding one to five years’ worth of expenses in cash or cash-like equivalents to avoid selling investments during market downturns. The specific amount depends on guaranteed income streams like Social Security or pensions. For example, retirees spending $4,000 per month would need $48,000 for one year, $144,000 for three years, and $240,000 for five years in cash reserves. These reserves act as a financial buffer, allowing investments time to recover without locking in losses during economic slumps.

Saving for Short-Term and Long-Term Goals Setting aside money for short-term goals—like buying a home, upgrading a car, or taking a big trip—is best done in high-yield savings accounts, money market funds, or CDs to protect against market volatility. Establishing an ‘opportunity fund’ allows for bold choices, like investing during market dips, switching to a dream job, or launching a side hustle without financial strain.

Strategies to Build Financial Resilience Aaron shared practical strategies to build financial resilience:

• Automate Savings: Set up automatic transfers of $20 weekly into a high-yield savings account to build an emergency fund gradually.
• Cut Variable Expenses: Reducing impulse spending, canceling unused subscriptions, and dining out less frequently can free up funds for savings.
• Use Sinking Funds: Create separate savings for predictable costs like car repairs, insurance premiums, and home maintenance to prevent these expenses from derailing your budget.

Timeline and Challenges in Building Emergency Funds Building an emergency fund takes time. Most people require one to two years to save three to six months of essential expenses, depending on income, spending habits, and debt load. Saving $250 per month would take three years to build a three-month fund ($9,000) and six years for a six-month fund ($18,000). Increasing that to $750 per month would shorten the timeline to one year and two years, respectively. Redirecting bonuses, tax refunds, and other windfalls can also accelerate progress. Consistency and flexibility are key.

Practical Mindset and Financial Wellness Achieving financial resilience requires clear goals, sustainable plans, and motivation from early progress. Small wins create momentum and build confidence, helping you avoid feeling overwhelmed and stay on track. Remember, financial wellness is about progress, not perfection—celebrate those small milestones along the way.

Market Recovery and Investment Strategy Aaron highlighted historical market recovery timelines. The 1929 crash took 25 years to recover in price but only 4.5 years with reinvested dividends, while the 2020 crash bounced back in just six months. On average, bear markets recover in five years, underscoring the importance of having cash reserves so you’re not forced to sell investments during downturns. Reinvesting dividends can significantly shorten recovery periods, proving that a long-term investment strategy is crucial for financial security.

All writings are for educational and entertainment purposes only and does not provide investment or financial advice of any kind.

The post How to Prepare for Unexpected Expenses appeared first on ROI TV.

Retirement Planning Strategies Across Decades

In your twenties, starting early with small, consistent contributions can make a significant impact. Saving just $190 per month, which is 7% of a $30,000 annual salary, and building an emergency fund of three months’ salary are foundational steps that set the stage for financial growth. The power of compounding interest over time is substantial.

By your thirties, as your salary increases to around $50,000, the focus should shift to saving $600 per month—about 14% of your income—to reach a target of $150,000 by age 40. It’s also crucial to build up your emergency fund, save for a home, and consider life insurance to protect your family.

In your forties, with a typical salary of $80,000, aim to save 20% of your income, equating to $1,300 per month. This strategy helps you achieve a target of $480,000 by age 50 while managing college savings, mortgage payments, and tax planning. The emphasis during this period is on maximizing contributions and diversifying investments.

By your fifties, it’s time to leverage catch-up contributions and increase savings to $1,100 per month to double your savings to $1 million by age 60. Tax-efficient strategies like Roth conversions and proper estate planning become increasingly important as you prepare for retirement.

Savings Goals and Benchmarks

Joe and Alan provided key savings benchmarks for each decade:

• One times your annual salary by age 30
• Three times your annual salary by age 40
• Six times your annual salary by age 50
• Ten times your annual salary by age 67

They emphasized the importance of small, incremental increases in savings, such as boosting contributions by 1% each quarter or dedicating bonuses and raises to savings. The magic of compounding interest makes starting early and consistently increasing contributions a critical part of achieving these benchmarks.

Risk Management and Investment Allocation

As you age, your financial strategy should shift from building capital to preserving it. In your twenties and thirties, higher-risk investments like stocks are ideal for growth. By your forties and fifties, the focus should shift to bonds and income-generating assets to stabilize your portfolio and provide reliable income in retirement.

Tax Planning and Roth Conversions

As your income grows, so does the importance of tax planning. Some strategies to minimize taxes on investment income, dividends, and interest. Roth conversions are a powerful way to shift money from pretax accounts to Roth IRAs, ensuring tax-free withdrawals in retirement. A diversified tax strategy can provide more control and flexibility during retirement.

Catch-Up Contributions and Retirement Account Limits

For those over 50, IRS catch-up provisions allow for additional contributions: $1,000 more for IRAs (totaling $8,000 annually) and $7,500 for 401(k)s (totaling $30,500 annually). Take advantage of these higher limits during their peak earning years.

Estate Planning and Risk Management

In your forties and fifties, estate planning becomes crucial. Setting up trusts, wills, powers of attorney, and healthcare directives protects your family and ensures your wishes are followed. It’s also vital to review beneficiary forms and maintain adequate life and disability insurance, especially if you have dependents and a mortgage.

Key Takeaways and Actionable Steps

Retirement planning is a lifelong journey. Consistent savings, smart investment strategies, and proactive tax planning are essential to reaching your financial goals. They encouraged viewers to use the Retirement Readiness Guide available on their website to evaluate their financial preparedness and implement effective strategies for every decade of life.

Intended for educational purposes only. Opinions expressed are not intended as investment advice or to predict future performance. Past performance does not guarantee future results. Neither the information presented, nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Consult your financial professional before making any investment decisions. Opinions expressed are subject to change without notice.

IMPORTANT DISCLOSURES:

• Investment Advisory and Financial Planning Services are offered through Pure Financial Advisors, LLC. A Registered Investment Advisor.

• Pure Financial Advisors, LLC. does not offer tax or legal advice. Consult with a tax advisor or attorney regarding specific situations.

• Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

• Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

• All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.

• Intended for educational purposes only and are not intended as individualized advice or a guarantee that you will achieve a desired result. Before implementing any strategies discussed you should consult your tax and financial advisors.

The post Financial Planning and Retirement Strategies for Every Decade appeared first on ROI TV.

Elder Financial Abuse Elder financial abuse is a growing national problem, costing victims an estimated $2.6 billion annually. Shockingly, half of Americans over age 65 show signs of financial abuse, which can include unnecessary services, excessive fees, stolen checks, and even family members withdrawing money without consent. Ric emphasized the importance of adult children monitoring their parents’ finances, discussing estate planning, and obtaining power of attorney to safeguard against abuse. Five signs of financial abuse were outlined: unnecessary purchases, unexplained disappearance of money or possessions, unpaid bills, large withdrawals, and individuals exerting excessive control over elderly parents. If you suspect abuse, contact law enforcement, adult protection services, or the National Center for Elder Abuse.

Graduate School Debt and Career Planning The financial implications of graduate school debt can be staggering, and Ric cautioned parents against allowing their children to incur six-figure debt without understanding its long-term impact. He advised having serious career conversations with children to ensure their education aligns with future income potential and specialty areas that generate sufficient earnings. Strategies to minimize debt include scholarships, employer-sponsored education programs, and military service in exchange for tuition coverage. Ric stressed the importance of viewing education as an investment in a child’s future and evaluating whether the cost of the degree is justified by the career benefits.

Insurance Needs and Financial Protection Insurance is a cornerstone of financial planning, not for wealth creation but for financial protection. Ric outlined key types of insurance, including disability insurance to protect income, life insurance for dependents, auto insurance, health insurance, and long-term care insurance. Statistics show that one out of two Americans over 65 will need long-term care, with costs averaging $7,000 per month or $84,000 per year. Ric advised purchasing the minimum necessary insurance to cover potential losses and emphasized analyzing risks and financial implications.

401(k) Plans and Retirement Savings Dallas Salisbury, CEO of the Employee Benefit Research Institute (EBRI), shared insights on 401(k) plans, noting the average balance in the U.S. is $67,000, while individuals who have contributed for 30 years average just under $200,000. Ric and Dallas emphasized the need for early and consistent saving, highlighting the importance of educating individuals about saving at home, school, and the workplace. Automatic enrollment and contribution escalation in 401(k) plans were discussed as effective strategies to encourage saving, along with pre-diversified investment options to simplify decision-making. Ric stressed that saving for retirement is a personal responsibility, and individuals must actively choose to save to avoid financial shortfalls.

Consumer Behavior and Saving Challenges While many recognize the need to save, instant gratification and impulse buying often derail financial goals. Surveys show that most individuals could afford to save an extra $25 to $75 per week but fail to prioritize it due to lifestyle choices and advertising promoting immediate enjoyment. Ric and Dallas discussed initiatives like America Saves Week and Choose to Save campaigns, which aim to educate and motivate individuals to save for their financial future. Tools such as financial planning checkups and public service announcements were highlighted as resources to help individuals understand their financial situation and make informed decisions.

Medicare and Retiree Health Care Costs Medicare covers only 64% of health care costs for retirees, leaving individuals responsible for nearly 20% of expenses, with private insurance and government programs covering the rest. Ric warned that these out-of-pocket costs could amount to hundreds of thousands of dollars for retirees and their spouses, making it essential to factor health care costs into financial planning. Proper planning can prevent financial strain during retirement.

Market Volatility and Investment Strategy When it comes to setting sell orders on 401(k) retirement funds based on market predictions, Ric advised against this strategy. Timing the market is incredibly challenging, and short-term performance often has little impact on long-term investing success. He emphasized diversification as a protective measure against losses and warned against emotional reactions to market volatility, which can lead to poor financial decisions. Staying invested through market ups and downs generally leads to better outcomes than trying to predict and react to market swings.

All information provided is for educational purposes only and does not constitute investment, legal or tax advice; an offer to buy or sell any security or insurance product; or an endorsement of any third party or such third party’s views. The information contained herein has been obtained from sources we believe to be reliable but is not guaranteed as to its accuracy or completeness. Whenever there are hyperlinks to third-party content, this information is intended to provide additional perspective and should not be construed as an endorsement of any services, products, guidance, individuals or points of view outside Edelman Financial Engines. All examples are hypothetical and for illustrative purposes only. Please contact us for more complete information based on your personal circumstances and to obtain personal individual investment advice.

Neither Edelman Financial Engines nor its affiliates offer tax or legal advice. Interested parties are strongly encouraged to seek advice from qualified tax and/or legal experts regarding the best options for your particular circumstances.

The post Financial Planning, Elder Financial Abuse, and Protecting Your Wealth appeared first on ROI TV.

Intuition Bias and Financial Decision-Making Intuition bias often leads to incorrect financial decisions. I shared the example of the coffee and muffin cost problem, where many people incorrectly assume the muffin costs 10 cents instead of the correct answer of 5 cents. He emphasized that financial decisions often require precise math, which many people struggle with, leading to costly mistakes like under-saving for retirement or missing out on employer-matched contributions. Rely less on gut feelings and more on calculated planning.

Grandparents’ Financial Support for Grandchildren I also addressed questions about saving for grandchildren’s futures, covering two main options: college planning and retirement planning. Stressing the importance of fairness among grandchildren and avoiding financial gifts that compromise personal financial security. I recommend consulting a financial advisor to ensure contributions are affordable and effective.

Long-Term Care Insurance and Pre-Existing Conditions Long-term care insurance is a necessity, especially as one in two Americans over 65 will need it, with average costs of $250 per day. He recommended buying insurance while still healthy since premiums are lower, and highlighted that pre-existing conditions like heart issues may not disqualify applicants.

Mortgage Strategy: Long-Term vs. Paying Off Early I advocate for carrying long-term mortgages to maintain liquidity. Longer terms reduce monthly payments, improving cash flow, while paying off a mortgage early ties up cash and can be risky in emergencies.

Medicare Tax on Investment Income The 3.8% Medicare tax on investment income for high earners, noting its impact on real estate and stock sales. He encouraged understanding the tax’s implications to better strategize investments.

U.S. Government Debt and Economic Implications I interviewed David Walker, who highlighted the unsustainable federal debt and its economic risks. Walker called for fiscal responsibility, international investments, and inflation-hedged portfolios.

Financial Planning and Happiness Financial planning is directly linked to happiness, as it provides peace of mind and confidence in one’s financial future.

All information provided is for educational purposes only and does not constitute investment, legal or tax advice; an offer to buy or sell any security or insurance product; or an endorsement of any third party or such third party’s views. The information contained herein has been obtained from sources we believe to be reliable but is not guaranteed as to its accuracy or completeness. Whenever there are hyperlinks to third-party content, this information is intended to provide additional perspective and should not be construed as an endorsement of any services, products, guidance, individuals or points of view outside Edelman Financial Engines. All examples are hypothetical and for illustrative purposes only. Please contact us for more complete information based on your personal circumstances and to obtain personal individual investment advice.

Neither Edelman Financial Engines nor its affiliates offer tax or legal advice. Interested parties are strongly encouraged to seek advice from qualified tax and/or legal experts regarding the best options for your particular circumstances.

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Workplace Retirement Accounts and Common Mistakes
Understanding your workplace retirement account is the first step to avoiding costly errors. As of 2023, $36 trillion is invested in preferred retirement accounts, with 35% of those funds held in IRAs. The rest is spread across 401(k)s, government pension plans, and annuities. One major point of confusion for many retirees is taxation—every dollar withdrawn from these accounts is taxable, and early withdrawals before 59½ often result in a 10% penalty. Knowing the rules and planning your withdrawals accordingly can save you thousands of dollars over the course of your retirement.

Types of Retirement Accounts: Defined Contribution vs. Defined Benefit Plans
Workplace retirement accounts generally fall into two categories: defined contribution plans and defined benefit plans.

• Defined Contribution Plans like 401(k)s, 457 plans, and IRAs allow employees to contribute a specific amount each year. These are now more common because they are less costly for employers.
• Defined Benefit Plans, commonly known as pensions, promise a fixed income based on years of service and salary history. Although less common today, those with access to these plans must decide between taking a lump sum or monthly annuity payments based on their risk tolerance and financial goals.

Options for Employer-Sponsored Plans Post-Retirement
After retiring, you have three main options for your employer-sponsored retirement plan:

1. Leave it in the plan – This option is the simplest and often comes with lower fees and fiduciary protections.
2. Roll it into an IRA – This allows for more investment choices and easier management.
3. Withdraw it – Early withdrawals from a 401(k) are penalty-free at age 55 if you retire, but regular income taxes still apply.

Taxation and Required Minimum Distributions (RMDs)
Understanding the tax implications of your withdrawals is essential. Distributions from 401(k)s and IRAs are taxed as ordinary income, and withdrawing before age 59½ incurs a 10% penalty.

• RMDs are mandatory for traditional IRAs and 401(k)s starting at age 73, ensuring the IRS collects its share of taxes.
• Roth IRAs, however, are exempt from RMDs during the account holder’s lifetime, making them a powerful tool for tax-free growth.
• Inherited Roth IRAs are required to be fully distributed within ten years, though they remain tax-free if held for five years.

Roth Conversions and Tax Strategies
Roth conversions allow you to transfer funds from a traditional retirement account to a Roth IRA, paying taxes now to avoid them later. This strategy is especially useful if you expect your tax rate to rise in the future. Converting your accounts before age 73 also reduces RMD amounts, which can minimize your tax burden.

However, it’s crucial to plan these conversions carefully to avoid bumping into higher tax brackets or increasing your Medicare premiums. Properly timed Roth conversions can offer substantial tax savings and more flexibility in retirement.

Beneficiary Designations and Estate Planning
One of the most overlooked aspects of retirement planning is beneficiary designations. Remember, the beneficiaries listed on your retirement accounts override any instructions in your will. Non-spouse beneficiaries are required to fully distribute inherited IRAs within ten years. For Roth IRAs, these distributions remain tax-free if the account has been held for at least five years.

To avoid unnecessary tax implications, always keep your beneficiary forms updated, especially after major life events like marriage, divorce, or the birth of a child.

Consolidating Multiple Retirement Accounts
If you’ve held multiple jobs throughout your career, you may have several 401(k) accounts scattered across different employers. Consolidating these accounts into a single IRA simplifies management, reduces fees, and makes it easier to maintain a cohesive investment strategy.

Consolidation also helps with RMD calculations, making it easier to plan your withdrawals without the hassle of managing multiple accounts. As Kurt from La Jolla learned, consolidating accounts can make retirement much more straightforward and stress-free.

Retirement Readiness and Resources
Preparing for retirement is more than just saving money—it’s about understanding your options and making strategic decisions that optimize your wealth. Joe and Big Al recommend downloading the Retirement Readiness Guide to explore detailed strategies for accessing savings accounts, understanding account types, and planning for the future.

With the right knowledge, managing your workplace retirement accounts can be a straightforward process that secures your financial future. By understanding your options, avoiding common mistakes, and implementing smart strategies, you can turn your retirement savings into a powerful tool for financial independence.

Intended for educational purposes only. Opinions expressed are not intended as investment advice or to predict future performance. Past performance does not guarantee future results. Neither the information presented, nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Consult your financial professional before making any investment decisions. Opinions expressed are subject to change without notice.

IMPORTANT DISCLOSURES:

• Investment Advisory and Financial Planning Services are offered through Pure Financial Advisors, LLC. A Registered Investment Advisor.

• Pure Financial Advisors, LLC. does not offer tax or legal advice. Consult with a tax advisor or attorney regarding specific situations.

• Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

• Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

• All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.

• Intended for educational purposes only and are not intended as individualized advice or a guarantee that you will achieve a desired result. Before implementing any strategies discussed you should consult your tax and financial advisors.

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Saving for Retirement I must emphasize the importance of contributing to retirement plans, noting. The average American worker saves only 6% of their pay despite being allowed to save up to 15%. I suggest starting small, perhaps with just 1% of your income, and gradually increasing it as you adjust. If saving immediately isn’t possible and allocating half of any future raises to retirement savings. Even modest, consistent contributions can compound over time, building substantial wealth.

Financial Challenges for State and Local Government Workers State and local government workers are facing fiscal crises that could threaten their pensions. Those eligible for pensions to consider early retirement to secure their benefits, as it’s less likely for politicians to reduce payments for current retirees. Consult a financial advisor to assess the risk of pension reductions and explore options like “double-dipping,” where retirees work elsewhere while collecting pension income.

Economic Decline and Long-Term Financial Planning Concerns about economic decline often lead to anxiety. The importance of focusing on long-term trends rather than short-term volatility. Diversifying investments across different asset classes to spread risk and capitalize on market growth over time. A forward-thinking investment strategy helps shield against economic downturns and positions investors for future recovery.

Real Estate Investment Risks When a caller named Gary asked about buying a condo in Florida using funds borrowed from his 403(b) retirement account, I cautioned against it. Investing in real estate far from home can be risky, especially in regions still recovering from market bubbles. I also warned against borrowing from retirement accounts, as this can deplete long-term savings and create vulnerability if employment is lost. Acknowledging Gary’s real estate experience but urged careful consideration of the risks involved.

Federal Budget Deficit and Debt Crisis David Walker, former Comptroller General of the United States, joined the conversation to discuss the growing federal budget deficit and national debt. He warned that without corrective action, a debt crisis could occur within the next three to five years. Walker advocated for structural reforms, including spending caps, debt-to-GDP targets, and budget controls like “pay-as-you-go” rules to stabilize the economy and avoid global economic fallout.

Encouraging Financial Literacy Among Children Financial education isn’t just for adults—the importance of teaching children about money management. Most parents are more comfortable discussing drugs or sex than money, even though financial literacy is critical for future success. There are resources like jumpstart.org for tools and information to teach kids about saving, budgeting, and investing.

David Walker’s Potential Political Career In a lighter moment, Ric asked David Walker if he planned to run for political office, given his expertise in fiscal policy. Walker shared that although many had encouraged him to run for Senate in Connecticut, he had no immediate plans but did not rule it out for the future.

All information provided is for educational purposes only and does not constitute investment, legal or tax advice; an offer to buy or sell any security or insurance product; or an endorsement of any third party or such third party’s views. The information contained herein has been obtained from sources we believe to be reliable but is not guaranteed as to its accuracy or completeness. Whenever there are hyperlinks to third-party content, this information is intended to provide additional perspective and should not be construed as an endorsement of any services, products, guidance, individuals or points of view outside Edelman Financial Engines. All examples are hypothetical and for illustrative purposes only. Please contact us for more complete information based on your personal circumstances and to obtain personal individual investment advice.

Neither Edelman Financial Engines nor its affiliates offer tax or legal advice. Interested parties are strongly encouraged to seek advice from qualified tax and/or legal experts regarding the best options for your particular circumstances.

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Early Retirement Lifestyle and Travel L.J. and Kelly made the bold decision to start living their retirement dreams before actually retiring. They spent a year traveling across the U.S., staying in Airbnbs, hotels, and with friends and family. Their journey took them from San Diego to Portland, Maine, down the East Coast to Florida, and back across the southern U.S. to California. Extended stays in different locations allowed them to fully experience each place rather than rushing through, which also helped with budgeting. Kelly, a physical therapist, emphasized the importance of traveling while healthy, sharing how many of her patients postponed travel until retirement only to be hindered by health issues. Their message was clear: prioritize travel and ignore the negativity from those who doubt your dreams.

Logistics of Domestic Travel Their year-long adventure was meticulously planned to minimize driving and maximize enjoyment. They aimed for only 4-5 hours of travel per day and pre-booked accommodations to avoid last-minute stress. Flexibility was key, as they had to adjust plans when an Airbnb fell through, costing them an unexpected $2,500. Despite such hiccups, extended stays not only enriched their experience but also brought financial perks like discounted monthly Airbnb rates.

Financial Considerations for Long-Term Travel Contrary to popular belief, long-term travel doesn’t have to break the bank. L.J. and Kelly compared their travel costs to their previous life in San Diego, where rent ranged from $3,000 to $3,500 a month—comparable to many Airbnb stays. Selling their house eliminated property taxes, insurance, and maintenance costs, saving them $15,000 annually. Cooking meals instead of eating out and choosing hotel chains with free breakfast and loyalty points further cut costs. With strategic budgeting, they proved that long-term travel can be financially feasible.

Health and Travel Insurance Traveling the country requires more than just good planning; it also demands health and travel insurance. Kelly stressed that good health is crucial for enjoying retirement, recalling her patients who delayed travel only to face health problems later. The couple also recommended travel insurance to cover unexpected medical emergencies, evacuations, and cancellations. Their experience showed that a small upfront cost for insurance could prevent major financial losses down the road.

Mindset and Overcoming Challenges L.J. and Kelly embraced the mindset required for a nomadic lifestyle, focusing on adaptability and resilience. They faced challenges head-on, like when their car’s transmission failed in Savannah. Thankfully, the repair shop covered the costs, showing that not every obstacle has to derail your plans. They encouraged others to experiment, take risks, and ignore negativity from those who doubt unconventional dreams.

Creative Outlets and Hobbies in Retirement Staying active and engaged is crucial for a fulfilling retirement. L.J. kept busy with creative pursuits like playing music and teaching, while Kelly shared how retirees often struggle without hobbies. They emphasized that even without natural talent, exploring new interests enriches life and combats boredom during retirement.

Advice for Aspiring Travelers L.J. and Kelly’s advice for those dreaming of long-term travel is simple: budget wisely, ignore the naysayers, and follow your passions. They highlighted the freedom that comes with not caring about others’ opinions, especially in retirement. By planning financially, taking health into account, and embracing the adventure, they proved that living your dream life doesn’t have to wait for a distant future.

You should always consult a financial, tax, or legal professional familiar about your unique circumstances before making any financial decisions. This material is intended for educational purposes only. Nothing in this material constitutes a solicitation for the sale or purchase of any securities. Any mentioned rates of return are historical or hypothetical in nature and are not a guarantee of future returns.

Past performance does not guarantee future performance. Future returns may be lower or higher. Investments involve risk. Investment values will fluctuate with market conditions, and security positions, when sold, may be worth less or more than their original cost.

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Downsizing as a Retirement Strategy
One of the simplest and most effective ways to access home equity is through downsizing. As life changes—children move out, health conditions make stairs more challenging, or the upkeep of a large home becomes overwhelming—downsizing can free up substantial cash while reducing monthly expenses.
Financially, downsizing can eliminate or reduce mortgage payments, lower property taxes, and cut down on maintenance costs. The average cost to maintain a home is about 1% of its market value annually, which can add up quickly. By moving to a smaller, more manageable property, you can redirect those savings into retirement investments or living expenses.

Tax Implications of Selling a Home
When selling your primary residence, there are significant tax advantages through the 121 tax exclusion. This allows single homeowners to exclude up to $250,000 of capital gains from their taxable income, while married couples can exclude up to $500,000.
To qualify, you must have owned and lived in the home for at least two of the last five years. This exclusion can be used multiple times in your lifetime, provided you meet the ownership and residency requirements. Life events such as marriage or moving back into the property can reset eligibility, allowing you to use the exclusion strategically.

Refinancing and Home Equity Loans
Refinancing your mortgage or taking out a home equity loan can be effective ways to tap into your home’s value.

• Refinancing: This involves replacing your existing mortgage with a new one, ideally at a lower interest rate, to reduce monthly payments or access additional cash.
• Home Equity Loans: These are loans secured by your home’s equity, providing a lump sum of cash. They typically come with fixed interest rates, unlike home equity lines of credit (HELOCs), which often have variable rates.

Joe and Big Al recommended opening a home equity line of credit (HELOC) before retirement when qualifying is easier. However, they also noted the risks, such as credit line closures during economic downturns, which could limit access to funds when they are needed most.

Reverse Mortgages
A reverse mortgage allows homeowners aged 62 and older to convert a portion of their home equity into cash, without the obligation to make monthly payments. The loan is repaid when the homeowner sells the property or passes away.

• Pros: You stay in your home while receiving steady income, potentially covering living expenses or medical costs.
• Cons: Higher interest rates and fees can reduce the amount left for heirs, and the equity in your home diminishes over time.

Joe and Big Al stressed the importance of seeking counseling before committing to a reverse mortgage to understand all implications and explore alternative options.

Creative Alternatives for Generating Income from Home
Your home can be more than just a place to live—it can also generate income:

• Renting out a room or basement: This can provide a steady cash flow, especially in high-demand areas.
• Converting a garage or accessory dwelling unit (ADU) into a rental space: This can increase income while maintaining privacy.
• Starting a home-based business: Business expenses are partially tax-deductible based on the percentage of your home used for work.
• Short-term rentals through Airbnb or VRBO: Renting out your property during peak seasons or while you’re away can provide substantial income.

However, Joe and Big Al advised reviewing insurance policies before renting to ensure coverage for potential damages or liability claims.

Viewer Questions and Practical Advice
During the discussion, viewers raised practical questions:

• Janice from Mercer Island asked about mortgage deductions for a home-based business. Big Al explained that deductions are calculated based on the square footage of the home used for business purposes, reducing both income and self-employment taxes.
• Winston inquired about Airbnb insurance. Joe and Big Al recommended reviewing homeowner policies and considering additional coverage specifically for short-term rentals to avoid gaps in protection.

Key Takeaways and Retirement Readiness Guide
Leveraging home equity can be a game-changing strategy for enhancing retirement security. Here are the key points to remember:

• Downsizing can free up significant cash and reduce expenses.
• Take advantage of the 121 tax exclusion to avoid capital gains taxes when selling your primary residence.
• Consider refinancing or home equity loans to access cash without selling your home.
• Reverse mortgages can provide income but require careful consideration due to long-term costs.
• Get creative with home-based income opportunities like renting out a room or starting a business.

Intended for educational purposes only. Opinions expressed are not intended as investment advice or to predict future performance. Past performance does not guarantee future results. Neither the information presented, nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Consult your financial professional before making any investment decisions. Opinions expressed are subject to change without notice.

IMPORTANT DISCLOSURES:

• Investment Advisory and Financial Planning Services are offered through Pure Financial Advisors, LLC. A Registered Investment Advisor.

• Pure Financial Advisors, LLC. does not offer tax or legal advice. Consult with a tax advisor or attorney regarding specific situations.

• Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

• Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

• All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.

• Intended for educational purposes only and are not intended as individualized advice or a guarantee that you will achieve a desired result. Before implementing any strategies discussed you should consult your tax and financial advisors.

The post Leveraging Home Equity for Retirement: Strategies for Financial Security appeared first on ROI TV.

Deciding When to Retire
Retirement is not just about leaving the workforce; it’s about transitioning from paychecks to relying on your savings, investments, and Social Security for income. The timing of when you claim your Social Security benefits is crucial. Claiming too early can permanently reduce your monthly checks, while delaying can significantly increase your payouts.
The difference is staggering: claiming early can reduce your monthly benefit by as much as $1,200 to $2,000 compared to waiting until full retirement age or beyond. This means the timing of your decision could add up to hundreds of thousands of dollars over your retirement years.

Full Retirement Age (FRA)
Your full retirement age (FRA) is determined by your birth year. For those born between 1943 and 1954, the FRA is 66. If you were born in 1960 or later, your FRA is 67. For those born between 1955 and 1959, the age increases incrementally by two months each year.
Knowing your exact FRA is essential because it marks the point where you can collect 100% of your Social Security benefits. Claiming before this age results in reduced benefits, while waiting longer leads to increased monthly payments.

Social Security Benefit Calculation Formula
Social Security benefits are calculated based on your highest 35 years of earnings, adjusted for inflation. The Social Security Administration uses these figures to determine your Average Indexed Monthly Earnings (AIME), which forms the basis of your Primary Insurance Amount (PIA).
The formula applies “bend points,” which segment your income:

• 90% of the first $1,226 of your AIME
• 32% of the amount between $1,226 and $7,391
• 15% of the amount above $7,391
  This weighted formula ensures that lower-income workers receive a higher percentage of their income in benefits, while higher-income earners receive a smaller percentage.

Impact of Early or Delayed Social Security Claims
The age at which you claim Social Security significantly affects your monthly benefit amount. If you claim before your FRA, your benefits are permanently reduced by about 6% per year, up to 30% if you claim at 62. In contrast, delaying your claim past your FRA increases your benefits by 8% per year until age 70.
For example, if your Primary Insurance Amount (PIA) is $2,311 at your FRA of 66, it drops to $1,670 if you claim at 62 but increases to $2,865 if you wait until 70. That’s a $1,250 monthly difference between the earliest and latest claim ages. This gap can equate to tens of thousands of dollars over your retirement.

Earnings Test for Early Claimants
If you decide to claim benefits before your FRA and continue to work, you’re subject to an earnings test. The annual limit is $23,400, and earning above this amount results in a $1 reduction in benefits for every $2 earned.
The earnings limit increases to $62,160 during the year you reach your FRA, with a $1 reduction for every $3 earned above the threshold. Once you hit your FRA, the earnings test disappears, and you can earn as much as you want without impacting your benefits.

Spousal Considerations and Longevity
If you’re married, the decision of when to claim Social Security is even more impactful. Higher earners can maximize their spouse’s survivor benefits by delaying their own Social Security claim. Upon their death, the surviving spouse is eligible for the higher of the two benefits.
Longevity plays a crucial role in this strategy. If you or your spouse is likely to live into your late 80s or beyond, delaying Social Security can result in significantly higher lifetime earnings.

Examples of Social Security Benefit Scenarios
To illustrate the financial difference that claiming decisions can make, let’s look at a few examples:

• For an AIME of $5,000, the PIA at FRA is $2,311. This reduces to $1,670 at 62 or increases to $2,865 at 70, a monthly difference of $1,250.
• For an AIME of $7,000, the PIA at FRA is $2,951. This reduces to $2,066 at 62 or increases to $3,659 at 70, with a $1,600 difference.
• For an AIME of $10,000, the PIA at FRA is $3,467. This reduces to $2,427 at 62 or increases to $4,299 at 70, resulting in a $1,850 difference.
  These differences are substantial, and over the course of a 20- or 30-year retirement, they add up to hundreds of thousands of dollars.

Key Takeaways and Recommendations
Despite concerns about Social Security’s long-term sustainability, the program is unlikely to disappear. However, changes may be made to keep it solvent, such as raising the retirement age or adjusting benefits.
When deciding when to claim Social Security, consider your financial needs, cash flow, and life expectancy. For those with longer life expectancies or younger spouses, delaying Social Security is often a wise choice, as it maximizes benefits and provides greater financial security for surviving spouses.
The difference in lifetime earnings between claiming early and delaying can be life-changing. Being strategic about your claim decision not only secures your financial future but also provides a stronger financial foundation for your spouse.

Taking the time to understand how Social Security works and how it fits into your overall retirement strategy can be one of the best financial decisions you make. Plan wisely, know your numbers, and choose the timing that best supports your financial goals and lifestyle.

The post Mastering Social Security: Strategies for Maximizing Lifetime Benefits and Spousal Security appeared first on ROI TV.

The 4% Rule for Retirement Withdrawals
The 4% rule, introduced in the 1990s, suggests that retirees can withdraw 4% of their retirement savings each year with a high probability of their money lasting 30 years. This rule assumes a balanced portfolio of 50-75% stocks and 25-50% bonds, with no cash reserves for market downturns. According to data from JP Morgan Chase, this strategy provides a 90-100% chance of survival over three decades—if everything goes according to plan. However, increasing the withdrawal rate to 5% or 6% significantly reduces the chance of the portfolio lasting 30 years.

Limitations of the 4% Rule
The 4% rule operates under fixed assumptions that may not reflect real life. It expects a 30-year retirement horizon, stable market conditions, and no need for adjustment during economic downturns. But the reality is that most retirees do not experience a 30-year retirement. For those retiring at 62, men typically average 19 years, and women 22 years in retirement. The rule also disregards dynamic withdrawal strategies that could allow retirees to adjust their spending based on market performance, which could extend the life of their portfolio.

Dynamic Withdrawal Strategies
Instead of sticking to a rigid 4%, dynamic withdrawal strategies allow for flexibility. For example, if the market is down, you withdraw less. If it’s booming, you might take out a little more. This method, supported by Vanguard and William Bengen, the creator of the 4% rule, provides a way to stretch your savings without risking its depletion. Adding a cash buffer—enough to cover two years’ worth of expenses—enables retirees to avoid selling investments during downturns, preserving portfolio value for better times. With this approach, some retirees can sustainably withdraw 5% or even 6% without exhausting their savings.

Adjusting Withdrawal Rates Based on Retirement Length
The 4% rule is designed with a 30-year timeline in mind, but many retirees don’t need their savings to last that long. According to the Social Security Administration, only 12% of 62-year-old men and 22% of women make it to age 93. This means that for many, the 4% rule is overly conservative, forcing them to live more frugally than necessary. By assessing your health, family history, and lifestyle, you can personalize your withdrawal rate to better match your actual needs.

Portfolio Size and Withdrawal Rate Impact
Your ideal withdrawal rate directly correlates with the size of your retirement portfolio. For instance, if you need $30,000 per year:

• At 4%, you need $750,000 saved.
• At 5%, you need $600,000.
• At 6%, you need $500,000.
• At 7%, you need $430,000.

A higher withdrawal rate could mean retiring sooner or enjoying more luxuries during your active years, but it also demands more strategic planning to prevent outliving your money.

Balancing Spending and Happiness in Retirement
The rigid adherence to the 4% rule can sometimes mean living too conservatively, missing out on experiences and joys that retirement is supposed to bring. Money is a tool, and its purpose is to provide happiness and security. If your plan is solid, consider loosening the reins a bit—take that trip, buy the nicer wine, enjoy your golden years without constant anxiety over running out of money.

Personal Anecdote and Planning for Uncertainty
I remember the day I got a call from my doctor. I was diagnosed with a rare brain tumor, something I never saw coming. That moment changed everything. It taught me that life is unpredictable, and while planning is crucial, so is living. Retirement planning should reflect this balance—prepare for the long haul but also savor the moments that make life worth living.

All writings are for educational and entertainment purposes only and does not provide investment or financial advice of any kind

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