Retirement

Retirement Wisdom From An Expert

July 20, 2016 By Twila Van Leer

Expert advice for successful retirement.

If anyone knows how successful retirement works, it’s Warren Buffet. Over a lifetime he has become a hallmark of profitable market investment. A recent article in The AARP Magazine shares 10 keys to his success.

Keep A Cash Reserve

Keep a reserve of cash for emergencies and for unexpected opportunities. A rainy-day provision is essential, especially as retirement looms. The end of a regular paycheck means changes in cash needs. Now you must rely on Social Security and whatever other nest egg provisions you have made over your work career. Embellish your emergency fund to take care of any financial challenges. Tap the fund to respond to lucrative investment opportunities.

Invest In Companies That Provide Essentials

Boring companies don’t get any attention at parties, but you may find that there are great long-term returns from companies in more mundane industries. You may think, for instance, that toilet paper, baby diapers and soap are not exciting investments, but Buffett has successfully invested in Procter & Gamble, which has become a world leader in this market segment. Those who put $1,000 into P&G stock in 1986 and reinvested their returns would have more than $32,000 to show for it today. Boring companies who become tops in their industry niche often provide better rewards to shareholders than attention-grabbing upstarts.

How Effective Is The Brand?

Brand loyalty is something to look for in wise investments. Loyal customers will pay more for a product they like. Coca Cola is an example. The logo is known around the world, making it the third most valuable global brand in 2015. Its initial success as a soda drink has financed its expansion into other marketing areas. Invest in strong brands to get larger returns.

Look For Good Fund Managers

Good management is a keynote of successful businesses. Buffett notes that most companies eventually have to survive a bad manager, but when there is a great leader, the company prospers. He points to the outstanding examples of Bill Gates at Microsoft, Steve Jobs at Apple and Jeff Bezos at Amazon. A great manager and a strong business model is an unbeatable combination.

Learn From Your Mistakes

Avoid mistakes, but learn from them. Even Buffett admits to investing mistakes. He experienced a loss of about $450 million in a Tesco investment when the company fell afoul of accounting problems. When such things happen, the best way to recoup is to study what went wrong. Search out the warning signs, suck up the loss and use the information to avoid further market losses. Keep a record of mistakes and they’ll be a guide to better investing.

Stick With What You Know

Stick with what you know. The investment market is huge and intimidating, but Buffett believes you can succeed without being an expert. He avoided the technology revolution in the 1990s and so did not lose big in the tech bust that followed. If you are more familiar with particular areas of the market, put your money there.

Increase Your Buying Power

Look for what will increase your buying power over time. Investments that produce consistent income and steady growth are best. In 2011, Buffett looked at gold as an example of a non-income producing asset, overshadowed by such investment opportunities as croplands and petroleum companies. Retirees benefit in particular from income-producing investments that keep up or hopefully exceed inflation and that provide sustained purchasing power.

Buy At The Right Price

Don’t overpay. Even if a company is successful, a share price that is too high is a bad investment. Wait until an industry has settled before investing. Buffett waited on investing in energy companies until stock prices plunged after the decline in oil and natural gas prices. Make a watch list of interesting stocks and see if valuations fall to more suitable levels. Patience is a virtue in the world of investments.

Use A Buy-And-Hold Approach

Don’t make the same decision over and over again. When you are frequently trading, it increases the chances for missteps. The buy-and-hold approach puts more emphasis on what stocks you purchase in the first place. You may not want to hold a stock forever, but minimize the number of decisions you have to make. The more opportunities you allow yourself to make mistakes, the more mistakes you’ll make.

Look For The Spirit Of Innovation

Don’t avoid revolutionary investments. The business world is full of visionary individuals looking for ways to improve things. One for-instance is the forward momentum at General Electric, a long-time leader in world business. The company saw the opportunity for snapping up a leadership role in the wind energy and turbine business and became a pioneer in the renewable energy industry. Look for the spirit of innovation as an indicator of strong investment possibilities.

Medicare Benefits That May Help

June 28, 2016 By Twila Van Leer

Medicare Benefits

Learning about the benefits of medicare can be a daunting process. In the words of Jaryn Laengrich, chief service officer at Cariloop, a Medicare service to help people caring for elderly persons, it is a “sprawling, complicated piece of law” that can be baffling. She notes these little known medicare services that the eligible may find useful.

Medicare Annual Wellness Screening

Medicare benefits allow you an annul wellness screening by a primary care physician. The objective is to prevent illness where possible. It includes an extensive appointment with a thorough review of the patient’s medical history. An Alzheimer’s screening is part of the exam if the physicians thinks it necessary. The wellness screening is offered through Part B.

Alcoholism Screening

Screening and counseling for alcohol misuse. Widowers over the age of 75 have the biggest problem with alcoholism, according to the National Council on Alcoholism and Drug Dependence. More of those in this demographic are hospitalized with alcohol-related problems than for heart attacks. Annual screening is allowed by Medicare, if performed by a primary care physician. Four counseling sessions will be compensated, as well.

Balance Screening

Falls are a serious problem among the elderly. Medicare B will pay for 80 percent of a thorough screening to determine if balance is a problem and what might be the cause.

Obesity Counseling

Those enrolled in Medicare Part B. who have a body mass index score of 30 or higher may receive counseling in a primary care setting. The program also will pickup a major part of the cost of bariatric surgery aimed at reducing obesity. The amount depends on a patient’s Medigap supplement plan.

Shingles Vaccination

Shingles is a painful and distressing disease that can strike anyone who had chicken pox as a child. The coverage is included in Medicare Part D, which provides for medications.

Diabetes Self-Management Training

Medicare pays 80 percent of the cost of 10 training sessions, including one one-on-one visit with a specialist. The remainder are small-group sessions. The intent is to improve diabetes management. The disease can be debilitating and cause severe effects.

Hearing Tests

Although Medicare won’t pay for hearing aids, it will cover examinations to determine hearing loss. Efforts to get hearing aid coverage have failed to pass muster in Congress because of the scope of the problem. An estimated 37 million Americans suffer some hearing loss, but only 30 percent need hearing aids.

Hospice Care

Many Medicare recipients are not aware that they are eligible for end-of-life care. It is focused on palliative treatment, and is available only to those who are believed to be within six months of death. The patient must agree to forego treatment aimed at curing. Care usually is provided in the patient’s home and involves a team that includes a physician, nurse, social worker, chaplain and volunteer. The objective is to provide as much comfort care as necessary for the patient in his or her final days.

Retirement Plans Are Not Always Available

June 22, 2016 By Twila Van Leer

Many employees don't have access to a company retirement plan. — Many employees don’t have access to a company retirement plan.

Retirement systems in America are not always available to people. The The Pew Charitable Trusts is an organization that helps states and cities to design
retirement systems that are affordable. They have conducted a study that identified areas of the country that have the most access to retirement plans. The results revealed that access varies more among the nation’s metropolitan areas than across states as a whole.

For instance, workers in Grand Rapids, Mich. had the greatest rates of access, at 71 percent and those in McAllen, Tex., the lowest at 23 percent, the Pew study showed in a comparison of 104 metropolitan areas. Overall, the nationwide percentage of workers who had access to a plan was 58.

Fewer Employers Offer Retirement Pensions

With fewer companies offering standard retirement pensions, the importance of a workplace retirement plan is increasingly important to those looking at retirement. Workers are looking more to a 401(k) or other option to help them supplement their anticipated Social Security.

Retirement savings plans offered by employees give people the ability to save for retirement.

Even so, 40 percent of full-time private sector employees say they don’t have access to an employer-supported plan. Local governments look at the reality and are concerned that helping retirees to survive financially may come home to roost with them. Policy questions are on local agendas and state agendas as officials look at the possibility of stresses on such programs as Medicaid, food assistance and other support systems.

State-run Savings Plan

Illinois has enacted a state-run retirement savings plan for some workers who have no workplace access. The plan will go into operation in 2017.

Federal Government Concerns

The federal government has concerns as well, particularly as the long-range health of Social Security is in question. Several policies to encourage savings have been instituted, including the Pension Protection Act of 2006, which enabled prospective retirees to make automatic contributions to a 401(k) plan.

myRA

President Obama created myRA, to assist people who don’t have access to a company retirement plan so they can save individually. myRAs will be invested solely in government bonds and will be backed by the U.S. government.

Pew found that the Northeast, Upper Midwest and Pacific Northwest regions of the country have the highest rates of worker access to retirement savings plans, while the areas with the lowest rates are in the South and parts of the West.

When To Begin Social Security

June 9, 2016 By Twila Van Leer

Social security main source of income for retirees.

A growing number of Americans are starting to withdraw Social Security benefits before reaching full retirement age, according to a research poll conducted by Associated Press and the NORC Center for Public Affairs and reported by the AP.

Forty-four percent of those polled said they will look to Social Security for their main means of financial support after retirement and they will start collecting before they reach 65 or 66, the benchmark for receiving full benefits.

Benefits Reduced If Collect Early

Social Security regulations allow retirees who were born in the period from 1943 and 1954 to begin collecting as early as 62 years of age, but the benefit is reduced by up to 30 percent. That can have a significant effect on the long-term benefit.

Retirees who wait until they over 66 years of age see considerable increases in their monthly benefit, according to experts at the AARP Public Policy Institute. For each additional year past 66, the amount of retirement pay rises by 8 percent. The benefits top out at age 70, at which time the retiree is receiving the maximum amount.

Individual Circumstances Affect Retirement Decisions

But many Americans can’t or don’t want to wait that long to begin collecting, depending on their individual circumstances. Health and other considerations may weigh heavily in decisions to retire. Some people who lose their employment while approaching retirement are not able to get another job and early withdrawal of Social Security funds is a necessary option.

Social Security Main Source Of Income

Social Security is becoming more and more the main source of anticipated income for the retirement crowd. Fewer companies are offering standard retirement plans, opting to offer employees 401(k) and other plans to provide for their old age years. Only 43 percent of those polled said they are expecting a traditional pension.

Supplementing Social Security

Some workers, about 50 percent, reported that they also have other padding, such as a regular savings or IRA account, but some Social Security is by far the most commonly anticipated source, the survey found. Some 86 percent of those polled said they expect Social Security to contribute to their retirement income.

Retirement Age Rising

The average retirement age has been rising, as more Americans, particularly women, see the necessity for working longer to make retirement affordable. The average age for males is 64, and 62 for females. Compared with other countries, the American retirement ages still are relatively young.

Many factors enter into the retirement decision, including life expectancy data that show there are differences between rich and poor and among ethnic groups.

Questions about the solvency of the country’s most–drawn on retirement finance source have been a troubling aspect of the issue for some time. Since 1984, the program’s trust fund has run a surplus, but that is expected to end by around 2020 when the Baby Boomer generation hits the retirement ranks. The Social Security Administration believes interest income from the fund should be able to handle the increase until 2034, but at that point, the possibility of shrinkage in benefits could become a reality unless the issues are addressed. The matter is part of the current presidential debates taking place before the November elections. Democratic front-runner Hillary Clinton sees a need for expansion of the program, while likely Republican candidate Donald Trump has declared it should not be changed.

Plan Ahead For Retirement

May 21, 2016 By Twila Van Leer

What you should already be doing in planning for your retirement. — What you should already be doing in planning for retirement.

The decisions you make early in life can make a huge difference in what your retirement cushion will look like. Waiting until you are about to head out the door of your employment is way too late to start thinking about it.

Stay Married

It’s common to hear from both parties to a divorce that he /she “lost everything” in the process. That isn’t mathematically possible, but it’s safe to say that it’s rare that either partner benefits financially when there is a split. If you fall into the divorce pit (and some 50 percent of American couples do) remember to calculate the future needs of retirement as you divvy up the goods. Applying some sound common sense in the relocation process will help. Wiping out the entire proceeds from a divorce while setting up independently may leave little for the retirement years. A smaller living space, fewer immediate “wants,” a more economical car may be good alternatives.

Spend Less Than You Make

This bit of wisdom has been bandied about forever, but not enough Americans pay attention. Debt is simply impatience expressed through money. If you save the amount of a monthly payment for as many months as the purchase takes, you can pay cash and avoid interest.

Live Frugally

Used vehicles serve well for every day getting where you’re going. Mow your own lawn, make your own repairs when possible, make eating out a rare option. Just keep thinking about how good life will be when you are retired if you don’t spend it all when you aren’t.

Invest

Take what is left when you have lived frugally and put it into a savings plan that will offer some tax advantages. An investment counselor is a good idea if you aren’t really savvy about the market. Making changes in your savings program just for the sake of change may be counter-productive. It can be tricky. Before you sign up for something new, think first if it will fit into the long-standing plans you have been pursuing.