Age 50. Workers age 50 and older can save extra money in 401(k) plans and IRAs. This allows you to sock more money away on a tax-deferred basis.

Age 59 1/2. At age 59 1/2, you no longer have to pay the 10 percent early withdrawal penalty on retirement account distributions. Be aware, however, that withdrawals will be subject to income tax.

Age 62. This is the first year of eligibility for Social Security payments. If you sign up at this early age, however, your payments will be significantly lower than if you wait. Additionally, if you sign up and continue to work, part or all of your payments could be temporarily withheld.

Age 65. Medicare eligibility begins at age 65. The rules are complex for making sure you get the coverage you want when you need it, so be sure to fully investigate the process well before you reach age 65.

Age 66. Full Social Security payments are available at age 66 for those people born between 1943 and 1954. This is your “full retirement age” and there is also no penalty for working and collecting Social Security benefits at the same time. Workers born between 1955 and 1959 have a “full retirement age” that slides upwards, until you reach 1960 where the retirement age jumps to age 67. Be aware that if you are born in 1960 or later and sign up for Social Security at age 66, you will get 6.7 percent smaller payments than if they wait until age 67.

Age 67. All workers born in 1960 or later must wait until age 67 to collect their full Social Security payments.

Age 70. If you can delay your Social Security benefits until you reach age 70; the resulting payments will be significantly larger. After age 70, there is no additional benefit to postponing Social Security payments.

Age 70 1/2. This is an important age, as distributions from traditional IRAs and 401(k)s become required. Thos withdrawals are taxable and it’s important to understand the rules. If you fail to withdraw the correct amount, there is a steep tax penalty.

As you can see, there are significant dates to pay attention to as you enter your retirement years. Stay aware of these, do your research, and reap the benefits of your good planning.

Source: U.S. News & World Report

Most people think that with no expensive work clothes, lunches out and commuting, they will spend less in retirement. Especially in the early years of retirement, that assumption is far from reality. Since they have more time to shop and travel, most retirees will spend more money in their first few years of their retirement. This doesn’t even take inflation into account, which at 3% over approximately 25 years can financially cripple retirees without a growing income.

Another old rule of retirement was to put 80 percent of your retirement fund in bonds, and the remaining 20 in stocks. Since people are living longer, and aren’t changing their spending habits or lifestyle much, it is now suggested to put 50 percent into stocks, and the remaining 50 in bonds.

Keeping your spouse involved in your retirement can alleviate a lot unnecessary stress, as well. Granting power of attorney, making all of your accounts joint, and creating an estate plan can help your avoid the financial hardships after your passing. Also keep in mind that health care costs can be upwards of $250,000 just to cover basic health, dental, vision and hearing. Medicare covers some, but you can’t rely on it for everything.

Finally, you need to be psychologically prepared to retire. If your job was your life, you should find a hobby or two to keep you occupied. With no work, and no children in the house, you will likely be spending nearly all of your time with your spouse. This can cause strain on many couples relationships, and they should prepare for it accordingly.

Source: CNBC

College bound students can sometimes get better offers than those with established, fair credit. Since their earning potential is higher than that of students that do not plan on attending college, students can get the best terms and rewards from credit cards, just with a lower credit limit. CardHub.com recently posted the 2013 Best Credit Cards for High School and College Students. With no annual fees on any of them, these cards all offered students the opportunity to start building credit for free, even if they never use them.

The law requires cosigners for anyone under 21, but there are other options for parents to control their kid’s credit card spending without the financial responsibility if they default. Parents can add children as “authorized users” on their credit cards, giving them the opportunity to form healthy credit card spending habits, and allowing the parent to manage their use in the process. This way, the kid gets the card they want without the parent having to deal with the downsides of being a cosigner.

Of course, this first card is a learning experience, and needs to be properly managed to ensure credit success in the future. Many adults are even unaware of the long-term affects one late payment can have on a credit report, much less an eighteen-year-old with full-time school, and a part-time job. Though it seems more and more college students understand the dangers of credit cards and are exercising caution with them. A recent study showed a third of students don’t have a balance on their cards at all, 42% have a balance lower than $500, and only 24% with a balance above $500.

Source: CNBC

Gen-Y and Millennials will certainly feel the pain of the financial crisis for some time, but Generation X is in for a world of hurt. On average, Gen-Xers lost nearly half of their wealth – about $33,000– between 2007 and 2010, and didn’t have nearly enough saved to compensate for that, much less their retirement.

It is generally recommended that you save enough to replace 70-100 percent of your pre-retirement income. The typical Gen-Xer is on track to replace only half that amount. With the lowest rates of home ownership of all of the groups in the study, and a lower net worth from previous age groups, the recession was just the icing on the cake for Gen-Xers. They experienced a nearly 50% decline in wealth, and on average, accumulated $80,000 in debt.

Through proper savings, sound investments and sticking to their financial plans, many Gen-Xers will still be able to comfortably retire in their 60’s, but they need to get on board soon, or risk working for the rest of their lives. Pew Research’s Erin Currier thinks there is a solid message policymakers should take away from this data. “As they focus attention on America’s retirement security, particular consideration should be paid to helping the youngest groups change course to make up for these losses in order to prevent downward mobility in the long-term,” she said.

Source: NBC News

Over the years, you have likely heard many mantras related to saving your money: a penny saved is a penny earned; save it for a rainy day; pay yourself first; etc. While each of these adages contains an essential element of truth, you can better manage your money by considering every dollar as an investment.

Broadly speaking, almost every decision you make with money is an investment. Spending money at the grocery store, going out to dinner, or – more traditionally – with a brokerage firm is investing in something to make your life better. If, after the basics of food and shelter, each dollar is equal, how should you spend your money?

First off, pay down your debt. Consumer debt, over time, costs you significantly in terms of interest. If you have extra dollars lying around, be sure to apply those monies to credit card payments. After you pay down your debt, develop an emergency savings fund with 6 months to 1 year of living expenses that you can tap if needed.

Most of us won’t have much more than 20% of our income available for discretionary spending. The key here is to make that 20% count. You don’t want to deny yourself a dinner out or a morning coffee, but each time you go to spend you can ask yourself if this is the best way to spend this money right now. Surprisingly, you may end up saving a little bit more and you can invest that in furthering your more traditional investment portfolio.

Source: The Motley Fool (http://www.fool.com/how-to-invest/thirteen-steps/step-3-treat-every-dollar-as-an-investment.aspx)

Maximize Saving In The Right Places

First off, if your company has an employer-sponsored plan, take full advantage. Contribute the maximum amount that includes any matching funds from your employer. Your contributions reduce your tax burden and they grow tax-deferred.

Smart Investment Choices

Making the best investments is a moving target that will change as your life cycle changes. Your tolerance for risk and need for growth will affect your decision. Your portfolio should reflect both your need for income as well as continued growth to counter inflation and the decreased purchasing power of your dollars.

Save Aggressively

You will need a lot of money to afford retirement so you need to start saving 10% or more of your income. As you age, you will likely need to save even more.

Tracking

There are financial calculators that you can use to determine your needs as well as if you are on track. Keep an open mind about how things change and how to adjust to those changes. Be active in the continual tracking of your strategy and adjust as necessary.

Be Aware Of Fees

Stay aware of how fees affect your investments. Avoid overpaying for underperforming investments. Don’t be afraid of index funds, with their lower operating expenses. The 1%-2% a year you save in those funds can add up over time. This monitoring is part of your strategy.

Plan Your Income Stream

Once you retire, you must make wise choices about which accounts to harvest first. This takes research and is affected by the types of accounts you have, the amount of money you need on a monthly basis, and your tax situation. Learn all you can about this issue BEFORE you retire.

Live A Full Life Today, As Well

The focus on retirement is important, but do not miss the present. Enjoy your family and friends. Invest also in your physical and spiritual health. Create a balance between saving for the future and living a life in the here and now.

Source: The Motley Fool 

1. My retirement income is contractually guaranteed for success.
2. My retirement income has a high probability of success.

If you opt for statement one, you will have a predisposition toward the safety and security provided for by annuities. Conversely, if you prefer a little risk in your life, you will have an inclination toward statement two  which is typically invested into a mix of different assets including stocks and bonds.

View this video as the Annuity Guys and compare which is best – a guarantee or higher potential, when choosing one’s retirement income strategy.

Click a star below to help us rate this video. We value your feedback!  No sign-in just click…

Annuities do not guarantee the highest income levels; they guarantee a lifetime of income regardless of stock market results. In a prior video, we highlighted the study done by Wade Pfau, a professor at American College where he determined that retirees greatest chance for a successful income in retirement came from a blend of annuities and equities. He has been cited as emphasizing the strength that annuities provide in their ability to safely cover the foundational income need for retirees.

As Annuity Guys, we know firsthand the benefits and peace of mind that clients enjoy when they know that their foundational income need is guaranteed. Structuring a retirement portfolio to provide the highest level of secure and guaranteed success should be goal number one for both clients and advisors.

Retirement Income Summit 2013 Why the 4 percent rule shouldn’t be a rule

Two choices: Probability-based or safety-first and both require open-mindedness from advisers

In the debate over whether it is better to base a retirement income withdrawal rate on predictable historical returns or one that focuses on basic retirement needs, it appears that the jury is still out.

“Do you want to focus on the probability of failure or the magnitude of failure?” said Wade Pfau, associate professor of economics at the National Graduate Institute for Policy Studies.

Mr. Pfau, who has championed the conversation over new ways to manage a retirement income portfolio, presented his food for thought yesterday in Chicago at the InvestmentNews Retirement Income Summit.

The two schools of thought, as he explained them, include a “probability-based” approach of establishing a 4% withdrawal rate, and the “safety-first” approach that involves taking defensive measures to ensure that basic retirement needs are met.

The investment approach for the probability-based approach, for example, relies on systematic withdrawals and typically applies a total-return perspective.

In the safety-first approach, by contrast, the portfolio assets are matched to goals, and lifetime spending potential is the focus, as opposed to maximizing wealth.

In a model arranged as a pyramid, the bottom layer in the safety-first approach is dedicated to essential needs, followed by a contingency-fund layer, discretionary-expenses layer and finally a legacy fund at the top…. [Read More from Investment News]

If you want to see the article that raised the ire in Eric, here is the link to CNN/Money.

Indexed annuities are a financial vehicle developed in the last decade. Initially they were designed to compete with the returns offered on CDs. Indexed annuities are fixed with a call option on an index, usually the Standard & Poor’s 500 Index. However, despite their ties to the stock market, these annuities are not offered as growth products nor will they offer the same returns as the market. Historical data suggests that expected returns are in the 3%-5% range and those gains may be locked in on contract anniversary dates.

Indexed annuities seem basic on the face of things, but can be complex. Are they right for your portfolio? Check this quick list of advantages and disadvantages, do your research, and decide for yourself.

Advantages

Locking Up Gains

Gains from your index options are locked in, though your growth potential remains limited.

Strong Actuarial Income

Most indexed annuities, when used for lifetime income purposes with attached income riders, return a higher actuarial percentage payout than similarly structured variable annuities.

Downside Protection

Your potential gains are attached to a call option, so if the markets go down and the call option expires worthless at your contract anniversary date, you will not lose any money.

Disadvantages

Limited Growth & Upswings

Your contract will limit the upside of your growth to some percentage. For example, this amount might be 4%. If the S&P 500 returns 15% during your one-year option, you will only receive 4%.

No Dividends

Indexed annuity options returns do not include dividends.

Call Options

The complexity of the inner workings of call options limits understanding of how these options work.

Anniversary Date

Gains are typically set at the contract anniversary date. That one day sets your annual return and, therefore, can be limiting.

There are many other factors to consider when researching indexed annuities. Clearly, indexed annuities are not for everyone. They are not strong for growth, but can be used with attached income riders for target date income planning. The strength to an indexed annuity is that there is no huge downside. And, as a consequence, the upside is also limited.

Source: Wall Street Journal (http://www.marketwatch.com/story/behind-the-indexed-annuity-curtain-2013-01-14?pagenumber=1)

As billions of dollars pour into 401(k) plans, especially by way of the popular rollover options, more workers and retirees are attempting to manage their retirement savings themselves. Instead of trusting their retirement savings and investments to advisors or large management companies, these folks are increasingly using online tools and resources to manage their money. While this do-it-yourself mentality can liberate, it is important to understand the entire framework of investing, before embarking on your own path.

Educating Yourself

The investment landscape is complex and to be successful you need to know what’s going on. The learning curve is steep. Ask yourself if this is how you want to spend your time.

Single Or Married

Couples must share the process of savings and investment. Do not embark on a ‘do-it-yourself’ investment plan if your partner is not willing to be involved. It’s better to use an advisor or investment company and focus instead on time with your partner.

Emotions

Day-to-day involvement with financial markets and products produces stress and anxiety. The volatility in investments creates a sense of vulnerability that you must be emotionally prepared to handle. An advisor or investment company alleviates the stress and limits the emotional aspect of investing.

Fees, Taxes, & Estate Planning

Sorting out various fees, tax liabilities, and how to best plan for survivors is complex. Doing it on your own is possible, but not always advisable. Consider how to best use advisors to get what you need at the best price, and free your retirement time up to enjoy yourself and time with your family.

Managing your retirement savings and income is critical. The need to be in control is common, but using advisors and financial planners is not a sign of weakness. Instead, know when to seek help and focus on getting the service you need at a price that fits your budget. Those money management skills free you from spending your retirement years simply managing your money.

Source: Wall Street Journal (http://www.marketwatch.com/story/do-it-yourself-investing-read-this-first-2013-05-13?link=MW_retirement_popular)

A 2013 research study published in JAMA Internal Medicine indicates that while medicine has improved significantly during the baby boomer generation, baby boomer’s health is worse than their parents at the same age. While baby boomers are expected to have longer life expectancy than the previous generation, their overall health in ‘middle age’ is not as good as their parents’ generation.

The study used data from an ongoing national health and nutrition survey to compare the answers of people who were 46 to 64 years old between 1988 and 1994, and the baby boomers who were in the same age range between 2007 and 2010. Analysis of the data indicates that baby boomers are less active that their parents, and also suffer greater frequency of obesity, diabetes, high cholesterol, and high blood pressure. These results are despite the fact that baby boomers have been dubbed the “Healthiest Generation,” able to exploit advances in medical care and reap the benefits of public health campaigns highlighting the dangers of smoking and unhealthy diets.

The lack of exercise and mobility is alarming, but on the upside the baby boomers smoked significantly less. Consequently, adverse health issues, such as emphysema and heart disease, related to that habit are less common. However, living longer does not mean leading a healthier life. In the end, the study provides a vitally important context for health workers and policy planning to develop future programs for improved health.

Source: Reuters (http://www.reuters.com/article/2013/02/06/us-baby-boomers-health-worse-idUSBRE91515720130206)