Retirement

Should You Work Longer? Here’s How to Decide

June 16, 2021 By Kathryn Vercillo Leave a Comment

You could retire at an early age. In fact, that’s the dream for many people. However, you don’t have to. Should you work longer? Should you work even well after traditional retirement age? There are a lot of factors to take into consideration. Here are some things to think about to help you decide.

What Does It Mean To Work Longer?

Retirement means different things to different people these days. Maybe you really want a FIRE lifestyle. In other words, you want to continue to earn income but to be free of a workplace commitment. Alternatively, perhaps you plan to retire at a traditional age from a government or corporate job. However, you’re wondering should you work longer than age 62 or 65 or 67, which are the typical retirement ages. First, define what it really means to you when asking yourself the question “should you work longer?”

Consider Quality of Life

Some people want to retire early so that they can fully enjoy their retirement years. They see retirement as freedom from the workplace grind. However, there are people who don’t do well after retirement. They actually find that they miss doing the work that they loved. Ask yourself honestly what you expect from retirement life. If you love your job then you might enjoy working longer even if you don’t need to do so financially. If you hate your job, then you might decide that leaving early is worth it.

Earn More for Longer

The biggest reason that you might choose to work longer is because you’ll continue to earn more money. Obviously, money does play a role in quality of life. Once you retire, you have to live off of your retirement income. The longer you delay retirement, the more income you’ll have for those retirement years. First of all, you won’t be spending that retirement money. Second, you’ll earn more while you delay retirement. This can make a significant difference in the amount of money that you’ll have when you do retire. If your main goal is to have as much money as possible in retirement, then you should work longer if you can.

Better Social Security Options

You get much better social security if you wait to retire. In fact, for each year after traditional retirement age until age 70, Social Security will add 8%. In other words, if you retire at 67, you get a certain amount of Social Security. In contrast, if you retired the following year, you’d get 8% more. Moreover, your spouse’s social security benefits may go up as high as 60% if you retire at 70 as compared to 62. Consider your Social Security benefits carefully when deciding if you should work longer.

Should You Work Longer Hours Instead of More Years?

Sometimes, when people ask themselves “should you work longer” they mean longer hours. In other words, should you put in more time now so that you can work fewer years in the long run? Obviously, it’s tempting to work long hours when you’re young. After all, you have the energy, perhaps you don’t have a family, yet. Therefore, you might want to add those hours up now to build that nest egg.

While there’s nothing wrong with that approach, there’s something you should know. Working longer hours typically doesn’t make you more productive. Moreover, you can easily burn out. Therefore, you want to make sure that you consider your work-life balance. Should you work longer now so you can have more time later? Perhaps, but only if you don’t harm yourself in the meantime with overwork.

Finally, Have a Plan B

After weighing gall of your options, you might decide that you should work longer. You set your goals, and you’ll work towards those. However, make sure that you have a Plan B. Illness, family changes, and changes in the marketplace can all lead to unexpected early retirement. As a result, you want to have your goals as well as your backup plan. After all, if those goals don’t work out as planned, then you still want to retire safely and comfortably.

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How to Retire Well in Rhode Island

June 16, 2021 By Tamila McDonald Leave a Comment

For many people, planning for retirement also means choosing a new place to live. After all, you often have the freedom to head nearly anywhere. Thus, allowing you to establish a home in an area that provides you with the perfect lifestyle. But deciding where to go isn’t always easy. Along with ensuring you have access to amenities and entertainment. You have to make sure that the location aligns with your budget. If you want to retire well in Rhode Island, here are some points to consider.

Cost of Living

When you need to gauge how affordable a state is, it’s wise to start with the cost of living scores. These help you compare how expensive a state is to the national average, which is always set at 100, as well as to other states.

When a score is under 100, it’s usually a mark of affordability, while the opposite is true of scores above 100. Additionally, when you compare two states, the one with the higher score is more expensive.

Rhode Island has an overall cost of living score of 119.6, marking the state as one of the more expensive options in the nation. Additionally, it doesn’t have a single category score below 100, so higher costs are common across the board.

Groceries come in with a score of 110.1, while utilities and transportation sit at 126.4 and 105.5, respectively. When it comes to healthcare, that’s a 106.3.

Housing is also quite expensive in Rhode Island. For that category, the state has a score of 129.8. That’s also supported by the average home values. While the average home value in the country is $281,370, Rhode Island’s is $358,452. That’s a difference of $77,082.

While that may cause you to assume that houses are simply nicer in Rhode Island, that isn’t necessarily the case. Instead, it mainly means that if you were looking at two comparable properties, one in Rhode Island and another in an area that mimics the national average, the Rhode Island home would be more expensive than the alternative.

Tax Considerations

As you try to choose a place to spend your retirement, it’s crucial not to overlook taxes in the state. How much you will need to pay out in taxes can have a major impact on your budget, as well as how long your savings will actually last. After all, you have little choice when it comes to paying taxes, making it a line item you can’t control.

By taking a close look at the tax implications of living in a particular state, you can determine whether you can afford them. Additionally, it gives you a chance to plan, especially if you still have some time to set money aside before leaving the workforce.

Rhode Island does have a state income tax. It relies on a bracketed approach, with rates ranging from 3.75 to 5.99 percent, depending on your income level. Eligible retirees may qualify for an income tax break, however. Depending on your income level and age, your taxable income in retirement may be reduced by up to $15,000.

However, outside of the exemption, all forms of retirement income are potentially taxable. This includes Social Security, 401(k)s, IRAs, private pensions, and more.

Property Taxes Are Higher

Additionally, property taxes in Rhode Island are higher than in many other parts of the country. Couple that with high home values, and it can be quite a burden. Now, seniors do potentially qualify for an exemption, the amount of which varies depending on the municipality. There are also other programs that may lower what you owe, including some for military veterans and individuals with disabilities.

Finally, Rhode Island also has a sales tax. There is one sales tax rate for the entire state, which is set at 7 percent for most purchases. Cities and municipalities cannot add to it, so the sales tax you pay is consistent throughout all of Rhode Island.

Part-Time Job Opportunities

Since Rhode Island is more expensive, retirees may prefer to have a part-time job to help make ends meet. Plus, working can provide you with other benefits, like ensuring you remain active and social.

In many cases, you can take a look at a state’s unemployment rates to estimate the availability of part-time job opportunities. Low rates usually mean positions are available, while higher unemployment typically means you’ll face more competition for open jobs.

As of April 2021, the unemployment rate in Rhode Island was 6.3 percent. That puts the state near the national average, which was 6.1 percent during that month.

Overall, that rate means that finding a part-time position isn’t necessarily easy, but it isn’t incredibly challenging either. As a result, you may want to assume your job search will take a little time or that you’ll need to be more open-minded if you need to nail something down fast.

Best Cities for Retirees in Rhode Island

Once it comes time to retire. You can’t just choose a state; you also need to pick a city. While Rhode Island is a smaller state. You still have plenty of options. Each of which brings something a bit different to the table.

If you prefer a larger city, it’s hard to go wrong with Providence. With Brown University and the Rhode Island School of Design within its borders, you’ll never run short of things to do, thanks to the numerous events the schools hold during the year. Plus, you’ll have solid access to amenities, which is always a good thing.

For retirees that prefer suburbs, Barrington is a solid choice. It’s close to Providence, so you can tap the city for amenities and entertainment. Plus, it has a more close-knit feel, and has less hustle and bustle, though it still feels vibrant.

If you want a taste of New England island life, try Jamestown. While it is connected to the mainland, it still has the same feel, offering up a quiet and relaxed lifestyle to residents. Plus, its bay views are hard to match and is a smaller community, giving it a cozy, small-town vibe.

How Much Money You Need to Retire Well in Rhode Island

Since Rhode Island has a higher cost of living, you may need more in savings if you want to live here and have a comfortable retirement. Overall, being able to tap around $75,181 a year in retirement income could do the trick. With that, you should be able to manage your needs and enjoy some wants, making it possible to retire well in Rhode Island.

Can you think of anything else that would help someone retire well in Rhode Island? If so, let us know. Share your thoughts in the comments below.

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5 Tips For Saving Money on Your Retirement Home

June 10, 2021 By Kathryn Vercillo Leave a Comment

Your life is going to change a lot after retirement. Of course, how drastically it changes depends upon your own preferences and choices. Obviously, your work life changes. Moreover, you might make bigger changes such as moving to a new house. Although you’ll likely do that to save money, the purchase of your retirement home is a big cost. Therefore, you’ll want to start thinking now about ways for saving money on your retirement home. Here are five key tips to get you started:

1. Buy Your Retirement Home Now

In other words, don’t wait until retirement to purchase your retirement home. Start doing your research now. Figure out where you want to live. Moreover, decide what kind of house you want in retirement. And then, buy the house. Doing this gets you saving money on your retirement home in a number of key ways:

You’ll qualify for a better mortgage while you’re still working.
Moreover, you’ll likely have more spending money to make repairs and renovations to the home.
Knowing the real cost of the home will help you plan better for retirement.
You can rent out the home as second income until you’re ready to retire.
Pay attention to the market in your desired retirement area. Make the purchase when it’s a buyer’s market.

Buying your retirement home before you retire is the number one way of saving money on your retirement home.

2. Plan for the Long-Term

In other words, try hard to envision what you’ll need when you’ve retired. Of course, you might be spry upon first retiring. However, if you plan to live in this home until the end stages of life, then you’ll want to think about accessibility, mobility, etc. Therefore, you might want to look at one-story homes, adding railings and ramps, etc. Whether you’re buying your retirement home now or just setting money aside for the future, definitely take those factors into consideration. This will help you avoid those costs in the future, effectively saving money on your retirement home.

3. Don’t Buy The Biggest House You Can Afford

Of course you want to live comfortable in your retirement. However, that doesn’t mean that you should buy more home than you really need. In fact, consider making minimalist choices. For example, while it would be nice to have extra bedrooms for family to visit, do you really need more than one? Can you cut back on your garage space or give up the larger living room? A smaller house is not only less expensive to purchase but much less costly to maintain. As a result, you can easily start saving money on your retirement home by buying less home to begin with.

4. Use Your Retirement Home as Your Vacation Home

Here’s the ideal set-up:

Pay off your current home mortgage.
Purchase your retirement home as soon as you can.
Rent out that retirement home as income until you’re ready to retire.
However, when it’s not rented out – or if you’re doing VRBO-style rentals – then use that home as your vacation home until you retire.

First of all, this gives you a great idea of what retirement life will really be like. Additionally, you’ll save on vacation costs.

5. Pay Attention to Taxes and Property Fees

Make sure that you don’t just consider the cost of the house itself but everything that goes along with it. What are the property taxes? Are there any other property fees? What other tax considerations are there for this new home? If you’re planning to move to a different state when you retire then it’s especially important that you make sure you understand all the tax implications in that state. Planning for that in advance, and buying your hone with that in mind, can go a long way towards helping you save money.

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How to Retire Well in Oklahoma

June 2, 2021 By Tamila McDonald Leave a Comment

As you get closer to retirement, deciding where you’ll live during your golden years is usually part of the equation. After all, the state you choose has a major impact on your lifestyle, as well as your budget. If you don’t choose wisely, you may find that your savings falls short of what you need to be comfortable. Luckily, with a bit of planning and research, you can make sure that you’re ready. If you’re hoping to retire well in Oklahoma, here’s everything you need to know to make it happen.

Cost of Living

When you want to estimate the affordability of an area, looking at its cost of living scores is a wise decision. It helps you see how a state compares to the national average with just a quick glance. Plus, you can examine the scores of different states to see which one is the most budget-friendly.

When it comes to the national average, that is always set at 100. If a state has scores below 100, it means that the state costs less than average. With scores above 100, the opposite is true.

Oklahoma has an overall cost of living score of 87.2, which is one of the lowest cost of living scores in the entire nation. When it comes to category scores for the Sooner State, every single one is also below 100.

For groceries, Oklahoma comes in at 93.3. For utilities, transportations, and healthcare, the Sooner State sits at 94.4, 92.0, and 95.1, respectively.

One spot where Oklahoma really shines is housing. The state’s housing cost of living score is a meager 71.6. This affordability is also showcased in the state’s average home value, which comes in at $146,179. That’s reasonably close to half of the national average, which sits at $281,370.

While some may assume that the lower home value means housing quality is poor, that isn’t necessarily the case. Instead, it’s simply that comparable properties cost less in Oklahoma than they would in an area that has prices closer to the national average, making it a strong sign of affordability.

Tax Considerations

One point that many retirees accidentally overlook when deciding where to live is taxes. How much you have to pay in taxes can have a big impact on your budget. After all, you have to pay what you owe.

By looking at a state’s tax situation, you can determine the impact the cost will have on your savings. This can make it easier to decide where to move.

Oklahoma does have a state income tax, with the rate ranging from 0.5 to 5 percent, depending on your taxable income level. However, Social Security retirement isn’t taxed in the Sooner State, and there is also a deduction of up to $10,000 for other kinds of retirement income. Retirement income beyond that is taxed at the standard rate.

There is also a sales tax in Oklahoma. The base rate is 4.5 percent for most purchases. However, cities, counties, and municipalities can add to that. For example, Oklahoma City has a total sales tax rate of 8.625 percent, though zip codes there that overlap with another city can have a higher rate.

When it comes to property taxes, rates in the Sooner State are fairly low. Additionally, retirees who meet certain eligibility requirements – usually based on age and/or income level – may qualify for a Senior Valuation Freeze or certain property tax credits that limit or reduce what they owe.

Part-Time Job Opportunities

When you want to assess whether part-time job opportunities are readily available, looking at a state’s unemployment rate can be a solid place to start. Often, when unemployment is high, securing a job is increasingly difficult. With lower unemployment, positions are increasingly available in general.

As of April 2021, the unemployment rate in Oklahoma was 4.3 percent. That is notably lower than the national average, which came in at 6.1 percent during that month.

It’s important to note that the city you choose as well as the kind of work you want to pursue does play a role. However, if you’re flexible, finding part-time job opportunities in Oklahoma shouldn’t be overly challenging.

Best Cities for Retirees in Oklahoma

When you’re deciding where to retire, you don’t just have to select a state; you also need to choose a city. Each town brings something different to the table, including varying access to amenities and recreation, as well as different costs of living and general vibes.

If you prefer city life, Oklahoma City and Tulsa are both great options. You’ll have excellent access to amenities and entertainment, as well as a surprisingly affordable cost of living for a major city.

For retirees who prefer suburbs, Edmond is a great option. You’ll have quick access to Oklahoma City while avoiding some of the hustle and bustle at home. Jenks can also be a good choice. It has a small-town vibe while being close to Tulsa, giving you the best of both worlds.

If you want to be close to outdoor recreation, consider Norman. It’s just outside of Lake Thunderbird State Park and is close to Oklahoma City, too. Plus, it’s affordable for homebuyers and renters alike.

How Much Money You Need to Retire Well in Oklahoma

Since the Sooner State has a very low cost of living, having a modest amount in savings is typically all you’d need to live comfortably. Generally speaking, if you want to retire well in Oklahoma, having access to around $54,959 annually in retirement income will do the trick. Along with handling your needs, you could cover the cost of some wants, ensuring you can enjoy your retirement with greater ease.

Is there anything else that you think retirees should know that could help them retire well in Oklahoma? Share your thoughts in the comments below.

If you enjoy reading our blog posts and would like to try your hand at blogging, we have good news for you; you can do exactly that on Saving Advice. Just click here to get started. Check out these helpful tools to help you save more. For investing advice, visit The Motley Fool.

How to Retire Well in Ohio

May 27, 2021 By Tamila McDonald Leave a Comment

Whether retirement is on the horizon or you simply want to be ready when the day arrives, figuring out where you’ll want to live is a must. Usually, your goal is to find a state that gives you access to your perfect lifestyle, all without draining your savings too quickly. If you want to retire well in Ohio, here is what you need to know.

Cost of Living

Before you settle on a state for retirement, it’s a good idea to examine the state’s cost of living. With cost of living scores, you can approximate a state’s affordability in comparison to the rest of the country and the national average, which is always set at 100.

Scores over 100 mean an area costs more than average, while scores under 100 mean they cost less. Plus, you can perform direct comparisons between states, where having the higher score marks the area as more expensive.

In Ohio, the overall cost of living score sits at 92.2, putting it comfortably below the national average. In fact, the only above-average category score the Buckeye State has is transportation, which comes in at 103.1.

Healthcare sits at exactly 100, meaning Ohio is right at the national average in that segment. For groceries and utilities, the Buckeye state has scores of 97.9 and 89.3, respectively.

However, where Ohio really shines is housing. In that category, the Buckeye State comes in at 77.0, a mark of affordability. This is support by the state’s average home value. That sits at $175,878, a full $105,492 under the national average of $281,370.

Tax Considerations

Since taxes can have a major impact on your budget, if you want to retire well in Ohio, it’s wise to take a look at them beforehand. That way, you can see what sort of effect they’ll have, making it easier to plan.

Ohio does have a state income tax, with rates ranging from 0 to 4.797 percent. However, Social Security is fully exempt.

While income from other retirement sources – like pensions, 401(k)s, and IRAs – is potentially taxable, retirees may have access to some credits to reduce the burden slightly, making Ohio even more affordable.

When it comes to property taxes, the Buckeye State is higher than average. However, the lower home values may play in your favor. Additionally, qualifying retirees may be eligible for a Homestead Exemption, reducing the taxable value of their property y up to $25,000.

Ohio also has a sales tax. The state rate is 5.75 percent, though counties and regional transit authorities can impose an additional sales tax in their area, potentially pushing the amount you have to pay when making most purchases higher.

Part-Time Job Opportunities

When you need to determine if part-time job opportunities are available in an area, looking at the unemployment rate can help. While the kind of work you want plays a role, lower unemployment usually means positions are more accessible, while higher unemployment could indicate more competition for part-time jobs.

As of March 2021, the unemployment rate in Ohio was 4.7 percent. That’s notably below the national average for that month, which came in at 6.0 percent.

Generally, you should be able to find part-time positions in many categories in the Buckeye State. However, exactly what’s available will vary by city, so it’s important to keep that in mind.

Best Cities for Retirees in Ohio

When you’re deciding where to spend retirement, you can’t just choose a state; you also need to select a city. There are quite a few options in Ohio that can be great for seniors. You simply need to go with one that offers your preferred lifestyle, fits with your budget, and has reasonable access to critical amenities.

If you want to be close to Cleveland and in a community with a high percentage of seniors, Beachwood could be a good choice. While it’s a bit more expensive, this Cleveland suburb gives you great access to amenities, particularly when it comes to healthcare facilities. Plus, it’s city adjacent, making it easy to enjoy everything Cleveland has to offer.

For retirees who enjoy the outdoors, Chardon could be a great option. Recreational opportunities abound thanks to the nearby Walter C. Best Wildlife Preserve and Bass Lak Reserve. Plus, there is a golf course available, and it’s just 30 miles from Cleveland, making day trips into the city a breeze.

If you prefer a small-town vibe, consider Ada. It has a quaint feel, low crime rates, and offers a slower pace. Plus, it’s still got solid access to amenities and recreation, making it worth considering.

How Much Money You Need to Retire Well in Ohio

Since Ohio is a more affordable state, you only need a moderate amount of income to live comfortably there. If you want to retire well in Ohio, you can do it if you have access to around $58,382 a year in retirement income. With that, you can cover your needs, as well as many wants, ensuring your golden years are enjoyable.

Can you think of any more helpful tips that could make it easier for someone to retire well in Ohio? Share your thoughts in the comments below.

Is It Inflation Or Fear of Inflation?

May 23, 2021 By Max Erkiletian Leave a Comment

You may read or hear the term “inflation fears” being used with increasing frequency. In turn, that raises the question of what we’re dealing with — is it inflation or fear of inflation?

What Is Inflation

Let’s start by defining terms. We will assume you know what fear is. On the other hand, you may not be sure about inflation.

Inflation is the increase in prices throughout the entire economy. Consequently, a rise in gas prices alone is not inflation. However, if food, housing, general goods, and gas prices jump together, you are dealing with inflation.

The primary measures of U. S. inflation are the Consumer Price Index (CPI), Producer Price Index (PPI), and personal consumption expenditure price index (PCE).

In April, the CPI jumped to 4.2 percent, its biggest 12-month increase since September 2008’s 4.9 percent hike.

Markets React

With one of the primary inflation indicators jumping, many wall streeters started selling. (Cue Chicken Little!). However, the Federal Reserve did not take the bait and stilled inflation fears by reasserting its stand against raising rates. The Fed has said repeatedly it expects “transitory inflation” as the economy reopens.

Fed Chair Jerome Powell has stated he does not see a need to tighten monetary policy until inflation runs above two percent for an extended period.

The central bank’s consistency calmed fears and stocks bounced back.

“Inflation is a process and not a one-time event,” said Chris Low, chief economist at FHN Financial told Reuters. “These bottlenecks are one-offs. The Fed will not consider action until it views price levels changes as permanent rather than temporary, something it does not consider possible until the economy is at full employment.”

Was April a False Inflation Positive?

There is an argument to be made that April’s CPI was a reflection of the anormal not the new normal.

Many areas seeing inflation in April’s CPI were the result of an economy recovering from the pandemic. About half of price increases came from four segments. They were: used cars, car rental, airfare, and dining out.

With more vaccinations and COVID-19 restrictions relaxing, Americans accelerated travel and leisure activities. As a result, there was a sudden burst of demand hitting a limited supply. The April CPI reflects the difference between a pandemic lockdown economy and a rapidly rebuilding economy.

Used Car Prices Lead the Way

“The index for used cars and trucks rose 10.0 percent in April,” according to the U. S. Labor Department. “This was the largest 1-month increase since the series began in 1953, and it accounted for over a third of the seasonally adjusted all items increase.”

Shortages

Like many industries, the rise in used car prices is the result of shortages.

The shortage of semiconductor chips has lead to an increase in electronics and automobile prices. With new cars in short supply, the demand for used cars has increased.

At the same time, shortages brought on by the pandemic have moved other prices higher. Car rental companies that drastically cut their inventories during the pandemic are now swamped with customers.

Travel bans and lockdowns lead to airlines cutting back and reducing staff. Meanwhile, restaurants went through the same process. Ramping up again takes time.

The elevated price of lumber has contributed to the rising cost of home purchase and home repair prices.

Is It Inflation or Fear of Inflation?

Shortages are often overcome with increased output. However, it takes time for services and products to catch up. As a result, some sectors, such as leisure, the automobile industry, and travel will recover in time. The question is, how much time?

The Fed’s criteria of two percent inflation over an extended period gives businesses time to recruit workers and ramp up manufacturing. However, it takes more time to grow a tree.

What To Do?

If Chair Powell is right and all the economy needs is a little time for supply to catch up with demand, all we need is patience.

However, some expenses are high regardless of inflation. The cost of education drives most college students into debt and medical expenses are the leading cause of bankruptcy in this country. Nonetheless, those costs may be considered systematic failures rather than inflation factors.

Safe Havens

If you are concerned that inflation is coming sooner rather than later, you might want to make a few moves to balance your assets.

If you have an adjustable-rate mortgage, you might consider locking in a low rate with a fixed-rate mortgage.
Floating rate bonds. As the name implies, the interest rate on these bonds fluctuate based on inflation. To get maximum diversity, you can invest in a portfolio of these bonds through mutual funds and ETFs.
Gold. Owning gold has been a favorite tactic of inflation bears for a long time. They like the fact that it holds its value. Again the best way to own gold may be through an ETF or mutual fund.

Caution

Some investments can get you stuck with low returns if inflation does not materialize.

Long-term bonds. Many investors favor these bonds for safety. They do protect principal but lose ground when interest rates take off.
Long-term CDs. Again, this is a popular investment for those seeking safety. Like long-term bonds, CDs protect your principal. However, if inflation accelerates, your CD will be left at the starting gate.

Conclusion

George Bernard Shaw said, “If all the economists were laid end to end, they’d never reach a conclusion.” And people thought he was trying to be funny.

A lot of analysts are talking about inflation. As a result, a lot of average investors are becoming concerned. However, the Fed, which is tasked with reining inflation, is advising patience.

If you’re confused about what to do, that’s understandable. For most of us, the right move is to keep our investments balanced and flexible. That means not getting locked into long-term fixed rates – unless your talking about your mortgage. It also means spreading investment risk through diversity. For most of us, that means finding a few mutual funds or ETFs that align with our financial goals and investing in them monthly.

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