5 Most Important Retirement Questions

As you near the end of your working life, you are probably wondering about a lot of different things. With so many different things to think on, you may even be asking, “What are the five most important retirement questions I could ask?” Getting a grip on every aspect of your retirement planning is, sadly, made to be more complicated than it has to be. Though you should absolutely consult with trusted professionals to secure your financial future as your last day approaches, these questions will help you frame the discussion as you meet with your advisor.

Who are you spending retirement with?

This question has two parts: financial and relational. From the standpoint of your money, you must look into who is going to rely on the income from your investments – you and your spouse, any dependent children, etc. Knowing who all falls into this category will help you figure out how much to save.

From the standpoint of other people, the question turns into a consideration of your social environment. How do you plan to fill your days when work is no longer part of the equation? The ability to meet new people and have stimulating conversation is a key to happiness for retirees, so consider which groups you’d like to join up with.

What do you plan to do?

Much like understanding how many people you’ll be supporting is important, having a clear picture of what it is you want to accomplish in retirement is a big key. Are you hoping to travel all over Europe? Have you always dreamed of volunteering for a summer or two on an archaeology dig in Guatemala? Your golden years are certainly a time to be enjoyed, but until you have an idea of where you would like to go, you have no real clue as to how much you’ll need to have saved in order to fund that lifestyle.

When can you retire?

Once you have figured out what your desires are, you can plan a budget for when you leave the office for the last time. Based on how your wealth projects, you can spend the remaining years you have at work pushing money into your savings accounts and investment portfolio to support that. Though you might have a bit of trouble catching up with only two or three years to go, you can still make some course corrections that allow you to achieve far more than you might have first guessed. The key will be to look deep into your expenses for areas to make cuts.

Where are you going to live?

As you begin looking to trim the fat in your spending, one of the first places you might consider is your home. This can mean something as simple as downsizing to reflect the fact you have an empty nest or relocating to an entirely different city with a lower cost of living. It can be exceedingly difficult for you to leave the cherished memories of the house your family grew up in behind, but keep nothing sacred – your financial health and well being depends on your ability to make smart decisions about where your money goes. When you add up the cost of upkeep and utilities, it could be an easier decision than you would think.

Why should you stop working?

Sure, there are plenty of reasons to give up being a desk jockey when you reach retirement age, but the fact of the matter is you don’t have to quit drawing a paycheck altogether. Thanks to a shortage of workers, there are a variety of industries looking for experienced professionals to lend their expertise on a part- or full-time basis. In addition to giving you the opportunity to pass on your wisdom to another generation, you will be able to continue earning an income that supports your dreams for the future with much less pressure than your time in the corporate world. Encore, a service designed to connect retirees with non-profit organizations needing help, is a great place to start.

Tips for a Happy Retirement

Over the last several years at work, chances are good you’ve done a host of retirement planning. You’ve probably made a budget, figured out which accounts to draw from and when, maybe even downsized your home so as to save on utilities – but have you looked up some tips for a happy retirement? You want to enjoy those years when your time is free to fill up as you choose, right? After you’ve done all the planning and your last day at the office, you’ve got to sit back and have some fun. Here are a few ideas to help you get started as you make the transition.

Create a workout regimen

It’s no secret that the best way to get the most out of your golden years is to keep yourself fit and healthy. This goes far beyond just keeping your ticker tuned up and beating strong, more research emerges all the time pointing to exercise as a means to stave off the effects of conditions like Alzheimer’s and Parkinson’s Disease. Many health clubs and community centers offer classes geared specifically to retirees that test your balance and help build muscle, so do some asking around for the best ones.

Dig into a hobby

It’s a subtle truth, but sometimes it’s tough to fill all the hours your job used to take up. You probably used to squeeze in some time on the weekends for woodworking or gardening, maybe playing a game of bridge or bowling occasionally with friends. Well, now you have the opportunity to do them all you want, so consider becoming a bit more serious about having fun with your interests. Have you had a project in mind for a while to beautify your home or yard? Why not learn how to do it yourself (and consult with some experts) so you can have the satisfaction of putting your knowledge and love to good use?

Get involved with a cause

There are probably dozens of organizations in your area that are begging for volunteers with your experience at this very moment – and not just because you’re a willing body they can put into a soup line. A growing number of not-for-profit groups are turning to retirees for help with everything from marketing to fundraising to program design, hoping to capitalize on their expertise without having to shell out the big bucks for a public relations firm. Find a cause that fixes a need you see in your community or elsewhere in the world, then see how you might be able to contribute.

Make new friends

Perhaps more than anything other than exercise, your ability to form and maintain fresh relationships is a key to your longevity. Intentionally seek out ways to engage with people from different backgrounds in conversation over lunch or a cup of coffee. It doesn’t have to lead to a life-long friendship worthy of the movies, but it will expose you to a variety of ideas, something that is key to brain function going forward. And, as you connect with people from all over, you might find other activities to fill your time with – salsa dancing or Australian rules football, anyone?

Ten Financial Risks of Retirement

When you sit down with your spouse and financial advisor to do some retirement planning, you make the best effort you can to prepare for the future.  Like it or not, these ten financial risks of retirement can sneak up on you and make your golden years a struggle.  Thankfully, there are ways to minimize these challenges by formulating a strategy that helps your assets continue to grow despite any blips in the economy or unexpected expenses.  By understanding the possibilities presented by the factors listed below, you will be in an advantageous position when it comes time to lay out your strategy for the years leading up to your final day on the job.
Lifespan
Though it’s tough to imagine a long retirement being a bad thing, the fact of the matter is you are far more likely to live to 85 than you think.  Advances in medicine, not to mention good genes and healthy habits, could have you pushing 95 or 100 – and your money has to make it there, too.  Invest as though you’ll live into triple digits and you’ll be in great shape.
Inflation
It’s a simple fact of life that the cost of everything increases over time.  Consider the purchasing power of $10 in 1980 was equivalent to almost $21 just 20 years later in the year 2000.  What can you do to keep your money from only going half as far?  Invest in inflation-protected securities or industries likely to gain as prices increase.
Market Dips
As the years after the sub-prime mortgage collapse in 2008 have shown, the market is a fickle mistress.  The instability of the global financial system continues to turn stomachs all over the planet, but the best thing you can do is diversify as much as possible.  This goes beyond the size of company or type of assets in your portfolio, too – pick companies from different regions so problems in one are less likely to affect your bottom line.
Early Maturation
Though you might have a handful of bonds that aren’t set to come good for a while, be mindful of the possibility they will be called early.  Though this is an opportunity for reinvestment, of course, you might find it difficult to locate something with a similar return.  Stagger your maturity dates so that your repositioning is less likely to happen all at once.
Cashing Out in a Low Market
For most people, a 401(k) or mutual fund contribution is based on the purchasing power of what they’ve set aside – when the prices are down, they get a lot more than when prices are high.  Though you might not think it too much of an issue, it can be a major problem if you are looking to sell during a downturn.  Your only option is to get fair market value, which means you are losing out on the possibility of benefiting from a future upswing.  Make sure you have plenty saved to cover your expenses for as long as possible so you can allow your portfolio to pick back up.
Fraud
Sadly, there’s not a year that goes by in which a group of senior citizens are robbed of their wealth by spurious characters going door to door.  Though you are fit and sharp now, where might you be in a couple decades?  Do your best to educate yourself now about the risks, involving trustworthy family members, if possible.  By having a background knowledge, as well as someone to act as your back-up when a too-good-to-be-true opportunity pops up, you have already set up a first line of defense.
Taxes
You might assume that, without a steady job, taxes aren’t something you will have to focus on much in your life after work.  Well, that’s not exactly the case.  Changes in the tax code happen all the time, subjecting earnings from investments or capital gains to a varying degree of vulnerability.  Sometimes thousands or tens of thousands of dollars could be at stake.  On the front end, you can put after-tax funds into Roth IRAs, but more complex dealings should be done with the help of a trusted financial professional.
Medical Costs
Adults who have cared for their parents during the last several years of their life know how much time is spent in the doctor’s office.  Even the fittest of people still has one or two prescriptions, an annual physical, and some wellness visits to make each year.  That leaves a lot of copays.  One way to help cover costs you face outside of Medicare is to create a Health Savings Account.  This will allow you to rollover any savings from year to year and, much like you did with your investments before retiring, you can make a set contribution each month.
Chronic Care
We all would like to think we will be on top of our game until our very last breath, but the fact of the matter is quite different.  More and more people are finding health care services are necessary during their final years, which can be fairly minimal (someone stopping by to administer medications) to very extensive (living in a medical home).  You can purchase insurance policies to cover just this kind of expense or set up specific accounts to be paid only when they are needed, but this area of financial planning is somewhat new, so you might want to consult with your advisor about the best option.
Unexpected Events
It might seem like Mother Nature would be the last thing for any of us to worry about, but sometimes disasters arise and leave people in the lurch.  This doesn’t take into account a fire or some other property damage that destroys what most people consider their most important investment – their home.  Regardless of where you live, it’s crucial as you head into retirement that your insurance coverage is good enough to provide security in the event of a major problem.

When you sit down with your spouse and financial advisor to do some retirement planning, you make the best effort you can to prepare for the future.  Like it or not, these ten financial risks of retirement can sneak up on you and make your golden years a struggle.  Thankfully, there are ways to minimize these challenges by formulating a strategy that helps your assets continue to grow despite any blips in the economy or unexpected expenses.  By understanding the possibilities presented by the factors listed below, you will be in an advantageous position when it comes time to lay out your strategy for the years leading up to your final day on the job.
Lifespan
Though it’s tough to imagine a long retirement being a bad thing, the fact of the matter is you are far more likely to live to 85 than you think.  Advances in medicine, not to mention good genes and healthy habits, could have you pushing 95 or 100 – and your money has to make it there, too.  Invest as though you’ll live into triple digits and you’ll be in great shape.
Inflation
It’s a simple fact of life that the cost of everything increases over time.  Consider the purchasing power of $10 in 1980 was equivalent to almost $21 just 20 years later in the year 2000.  What can you do to keep your money from only going half as far?  Invest in inflation-protected securities or industries likely to gain as prices increase.
Market Dips
As the years after the sub-prime mortgage collapse in 2008 have shown, the market is a fickle mistress.  The instability of the global financial system continues to turn stomachs all over the planet, but the best thing you can do is diversify as much as possible.  This goes beyond the size of company or type of assets in your portfolio, too – pick companies from different regions so problems in one are less likely to affect your bottom line.
Early Maturation
Though you might have a handful of bonds that aren’t set to come good for a while, be mindful of the possibility they will be called early.  Though this is an opportunity for reinvestment, of course, you might find it difficult to locate something with a similar return.  Stagger your maturity dates so that your repositioning is less likely to happen all at once.
Cashing Out in a Low Market
For most people, a 401(k) or mutual fund contribution is based on the purchasing power of what they’ve set aside – when the prices are down, they get a lot more than when prices are high.  Though you might not think it too much of an issue, it can be a major problem if you are looking to sell during a downturn.  Your only option is to get fair market value, which means you are losing out on the possibility of benefiting from a future upswing.  Make sure you have plenty saved to cover your expenses for as long as possible so you can allow your portfolio to pick back up.
Fraud
Sadly, there’s not a year that goes by in which a group of senior citizens are robbed of their wealth by spurious characters going door to door.  Though you are fit and sharp now, where might you be in a couple decades?  Do your best to educate yourself now about the risks, involving trustworthy family members, if possible.  By having a background knowledge, as well as someone to act as your back-up when a too-good-to-be-true opportunity pops up, you have already set up a first line of defense.
Taxes
You might assume that, without a steady job, taxes aren’t something you will have to focus on much in your life after work.  Well, that’s not exactly the case.  Changes in the tax code happen all the time, subjecting earnings from investments or capital gains to a varying degree of vulnerability.  Sometimes thousands or tens of thousands of dollars could be at stake.  On the front end, you can put after-tax funds into Roth IRAs, but more complex dealings should be done with the help of a trusted financial professional.
Medical Costs
Adults who have cared for their parents during the last several years of their life know how much time is spent in the doctor’s office.  Even the fittest of people still has one or two prescriptions, an annual physical, and some wellness visits to make each year.  That leaves a lot of copays.  One way to help cover costs you face outside of Medicare is to create a Health Savings Account.  This will allow you to rollover any savings from year to year and, much like you did with your investments before retiring, you can make a set contribution each month.
Chronic Care
We all would like to think we will be on top of our game until our very last breath, but the fact of the matter is quite different.  More and more people are finding health care services are necessary during their final years, which can be fairly minimal (someone stopping by to administer medications) to very extensive (living in a medical home).  You can purchase insurance policies to cover just this kind of expense or set up specific accounts to be paid only when they are needed, but this area of financial planning is somewhat new, so you might want to consult with your advisor about the best option.
Unexpected Events
It might seem like Mother Nature would be the last thing for any of us to worry about, but sometimes disasters arise and leave people in the lurch.  This doesn’t take into account a fire or some other property damage that destroys what most people consider their most important investment – their home.  Regardless of where you live, it’s crucial as you head into retirement that your insurance coverage is good enough to provide security in the event of a major problem.

Retirement Income Plan

It’s only natural, after decades on the job, for you to feel a bit of trepidation as the day arises when your retirement income plan kicks in. For years, you have been able to count on a steady paycheck and the possibility of an incremental raise from time to time. Once you leave the workforce, you will be able to count on a monthly check from the Social Security Administration and payouts from the various accounts set up as part of your retirement planning – stocks and mutual funds that are subject to the whims of the market. If you’ve learned anything from the current state of the economy, it’s that your portfolio can take a hit one day and have you flying high the next. How do you create some stability when the financial sector is as volatile as a nitroglycerin plant during an earthquake?
Here are a few tips to keep you moving in the right direction, when the Dow Jones is a roller coaster:
Live Within Your Means
Making a budget is a basic practice for many households in all strata of society. Sticking to one, however, proves to be too challenging – they either expect to live like princes or attempt to be paupers and fall short either way. Sit down with your spouse and make a realistic target for your spending, leaving aside extra money for savings accounts and additional investments, as well as activities both of you can enjoy. Ideally, you will have begun this practice well before you retire – spending your last year at work spending as though you are already retired is a good idea – but even creating a plan in the first month or two after you leave the office behind is acceptable.
Diversify Your Portfolio
It’s likely you’ve heard this advice from your financial planner and investment magazines over and over, but it goes far beyond the types of stocks or mutual funds you own. Sure, you should have a variety of low- and high-risk accounts to provide a measure of security against a market in flux, but you might find other areas are being neglected. You probably have a home that acts as one of your major assets, but do you own other properties that can be rented or sold? Have you sought ways to solidify your percentage of precious metals in the overall picture? Take an honest look at your situation and see how things could be reshuffled to maximize your return.
Seek Out Earning Opportunities
Without a doubt, you have earned a break from the daily grind associated with a 9-to-5 job. Does that mean you ought to give up on employment altogether? Absolutely not – and that doesn’t mean you should be greeting customers at your local retail chain. Chances are good your experience can be put to good use in a variety of ways. If you were in advertising, for example, you could begin consulting with small businesses part-time to help them grow. This will allow you the fulfillment of continuing to contribute to society without having the pressure of someone breathing down your neck. Who knows? The freedom might unleash some creative talents you forgot you had!

Best Retirement Plan Companies

Saving for life after work is a big deal, so it is natural that you will search out the best retirement plans companies around. The number of retirees is growing exponentially thanks to the Baby Boom and organizations of all kinds are attempting to grab market share by devising ways to provide retirement planning services. With the airwaves being flooded with commercials and conflicting reports in print media, how can you tell which one to choose? The simplest answer is to consult with a trusted financial planner, someone who will take the time to understand your goals and plans, then make recommendations to help bring those dreams to life. If you want to get some ideas before you meet with a professional, the following companies all have good reputations:

T. Rowe Price

Based on the sheer variety of plans available, T. Rowe Price is a popular choice for those who are close to retirement and those who have a few decades to go. Whether you are three years out and looking to make a target-date fund to solidify your portfolio or have a little bit more room to maneuver, you will have access to personal advice to secure your future.

Fidelity

Individuals who have a better understanding of how the stock market works, but don’t want to fly without a safety net will find the resources at Fidelity more to their liking. Much like T. Rowe Price, this is a larger financial services company with a decades-long history of providing the full range of banking services for customers of all kinds. You will have access to advisors, as well as the ability to make adjustments to your risk profile or even trade shares online.

Scottrade

If you are looking for a hands-on approach to your investments and are internet-savvy, then Scottrade may be the company for you. Designed as an entry to the market for those with lower starting assets, this organization has grown quickly over the last decade as a center for trading online. Though there are some professionals who can provide guidance on your options, the programs are generally set up to be managed day-to-day by the investor themselves.

Decimal

Are you self-employed? Wondering how to create a retirement account similar to a large corporation? Decimal provides specialized 401(k) plans and Roth IRAs for sole proprietorships, partnerships, and corporations whose owners are the only employees. It serves a small market segment, but Boomers with an entrepreneurial mindset will enjoy the ability to develop an investment portfolio in line with the average worker at a big company.

These are just a few of the many choices you have when it comes to investing your hard-earned dollars, which is why it’s important to do some research on your own. Check with reputable resources, like Consumer Reports or other watchdog groups, while asking around amongst your friends and family. Find out what people like and don’t, as well as how helpful the individual agents are. You’ll be surprised how far a few questions will get you, and how much safer the financial aspect of your golden years will be.

How Beneficial Can A Whole Life Insurance Be?

When it comes time to purchase life insurance, there are always a lot of questions. Within the industry itself, there are competing claims that muddy the water, leaving one to wonder which type of policy is best for them. There are so many advantages of Whole life insurance over the less expensive term life options, though at greater cost. In the long run, the financial goals of the individual purchasing the insurance are crucial, as well as risk tolerance and income, to a lesser extent.
What draws most people to whole life insurance policies is the security they provide. For the entire life of the policy, premiums and face value are set in stone permanently. What this means is that, due to inflation, the policy will end up costing less as time passes. Your minimum agreed benefit and cash value will be paid out in the event of your death without any further medical examinations to determine insurability, unless you decide to alter the face value or protection clauses. (In most cases, though, it’s simpler to purchase an entirely new policy to cover the balance, if you decide you’d like more coverage.)
Over time, a whole life plan will build up a cash value that term life plans cannot. For those looking to utilize the policy as part of retirement planning, this is a major advantage. When the premium is paid, part of it will be put into the insurance company’s general fund and part will be set aside for the insured. In effect, the plan becomes a like a savings account or piece of real estate that develops a market value to support loans or pay other expenses in emergencies, such as medical care during a chronic or terminal illness. These loans or withdrawals will be repaid out of the death benefit if there are any remaining balances, but the ability to defer tax on these monies until they are disbursed is very appealing – and, even then, a portion of the gains may not be subject to income taxes.
Those funds placed into the insurance company’s larger pool give whole life insurance policies the added possibility of annual dividend payments. This feature is a bonus, as the availability of these extra funds will determine whether they are paid out or not in a given year. If they do, they are a major advantage to the insured, as they can help the individual increase the death benefit in the event of rising costs or for added protection. Some like to use them to cover part or all of premium payments or, in other cases, cash the dividends out for supplemental income during retirement.
There are a lot of differences from company to company and state to state, so be sure to check with a trusted insurance agent. Some whole life insurance policies are unavailable to creditors or lawsuits. Others have riders which stipulate the premiums must be waived if the insured suffers a partial or permanent disability. These advantages can be awfully tempting, which makes it all the more important to discuss them with qualified professionals, particularly your accountant or financial planner if you are planning on utilizing your whole life insurance policy as part of your retirement portfolio.

Figuring Out What Retirement Locations You Prefer?

There are a lot of questions you will have to answer by your last day of work. You will have to set up pay outs from your investment portfolio, adjust your lifestyle, and maybe even plan a long vacation to celebrate. Another major issue that might come up along the way is where you’ll live. You may have taken it for granted you’d be staying put, but there are all sorts of attractive retirement locations out there. Would you prefer to continue living in your current home? Do you have an itch to explore somewhere else with your newfound free time? Here are four factors you must consider when thinking about where to spend your golden years:
Proximity to Family and Friends
Have your children stayed close to home? Do you meet regularly with a close-knit social group? Deciding to pick up and go somewhere else will affect your ability to see them, obviously. Coordinating travel for holidays can be expensive and time consuming, but advancements in Internet technology have made it much easier to connect using video in real time. Of course, if you’re at the head of one of the quickly-growing number of families that’s spread out across the country, chances are you are already taking advantage of it.
Big City or Small Town
After spending a lifetime in one place, you might feel like partaking in a different kind of cultural experience. Perhaps the hustle and bustle of a major metropolitan area has left you yearning for some peace and quiet in a more rural area. Maybe you’re in the mood for the opposite: touring museums and seeing plays in a cosmopolitan city instead of the routine calm in a peaceful town. Be aware of the differences in property taxes and housing costs. Some states have lower property taxes than others and, in larger population centers, the law of supply and demand leads to higher prices. If you opt to leap into a larger pond, make sure your retirement planning has prepared you appropriately for the financial differences.
Employment Opportunities
If there’s a chance you would like to keep working part-time, it might benefit you to do some research about the job market for retirees. As Baby Boomers near retirement age, there is bound to be a shortage of workers, so you might find a part-time position available to supplement your income and keep you socially active. That said, you might find a means to build up a business out of your home wherever you go – the Internet has led to a wide range of possibilities for those willing to put forth the effort.
Quality of Healthcare Facilities
When you’re sick – or if you have a condition requiring specialized care – you want to make sure you can get access to the best services possible. As you weigh the different options you are bound to come across, consider the availability of top-notch medical staff in the area. Though it may be appealing to become an expatriate living near the beach in Costa Rica, it might be a challenge to get access to prescription medications in a timely manner.

What You Must Know About Pension Plans

If you are in the workforce today, the chances you have a defined benefit pension plans are pretty slim. Outside of a few industries with active union membership, most corporations have done way with them as part of cost-cutting measures. Of those who lucky enough to have one, a recent study by Fidelity Investments found 71% of the individuals polled were unaware of the major details – they were unable to answer questions about simple things like when payments begin. If a pension is part of your retirement planning, here are a few keys to understand:
Vesting Schedule
Pensions were originally intended, at least in part, to reward employee loyalty. In order to incentivize the benefit, employers created a timeline by which these accounts would “mature” to the full amount. If, for example, you become eligible for vesting after five years with the company, over the next five years you might have accrued 10% of the maximum allowed by the IRS. Five years after that, you might be up to 20%, and so on until the contribution limits are reached. This value cannot be taken from you, even if you were to leave the company – the account will be frozen until you reach retirement age.
Payment Calendar
Most defined benefit plans pay out in equal amounts on a periodic basis until the annuity is exhausted, but you have options as to how often the disbursements arrive. You can decide on monthly, quarterly or annual checks based on your preference and the balances you will receive from other parts of your investment portfolio. (Some even permit a one-time payment at retirement. Though you might choose to hold off on receiving them for a while if the stock market is flying high, you will have to make a decision by age 70 or April 1 of the year following your retirement, whichever is later.
Estate Planning
In the event you pass on before the end of your pension annuity, the plan will set aside options to ensure your spouse is able to claim at least a portion of the amount you’ve accrued. Depending on the way your benefits are structured, particularly if you chose the joint/survivor option, it’s possible to continue the payment calendar with a minimum of 50% of the periodic disbursement and ensure your loved one is provided for when you’re gone.

What is the Difference Between Qualified and Nonqualified Annuities?

No matter what stage you are at, retirement planning always seems to be an alphabet soup filled with all kinds of “similar but different” options: 401(k)s, Roth IRAs, and so on. The labels, as defined by the Internal Revenue Service (IRS), often overlap causing even more confusion. When you’re trying to set up an investment portfolio that guarantees your financial future after your last day of work, every little bit of clarity helps. With that in mind, here are three key differences between qualified and nonqualified annuities:
1. Tax Deferment
The primary means by which to distinguish your annuity is whether contributions are made before or after taxes are pulled out of your paycheck. For the most part, if pre-tax dollars are used to fund the account, such as in an employer-created 401(k), the IRS classifies it as “qualified” and will tax disbursements in the future. On the other hand, when you set aside part of your net earnings into an investment vehicle – a money market account or whole life insurance policy with cash value, for instance – you are participating in a “nonqualified” agreement in which taxes have already been paid.
2. Investment and Income Restrictions
Simply put, the IRS sets limits on the amount of qualified annuity contributions which can be made every year. Since 2009, the maximum amount that can be set aside in a 401(k) is $16,500 with an additional “catch-up” amount of $5,500 available to people over 50. Nonqualified plans, because they are made out of after-tax monies, have no ceilings – you can add as much as you can afford to your account, so long as the company you’re doing business with permits it (and most do).
In addition, there are income restrictions on certain types of qualified annuities: if you would like to fund a Roth IRA, you’ll have to earn less than $105,000. Though you may not be affected early in your career, as your earnings grow you’ll be exempt from contributing to an account which might allow another $5,000 investment for your retirement portfolio.
3. Mandatory Withdrawal Dates
Both types of annuities are subject to a 10% penalty if you withdraw from them earlier than six months before your 60th birthday, but there is no point at which you will be required to accept payments on your nonqualified account unless you agree to it. (Some insurance companies, as an example, might require them to begin at age 85.) However, if you have a qualified annuity, you’ll be required to receive the first disbursement no later than six months after your 70th birthday. The IRS uses life expectancy estimates to ensure monies are distributed – and taxed, since they haven’t been yet – to appropriately fund the golden years of retirees.
With all the options available, it can be tough to discern the best course. Be sure to consult with a trusted financial advisor before making any decisions, as they will best understand your goals and current portfolio make-up.

Learn How Social Security Evolved

Signed into law on August 14, 1935 by Franklin Delano Roosevelt, a limited form of what we now call Social Security has been in place since January of 1937. During the Great Depression, more than half of senior citizens after Retirement were in poverty and the “social insurance” plan was developed by the President’s Committee on Economic Security as a means to combat it. In the beginning, the program was designed to provide benefits to the retired and unemployed, as well as a lump-sum at death.
From the start, the limitations imposed by the program were controversial: benefits were offered for certain professions, leaving out women and minorities in large numbers. Exclusions that kept nurses, teachers, social workers and many others from claiming benefits meant barely more than half of the American workforce received help. In addition to stipulations already in place “just big enough for the majority of Negroes to fall through,” as the NAACP protested, much of the authority for distributing aid was given to the states to appease Southern congressmen. As a result, black families were often allocated less money than white ones, widening the gap even further.
Of course, there was some debate as to whether the program would be considered constitutional at all. The Supreme Court had been quite forceful in striking down New Deal legislation throughout the mid-1930s and, if not for a timely switch after the Judiciary Reorganization Bill was proposed by President Roosevelt in 1937, it might have been eliminated just as the first death benefits were being paid out. A pair of decisions released on the same day, Steward Machine Company v. Davis and Helvering v. Davis, upheld the right of the federal government to set policies for “the promotion of the general welfare.” Three years later, Ida May Fuller of Ludlow, Vermont received the first monthly Social Security payment.
The program has evolved almost continuously, as concerns regarding holes in the payment plans led to more inclusive amendments in 1939. The number of covered individuals remained relatively stable until separate amendments in 1950 and 1954 extended coverage to nearly everyone, but dependents and spouses of working women were still prevented from receiving death benefits until 1962. It wasn’t until the 1970s, when protection was extended further and cost-of-living adjustments were created almost 40 years after the bill first went into effect, that Social Security as Americans understand it today came into being.
So this was just a brief of Origin of Social Security