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Baby Boomers Stocks to Invest In

Top 5 Stocks to Buy for Baby Boomers


With all the major hype and hoopla surrounding millennials and their sky-high achievements, baby boomers seem to be much less a topic to talk these days. Practically no one speaks about them, let alone the stocks that they must buy.

It is, however, an extremely important topic. Given how baby boomers – the bulk of the population – are now moving towards retirement, and how bond yields are going up, and how experts are leaning towards calling the bonds bull market history, it is prime time for the generation to take action and make their portfolios as risk-free as possible.

Here are the top 5 stocks that baby boomers can buy to help stay well-off getting into and throughout retirement.

Royal Caribbean Cruises (RCL)

As a general rule, retirees with a good amount of savings in their accounts tend to travel quite a bit during the first decade of retirement. Given that the oldest of the generation is now 72 years old, they still have a couple of years to travel before they settle for good.

This makes up for one of the many reasons why buying a stock in Royal Caribbean Cruises Ltd (NYSE:RCL) is a fantastic idea for baby boomers. Stocks here have a low risk factor as there are a large amount of baby boomers near to the age of travel who are sure to participate in cruising. Added to that is the fact that millennials too are now very interested in and participate in cruising in large numbers – which is always good news for the business, as even when the boomers will pass over the cruising phase, there will be a large group of millennials to pick up the slack.

There are numbers to show it too – In the last 5 years, RCL stock has gone up by an average of 30% every year – a momentum that is expected to continue for a few more years to come.

Vail Resorts (MTN)

Not all baby boomers are interested in cruising – there are several health-conscious ones who love to enjoy life and keep fit by engaging in more sporty activities such as skating and skiing.

With a good many of baby boomers being in great form, several do ski their way well into their 80’s, if not further. In fact, chances are that many of these have worked past the age of 65 – not with the purpose of earning money, but to spend their time in a more productive manner.

Owning stocks in a company such as Vail Resorts, Inc. (NYSE:MTN) makes it all the more a sweeter (not to mention low-risk) Given that it is one of the world’s biggest ski resort companies, it is sure to receive plenty of business from baby boomers from the next two decades at the very least. And even when the phase does pass, one can assume that there will be a lot of millennials to pick up the pace.

Ameriprise Financial (AMP)

Lauded as one of the most stable, Ameriprise Financial, Inc.’s (NYSE:AMP) stocks have been appreciated since before it turned out to be a sought-after insurance company. In between these years, their stock has grown by 316%, which is over two-and-a-half times that of S&P 500.

As of the end of 2018, Ameriprise had over $131.8 billion assets under management, with major presence U.S. and in countries all over Europe. Not to mention the fact that their asset management business (which is in fact their main business) generates over $80 billion in annual gross sales.

Such a low-risk, high-reward situation is especially ideal for the younger of the baby boomers, who may still be looking for good stocks to invest in. Those who already have can sit back and enjoy the fruits of their choices.

Lululemon (LULU)

Further debunking the myth that baby boomers aren’t the healthiest generation, there are many who are not interested in travel, but do more than their bit to stay fit. Scores of baby boomers today opt for healthier activities such as Zumba, running, Pilates and yoga.

Taking up a rather large part of the yoga accessories and apparel market is Lululemon Athletica Inc. (NASDAQ:LULU) – a company that is known and reputed to be the go-to place for many a customer to buy their grear. Not only is their gear popular among both sexes, it is popular across all ages due to their wide range of styles and products that serve the purpose whilst not compromising on comfort. This high selling point makes it an ideal area for would-be investors.

Vanguard Health Care ETF (VHT)

Regardless of how fit baby boomers will be, one cannot escape the fact that they do – or at least will need an advanced quantity and quality of healthcare. Vanguard Health Care ETF (NYSEARCA:VHT) is one company that really is prominent here, with its high reputation and low-risk stocks.

Armed with a 372 healthcare stocks-strong portfolio, a median market cap of $76 billion, and $7.2 billion in total assets, the company practically the strongest in the traditional healthcare sector, and with the large number of baby boomers in the picture, is sure to continue to do so. It is no wonder then that it is one of the biggest ETFs in the country.





Let’s face the facts here – nobody likes probate. The further we remain from the lengthy and long-drawn (and not to mention, costly) process, the better we feel about ourselves and our precious assets.

One of the best ways for people to avoid probate is to draft a living trust along with (or even without) your will. A living trust ensures speedy delivery of assets and helps you avoid probate, helping your family avoid unnecessary inconveniences after your passing.

That being said, all is not advantageous when it comes to making a living trust. Depending on several factors including (but not limited to) your age, marital status, and financial status, a living trust could be useful or not. For most people, however, the answer is somewhere in the middle.

Here are the factors that will help you determine whether or not living trusts really are the best for you – probate and otherwise.


For those with a medium to large amount of assets and in their advance stages of life, making a living trust is justified. Not only is there a lot of money at stake, there is not enough time, and it really does not make sense to put all of that through probate. Additionally, having a living trust would help in making sure that there is someone to make crucial decision if you are incapacitated, but not dead.

However, if you are relatively younger – at least under-50 – earn a mid-level income, and have few assets, making a living trust would make very little sense. While you may not be very rich, you are sound both in terms of health and finances, and it is best to keep that stable and not worry about costs surrounding probate – which is decades away anyway. All you need is a serviceable will to transfer your property to your beneficiaries.

Financial Status:

While living trusts are largely convenient, they come with a steep downside i.e. the time and cost involved establishing as well as maintaining the trust. A trust drafted by a lawyer would cost no less than $1,000, and possibly more according to the nature of your trust and the amount of maintenance work you will have to do. Furthermore, even if you have a living trust, you will still have to make at least a simple will, that will act as a back-up legal tool.

If you are rich and have a lot of assets that need to be in one place, making a living trust makes sense. Otherwise, it would simply be a time and money-intensive way to be hard on what assets you do have. The better thing to do here would be to wait out a few years and check if making a living trust really is a means that justifies both the beginning and the ends.

Marital Status:

Your marital status largely determines how you may leave your estate to your loved ones after you have passed away. Chances are, you would like to leave the major portion of your property to each other in case you die. Going by this assumption, if you are young, avoiding probate is not a worry. Additionally, if you are among the several couples who own their assets jointly, those assets would not have to go through probate.

Another reason why you might not need a living trust is because most states allow their surviving spouses to make use of expedited probate procedures to avoid the time and cost that comes with the standard probate.


Steps to IRA for self-employed (IRA & Roth IRA)

The Self-Employed Guide to Getting Started with an IRA


Saving for your retirement is a must, no matter what one’s current financial status may be. As daunting a task as it might seem, there are ways to make it, thanks to the various retirements schemes and plans out there.

One of the most common and popular retirement plans is the Individual Retirement Account. Popularly called the IRA, it is a savings account made to help people save up money that they can later spend when they retire. They are of 2 types – Traditional and Roth IRAs. While the former allows providing deduction for holders’ contributions and helps them defer taxes on their savings till the time of withdrawal, the latter does not offers it’s holders any such provisions. That being said, it does make investment earnings both tax and penalty-free during withdrawal. Both of these plans are usually offered by employers.

For small business owners and the self-employed, however, there is a slightly different variation of the IRA. Called the Simplified Employee Pension or, simple the SEP IRA, this is a variation of the the traditional IRA tailored for the self-employed. Freelancers, and small business owners with at least one employee are eligible for an SEP IRA.

Here is how you can get started to open your IRA account, and by extension, start building your own retirement nest egg:

Step 1: Decide the IRA that suits you the best

Before you even begin the process of opening your IRA, you need to make your priorities straight. The first step towards doing that is to decide upon the plan that would suit you the best. There are several factors that will influence the type of IRA you should use – these include (but are not limited to) – your income, age, debts, tax status and overall financial status.

Step 2: Consider opening an SEP IRA

For several freelancers and small business owners, opening an SEP IRA is a viable option, since they can easily use it to make tax-deductible contributions for themselves and/or their business. It is therefore important that you consider if an SEP IRA would work better in your particular situation.

Remember: Only you – the owner and employer – can contribute to your IRA.

Step 3: Choose where you would like to open your IRA

The next important step to take is to choose the place where you will be opening your IRA. The appropriate thing to do is to choose the account provider that offers the lowest possible account fees, good customer support, commission-free exchange funds, and a range of mutual funds sans transaction fees.

Step 4: Decide upon the amount of initial deposit you would like to make to start your IRA

Your initial funding is the first step to determining how much your IRA would be worth and how much you can and should possibly contribute to it. While a few brokers do have $0 minimum deposit rate, most require a minimum investment of $1,000.

Step 5: Plan your investment options

There are several ways to invest in IRA funds – individual stocks, bonds, and mutual funds are some of those ways. Make sure to choose the investment options that suit your situation best and help you make the most with the least risk.

Step 6: Plan your time on when and how you would like to manage your IRA

Opening and maintaining an IRA requires time and involvement – which is tricky when you are freelancing or running your business. Make sure to devote some time to pay attention to IRA matters, given how crucial they would be after you retire. Additionally, you can utilize a robo-advisor to help manage your account with the help of computer algorithms.

Step 7: Decide your marital status when you open your IRA

Your marital status determines the extent and contributions of your IRA. For instance, if you file your IRA as a with your spouse (if that is applicable), you can make twice the amount of contributions.

Step 8: Consider the option of opening your IRA online

In today’s day and age, when technology is at its prime and time if of the essence, the internet is one of the best places for the self-employed to open an IRA. All you need to do is to go to the website of the provider and fill in the relevant information such as employment information, social security number and contact information.

Step 9: Plan the funding of your IRA account

How you fund your IRA is a crucial step in determining where your account would stand eventually. Make sure to include your account number when you set up your IRA.

Step 10: Make automatic transfers to your IRA account

Setting up automatic transfers has more benefits that you can count. Not only does it help allocate a fixed amount every month, it would help you structure your expenses around it. It also acts as a reinforcement in maintaining your bank account, given how you would like to avoid making any kind of defaults (and the amount of fees that it would entail).


Living Trusts - Top 3 Benefits (Wills & Trusts)

Best Benefits of a Living Trust


No matter how small (or big) the size of your financial assets may be, it is a must to have a proper legal document that will allocate said assets at the time of your death – and in accordance to your wishes.

Most people solve this problem by making a will. And why wouldn’t they – it is legal and offers a good way to distribute your assets after you die. That being said, there are other documents that can be used in place of a will.

One such document is a living trust. It works a lot like a will but has some slight differences that offers some solid benefits. Ironically for something that is essentially more dynamic than a will, living trust are used quite rarely. In fact, only as little as 20% Americans use living trusts.

For the rest who don’t here are 3 compelling reasons why a living trust works better than a will. But first, let’s know what the difference is between these two documents.


Living trust vs. will

Often called an “inter vivos” (meaning revocable) trust, a living trust is a legal document through which you can have your assets placed in trust. Not only will this help you after you die, it will also help you during your lifetime. Once you die, your assets will be transferred by a “successor trustee” i.e. a chosen representative to your desired beneficiaries.

Alternatively, a will allows you to make a plan of how your assets should be distributed after you die. An executor, who you will name in the will, will oversee the process for distribution of assets, but that can and does happen only when you die.


Benefits of a living trust


You can avoid probate with a living trust:

The key benefit that a living trust offers is avoiding probate. A will – even when it is valid goes through the lengthy process of probate, which consumes a lot of time and energy on top of the stress of losing a member of their family. A living trust, however, has no such strings attached – and therefore facilitates quicker distribution of assets – weeks, as opposed to months (or even years with a will).

A living trust is more cost-effective:

While this largely depends on your overall financial situation, a living trust usually costs way less than a will in the long run. A living trust does cost more initially, since you have to make actual transfer of assets (like stocks, bank and bond accounts, certificates etc.) via a separate set of paperwork, in addition to writing the living trust. It is, however, more cost-effective when it comes into action as you need not have the living trust go through the lengthy probate process upon your death. They will also hold up better in the event someone contests it after your death.

A living trust helps provides a better level of privacy:

This is another major benefit that comes with drafting a living trust. Contrary to a will, a living trust is not a public document, and any assets that are distributed will be done in private. This avoids any and all transactions to be put on public record.

Additionally, a living trust will easily help you handle any property of yours that may lie out-of-state. Even with a will, such property would have to go via the probate process in both the property’s state and in yours, making it a very inconvenient and long-drawn process.


Baby Boomers - Steps Before Retirement (Baby Boomer)

The Baby Boomer’s Guide to Preparing Before Retirement


If you among the many baby boomer and are currently earning at your best in your career, you’re probably also wondering how you would be handling your finances during retirement to lead a comfortable life. After all, with all the news headlines about retirement challenges going around, there is quite a bit of concern on the matter.

It’s not all bad news, however. In fact, Financial Finesse’s recent report on generation-wise financial wellness says that Baby Boomers are in fact the strongest when it comes to financial position. And with some good judgement and sound planning, they can take advantage of this financial position to save enough to have a fulfilling and financially plentiful retirement.

Here are some steps that you can take as a Baby Boomer to secure your own retirement prospects:

Make a spending plan while keeping retirement budget in view:

Much like Baby Boomers and retirement, budgeting tends to get a bad reputation, mostly because it is imagined as a constant struggle to find a way to monitor spending all the time. This couldn’t be farther than the truth, however.

In reality, budgeting is the art of bringing a balance between wants and needs, and one’s spending power. It’s a great way to both save and be grounded at the same time. By making a proactive plan around your spending habits, you can plan where you will put your money well in advance, and make sure that your life goals and spending are in the same league.

Besides, there are other very key advantages to making a spending plan – from avoiding spending too much before retirement (and increase your debt), save up some extra money to pay your current debts before retirement, and make the best of specialized tax-advantaged accounts such as HSAs, 401(k)s, and of course IRAs.

Consider your options for health insurance:

One of retirement’s biggest concerns when it comes to expenses are those that are related to health care. Quite legitimately so, as healthcare requirements tend to complicate and increase as one nears (and later enters and further advances into) their retirement years.

In the event that you already have medical insurance for retirement, you must begin to review your options, and estimate how much said options would cost you. If the plan you are on is a highly-deductible one along with plan with an HSA option, you must do you best to set aside the $3,450 max for individual coverage, or the $6,900 max for family coverage – you can also save an additional $1,000 if you are 55 or above.

Estimate what you would need for long-term care:

Long-term care is both a requirement and a cost-drainage factor on retirement expenses. And while it can never be avoided, one can do their best to work around it to earn and save enough for a full comfortable retirement. Not planning in advance can lead to depletion of funds within a few years followed by financial misery.

While making your plans, you must bear in mind that Medicare does not cover expenses for long-term care. Which leaves you to either liquify assets or use your retirement savings. The best alternative to this would be to purchase long-term care insurance in advance that will help you stay protected when you have retired.

Here are some ways in which you can begin to make your expense plan for long-term healthcare:

  • If your healthcare estimate run to the $200k to $2-3 million range in terms of assets, you should consider going for an insurance plan that offers long-term coverage.
  • Regular reviewing of your investment portfolio will help you understand if it is properly diversified.
  • See if the state you live in offers any long-term care partnership programs. Such programs help you to store assets that equal to amount of insurance coverage. Even if you have utilized the benefits, you would be eligible for Medicaid.
  • If you have a percentage as high as 10-15% in a single stock, make sure to diversify it. Stocks fluctuate with time, and you do not need the upheavals that come with a plummeting stock close to the age of retirement.

Estimate the amount of money you would need during retirement:

One of the best things you can do is to estimate the amount of money you will need during retirement is to review your finances. Yet, ironically, people rarely (if ever) take out the time to run basic retirement calculations. This is due to reasons such as the fear of finding their status and an uncertainty on the tools required for their progress, among others.

Reviewing your current finance and expenses and making an estimated plan of your future finance and expenses will help you understand what course of action you should take to understand what you will need and what you can do to spend your retirement in peace and financial fulfillment.


Estate Planning for Unmarried Couples (Estate Planning)



In today’s day and age, marriage is not the only way for couples to stay under one roof. In fact, data from the U.S. Census Bureau says that the number of adults who live cohabit together is 29% more than what it used to be in 2007 – and over a half of this percentage is aged 35 and younger.

Just like marriage, cohabitation has a profound effect on estate planning – albeit one that is markedly different from that of married couples. Given that there is no set legal system in place for those who cohabit (as opposed to marriage), it is important to understand how estate plan would work in such situations, and how couples who cohabit can take advantage of benefits afforded by married couples such as social security, right to property, inheritance and decision making privilege, among others.

Here are key elements that unmarried couples must consider when making their estate plan:

Avoid probate by re-titling your real estate:

In general, having a sound estate plan helps you make sure that your assets will remain safe, avoid probate, and go to those you wish to with no hassles. This applies even more so in case you are cohabiting – in the absence of proper legal documents, your assets would fall under intestacy laws, and your near and dear would all have to go through the long-drawn system of probate.

While there is always a chance for your property to ultimately by subjected to probate, there are things you can do to avoid the undesirable situation as much as possible. You can start by transferring your property to a joint trust with your partner. That way, if you die or become incapacitated before them, your partner would be able to administer the estate in the capacity of a successor trustee.

Secondly, you can enter into joint tenancy along with your partner. This is a special kind of ownership wherein two or more people can own a property collectively – even if they are not related by blood or marriage. If one of the tenant dies, their interest immediately passes on to the surviving tenant(s).

Name your partner as your Attorney-in-Fact:

The Power of Attorney is the most essential and critical of all estate planning tools that you must have. This is one document that affects you throughout your lifetime, as opposed to others, which affect others and only after you are dead. By using a Power of Attorney to appoint your partner as an ‘Attorney-in-Fact, you can make sure that they have the power to act on your behalf in legal, medical and financial matters – when you are unable to make decisions for yourself. Additionally, you should add your partner and give them the power to make end-of-life decisions by appointing them as your proxy via an Advance Directive for Health Care document.

Appoint your partner as your “pay-on-death” beneficiary:

For those who are technically not married, financial and legal instruments (such as will and estate plans, bank accounts, insurance policies, and retirement plans) give you the option to at least one individual – in this case, your partner as a “pay-on-death” beneficiary. This allows your partner to receive your assets after your death automatically – even if you are not married. So for instance, if your partner is listed as the pay-on-death beneficiary of your bank account, all he or she has to do is take a copy of your death certificate, along with a proof of their identity. The bank will then re-title the account to their name or transfer the funds to their account.

Include your digital assets in your estate plan:

The touch of technology has altered the whole world we live in – and estate planning is no exception. With the rise of technology has risen the amount of online “assets,” namely social media accounts, e-mail accounts, websites, and even finance in the shape of cryptocurrencies. It is, therefore, essential for you to include said digital properties your estate plan and make sure that your representatives have the access to take actions to reassign and/or delete your online accounts after you pass away.

Write detailed instructions for your partner:

A lot needs to be done when someone passes away – from things as sensitive as distribution of assets to those as seemingly mundane and simple and paying pending bills and turning off subscriptions. Writing a letter of instruction for your partner to tell them (or, alternatively, any other representatives) all the things they should know regarding managing your estate. This includes handling bills, canceling services and/or subscriptions, handling personal effects and making sure that certain members of the family and friends are notified.

Having such instructions in hand will make executing them a much simpler task for your partner and/or other representatives to manage all of your affairs after your passing.


IRA Myths (IRA & Roth IRA)



For most, one of life’s biggest goals is to have saved enough to live out their retirement peacefully and with financial independence. It is therefore, highly essential to have a proper retirement savings strategy in place.

Individual Retirement Accounts (IRA) can – and do – play a very vital role in such situations – being one of the most common ways for people to set aside money to be used during retirement. IRAs are of two types – traditional and Roth – money going into a traditional IRA is contributed as tax-deferred, but taxed when withdrawn, while money going into a Roth IRA only goes into the account after tax deductions but is tax-free when withdrawn. You can either contribute through one or the other, or sometimes even both, so long as you stay within the annual limit for making contributions.

Given the rather complex nature of IRAs, and the confusion around the same, there are several myths that surround them, which can often cause unnecessary distress on the part of both present and would-be contributors.

Here are three key misconceptions that surround IRAs, and what really is the truth about them:

Myth #1 – You cannot contribute to an IRA if you are unemployed:

Although it is mandatory to be an active income earner to qualify for contributing to an IRA, the Internal Revenue Service does have exceptional provisions whereby those who are technically unemployed can also make contributions. The most common of these is the spousal IRA.

As the name implies, the spousal IRA allows the unemployed spouse to contribute to the IRA (within contribution thresholds), so long as their spouse is employed. It works as a suitable option especially for women, who tend to take at least some time out of their careers at some point (either to have and/or raise children or to care for their elders). For them, the spousal IRA can allow them to track their retirement savings and keep to the norm – even if they are temporarily not working.

To qualify for spousal IRA, the non-working spouse must:

  • Be married
  • Be able to file returns for joint income tax
  • Have a household earned income that matches the contributions made by the working spouse to their IRA, and the non-working spouse to their spousal IRA

Myth #2 – If your earnings are more than the specified income thresholds, you will be disqualified:

Whereas earning a large income is always a great thing, it can disappoint when it comes to contributing to an IRA. This is because there are set limits when it comes to making IRA contributions.

In the event that you don’t have a workplace retirement plan in place already, it is possible for you to make contributions (and later fully deduct your contributions) even if you make a salary as high as $1 million. Limits can still arise, however, in case you are not covered but your husband or wife is.

In the event that you do have a workplace retirement plan, your income will cast a larger shadow on your eligibility to contribute. If you earn $72,000 or more and are single, or earn $119,000 or more, and are married, you are ineligible to deduct any part of your traditional IRA contributions. That said, you could continue to contribute to a traditional, non-deductible IRA.

Roth IRAs, however, are much more stringent. Earning a higher income can easily disqualify you from making direct contributions. This applies even if your current workplace does not offer you a retirement plan.

All said and done, you could still save via the “backdoor” option – this happens when you make a non-deductible contribution to a traditional IRA, and thereafter and then convert said contributions into a Roth IRA one.

Myth #3 – You cannot contribute to an IRA if you have a workplace plan in place:

This is a big confusion surrounding IRAs – and a false one too. Many think that if their workplace has a retirement plan like a 401(k) in place, they are ineligible to contribute to IRAs. The truth, however, is that if you are employed and under the age of 70 years and 6 months, you can contribute to a traditional IRA. The only caveat here would be that you would not be able to make deductible contributions. For Roth IRAs, you can contribute at any age, so long as your income lies below a certain limit.


Common Tax Myths to Ignore (Tax Minimization)



Doing your taxes is a tough job. With laws and rules changing with every region and year, there is a lot of confusion around how it should be done in the most efficient manner – not to mention one that is easiest on the pocket.

While there are way too many myths for us to bust in one go, we can help you with the top five tax myths that currently prevail in the world of taxes, help you get the best of your returns and avoid getting audited.

Tax myth #1 – It is voluntary to file your taxes:

Very obvious, yet one of the biggest myths to circle around the world of taxes – no matter what state you may be in, it is always mandatory to pay your taxes.

The confusion happens because people often mistakenly refer to a passage in the Form 1040 instruction book that states that the tax system is a voluntary one. While that is correct in theory, it has no bearing upon the status of paying taxes, which is as mandatory as it gets.

Tax myth #2 – Students need not pay any taxes:

A truth to some extent, students earning less than $12,000 a year do not need to file their income taxes. Those earning more than that figure, however, need to pay taxes on a mandatory basis.

That being said, if you are a student under the age of 24, your parents claim you as a dependent, and you meet certain criteria, you can avoid having to pay taxes. It doesn’t matter if you go to school full time. You need to file your income taxes.

Fortunately, there is the IRS to help with this – there is a very handy “quiz” on their website to help understand if you need to file a tax return.

Tax myth #3 – Pets can be filed as dependents

Although pets have a very special status in life (for they are loved and require a lot of investment), they cannot be filed as dependents, and therefore cannot get you a tax break.

That being said, pets can be leveraged to make tax breaks in some circumstances – for instance, if the pet in question is a service animal such as a therapy animal or a guide dog, or even a guard animal for your business (if that is applicable). Make sure that you have a detailed record related to your pet, as the IRS will require both the proof of the need of a service animal, as well as the proof that said service animal is trained to help you.

Tax myth #4 – The accountant is responsible for filed tax errors

To err is human – and something that’s applicable even to accountants and financial experts. Even the finest of experts can sometimes make a mistake and that could potentially result into you getting audited.

You heard that right – even if it is your accountant who makes the mistake, it is you who will be on the hook. The only way you can avoid this from happening is by making them double check their work, and then potentially double-checking it yourself.

Tax myth #5 – Your “home office” gives you a deduction

Your company may have a flexible policy allowing you to work from home on some days. You may even be a full-time remote worker. But that does not mean that you will be eligible for tax deductions.

In order for your workplace to be eligible for a tax refund, it must be available for exclusive and regular use, and must be the principal place of conducting business. Therefore, not should your office be exclusively for work, it must be the place where you would conduct all of your business activities, including (but not limited to) in-person meetings with clients and/or customers. You can only add your home office as a refund if it strictly meets these requirements.


Saving for Freelancers (Retirement)



Living the freelancers’ life is the dream for many – the ability to be your own boss, set your own working hours, and achieve a higher level of work-life balance. And with over 36% of the American workforce engaging in some or the other kind of freelance work, the gig economy is indeed going from strength-to-strength.

That being said, the working for the gig economy also comes with its own downsides, most of all being the lack of any kind of employer-sponsored benefits and retirement accounts like the IRA or 401(k). Having a clear absence of such a structure makes it very difficult, if not impossible to save for retirement in a clear-cut manner.

With the right perspective, however, this supposed weakness can easily be turned into a strength. Whilst you do not have a solid employer-sponsored 401(k) as a freelancer, you are your own boss and do have the flexibility to make a lot of choices the average employee couldn’t. As a freelancer, you can (and should) take advantage of the options that you do have and can use to save for retirement.

Here are some common investment accounts that you can use to save for the future as a freelancer:

Traditional and Roth IRAs

Individual Retirement Account (IRA) allow individuals to set aside part of their savings for their retirement. As a freelancer, you can choose and work with either of a traditional or a Roth IRA, or even a plan that combines the two. Those aged 50 or less can deposit up to $5,500 into a traditional or Roth IRA or a combined plan. Those over 50 can deposit an extra $1,000.

Any money that you deposit into a traditional IRA is pre-tax, so your savings will be subject to tax when you withdraw them during retirement. Roth IRA, on the other hand, requires you to pay the taxes on the money before you deposit it, making the withdrawn money tax-free.

Opening an account is easy – you can easily do it online through a broker, such as Betterment, Vanguard, or Fidelity.


A Simplified Employee Pension IRA (SEP IRA) is a retirement account ideal for those who make their living as freelancers. In this plan, workers can add either of $55,000 or 25% of their net earnings – whichever turns out to be the lesser – annually. Accounts can be set up with online like with a traditional IRA, and contributions can be easily deducted.

Solo 401(k)

As the name implies, a solo 401(k) is exactly that – a 401(k) account for a single person. It is similar to the traditional 401(k) in the sense that you can deposit up to $18,500 into the account ($24,500 if you are 50 years old or more), but given that you act as both the employer and employee, it is possible for you to make additional contributions as an employer, and therefore boost your total contributions. Subject to your income and IRS calculations, the total amount you can add becomes up to $55,000 per year.

Make sure to open your account by December 31st of the year in which you intend to contribute – for instance if you want to contribute for 2019, you have to open your account before or on Dec. 31, 2019.

How much should you save for retirement?

The amount one needs to save for retirement is different for everyone as it is based upon various factors such as age, debts, saved money and assets, and current income. That being said, a general rule is to save around 10% to 15% of your income in a retirement account at the very least. The more you can increase the percentage, the better it will be.

Another factor that is you must consider before embarking on saving for retirement is debt load. If you’re among the freelancers who have high-interest loans (like soft loans or pending credit card bills), you should first concentrate on paying-off and neutralizing said debts before you begin to save. This is because the annual interest you would be paying on said loans would be greater than the returns you would be receiving from the retirement savings.

On the flip side, if you have low-interest debts (like federal student loans or mortgage), you should start saving for retirement right away, whilst making sure than you are also paying your loan debt(s).


Estate Planning for Wealthy Families

Estate Planning for Wealthy Families


One of the best and most essential things a family with wealth can do to protect and grow their wealth is to create a solid financial estate plan. According to a 2014 report by Vanguard, seeking an advisor to build a financial estate plan is one of the top three services sought by affluent families (besides implementation of tax-advantaged strategies and planning for long-term care).

In such situations, a good plan makes all the difference – not only will it cover the goals the family wishes to attain, it will also keep searching for areas to improve in, and when necessary adapt to changes and include new situations.

Here are some estate-planning tips that you can use to protect and grow the wealth that belongs to you and your family:

Minimize your taxes:

While planners are the best at doing what they do (provided you’ve done your research and hired a good one), they are usually not the most knowledgeable when it comes to tax matters. It is, therefore best that you consult a tax lawyer or accountant who can help you minimize your taxes as much as possible before you begin the process of building your estate plan. Tax lawyers work with estate planners and advisors to review areas where benefits can be maximized through conducting an early division of assets.

Add a life insurance plan:

Making the addition of a life insurance plan into the financial one has more than a few benefits. For starters, it works as a great way to manage tax and risk-related expenses within corporations. Secondly, it serves as a handy tool for families that have high spending rates but wish to leave a certain estate value behind with as few tax litigations as possible.

Take your family structure into account:

Usually, families that are more affluent and wealthy than others tend to have a more detailed and complicated asset structure. This is at least partially because of the fact that many of said assets get implemented in an ad hoc manner over a large period of time, with the hiring of multiple tax lawyers and/or accountants.

Generally, creating a uniform family governance plan will help formalize the structure into a clean, solid shape. This would help make the financial structure more efficient and accountable and reduce costs tremendously. The factors to be taken into account here should be the formal setting out of family members’ roles and responsibilities, and a thorough calculation of the required outside expertise (such as investment, legal, and accounting).

Make your will early – and review your will regularly:

Quite surprisingly, it is a known fact that people tend to not make wills unless they cross a certain age. To most people who are young, making a will and an estate plan is a waste of time, money and personal involvement.

In reality, however, the only person who can validate the truth of the matter as an estate planner. With solid estate background and experience (from practical experience to memberships of prestigious organizations such as of The Society of Trust and Estate Practitioners (STEP), planners will be able to map out a procedure and summarize the areas that needs the attention of a lawyer. Undertaking this process when you are young – and reviewing it regularly will help you stay organized, fulfill the current financial needs of you and your family, reduce otherwise unnecessary legal bills, and make sure that the a well-formulated will exists, capable of handling any and all situations.

Allocate your investments:

Last but not the least, you must integrate all of the above into designing and building your investment portfolio, in accordance to the Investment Policy Statement. Doing this can require some initial heavy lifting, but it will be worth it when you are relieved that a solid estate plan is in action.

To allocate your investments fairly, make sure than the investment assets are well-diversified, yet dynamic enough to be easily changes with changes in the family structure.


Estate Planning for Blended Families (Estate-Planning)



In today’s day and age, blended families are on the rise. While they are generally good news for both the parties involved (as well as their children, if there are any), they come with some unique changes and challenges, especially on the legal and financial front. In the case of estate planning, for instance, things can get tight in case the wishes of spouses clash with each other – say, a well-to-do man with 2 children married a relatively wealthy woman with 1 child, the man may want the joint estate to be split equally between the 3 children, whereas the woman may want to each parent to address their child’s inheritance on their own. While the couple should have discussed these matters before marriage, they rarely tend to think what they must do with their wealth once they pass away.

Not only are such kinds of frictions bad, they can have people holding grudges for years, if not decades. The best way to avoid this is to make a solid estate plan for blended families that will honor everyone’s wishes and help divide property equally after the death of the parents.

Here are some tips on how you can successfully work on estate planning for blended families:

Tip #1: Make a disposition of remains – A disposition of remains is a legal document that appoints one individual to make crucial decisions, such as burial. This can be very useful when there is a conflict of opinion between the deceased parent’s children from their first marriage and the surviving partner. In case the deceased has not signed said document before his/her death, the surviving spouse will have complete control over all decisions, and the children will have absolutely no say in any matter whatsoever.

Tip #2: Make sure to spell out the terms of property distribution after your death – Spelling out the terms of how property is supposed to be distributed after your death will help clear the air on how financial matters would be handled, and would help make an atmosphere that is fair for both your surviving spouse (and their children), as well as your children from your previous marriage. Failing to do so will cause your spouse to receive all joint assets, along with total and complete rights to do whatever he or she would like to do with said assets. Such situation can turn out to be slippery, as the surviving spouse may have a greater desire to favor his or her own children.

Tip #3: Use irrevocable trusts – If you are both sincere about sharing your resources equally among your children regardless of their origin, irrevocable trusts are a great way to legally cement your wished and justifications. To do this successfully, you can do either of the following:

  • Buy life insurance and name the biological children of the first spouse passing away as the beneficiaries.
  • Have the assets entered in a trust upon the death of the first spouse and appoint an independent and impartial trustee who will control how said assets will be distributed. This will prevent the surviving spouse from emptying the trust on their own will.
  • Upon their death of the first spouse, give the assets to their biological children, to the stepparent’s detriment.

Tip #4: Discuss the extent of information that children should have upon their biological parent’s death – With matters as sensitive as estate planning, it is important for biological children to not feel that they are being kept out of the loop in any way. For instance, if the biological parent has assets (which the biological children did not know about), and if said assets were passed on to the stepparent, this would make the biological children feel that they were keep in the dark the whole time, which in turn would create a big rift in the fabric of the family.


Estate Planning Myths (Wills And Trusts)

Top Estate Planning Myths


When it comes to handling wills and estate planning, terms can get confusing. Living wills, wills, and trusts are different, yet overlap, which can make it confusing for an ordinary man to understand what they specifically are. Such kind of lack of awareness gives rise to confusion which leads to the development of myths that may completely interfere with your plans to secure your future.

No matter what your status is in life, having a solid estate plan is place is of utmost importance. Here are some myths that you must avoid when you are making your own plans:

Myth #1: A will and a living will are one and the same

One of the biggest confusions surrounding estate planning and wills and estate planning is that a testament, a last will, and a living will are one and the same. While they sound similar and fulfill the larger goal of securing financial matter around the time of your death, they each have different roles to fulfill. While a testament and a last will deal with financial actions in the aftermath of your death, and only become active once you die, living wills work as an advance directive – helping you make the choice of how your financial matters will be handled during your lifetime – and especially its later stages. They remain dormant unless you become incapacitated and unable to make or express choices even when you are alive.

Myth #2: It is important to plan a reading for a will

Thanks to the popularity of TV shows, most know about the compelling part that is the reading of a will, when the family (and maybe other possible inheritors) sit together for the lawyer to read out the will. It is however just that – fiction.

While the reading of the will makes for a very compelling and dramatic scene it has absolutely no relationship with actual laws. While your family does get to read your will after your death, it happens from a copy that they receive (in private) rather than a mass gathering an announcement.

When you die, someone (possibly your spouse or child) will have to bring your will to a probate court. Upon submission to probate court, the will would become the part of a new probate case and will be scrutinized by said court of law. Only after the court successfully determines the legal validity of the will, its terms will be enforced. If the courts deems the will invalid, the state will take over the matter.

Myth #3: A will is exclusively meant for the old, sick and/or wealthy

One of the greatest mental blocks when it comes to making wills is the fact that many people believe it is a directly reflection of human mortality and is therefore only suited for those who are close to death, and/or have a considerably large amount of wealth on their hands. Therefore, if you are not old, sick or wealthy, a will is not necessary.

Some of this is true – wills do reflect the fact that no one lives forever, and that planning ahead of time is a necessity, and people who belong to the aforementioned groups have a greater need for a will, those far away from said groups (namely young and healthy adults, and people with limited wealth) also require a will as well as an estate plan.

The truth is that despite all odds, emergencies can strike anyone at any time. Such untimely occurrences are indeed unfortunate, but the lack of proper legal devices further complicates things in the form of destructive family conflicts and haphazard actions. So even if you are someone who is not old, wealthy and/or sick, or even someone with a family, you must make sure to have a will.

Myth #4: Having a will is enough

A will is an essential document important for the purpose of estate planning (not to mention the perfect first step in the right direction), it is not enough on its own. This is primarily due to the fact that a will is a legal device that is meant to get into effect only when you die and has practically no purpose to serve when you are alive. For instance, if you are sick and require somebody to help manage your finances and health, a will would be of no use.

This is where other estate planning devices (such as estate plans and living wills) come in – each serve a specific purpose, and together, they address all aspects of your finances in all stages of your life. Do bear in mind that in order to give yourself and your family the best of benefits and protections, you must first have all the estate planning tools at hand.

Myth #5: There’s no need for a will when you can simply tell people what you want

One of the biggest myths surrounding wills is that of making an “oral will.” Often the product of fictious TV shows, many do believe that simply saying one’s wishes aloud on one’s deathbed is enough – and that a document (and all the legal proceedings that come with it) is not necessary.

This could not be farther than the truth, however. Making an oral will has nothing to do with with how modern estate planning laws function, and therefore have no legal bearing on how your property would be distributed once you die.

While some states (say, twenty of them) do allow people to make oral wills (a process called nuncupative wills), it comes with quite a few limitations. For instance, the state of Washington allows residents to create oral wills, it can only happen under specific criteria:

  • The total value of the personal property be less than $1,000
  • There should be at least two competent witnesses on the scene
  • You must be in the last stages of your illness
  • Someone must be present to write down the terms of the oral will and submit it to the probate court within 6 months of your death
  • Your spouse and/or children should be notified of the oral will in order for them to be able to contest the terms.

Therefore, oral wills – even in the states where they are allowed, are no match for a drafted last will and testament.

Myth #6: Having an estate plan is enough

Having an estate plan in place is one of the best things you can do – it is a great way to make choices that will help secure the financial situation of both yourself and your family and help avoid conflict and legal hassles later.

That being said, it is definitely not enough. Estate plans need regular review and if applicable, amendments and updates in order to make sure that the choices you make have the same effect years and decades down the line.

The most common reasons why changes in estate plans are often needed are:

  • Circumstances: The key purpose of an estate plan is to have a solution that fits the needs and expectations in your personal circumstances. And circumstances often do change in life – marriage, divorce, illness, financial upheavals, and family additions are some of the many reasons why circumstances can change drastically. In such cases, you must make sure that said changes are reflected on the way you plan your estate.
  • Choices: Sometimes even without external circumstances, you may want or need to change your estate plan to better suit your current mindset and view on life. For instance, if you have taken a liking to philanthropic activities, you may want to have some of your wealth go to charity, and therefore will need to amend your estate plan to reflect that.
  • The Law: Legal changes have considerable effects on the ramifications and sometimes even the validity of an estate plan. Legal changes in estate planning are known to happen every few years, and it is important to know if and/or how the legal changes affect you and your estate plan.

Myth #7: Having a will means a probate is not needed

One of the most dreaded parts of the legal procedure is a probate – and many who have a will in place believe that probate is not needed. Although it is no longer as time and expense intensive as it used to be, probate still is a considerably lengthy process that can last for at least a few months and cost quite a bit. And while having an estate plan in place does help in avoiding (or at least minimizing) probate, a last will or testament has no such effect.

Submission of a will to a probate court is mandatory and is a process that is bound to happen – even if you die. It is therefore better that you complete the long-drawn, but necessary process long before such an eventuality. Keep in mind that the probate is the only way for the court to determine the legal validity of your will, and for you to make sure that your choices are indeed enforced.

Myth #8: You have to leave an inheritance for your children or else they will challenge the will

Usually, there is a social obligation for parents to leave behind their property for their children – it is appropriate and expected. However, there is no legal obligation for you to leave an inheritance. There could be exceptional circumstances when you may not want your children to inherit your property.

Legally, you are free to leave your inheritance to whomever you want to. Your children can challenge the will if they don’t find themselves as an inheritor of your wealth, but it is a process that is far more complicated than it looks. For starters, they will have to meet some basic legal requirements to even be eligible to challenge a bill – this includes having a “standing,” (as in if they stand to inherit from the current as a successor), and have “grounds” for the will’s invalidity (as in, a solid and legally sound and recognized reason for why they believe that the will is not valid). Simply being unhappy with the will, however, is no ground on which they can challenge it.

Myth #9: In the absence of an estate plan or will, your property will go to the government

While It is correct that the government can and does end up being the inheritor of your property in certain circumstances (which, specifically, is a process known as escheat), said circumstances are very few and far between. In every state, the state government has laws in places that determine who is to inherit the property in the event of the lack of a will or any other kind of directive.

If you die without leaving a will, your property would be subject to laws of intestate succession, which, in simple terms means that the property will be inherited by the closest surviving relative. For instance, if you die without a surviving spouse but have children, the property would be equally divided and given to them. If you have no immediate family of your own, but have a niece or a nephew, the property would be inherited by her/him.

Escheat will only happen when the government cannot find any relative who can inherit your property in the absence of a will.


Stock Market Myths (Stock Investing Strategies)

Stock Market Investing: Top Myths


Investing in stocks is one of the most lucrative option for anyone – when done right, it can help generate a lot of money. That said, many are hesitant to do so, at least in part due to a lack of understanding. Some common ideas that persistently surface for the topic of investing in stock markets are as follows:

Myth #1: Investing in stocks is the same as gambling

This is surprisingly the biggest reason why people tend to stay away from the stock market. Even though investing in the stock market is a science that requires thorough researching, appearances make it seem like it is a gambling ventures where people put in their money by making wild guesses.

In reality, this is completely false. A common stock share represents ownership in a company, giving the holder the rights to claim both assets and a percentage of the profits generated by the company. The problem happens when investors fall into the mental trap of thinking of shares as trading vehicle, that something that they own. Gambling, on the other hand, is a game with random actions and a random outcome. Essentially, it’s just taking money from someone and giving it to someone else on the basis of pure chance. There is no science to it.

Myth #2: The stock market is only meant for brokers and the rich

While there are a few market advisors who portray that investing in the stock market is ideal only for the wealthy and the knowledgeable, this could not be farther than the truth. It is true that the wealthy and the knowledgeable may a greater level of security and ability to mitigate if things go south, but that does not mean that others are not suitable to invest in the stock market, especially in today’s day and age. Thanks to the internet, ordinary people have a much more accessible market and far more information on their hands than earlier. In addition to this, robo-advisors and discount brokerages help people improve their financial status by investing in the market with minimal investment.

Myth #3: Fallen stocks do go back up

This is one of the most dangerous myths of the stock market, and one that many amateur and even some seasoned investors believe to be true. Many do believe that a previously well-running stock that has gone down will go back up again.

In reality this is only a dangerous illusion. Let’s explain this through an example:

  • Stock A – a large company whose price per share had reached an all-time high of $100 but has recently fallen to $20
  • Stock B – a comparatively smaller company whose price has steadily risen from $10 to $20

Many investors here would prefer to invest in the first option believing that the shares would eventually bounce back to normal. This kind of thinking is as good as trying to catch a falling knife – one would only end up getting hurt. Investors must bear in mind that investing, with its use of technical analysis differs greatly from trading. Price makes up a single part of the entire investing equation – buying companies exclusively on the basis of market price means nothing.

Myth #4: Stocks which go up must also go down

As accurate as the laws of physics are, they do not apply to the stock market. The gravitational force has no effect on stocks whatsoever – stocks go up or down due to internal and external financial and economic fluctuations. One of the biggest examples of stock that has always gone up is Berkshire Hathaway. In the 90s, Berkshire Hathaway’s stock price went from $7,455 to $17,250 per share in less than 5 years. Over 20 years later, their stock is still on the rise at $308,000 per share (as of February 2019). While it cannot be said that stocks on the up will always be on the up, there’s no guarantee that they will go down either – all of this is dependent on the company’s activities and its reflection in the market.

Myth #5: Have a limited amount of knowledge is okay

While it can be said that knowing something is better than knowing nothing, it is important for stock market investors to have a very clear understanding of the concepts involved in the stock market and to do their research and homework when it comes to knowing where they are investing their money. In case the investor does not have enough time to conduct an extensive amount of research, they must hire an advisor who would help them understand what they are doing with their money. While it may seem costly to do so, at the end of the day, it far outweighs the cost of investing in something with little understanding.





A living trust represents one’s plans for the future – the better the plans, the more structured one’s life is. That said, sometimes, even the best laid plans can be rendered useless by unexpected changes that happen in life. Changes like this can get you thinking about wanting to change your own plans – and in this particular context – your living trust.

Changing a living trust can be simple provided certain key steps are followed. Here is a guide on how you can go about that:

What type of trust do you have?

In order to understand how changing your living trust would work, you first need to understand the type of trust that you currently have. Trust are of two types – irrevocable and revocable. Irrevocable trusts are meant to be permanent, and therefore are very difficult to make changes to. A revocable trust, on the other hand, is flexible in nature, and can be easily changed or even deleted if necessary.

Why should you change your trust?

There are several reasons why you may need to change your living trust. Some of the most common reasons for this are adding and/or changing beneficiaries in the event of a birth of a grandchild, the death of an existing beneficiary, divorce, change in financial status, change in laws, moving to a state with different laws. Other reasons include a change in intention in how assets should be distributed (for example, if you decide that beneficiaries must reach an age before they inherit the assets), removing or adding a property to the trust, changing the trustee and/or the successor trustee, or making a change in the powers that would be vested in the trustee.

In the event that the sole reason you want a change in your living trust is to add property to the trust, all you need to do is transfer the ownership of that property into the trust by adding it to the trust’s schedule of assets. Given that trusts are set up in a way to readily accept new assets, making amendments will not be necessary.

Changing the living trust

The easiest method of changing a living trust is to fill out a trust amendment form. This is a legal instrument that helps you make changes to your living trust without compromising the integrity and active status of the original document. If the trust in question has been made jointly with your spouse, the agreement of both of you would be required to amend the trust.

Sections to fill out require basic information – the name of your trust, whether or not this is the first change to the trust, previous changes to the trust (if applicable), and a statement of whether the amendment overrides previous changes or will remain in effect.

When writing the change, do make sure state that you intend to make changes to the trust, refer to the relevant paragraph number in the original trust document, and then state how you will change the section. Once you are done, you must sign the living trust amendment in the presence of a notary, and then attach said amendment to the original trust document and its copies.

How to restate the trust

Besides using the amendment form, you can also make changes to the trust by making restatement. Essentially, it is total redo of the trust that allows the trust to remain active while the new document alter its provisions. Restating trusts can be particularly useful if the number of changes you are making are several in number.

Making the restatement involves filling out a trust restatement form, stating the date of the original document, restating provisions, and then incorporating the changes that you intend to make.


Saving for Retirement no matter what your age



Having enough money for retirement is a crucial factor in life. After all, this is the time to rest and take it easy without the worries and rigors of active working. It is only paramount, therefore, that the more money one has, the more comfortable one can be.

While it is true that the earlier one begins investing, the better are the chances of saving more (courtesy compound interest), one can always save more for retirement even at later stages of life.

Here are some universal tips that can help you grow your retirement nest egg, no matter you’re your age is:

Start now: Taking the first step is the most essential thing to do when saving for retirement, especially if you are in the later stages. Don’t let overthinking get in the way of taking a step towards saving more. If you’re younger, you should definitely pay attention to start saving and investing as much as you possibly can and allow for compound interest to work in your favor as much as possible.

Add to the 401(k): One of the time-tested and best ways to save for retirement is having a 401(k) plan in place. In many workplaces, employers offers a traditional 401(k) plan, allowing employees to contribute pre-tax money, that offers considerable advantages.

Start your IRA: Having an individual retirement account (IRA) is yet another great way to build up your nest egg. IRAs come in two varieties – the traditional IRA, and the Roth IRA. Traditional IRAs are usually ideal for those who already have a workplace retirement plan, has tax-deductible contributions, and offer the opportunity to keep tax-deferred till the point after retirement when you start making your withdrawals. Roth IRAs, on the other hand, are more suitable for those with more phased-out income limits. Generally more flexible, they are funded by after-tax contributions, and have their qualified distributions (earnings included) enjoying a federal-tax-free (and sometimes even state-tax-free) status, provided you are at least 59½-years-olf, and meet the minimum holding period requirements.

Use catch-up contributions: Given the limited capacity of 401(k) plans and IRAs, beginning to save early in life is an absolute must. That said, if you’re among the many who are in the later stages of life and have save nothing-to-less, all is not lost. For those aged 50 and above – you can take advantage of being eligible to make “catch-up” contributions to IRAs and 401(k)s by contributing more than what is the monthly limit. This will play a great role in boosting your retirement savings.

Keep your expenses in check: Much as anyone would hate to admit it, expenses have a habit of expanding all the time. While some of this is natural (due to inflation, the economy, rising costs of essentials, etc.) not all of it may be justified. Making regular checks of your expenses can help you track lifestyle and spending habits, come up with better ideas and reasonably save wherever it is possible to do so. For instance, bringing home-cooked lunch to work is a better option (both in terms of health and money) than buying lunch at work. Having a reduced spending allows you to have extra money on your hands which you can then save or invest.

Keep an emergency fund: No matter what your age, marital status or cashflow, having, maintaining and growing an emergency fund should be a must for anyone. During times of crisis (which despite all efforts, can strike anyone at any time), emergency funds can help rescue you from having to fork out from your regular expenses and even your savings. One way you can actually maintain and grow your emergency fund is by regulating how you spend the money you get paid extra – for example, when you receive a raise. Tempting as it is to spend the extra cash on little-to-moderate luxuries, it will be far more rewarding to stash at least half of it in the emergency fund.

If/When you’re closer to retirement, try and delay Social Security: This is one of the best ways to save for anyone who is closer to retiring. By delaying Social Security payment every year before reaching the age of 70, you can increase the amount of money you will receive during retirement to a good extent. You can start delaying Social Security at the age of 62 (which is the age when you start receiving them), delay all the way till you are 70. That way, you can make a significant difference to the amount you receive every month post-retirement, as well as potentially increase the amount of survivor benefits for your partner or spouse.





Benjamin Franklin once famously said that nothing in this world is certain – bar death and taxes. While many tend to laugh on this, it is something that is inevitably true. More ironically so in this case, where tax law has combined both these “certainties” into a unique experience called the inheritance tax.

Basically, the property you leave behind when you die goes down to your children, family and friends, or even to charity. And also to the government in the form of taxes. Said property may be deceased to any one of inheritance, estate, or state and federal tax statutes, or in some cases a few or all of them.

One chief area of concern is the inheritance and estate tax, which are often mistaken as one and the same. In this article, we’ll what inheritance taxes are and how they differ from estate tax.


Estate Tax and Inheritance Tax – the Key Difference

The first thing you should know about these two taxes is that while they are used in context of a deceased person’s property and assets (and are often famously called “death tax”), they are in fact two very different kinds of taxes. The exact definition of these two taxes, however, differs from one country to another and even from one state to another, as some states levy the inheritance tax while others don’t. In the context of this article, the definitions and standards mentioned are accurate with US law in general, with some state-wide variations.

Estate tax refers to the tax deducted by the federal government after the debts of your estates have been cleared, your property has been liquidated (if required), the funeral expenses have been made and the relevant officials (like the executor) have been paid their dues. It is only after the estate tax has been paid that the heirs receive their share (from the leftover worth). Needless to say, this is a tax that is paid by the estate itself.

Inheritance tax, on the other hand, is paid by the beneficiaries once they have received their share in the deceased’s property. In contrast to estate taxes, which are levied by the federal government, inheritances taxes are levied by the state governments, and that too by only a few states in the country. This often puts residents in some states at a double disadvantage of having to pay both taxes.

That said, there are exemptions to payment, which tend to reduce the amount that you will have to pay as taxes.





Practically everyone has heard of the terms “will” and “trust,” and knows the context in which they are used. However, most people assume that they are one and the same – which is far from truth. In reality, these two documents and their functions are very different. While they are both estate planning devices and are very useful, they serve different kinds of purposes, to the extent that they can be used in conjunction to make a wholesome estate plan.

To start with, let’s take a look at the basic definitions of the two documents – while a will is a document that consists of directions in which your wealth and/or assets should be distributed after your demise, a trust can be used to distribute them before death or during the period of death (or even afterwards – but that’s up to you). While the will becomes active after only after your death, the trust will come into effect the moment you create it. By law, a will requires the presence of a legal representative who will see to the implementation of your wishes after your death. A trust, on the other hand, requires no such thing. A trust is generally arranged between a person (or institution, like a law firm or a bank) – known as the “trustee,” and the person who stand to receive the property – called the “beneficiary.” Trusts generally have 2 types of beneficiaries – those who receive income from the trust when they are alive, and those who receive the leftover amount after the death of the first set of beneficiaries.

Another key difference between a will and a trust is the kind of property that they cover. While a will covers only that property which is in your name at the time of your death, it does not include any property that is held in a trust or even in a joint tenancy. On the flip side, a trust can only cover property which has been transferred to it; therefore, the property must be put in the name of the trust in order to be included in it.

By rule of law, a will is supposed to pass through probate, which means that it’s administration will be overseen by a court of law, which will make sure that the will remains valid and the all the directions on it are followed according to the wishes of the deceased wanted. A trust, on the other hand, passes outside probate, and therefore does not need the supervision of a court (or the extra time and money that goes along with it. It is also for this reason that a trust can stay private unlike a will, which will ultimately become a part of public record.

Deciding which is the best option for you can be tough, since each of them have their own advantages and disadvantages and their usefulness (or lack thereof) is dependent upon your unique situation. To get the best of yours and your survivors’ interest, you must make a proper consultation with your lawyer and financial advisor.


Inheritance Tax - Have to pay



When the question is of Estate and Inheritance Taxes, the best news is that in most cases, you will be exempted – only those with big estates will be feeling the heat of taxes. That being said, there are some exceptions to this rule, and your unique inheritance situation (be it in terms of the size of the estate, your relation to the deceased, or anything else) may change your tax bill dramatically.


Estate tax vs. inheritance tax:

While many people consider estate and inheritance taxes to be the same, they are in fact two very different kinds of taxes. They have certain very vital differences, chief among them being the fact that estate taxes are deducted from deceased’s estate, whereas inheritance taxes are paid by the beneficiary. Depending on the size and location of the estate and the relationship between the deceased and the beneficiary, both, neither or either one could work as an active factor.



The Estate tax is levied on the property that gets transferred from the deceased. As already mentioned, most people are exempted from paying the estate tax, Thanks to the IRS exempting estates of less than $5.49 million from it. Added to that is the fact that the exemption is applied per individual, which means that if a married couple can enjoy an exemption of $10.98 million (double of the original).

Estates which exceed the aforementioned threshold have up to 40% of tax rate levied on them by the IRS. In this case, however, the IRS taxes the assets at the current fair market value of the estate, and not on the amount that the owner has originally paid to buy the estate.

According to Tax Foundation, a Washington DC-based think tank, estate taxes are collected by the District of Columbia and 14 other states. These states may have an exemption threshold that is lower than the IRS. For instance, the threshold in Massachusetts is around $1 million. That said, the estate tax that the owner will pay will be to the state government, and not to the IRS.



Contrary to the Estate tax, the Inheritance Tax is levied on the beneficiary. According to a Tax Foundation analysis, this tax is currently levied by the states of New Jersey, Nebraska, Iowa, Pennsylvania, Kentucky, and Maryland currently levy this tax on those who receive inheritances.

Much like the estate tax, the Inheritance tax too has several exemptions. For instance, in most cases, the deceased’s partner and children are exempted from paying it.

That said, some people may be doubly disadvantaged as well. Some states such as New Jersey and Maryland levy both estate and inheritance taxes. In such cases, both the owner and the beneficiary and will have to pay taxes, and taxes will be paid to the state government as well as the IRS. The chances of this happening, however, still remain very slim. Estate taxes are generally paid only when the value of the estate is very high and/or the beneficiary is not directly related to the deceased.




As of late 2007, Baby Boomers began collecting their Social Security payments, marking the beginning of an interesting time when there will be a long list of them in the retirement age. Due to their size alone, they form a demographic category that has more total spending power than anyone else on the globe, which in turn makes their investing and spending power very impactful on the U.S. investment landscape and the economy overall.

Those approaching retirement must keep in mind that the choices they you make today will affect what their financial status will be 20 years (or more) down the line. This is the minimum one can expect, given that the average life expectancy for the baby boomer has been calculated as 83 years.

Here are 5 best investment strategies that you must consider:

Variable Annuity (VA)

Believe it or not, the value of insurance become more important as you approach your retirement age. While traditional whole life policies still remain, there now exist some newer, more updated theories and products which have garnered enough attention to make their own place. One such product is the variable annuity, which permits investors to sign up for what is very much like an insurance policy, the only difference being that the balances can be invested into bonds and stock holdings.

Variable Annuities allow holder to gain on cash balances above inflation, which is a key factor in keeping your insurance’s value. That being said, it is always better to be safe, and select a variable annuity with restraint, given that fees for each type tends to be very different. Also make sure that you understand every fee that you are paying, from annual fees and underlying investment fees to front- and back-end sales fees.

U.S. Treasuries

U.S. Treasuries actually make up for the sole investment for many retirement-aged individuals. With yields that are regarded as a benchmark of safety (the risk-free rate of return), treasuries make for a very safe and reliable investment, especially when the odds are risky. All treasury bonds are controlled by the U.S. government, which has so far not defaulted on a single Treasury bond. No matter how you access exposure to Treasuries, from individual bonds and mutual funds to exchange-traded funds, and others, they lend a lot of weight to your overall portfolio.

For those above 60 years of age, capital preservation is much more essential than capital appreciation. Not only do treasuries offer this, they also offer a steady stream of income and a chance for you to preserve your assets during inflation. While municipal and corporate bonds are sold in the same manner, they tend to have higher default rates and require more research to be done by the investor for evaluation of merits.

Certificates of Deposit (CDs)

CDs stand only second to Treasuries thanks to their high yield (which often goes higher than that of Treasuries of the same maturity), as well as the feel-good factor of giving your hard-earned money to an established financial institution like a bank. Plus, there is the Federal Deposit Insurance Corporation (FDIC) insurance. The only thing there is to remember here is that there is a threshold of $250,000 per bank, since the FDIC insures a specific limit to individual account holders. If your amount is greater than this, you will have to spread your money over several different banks.

Real Estate

As with any demographic, real estate is an investment that pays well if done wisely. As someone approaching retirement, there are many avenues you can explore: from buying a second property and/or rental property, to converting from a paid-off mortgage to a smaller but more efficient home. Many people actually enjoy moving to a smaller home and/or a new location. These options will help provide asset diversification and help you save on taxes, as well a offer you a place where you can spend that much-deserved extended vacation-time.

You must keep in mind to not take such decisions lightly though, and must consider consulting a certified advisor before you actually decide to embark on a decision. After all, there is a lot that needs to be considered here, from your net-worth diversification and liquidity needs to your finances and personal tax situation. Plus, if you opt to keep a rental property, you will yourself have to put some work and effort behind it.

Individual Retirement Account (IRA)

It is virtually impossible to make a best investment strategies list that does not have this option, and for good reason. In fact, if you’re one of those who has been investing for years, you probably have a well-funded IRA already. Once you retire, your 401(k) assets will roll over to either a Roth or a Traditional IRA. And in case you’ve crossed the age of 50, you can add more than your standard annual contribution limits to your account. IRAs make a particularly good strategy, since they have the ability eliminate capital gains taxes and reduce your future tax bills significantly.

Both the Roth and the traditional IRA have their own advantages. While asset transfers to a Roth IRA are not tax-deductible (meaning you still have to pay income taxes), the income that you will go on to receive will be completely tax-free. Furthermore, the assets in your IRA must reflect your overall asset allocation.

Special Mention: The Wild Card

Yes, we mentioned five investment strategies. But we decided to include this spot for those who apprehensive of spending 20+ years sitting around having nothing to do. While good investment ideas do involve careful financial planning, they also sometimes (if not always) involve (being creative and following your passion). In fact, any one of your hobbies can function well as an investment opportunity. This includes several activities such as:

  • Starting your own business
  • Classic cars
  • Paintings and fine arts
  • Coins and collectibles
  • Sports memorabilia

That being said, you must be well aware that these too have their boundaries. After all, there is no point in starting a business which will keep you so busy that you finally get in way over your head. However, if there is something you are truly interested in – and preferably have good knowledge about it, you must not hesitate to take it further, now that you will enter a phase in your life when you actually will get the time to do so. We do live in a world that is brimming with possibilities and age is really just a number. So long as you stick to putting a fixed percentage of your net worth (a maximum of 10%), you will be completely fine.

To Conclude:

Now that you are approaching retirement, the choices you make can and will affect how you will be leading your lifestyle for decades to come. You must, therefore, make sure to properly think about what you need, set your goals, and then set about selecting the best strategy (with the help of a professional) to achieve said goals.



Life for the baby boomers hasn’t been easy, at least as far as saving for retirements is concerned. They have indeed experienced quite a few hard knocks. However, they now have a sound retirement saving strategy in place – one that can actually be beneficial for the younger generations as well.

A lot has happened in the last 40 years which has pretty much spelt doom for common investment strategies – from sudden busts and booms, periods of deflation and inflation, to sharp rise and fall of interest rates and speculative ventures gone bad. bubbles that ended badly. To top it over, the S&P 500 in this period has stood at an average of 12% a year (a figure that includes both price range and dividends.

While one cannot say that boomers have been stable through all this time, one can definitely say that they have learnt well from their failures. And they are now keen to find ways that will help them save for the rest of their saving years.

According to an American Funds study, 65% boomers reported that they felt smart as investors when they stuck with their investment strategy. In the same study, 6 out of 10 reported that they remain quiet when the market gets volatile. Only a mere 2% say that they feel smart when they make a move that’s bold and risky but well-rewarding if it works.

The younger generations, however, don’t seem to share this sentiment. For instance, only 43% of millennials feel smart when sticking with their strategy, while the rest only feel smart when they attempt to pick a hot stock. The latter’s percentage, here, is almost 6 times more than the boomers.

Baby boomers, however, thanks to their experience, have learnt an entirely different lesson. They’ve understood that good times don’t last long – let alone forever. Thanks to the huge market upheavals following the financial crisis, a mere 16% of boomers believe that they will continue to get their benefits either at the same rate or at a better rate. This is of course a lesser figure that the 31% who believe the same.

All said and done, there is a perfect explanation why millennials are more optimistic. Given that they understood the importance of saving much before their boomers counterparts did, they have a bigger edge over them. According to the American Funds study, almost 60% of the millennials began to save for retirement before the age of 25, as compared to only 28% of boomers. That being said, they also tend to have a more pessimistic view of their later lives, thanks to the debt that most of them face, especially in the form of student loans. As opposed to the baby boomers, who believe that they will be happy throughout retirement, millennials do not believe that they will be that lucky.

The study also shows that despite their wise savings habits, baby boomers do tend to have their blind spots. While they do remain committed to low-cost index funds (which are known to produce good results in the long-term), they also leave them vulnerable to sharp short-term downward market moves, which, according to 81% of boomers, is a great matter of concern.

If your portfolio mainly consists of investments and bonds, with stock index funds forming a very low percentage, it is better to stick to index funds. However, half of all generations still fail to understand the problems short-term risk of an index fund – the fact that things can turn real ugly real fast in case the market turns sharply lower, especially during the initial period of retirement.



While retirement does mean no work, you still must pay your taxes. Unsurprisingly, paying taxes can get tricky during a time when you’re not actually working, and instead are relying upon savings (which no matter how large, is still limited). It is therefore essential for you to estimate the taxes that you must pay, and plan your budget accordingly to avoid any inconvenience later.

Taxes during retirement work the same way as they would when you work, i.e. calculated on the basis of your annual income. Every source of income is taxed differently, which is why it is a good practice to have sound knowledge of the various nuances of tax rules.

The following are the most common types of retirement income and the various tax rules for them:

Social Security Income

If Social Security as your sole retirement income source, you will probably not have to pay taxes in retirement. If you have income sources other than this, however, then at least a part of your Social Security income will probably be taxed. The amount of tax determined is based upon a formula, can vary from zero to 85%, depending on your additional sources of income. Other income sources are termed as “combined income” by the IRS, and this combined income is plugged into a formula in your tax worksheet which will determine the percentage of your benefits which will be taxed annually.

Usually, retirees with large amounts of monthly pension will pay up to 85% from their Social Security benefits, and will pay their total taxes at a rate of 15-45%. Retirees relying only Social Security mostly get their benefits tax-free.

IRA and 401(k) Withdrawals

Generally, retirement accounts withdrawals are during retirement. This includes both IRA withdrawals and withdrawals from plans like 401(k), 403(b), and 457, among others, all of which are reported as taxable income on your tax return. The percentage of benefits that you must pay as tax will depend upon a combination of your total income, your deductions and the particular year’s tax bracket. For instance, if your year has more deductions than income (say, for instance, if you spent a lot on medical expenses), you might be exempted from paying any tax on withdrawals for that particular year.

Roth IRA withdrawals, if done properly will be tax-free.


Pension income is generally taxable. The best way to determine the tax on your pension is to use a simple guideline – if the withdrawal goes in before tax at the time of withdrawal, then it will be taxed. Since most pension accounts are funded with pre-taxed income, all of the amount will be written-off as taxable income each year on your tax return. In such cases, you can ask for your to be deducted from your pension check.

Annuity Distributions:

IRA or retirement account-owned annuities are taxed on the basis on tax rules in the section on IRA withdrawals. If the annuity was purchased with the help of money that was not within an IRA (or any another retirement account), then the tax will apply based on the kind of annuity purchased.

In case of immediate annuity, only a certain portion will be considered interest, and only this portion will be included in the taxable income section of your return. The annuity company will inform you of your “exclusion ratio” i.e. is, the amount of annuity income which will be excluded from the taxable income.

As for withdrawals variable or fixed annuities, the earnings need to be withdrawn first. This implies that if the account is worth more than your contributions, you will initially withdraw earnings or investment gain, which will be taxable. Upon withdrawing all your earnings, you will be withdrawing the original contributions, i.e. cost basis, which are tax-free.

Investment Income

Investment income works the same way as dividends, capital gains and interest income, by being reported on a 1099 tax annually. It is sent directly from the financial institution where your accounts are held. If you are systematically selling investments to generate income during retirement, every sale you make will generate a long/short term capital gain (or loss), which will subsequently be reported on your tax return. Taxes are nullified only when the other sources of income are not very high.

Selling your home

If the home you are selling has been lived-in for a minimum of two years, you have a high chance of not having your home taxed unless your gains are more than $250,000 (in case of a single person) or $500,000 (in case of a married couple). Renting homes have more complex rules, and tax calculations for the same require the expertise of a tax professional, who will help you determine the amount of gains which need to be reported.



Believe it or not, planning your ahead in time can helps you manage them efficiently once you have retired. In order to do so, you must have a thorough understanding of the various options that are available to you. Once you gain this understanding, you will be able to choose the right strategies which will help you keep your tax bill as less as possible. With the right decision, retirees can gain some control over their taxes thanks to the ability to being able to decide the amount that they need or want to withdraw from their retirement plans.

Here are a few tips to help you get started with planning your tax strategy:

  • Exemptions and Deductions: Make sure to take complete advantage of all personal exemptions and/or itemized or standard deductions. These will help you determine the amount of your income that should be tax-free. For retirees, taxable distributions can be coordinated with their medical expenses, property taxes and mortgage payments.
  • Increase your Retirement Contributions: This can be particularly useful if you have multiple available deductions. You can try withdrawing more retirement funds than when is necessary in a given year once your deductions exceed the taxable income. This will help you avoid paying extra taxes in the next year(s) which could have a low or even zero tax rate.
  • Defer retirement plan distributions: By deferring your retirement plan distributions until they are required by tax law or until you need them, you can keep your taxable distributions to a minimum, and therefore push your income to subsequent tax years. Taxpayers who wish to go with this plan should start withdrawing funds from their traditional IRA plans and 401(k)s once they reach the age of 70 1/2. Distributions should start by April 1 of the year next to the year in which the taxpayer turns 70.5 years; this is known as the “required beginning date.” You can calculate the minimum amount to be distributed by dividing your account balance by the life expectancy figures published by the IRS in Publication 590. To make things easier, you can try web-based calculators to estimate the minimum required distributions.
  • Elderly-specific tax credits: While taxpayers of and above the age of 65 are eligible for the special tax credit, actually qualifying for the same requires some careful planning, for the adjusted gross income (AGI) must be within certain limits.
  • Maximize your tax-free income: By selling their main home, taxpayers can have up to $250,000 exempted from their capital gains. If you are married, this figure will increase two-fold to $500,000. Interest that is earned from municipal bonds is also tax-exempt.

How is Retirement Income Taxed?

Retirees have a range of sources from which they earn their income, from pensions and annuities to Social Security benefits. Each of these sources are subject to a separate set of tax rules.

Social Security: Depending on your income profile, your Social Security can stand to partially or fully tax-free. While finding out where you stand does require some careful and complicated calculation, it is worth the benefits you will get in terms of less taxes and better planning.

Pension or Annuity Income: These can partially or fully taxable. Distributions will be fully taxed in the event that all contributions to your pension were made with tax-deferred dollars. However, if you have contributed any after-tax dollars for funding your plan, you can get some cost basis in the plan contract.

IRA Distributions: Depending upon the kind of IRA you have, your individual retirement account’s distributions can be fully or partially taxable, or even completely tax-free. Distributions get fully taxed when the taxpayer has a deductible traditional IRA. However, if you have any basis in a non-deductible traditional IRA, your distributions will be partially tax-exempt. Roth IRAs are mostly totally tax-free so long as you full two basic requirements, namely, your first Roth IRA should have been made at least 5 years before any distribution, and the funds should be distributed after you have reached the age of 59 1/2.

401(k) Plans: 401(k) plan distributions are fully taxable on account of the fact that these contributions were not included in your taxes when they were made. These get the same treatment as Roth IRA distributions.

Your Guide to Earning Well after Retirement

Your Guide to Earning Well after Retirement

So, you’ve been working hard and saving well for all of your professional life and are now on the threshold of retirement. Needless to say, the time for you now is to actually enjoy all that you’ve wanted to do so far.

Before you jump on the retirement bandwagon, however, you must ensure that your savings and post-retirement earnings are enough to last for the rest of your life – all while factoring the ups and downs of the market, unprecedented expenses, inflation, and of course, longevity.

However, it’s not as daunting as it may sound at the moment. By remembering the following key factors when making your post-retirement income strategy, you can make your life a smooth and easy one – with no worries of having to come out of retirement to earn. Ever.

#1: Longevity

Thanks to advancement in science and technology, the mortality rates have down a lot. This makes it quite likely for healthy 65-year-olds today to live until their 90s – or at least their 80s. And if one goes by currently available data, longevity expectations will only serve to increase in the coming future.

This implies that the possibility of people living for 30 years or more after retirement is pretty commonplace. And that needs an equal amount of income to boot. If you do not plan out your strategy thoughtfully, you may just end up outliving your savings and having to come out of retirement, or worse, living on Social Security as a source of income (Given that the average Social Security benefit is around $1,296 a month, one can say that it isn’t enough to cover all needs).

#2: Inflation

Just because the current rate of inflation is low, doesn’t mean that it won’t fluctuate. Even if it doesn’t, it will surely have a powerful impact over a long time – say, 20-30 years. This can – and does – have a profound effect on retirees, who unlike their younger, working counterparts do not have the option of relying on raises and incentives.

A lower rate of inflation too can have a profound impact on the purchasing power of a retiree. For instance, an inflation rate of 2% would turn what is $50,000 today into $30,477 25 years from now. Looking at this in another way, if you bought something by spending $50,000 today, you would have to shell out $82,030 to purchase the same thing 25 years from now. It is therefore important that you make your plans early and put into factor the effects of inflation in order to be able to maintain your current lifestyle.

#3: Market volatility

Ups and downs of the market can be extremely unsettling when a retiree who is banking upon living comfortably on a fixed amount for the rest of your life. No matter what the circumstances you will need stocks for growth potential, both when you’re saving for retirement and when you have actually retired. By default, the assets you have should be able to last you a minimum of 30 years.

#4: The Amount of Money Withdrawn

Now this one is a no-brainer – no matter how inflation- or market-proof your savings are, they won’t last long if you draw too much. On the other hand drawing too little (mostly out of fear of your savings diminishing) will have an adverse effect on your lifestyle and psychology.

A sound retirement income plan includes recommendations on the amount of money that you can safely withdraw from your savings and still have the confidence in the fact that you won’t run out of money. Believe it or not, planning in this area (or lack thereof) can have a dramatic effect on how long your assets will last.

Elements of a Sound Retirement Income Plan

Now that you know the factors you must consider when preparing a retirement income plan, you should know the various important elements that make a good one.

The following are the basics of a sound income plan for retirement:

#1: Guaranteed income that will take care of daily expenses

The first thing your plan should fully cover is your daily expenses. This covers all the non-negotiable requirements that you have as a human being housing, clothes, food, health care and utilities. Not only should this income be able to last for the rest of your lifetime (30 years or more), it should have sources of income that are stable and do not easily get swayed by external factors.

Generally, there are 3 main sources of guaranteed income:

– Social Security: For most, this acts as a base of income post-retirement. When and how you take money from here has a profound impact on your retirement. While it may be tempting to start taking the money the moment you are eligible (generally at 62 years of age), it can prove to be costly later. Starting at 62 instead of waiting till you reach full retirement age (FRA) will lead to reduced monthly benefits.

– Pensions: While pensions were very common in the past, that is no longer the case. In fact, the U.S. Department of Labor says that only 14% workers today have a proper pension plan to speak of. In the event that you fall among them, you must decide on how you would like to draw the money – as a monthly payment or as a lump sum. In case you are not among the 14%, you can follow certain paths that will allow you to make a pension-like stream of income.

– Annuities: Basically, an annuity is a contract made with an insurance company that pays you a set income in return for an up-front investment that you made. This payment can either be made over the rest of your life or over a set period of time, and is unaffected by market upheavals. Fixed income annuities are of several types, such as a deferred income annuity, immediate income annuity, and fixed deferred annuity with a guaranteed lifetime withdrawal benefit (GLWB).

#2: Growth potential that can fulfill long-term requirements

Aside from the daily, non-negotiable expenses, you will also have other expenses that will cater to your hobbies and dreams (for which you will have time) – such as pursuing a new hobby or going on a vacation or buying a boat. When you construct your income plan, you must make sure that it includes investments that have a potential to grow and try to keep up with the rates of inflation and meet these demands. A good practice in this regard is to use your investment portfolio and pay for these discretionary expenses. That way, you could easily cut back in case the market suffered a sudden downfall.

Having a mixed bag of cash, bonds and stocks, that work according to your frame of time, financial position, and market tolerance is a very good place to start. You must execute your strategy carefully though, because while a conservative strategy will lead you to miss out on the growth potential of stocks in the long-term, a plan that is too aggressive may lead to you taking far too many undue risks – which could prove very costly when the market becomes volatile.

#3: Flexibility that can help you refine your plan with the passage of time as much as possible

Quite obviously, the more flexible your plan is, the better it will perform. As a rule of thumb, your plan must be able to adapt to any curveballs it may get. Plenty of things in can happen after you retire – both good and bad – while you may get an inheritance, you may also experience a sudden medical emergency or have your parents move in. If and when such things happen, you must have a plan in place that can cushion you against the financial hardships that you will have to suffer otherwise.

One good practice that helps in this regard is to have income from different sources. Not only will this create a more diversified stream of income during retirement, it will also help you protect yourself against some very important risks like longevity, emergencies, inflation, and fluctuations.

Take for instance, a plan that includes a combination of taking withdrawals and income annuities. While the former is not guaranteed to stay for life, it does offer the chance to control how much money you can withdraw each month. The downside to this is that the money might just run out if you draw too much, live a long life or if the market hits a sudden low. Income annuities, on the other hands are not flexible and have very little potential to grow, but act as a guaranteed source income that will stay for life


To Conclude…

It’s a given fact that everyone’s situation – both financial and social is unique, and there is no “one foolproof income strategy” that will suit the requirements of all investors. You must therefore, identify your own situation and requirements, determine the need of growth potential, and then plan a strategy that will best suit your life as a retiree.

To make things easier, you can try following these six easy steps to create a basic yet strong income plan that will serve you well once your retire – and will last as long as you live:

Step #1: Study your lifestyle and situation and make financial as well as personal goals

Step #2: Plan a basic retirement income strategy in order to determine how long your current savings will last, and how you can successfully extend this period while maintaining your lifestyle

Step #3: Determine the following factors

– When you should take the help of Social Security
– The portion of your investment portfolio that you want allocated to a contingency fund, protection, and growth potential
– How your investment portfolio will be managed and who will do the managing

Step #4: Execute your strategy with the right combination of savings and income-producing investments, which will serve to balance your investment priorities and financial requirements

Step #5: Review your savings and investments regularly with an investment professional and always make an effort to refine your portfolio so that to suit your personal and financial requirements.

Step #6: Don’t forget to enjoy your retirement and live your dreams!

Top 5 Retirement Plan Options Article

Top 5 Retirement Plan Options

In today’s day and age, there is no dearth of good retirement plans. That said, there are some caveats if you really want to benefit from them, the chief among them being the fact that there is no one way to achieve your goals and gain maximum profits.

According to Jennifer Landon, founder and president of Journey Financial Services, there is no such thing as a “silver bullet” when it comes to finding an ideal retirement plan. This is due to the basic reason that any retirement plan which qualifies as “good” is comprised of a combination of income sources that have specifically been structured for the set goals.

While there are more retirement plan options than one can count, here are five options that work best with almost all sorts of requirements:


Quite unsurprisingly, pensions work as the best retirement plans on account of the fact that they ask very little from you. When it comes to pensions, the money is contributed by the employer and funds are managed professionally. All that is left for you to do, therefore, is to keep working till you qualify for it.

That said, it is not a suitable option for everyone. According to Marc Labadie, vice president of CR Myers & Associates of Southfield, Mich, pension plans today are very different than what they used to be. While they are standard for people working for the government and municipal corporations, they are getting decreasingly popular in the corporate sector. Even the pension plans that still stand have become less generous. In fact, many don’t even offer a cost-of-living adjustment, which means that the first payment and the payment of say, 30-35 years later (when you’ll be 90 or 95) will be the same.

Labadie further added that in order to live comfortably future retirees who do have pension plans should make it a point to save additional funds – or move down to a lesser lifestyle.


Defined contribution plans like 401k or 403b allow you to give your future the kind of direction you desire by allowing you to choose your plan, change the options, make contributions, and over and above all – choose to participate (or not) in the first place. According to several financial, defined contribution plans serves as the best retirement plans – right next to pensions – since the employers who offer them usually match a specific portion of your contributions. Tim Swanson, executive vice president and U.S. head of Citizens Private Bank & Trust, says that in most cases, this turns out to be a dollar-for-dollar match, making an immediate 100% return on the employees’ money.

Needless to say, the biggest upside to such plans is having your contributions automatically deducted from the paycheck – thereby saving you the hassle of making an extra effort to save and/or invest. The downside, however, is that there is a limit to how much you can contribute. For instance, the limit for people under the age 50 (as of 2015) was $18,000, whereas the same limit was increased by $6,000 for people over 50 (and only in terms of catch-up contributions).

While some employers do offer a Roth 401k option, which tax the funds you contribute upfront, most 401ks are conventional and require you to pay taxes when you make withdrawals.


Funded with taxed money, Roth IRA refers to an individual retirement account which will give you the opportunity to grow and make withdrawals – without paying taxes. According to Swanson, one of the best retirement plans (that he himself usually recommends) is to sign up for a 401k and then do a Roth IRA – in the event that they can afford it. Doing so will allow them to get a plan that is well-balanced and permits them to pre-tax contributions to the employer plan as well as after-tax contributions to the Roth plan – both at the same time.

Roth IRAs also come recommended for the younger savers, regardless of whether their plans are sponsored by their employer. Labadie says that it is very advantageous for the young saver (who literally is several decades away from retirement) to pay taxes today at a known rate today, see it grow tax-deferred, and finally pay out as tax-free – when the tax rate is unknown.

All said and done, Roth IRA too is not a viable option for all. Whether or not you’re eligible and how much you can contribute depends upon your modified adjusted gross income and tax filing status.


Annuity refers to an insurance product which permits you to invest in the present day, and receive a guaranteed income stream in return from the time of your retirement. You get the option of receiving your payments per month, quarter, or year, or even as a lump sum.

Annuities are of several different kinds. There is the single-premium immediate annuity (SPIA), which allows you to invest and then trigger the income immediately (though it is currently not a popular option due to the low rates of interest). Also available is the deferred-income annuity (DIA) that has a cash-refund option. This is a much more popular option due to that fact that it allows you to control the time when you can trigger the income stream and gives you the options to not annuitize at all – if you don’t need and/or want it.


If you’re close to retirement with no substantial savings in place, you should consider real estate as a viable retirement-planning option. According to Landon, while anyone can choose to opt for real estate as a retirement plan, it serves best for the 50-60 age bracket since they are the ones who need to prioritize their income-producing options.

Landon says that it is best to opt for the investment that will give them the most of their money. Real estate, for more reasons can one can – and does give this opportunity by creating a decent – yet constant income stream.

When it comes to making real estate your retirement plan, it is always recommended to purchase the property with a lump sum in order to avoid the complications and hassles of debt during retirement. You should also set apart some money for taxes and repairs.

The only downside of real estate is the fact that property management is an active process that requires constant working and involves ongoing and real risks. And that may turn out to be bothersome for some people. That said, once you weigh the pros and cons of real estate together you will realize that it might just prove to be a better option than most.



Putting a plan in place that can generate enough money to support you after retirement can be tricky at best. Not following the right plan…or rushing into something may just sound the death knell for all of your hard-earned savings.

Here are five great ways in which you can generate good income during your retirement. They’re no “get-rich-quick” schemes, and will need quite a bit of involvement; however, the rewards will be worth it in the end.


Constructing a portfolio of bond and stock index funds (or working with a financial advisor who does this work) is a fantastic way to create a stable source of income post-retirement. The portfolio, which is created to help you achieve a respectable long-term rate of return, allows you to additionally follow a specific set of withdrawal rate rules which will typically permit you to draw 4-7 percent a year. It will also allow you to increase your withdrawal in relation to inflation.

The logic that underlies “total return” is that you, the investor, are able to target a 10-20-year average annual return which exceeds – or at least equals your rate of withdrawal. While you may be targeting a long-term average, your returns can – and does deviate from said average every year. Therefore, in order to follow the investment approach successfully, you should maintain a diversified allocation that is independent of the yearly portfolio fluctuations.

This approach is best-suited to experienced investors, who are well-versed with the art and science of managing money and making timed, disciplined and logical decisions. It can also be taken by people who can – and are willing to invest by hiring an advisor who is experienced in using the approach.


This is a special type of mutual fund, which automatically distributes your hard-earned money across a diverse portfolio of bonds and stocks by owning an assortment of other mutual funds. Specially constructed to provide a single package that can accomplish all needs and fulfill all objectives, these funds are managed with the sole aim of producing a stable monthly income, which is then distributed to you, the investor.

Funds vary in type on the basis of their objective – while some produce high monthly income use principal to fulfill their payout targets, others produce a low monthly income amount but have a more balanced approach as regards preserving principal.

The greatest advantage of a retirement income fund is for you to have the ability to control your principal amount and be able to access your money anytime you want. However, you must know that this comes with a catch – withdrawing amount from your principal will lead to a proportionate decrease in your future monthly income.


Quite unsurprisingly, rental property can – and does act as a stable source of income. Make no mistake, though – it is neither a get-rich-quick scheme nor a passive involvement where you can sit and earn while doing nothing. Owning and managing real estate is a proper business in itself, and will never generate proper income if it is not treated as such.

Rental real estate will include several different kinds of requirements – both intended and unintended – in terms of money, time and most importantly, involvement on your part. Therefore, you must factor-in any and all expenses and other things that may be required to maintain the rental property. You should also consider a definite time-frame for which you will own and maintain the property, and consider the vacancy rates (given that no property can remain occupied 100% of the time).

Unsure where to start? Try reading books on investing in real estate, talk to retirees who work as experienced investors, or join a club that specializes in real estate investing.


Simply put, a bond is made when you loan your hard-earned money to a municipality, corporation or government. The bond, which is set to mature at a specific date, will earn the lender a specific amount of money (paid by the borrower) for a specific period of time until the bond matures, which is when the principal is returned to the lender. For many retirees, this interest income (called “yield”) which received from a bond (or a bond fund) can act as a stable source of income.

Bonds are of several types, each of which indicates the time-period before maturity and the level of financial strength of the bond’s issuer. Besides short-term, mid-term, and long-term bonds, there are floating rate bonds (which have adjustable interest rates), and high-yield bonds (which have low ratings but pay high coupon rates). Bonds are also available individually and in packages.

A bond’s principal value fluctuates with change in the rate of interest. For instance, a rising interest rate environment leads to decrease of existing bond values. While this principal fluctuation won’t matter if you plan on holding the bond to maturity, it will if you own a bond mutual fund and wish to sell it and use the funds for living expenses.

You should definitely buy bonds if you’re looking for small but stable income – and a guaranteed principal after a certain amount of time (i.e. once they mature). But if you’re trying to get high returns, or making gain on capital appreciation, you should consider other options.