Month: December 2018

Each one of aspires a peaceful, confident and respectful , stress-free life post retirement after years of slogging and hard work. For a financially accomplished and stress-free retirement, you might require a regular flow of income, without tension, everyday.

     Gone are the days when workers ad other working people could count on the pension plan and social security to cover their costs during their golden years. Today, pension are a rarity and social security isn’t sufficient for your comfortable retired life. For thi purpose, you have to plan your investments and retirement contributions thoughtfully during your working days. It is essential to create a regular source of income and, hence, the need to choose your retirement investment thoughtfully.

  Various Types Of Retirement Accounts : –

 Keeping the above in view, the government expects You to save for retirement and is offering tax-breaks on retirement plans. These retirement accounts offers numerous benefits. In most cases, your contributions to retirement accounts are tax- deductible and your contribution compounds without taxation until you withdraw it. Some accounts even allow for tax-free withdrawal of investment earnings such as the Roth IRA. There are various types of retirement Accounts available to employees : –

1 Employer- Sponsored Plans ; – These are workplace retirement plans. These include 401(K); 403(b);plans; 457 plans, defined benefit plans etc.

2 Individual Retirement Accounts : – These include IRA like Traditional IRAs; ROTH IRA; Spousal IRA, Rollover IRA.

3 Self- employed Plans : – These are the plans available to the owner of a small business or self- employed people like SEP IRA; SOLO 401(K) [Roth and Traditional}; Simple IRA and Profit Sharing.

4 Annuities- An Odd Investment : – These are the plans that are backed by an insurance company.

     Details Of Various Plans : –

1. Employer- Sponsored Plans : – The employer sets up this type of retirement plan and usually provides a limited number of investment options. The main advantages of these plans are :-

–They’re easy to set up and maintain..

— Your employer might match a portion of your contribution.(This is free money)

— Employee contributions reduce your taxable income for the year.

— You decide how much of your contribution to direct into each investment among the various options within the plan.

  2 Individual Retirement Plans ( IRAs ) : –

        An individual can set up an IRA at a financial institution, such as a bank, or brokerage firm, to hold investments- stocks, Mutual funds, bonds and cash- earmarked for retirement. The salient features of these plans are    

        — You choose the bank or brokerage and make all the investment decisions.

        — IRAs provide a much wider range of investment choices than workplace retirement plans do.

        — If you qualify for both a Roth and a Traditional IRA in the same year, you can contribute to both.

 3.  Self- employed Plans : –  According to U.S. Department of labour report, 34% of workers don’t have access to a workplace retirement plans. If you work at or run a small company or are self- employed, you might have a different set of plans, which are mostly profit- sharing plans. The key points of these plans are: –

    — These plans often offer more investment choices than employer- sponsored plans, such as 401(K).

    — You might be able to set up your account at a financial institution you already use.

    — If you’re self- employed, you can give yourself a generous profit- sharing contribution

4.  Annuities : –  Annuities are peculiar investment products. They’re contracts that are backed by an insurance company. If you, the annuity holder dies during the accumulation phase, your designated beneficiary is guaranteed to receive the amount of your contribution.

  Which Retirement Accounts Are Best For You : –

 — If you have a 401(K) or other workplace plan- then first contribute enough to get any free money offered.by your employer via the company match.

 — If you have maxed out your 401(K) or you don’t have a retirement plan at work – consider an IRA, which type of IRA is best for you- you decide.

 — If you’re Self-employed, or the owner of a small business- ther are retirement accounts designed specifically for you – like SEP IRA; Soli 401(K); SIMPLE IRA and Profit- sharing.

     Allocating Your Money In Retirement Plans : –

 Most working people need to make their money work hard in order for it to grow fast enough to provide you security. When you are young and time is on your side, you can take risk and go for aggressive investment plans. But at the age of 50 -55 year, you are to be little conservative. Think of your retirement accounts as part of your overall plan to generate retirement income. Allocate different types of investment between your tax-deferred retirement accounts and other taxable investment accounts to get the maximum benefit of tax- deferral. An example of how people may choose to allocate their 401(K) investments among the plan’s options is given below :-

                                        Allocating 401(K) Investments

                                  25 yrs old 50 yrs old             60 yrs old

                               Aggressive risk Moderate Risk       Moderate Risk

                                   Investor Investor                Investor

Bond Fund                      0% 35%                      50%

Balanced Fund                10% 0%                        0%

(50%-stock, 50% bonds)

Blue- chip stock Funds     30- 40% 20-25%                   25%

Smaller co. stock Funds  25-35% 15-20%                  10%

International Stock Funds   25-35% 20-25%                  15%

CONCLUSION : –

With good reason, people are concerned about placing their retirement account money in investments that can decline in value. You may feel that you’re gambling with dollars intended for the security of your golden years. So, better understand the various retirement plans available to you for investment and, if required, you may discuss with a financial advisor or professional before deciding the plans where you want to invest your money.

      It is a common myth that financial planning is only for people in a certain age group or income bracket. BUT it is not true. Financial planning is helpful for people at all stages of their lives. And more so for the individuals in the age group of 50-55 years when, hardly any time is left for procrastinating it any further. The goals, already set, needs to be revisited and fresh and hard look needs to be given to your savings and investments.

   How To Set Financial Goals : –

  It is assumed that by this age, most of the people must have set their Financial Goals. However, the following are few of the steps for setting financial Goals so that you reach your destination : –

     Step 1 – Figure Out What Matters To You : – It is important to think about your short- term goals as well as long- term, big ticket items like college expenses for your children, purchase of house, retirement savings and even buying a car. Write down your goals on a piece of paper. But make sure your goals are SMART.

    Step 2 – Prioritize : –  Goals need to be prioritized and quantified. Achieving of all goals may not be possible right away. Thus, the need for prioritization. Start with three key measures of basic financial health – Retirement Funding, Emergency fund savings and Debt Repayment. Prioritize as per your savings and availability of funds.

    Step 3 –  Create A Realistic Budget : –  Your Budget should be realistic and based on your expenses in the last 3/6 months. Don’t ignore even petty expenses. Follow 50/20/30 rule for budgeting i.e. 50 percent should go to essential living expenses; 20 percent to your savings and no more than 30 percent should go toward your lifestyle like entertainment, clothing, fitness etc.

     Step 4 – AUTOMATE : –  Ensure, that your savings and retirement plan(investments for retirement) are automatically deducted into a separate account. Setting up weekly/ fortnightly or monthly payments will take off the mental burden and keep you on track.

     Step 5 – Check On Your Progress : –  Financial planning is iterative. It needs to be reviewed and updated periodically. Better schedule annual review of your plans vis-a-vis your goals and your budget and make necessary adjustments.

      Basic Steps to Help You Achieving Financial Goals : –

       Use these Basic Steps to help you get smart about your money which will go a long way in achieving your Financial Goals : –

    1 What’s Behind Your Financial Decision : -Before you create a budget or, make spending cuts, take a close look on your lifestyle & values to determine what you value most, as these are different for different people.

    2 Get Organised : –  This requires managing your Financial documents, and also your time. Some of the documents that you should keep in an easily accessible fireproof box at your home can be:

• Bank Statements
• Credit Card information
• Investment information
• Insurance policies
• Tax returns

Some other important papers which you must keep in safe deposit box in a bank are ;

• Birth Certificate
• Death Certificate
• Marriage License
• Divorce papers
• Copies of Wills etc.

3. Know Where Your Money Goes : –  Start by jotting down everything you think you spent money on last month. Include rent, car insurance, groceries, small purchases and other miscellaneous expenses. Then plug spending leaks.

 4  Shop Smarter : –  Make smarter spending decisions to “Find” money without actually making more. For this, the following steps can be taken;

• Avoid impulse purchases
• Take only cash on shopping trips.
• Buy generic store brands at markets, when possible
• Compare prices and consider using coupons.

  5 Review And Reduce Your DEBT : –  Suggest that your total consumer debt should be less than 20 percent of your net income. Then create a Plan to reduce debt, especially costly Bad Debt like car loans, Credit-card balances. Also try to shift higher interest loans to a single lower- interest loan.

   6 Build A Strong Credit Report : –  Maintaining a strong credit Report can help you in a number of ways, like more favorable terms on loans and mortgages. You may also get better rate on car insurance. For this purpose, use only one or two credit- cards and pay credit -card bills as soon as they arrive to avoid late payment fees.

   7 SAVE For Your Future : –  Understand the Time Value of Money. The earlier you start saving and retirement income planning, the better. Even , if, you are 50 years of age and not started saving enough, start it NOW. And you’ll be much further ahead of tomorrow. For this, every time you receive a paycheck, save a certain percentage of your income before spending money on anything else.

    8 Set Financial Goals : –  Be smart about your Goals. Write down your financial goals and divide them into three categories- short-term, medium- term and long- term Try to set SMART goals(SMART word has been explained in earlier posts)

    9 Create A Spending Plan : –  Use a spending plan to ensure your daily spending habits don’t overwhelm your goals. A spending plan is not meant to be strict budget. Instead, it’s a guide that will help you take control of your financial future and, ultimately, reach your goals.

    10 INVEST Money To Reach Your Goals : –  Once you have identified your financial goals and established a spending plan, you know what you’re saving for and how much you’ll need to get there(your goals). For longer- term objectives, investing is one of the best ways to watch your money grow. Some of the investment choices can be :-

• Tax- Advantaged Retirement Accounts
•       Individual Retirement Accounts(IRAs)
•       Roth IRAs
•       401(K) and 403(b) plans
• Mutual Funds
• Treasury Securities
• Stocks and Bonds
• Real Estate Investments

(Various Investment vehicles have been discussed in earlier posts)

         CONCLUSION : –

        Financial Planning gives you a road map for where you want to go, in this case your Financial Goals. Proper and timely steps in this regard would go a long way to achieve your goals, short- term and long- term and also make your retirement life comfortable and tension- free. Try to develop a relationship with your  money.

     Many of the people , I speak say, that they do want to retire “the sooner, the better”, but they have not prepared themselves for that D-day. They wonder what planning or preparation is required for retirement? They feel and hope that they would be able to sustain a comfortable life ,even after retirement,without any per-planning. Even some think ,they would never retire and the life will always be like this. BUT this is not going to happen. That D-day is going to come, sooner or later, whether you like or not. Especially at the age of 50 or 55 years, one should not close eyes to the reality of life and can’t brush aside this fact. One has to plan and prepare for impending Retirement life.

         Retirement, which seems to imply idleness or the end of usefulness to society, may not be a proper term for many, who wish to remain active. So, the correct term, in my view ,should be Superannuation, i.e. having financial flexibility and independence, and not having to work for a job.

       Why To Prepare For Retirement?

     If you hope to someday reduce the time you spend working or cease working altogether, you’ll need sufficient savings to support yourself. Many people underestimate the amount of money needed to retire. You can live with this absurd thinking at your young age of 30- 35 years, but at your advanced age of 50- 55 years, you have to figure out  how much you should save per month to achieve your retirement goals. This period in your career when you are hardly a decade away from your retirement, is a critical period in which you should have a realistic assessment of how financially prepared you are for retirement. There are so many variables to consider when planning retirement that if you forget a major piece like- healthcare costs, nursing home care, loss of good- paying job etc., your retirement plans could drastically be affected.

         Don’t Neglect Non-financial Preparations For Retirement : –

      Investing your money/ savings is just one aspect of preparing for your retirement. In order to enjoy the lifestyles, even after retirement, you needs to invest energy into other areas of your life as well.

  —– Physical Health : –  Few things are more important than your health. Unfortunately, many people aren’t motivated to care about their health until they discover problems. By then, it may be too late. Exercising regularly, eating a balanced, and nutritious diet, driving safely go a long way in this regard. Regular medical exams. Are also important in detecting problems early.

 —  Psychological Health : – In addition to your physical health, be sure to invest in your psychological health. Have a circle of family and friends around for support. Unfortunately, many people become more isolated and lose regular contact with business associates, friends and family members as they grow older. But to have a happier and healthier life, try to stay active, getting involved in volunteer and new social circles.

  — Stay Active –: – treat retirement life like a bubbly, charming period. To avoid boredom and depression, you need to have a sense of purpose and a sense of routine. Establishing hobbies, volunteer work or a sideline business can be a terrific way to ease into retirement.

         Financial Planning For Your Retirement : –

  To maintain your standard of living in retirement, you may need about : –

   — 65 percent of your Pre- retirement income, if you :

        — Save a larger amount(15 percent or more)of your annual earnings.

        — Are a high income earner.

        — Will own your home free of debt by the time you retire.

        — Do not anticipate leading a lifestyle in retirement that reflects your               

                current high income.

        —– 75 percent of your Pre-retirement income, if you : –

            — Save a reasonable amount(10 to 14 %) of your annual earning.

            — Will still have some mortgage debt or a modest rent to pay.

            — Anticipate having a standard of living in retirement that’s

               Comparable to what you have today.

        — 85 percent of your Pre-retirement income, if you :

             — save little or none of your annual earnings(less than 5 percent)

             — Will have relatively significant mortgage payment to pay in

                 retirement.

             — Anticipate to maintain your current lifestyle through retirement.

         Some Basic Steps To Help You Through Retirement : –

1. Plan Both Financially And Personally : – Planning your activities is even more important than planning financially. Plan your interests, friends, and ability to know how to spend money when you retire
2. Take Stock Of Your Resources : – Ignorance about your assets may cause you misunderstand how little or how much you really have for retirement when compared to what you need..(In this regard, the above data of financial planning may help)  
3. Reevaluate Your Insurance Needs : – When you have sufficient assets to retire, you don’t need to retain insurance to protect your employment income any longer. Similarly. You can reassess your Life insurance and other Insurance coverage,
4. Evaluate Health care/ Living Options : – Medical expenses in your retirement years can be extremely high. Early preparation , in this regard ,increases your options; if you wait until you have major health problems. It may be too late to choose specific paths
5. Decide What To Do With Your Retirement Plan Money : – If you have money in a retirement savings plan, you have option of leaving the money in the plan. Further, you have many more (perhaps better) investment choices to consider. Evaluate your options properly.
6. Pick A Pension Option : – Selecting a pension option is similar to choosing a good investment- each pension option carries different risks, benefits, and tax consequences. Check to see whether the amount of your monthly pension stops increasing past a certain age. Then don’t delay access to your pension benefits past that age.   
7. Get Your Estate In Order : – When you’re considering retirement or you’re already retired, getting your estate in order makes all the more sense. Plan your estate/ ill properly. You may also want to consider giving monetary gifts now, if, you have more than you need.

   CONCLUSION : –

  Retiring can be a challanging transition. Most Americans have an idealized vision of how wonderful retirement would be- no pressure of work, deadlines, irritating bosses, unlimited time to travel. Play and lead a good life. Sounds goods, but the reality for most Americans is different, especially for those who don’t plan ahead(financially or otherwise)

   BUT before it is too late, as it may already be at the age of 50- 55 years, assess your financial readiness to determine whether you have sufficient resources to met your retirement goals and objectives. To help you in this regard, it is best to seek professional help from those who specialize in retirement planning.

    It has been observed by the experts, based on various studies that many ,may be most of the activities which we normally perform daily don’t add any value to our lives/ careers. Some experts have even claimed that 90 percent of our activities are Non- Value adding activities. This claim may appear to be laughable to most individuals, BUT, if we write down all the activities which we perform on a normal day, we would observe that most of them do not improve or add any value to our life. The same is true about our money spending habits. If we jot-down our daily expenses, the fact will be revealing. And if we add all such non value adding expenses over a month or a year, it may run into hundreds of dollars. This is true not about the actual impoverished people living on the street, or barely- able-to-put-food-on-the-table people, but a lot of people with middle level income group, who also waste a lot of money.

Where Your Money Goes : –

At any income level, people who have small incomes, people who have six- figure or seven figure incomes, fall into one of the following Three categories

  — People who spend more than what they earn ( accumulating debt)

  — People who spend all what they earn (saving nothing)

  — People who save 2,5,10 or even 20 percent(or more)

 The spending habits don’t depend on the educational level of the individual. If one has a better education, he would be better with money – this is really not true. Lots of people, who are wasting money- may be on expensive mobiles, branded clothes or shoes, newest iphones or other expensive habits have a college degree , some even have a Master’s. While some of these people do spend money in Wise ways, whereas others spend in ways that seem Unwise. Wise means “in a way that will increase your wealth” and Unwise means “ in ways that will decrease wealth or that can be dangerous”. Some of the things people waste their money on,are like:-

• Cigarettes
• Lottery Tickets
• Expensive clothes/ shoes/ sneakers
• Manicures/ pedicures/ expensive hairdos
• The latest entertainment technology
• The highest price cable TV packages
• Casinos
• Eating out frequently, or other similar expenses.

These are some of the habits which really is a waste of money and Makes you Poor and you start living on debt/ loan and financial stress.

Examining Overspending : –

 Many individuals earn just enough to make ends meet; some simply spend more than they make. The result of such spending habits, as mentioned above, is of course, an accumulation of debt. In the American market, you are referred as “ Consumer” and not as a person, a citizen or a human being. Some of these overspending habits may be due to the following reasons : –

  –-Having Access To Credit : Thanks to the innovations like ATMs, credit cards, PayPal and so on, your money is always available, 24/7. Credit is most perilous when you make consumption purchases, you can’t afford in the first place. Consumer debt is nothing but the misfortune of getting in over your head, racking up high interest charges and thus delaying your progress towards your financial and personal goals.

  — Misusing Credit Cards : – If you pay your bill in Full every month, credit cards offer a convenient way to buy things, but if you carry your debt over from month to month at high interest rates, credit cards encourage you to live beyond your means.

  — Taking Out Car Loans : – Purchasing a car on loan may appear very tempting, but you are driving/ pushing yourself into a debt trap. Auto loans are easy for just anyone to get, but very difficult to repay. The dealerwants you to think in terms of monthly payments, which may sound cheap, but you’re going to repay it forever- and you just bought a car that cost a huge chunk of your monthly take-home income.

  –– Spending To Feel GOOD : – Just as people can become addicted to alcohol, tobacco, television and the internet, some people also become addicted to Overspending like going to a fancy restaurant, just to feel Good. And the more you spend on such outings, the less you save and the longer you’ll be stuck working under stress, obligations and demands.

  — Bending To Outside Influences : – Living for today has its virtues. Tomorrow may not come. But odds are good that it will. Some people just want to see the latest movie, even at an exorbitant price; wear the latest designer clothes, get newest smartphone, as they don’t want to feel left out or behind the times- although they may not be in a position to purchase them in cash or comfortably.

  Financial Literacy : –

In recent years, various studies have indicated that Americans are by and large financially illiterate. Many individuals do indeed have significant gaps in their personal financial knowledge. Unfortunately, most Americans don’t know how to manage their personal finances because they were never taught how to do so. Now as a senior citizen or professional who are in the advanced age or who have already retired, have a responsibility to discuss money with their younger ones. Make them financial literate as most high schools and colleges lack courses that teach this vital, life-long needed skill. As parents, we must inform them important finance concepts, otherwise, they may learn the hard way – by making lots of costly mistakes. In addition,to the enormous financial costs, increased stress and anxiety go hand in hand with not mastering your money

 CONCLUSION : –

This topic is very pertinent for the individuals who are nearing retirement or who have already retired. They have to inculcate good financial habits in their children, in their family members so that they understand the importance of financial planning and budgeting. They should spend their money wisely and set an example to their children. The spending habits should be driven by YOUR desires and plans and not those of others. If you have not set any goals yet, you may not know how much you should be saving. It is a fact that despite relatively high income compared with the rest of the world, some Americans have a hard time saving a good amount of their income, because they spend too much- sometimes far more than necessary..

There are many Americans who are although in their 60s But have nothing in their savings and may have to work even after their official retirement, to meet their expenses, as it is very difficult to live a comfortable life after retirement, only on the Social security amount. If you are not conscious of your expenses, you may also be one of them. But in this regard you are not alone. According to a new survey from GoBanking Rates, twenty-eight percent of Americans have nothing in their savings accounts and another twenty-one percent don’t even have a savings account

  The Obsessed Thinking : –

In this regard, the people have various reasons to forward, like ;-

–” I get financial security. I don’t get the obsession with retirement

— “ My great grandfather worked until he died, so did my grandfather. I hope same happens with my father”.

  These and similar thinking is self-defeating absurd thinking, But the fact is that a lot of people are not able to work until they die, even if they want to do so. One must remember that this is not the economy of their grandfather’s era. The economic world has undergone a sea change, globally, in the past few decades, and so our needs, expectations, requirements and commitment

     Further such people forget to account for the fact that people are living much longer now after retirement, may be about 25 to 30 years,whereas, it was about 10 to 12 years earlier.,yet getting disabilities as they age at virtually the same rate as before. The average life of a male is now 78.6 years and it is 82.4 years for a female. The end result is that much of the population spends many of their elder years unable to work. You should not rely on being active and productive until your last day and then suddenly dropping dead. Working is something that can always be done like doing side jobs or operating one’s own business, but these things wouldn’t be viable sources of income. If the money comes in, great. If not, you should always have something to depend upon.

  Common Money Mistakes You May Make : –

 The common financial mistakes which is generally made by the people.are as under : –

— Not Planning : – Most of the people procrastinate . They have deadlines and then deadlines extensions. You can allow your credit-card debt to accumulate. You can pay higher taxes due to not planning your finances and also not setting your financial goals..

—– Overspending : –  As you have not set your financial goals and planned your finances, you may be tempted to spend on luxuries, vacations, restaurants and other such non-essential activities. Most Americans don’t plan for future and so don’t save much for their life after retirement.

— Buying With Consumer Credit : – Buying on credit encourages you to spend more than you can really afford. Carrying the credit-card balance, month-to-month, means that your future earnings are spent for debt repayment. You must know that most companies charge between 18- 21 percent on the credit-card balances.

— Delaying Saving For Retirement : – Some people may be under the illusion that they may work till their end and would never retire, and so why to save for life after retirement. But, in fact this may not happen. Your health may not allow you to actively work. Therefore, the longer you wait to start saving for retirement, the harder reaching your goal will be, to have a comfortable life after retirement.

— Not Doing Your Homework : –  With all the different financial products available, making informed financial decisions has become a difficult task. To avoid confusion, you have to shop around, read reviews, check references and do proper homework to avoid financial mistakes, which may land you in problems.

—Making Decisions Based On Emotions : – This is a common reason for landing most of us in financial overspending. You may undergo major life changes or you may feel under pressure and make decisions under emotions or distress. AVOID IT. Take your time and keep your emotions out of picture while taking key financial decisions..

— Exposing Yourself To Catastrophic Risk :  People without a savings reserve and support network can end up homeless. Many people lack sufficient coverage to replace their income. You’re vulnerable if you and your family doesn’t have insurance to pay for financially devastating losses.-

— Focussing Too Much On Money : – Money is not the first- or even -second- priority in happy people’s lives. Your health, relationships with family and friends, career satisfaction and fulfilling your interests are very significant and we must work for them.

  Developing GOOD Financial Habits : –

Various studies have indicated that Americans are by and large financially illiterate. The vast majority of survey respondents have “falling” scores- meaning that they answered less than 60 percent of the questions correctly. Most Americans don’t know how to manage their personal finances because they were never taught how to do so, neither in schools nor at home by their parents.

 But if you understand the basic concepts , regardless of your income, you can make your dollars stretch farther, if you practice good financial habits and avoid mistakes. In fact, the lower your income, the more important it is that you make most of your income and savings.

 Personal finances involves much more than managing and investing money. It also includes making all the pieces of your financial life fit together. You must strive to overcome temptations and keep control of your money rather let your emotions and money rule you.

  CONCLUSIONS : –

Money problems can be fixed overtime with changes in your behaviour. We have to be alive to the situation and face the reality. Day-dreaming is not going to help you to meet your goals, short-term as well as long-term. You must overcome the lure of easy credit as many attractive reasons would be forwarded by the dealers. You must have a strong desire to live within your means and discuss openly the details of your income with your spouse and grown -up children, so that they are aware of the facts and avoid having unrealistic desires. Wrong financial planning at your age of 50-55 years may result into serious financial and family problems in your future retired life, which is a fact and not a fiction.

 

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     Life is about experiencing every good bit of it throughout one’s lifetime, be it a walk in the park or building memories of playing with your little ones. But these experiences can be truly rejoiced ,when one lives a healthy life without having to worry about any unforeseen medical issues. For this purpose, the health insurance companies have floated various plans which help safeguard you & your family against financial risks arising out of a medical emergency. These “Healthcare Plans” assure you that while you’re unwell, they will take up all the hassles related to your treatment, so that you can stay worry free and focus only on your recovery.

          Comprehensive Health Insurance Plan : –

    A health insurance plan ,to meet everyone’s(individual and family) needs, should cover : –

  ___ In-patient Care

  —    Pre and post-hospitalization

  —    Room Rent And ICU cover

  —   Daily Allowances

  —   Ambulance cover

  —   Organ Donor Cover

  —   Lifelong Renewability

  —   Annual Health Checkup

  —   No-claim Bonus

  —   Tax-benefit etc.

         Average Cost Of Health Insurance : –

    Health insurance premiums have risen dramatically over the past decade. There are a number of factors that impact your health insurance costs. One of the primary factors in your health insurance costs depends on where you live. It also depends on the metal tier of the plan like bronze, silver, gold etc., and the Plan type adopted by you.

1. Average Health Insurance Rates By State : –

State                      Monthly Premium     Annual Premium

Florida                          $285                              $3,420

Illinois                           $244                               $2,928

New Jercy                     $307                            $3,684

Pennsylvania                $231                             $2,772

  2  (B) Average Health Insurance Premiums By Metal Tier : –

    The average rates paid for insurance plans are inversely related to the amount of coverage they provide.

             Type            Monthly Premium        Annual Premium

          Bronze                    $201                              $2,411

          Silver                      $247                               $2,961

          Gold                        $291                                 $3,487

           Platinum                  $363                         $4,360

     (C) Average Rate By Plan Types : –

      The insurance premium also depends on the type of network, the plan use like HMOs tend to be most restrictive about which doctors you can see and what you must do to see them.

                 Type      Monthly Rate          Annual Rate

                 HMO        $230                           $2,784

                 POS         $244                              $2,928

                 PPO         $251                              $3,019

                 EPO         $254                             $3,056

  How Much Does An American Family Pay For Health Insurance?

     According to eHealthinsurance, for unsubsidized customers in 2016, premiums for individual coverage averaged $321 per month, while premiums for family plans averaged $833 per month. The average annual deductibles for individual plans was $4,358 and for the average deductibles for family plans was $7,983.. Further every month, a family of four’s health care costs are going up $100 a month, on average, for more than a decade.

   Why Health Insurance Is So Expensive ?

  The U.S. is famous for over-spending on health care. The nation spent 17.8 percent of its GDP on healthcare in 2016, whereas, the average spending of 11 high-income countries like Canada, Germany, The U.K. and France etc. was only 11.5 percent. Percapita, the U.S. spent $9,403, which is nearly double what the others spent. In the U.S.the drugs are more expensive; Doctors get paid more; Hospital services and Diagnostic tests cost more. And a lot more money goes to planning, regulating and managing medical services and other Administrative charges.

     As far as the Quality of Health care is concerned, the U.S. fared comfortably to other countries. Long wait times for treatment are not as much an issue for Americans as they are elsewhere. In treating heart attacks and strokes, the U.S. actually had the Best record of any other country.

     Further, Americans also had the lowest rate of coverage. About 10 percent of the population did not have health insurance in 2016. In other countries, nearly everyone was covered. However, the percentage of population with health insurance has increased since the Affordable Care Act (ACA) was passed.

        Affordable Care Act (ACA) : –

    The Affordable Care Act , also known as “Obamacare” has helped millions of people get health care coverage. Before the ACA, health insurance was -unaffordable and unavailable for many. Now, with Obamacare, if you meet certain qualifications, the Government will help pay for your monthly premiums and out-of-pocket cost. And for those who have pre-existing medical conditions, you can no longer be denied coverage under Obamacare.

        Finding The Proper Health Insurance Plan : –

     Finding the right Health Insurance plan can be difficult. Each plan has its pros and cons , especially considering how costs can vary depending on the plan’s monthly premiums, deductibles and copays. But with Obamacare Plans.com, it is easy to compare your options and decide. Whether you prefer to lower your premiums with a Bronze or Silver plans, or need to lower your out-of-pocket cost with a Gold or Platinum plan- you can choose a plan, depending on your eligibility and qualifications; some plans can be as low as $50 per month.

         CONCLUSION: –

   Health Insurance coverage in the United States is now generally mandatory, and if you don’t have it, you can face hefty tax fines. The Affordable Care act(ACA) and Health Care and Education Reconciliation Act enacted by President Obama, in March 2010 have enacted comprehensive health care reforms in the United States. Medicare, the Government ran health insurance plan for the elderly, is a multi part major medical plan. Supplemental Insurance policies, known as Medigap Coverage, would help you paying for the costs that Medicare doesn’t pay.

 

Budgeting your Money and Budgeting your Time have more in common than you think. They are both precious resources that are easy to waste and worth saving, when you can. Some of the more basic principles of Time Management can be applied to your finances to make your budget more streamlined, efficient and productive. Further, to compete with the fast moving society, Time management is very crucial. The more time you have, the more you can plan and organize your Finances

   Some Important Time Management Techniques: –

The Goal of time management , for elderly people, is to reduce stress as they face many competitive activities and responsibilities simultaneously like increased office work/activities (as you may be at the peak of your career by this time); pressing domestic responsibilities of grown up children; arranging for their college education and also to manage your finances properly. All these activities demand a lot of your personal attention and time and may result into mental and physical stress. In this regard, the following Time Management Techniques may help you a lot : –

 TIME IS MONEY. Use this advice to get the most from every work you do.

1 Keep Things Varied : – Vary the sorts of work you do so you are able to jump between them when you’re fed up, otherwise, monotony will get you tiresome and productivity can drop.

2 Write Things Down : – Make To- Do lists- the more complete, the better. They will help you to organize your ideas and so the work and you’ll be much less stressed.l

3 Automate your Accounts : – Set an automated reminder and payment system. This will reduce your payment delays and so the late fee/ interest charges. Pay your Insurance premiums/ Mortgage installments and other Utility bills through Online automate system.

4 Don’t Mix Work And Home : – Approach your day in “Work Mode” even if you’re working from home (especially after your retirement). Avoid interruptions and reduce the use of phone, especially when dealing with finances.

5 Budget Realistically : – The fundamental of preparing your Monthly Budget is that it should be realistic and nothing , even petty amount, should be left out. For this, you may scan through last three months or six months expenses. The Budget should be prepared timely and correctly and then try to stick to it.

6 Be Prudent : – Value your money and have a positive and committed relationship with your money. It’s a good idea to practice a sensible spending so have time to hunt around for the best bargains, when it comes to purchasing especially high cost items.

7 Don’t Be Careless With Important Paperwork : –  It’s really important that you make sure you don’t lose any of your bank statements. Try to get them regularly and in time. File them away carefully and methodically as soon as they come through the post. This would help in filing your Tax returns,also.

8 Don’t Dismiss Insurance : – As impressed in earlier posts, review your insurance- Life Insurance, Medical/ Health insurance, Auto Insurance as well as home Insurance periodically and ensure it meets your as well as family requirements adequately. Make necessary changes, wherever, required.

9 Don’t Pay Your Tax Bills Late : – Timely payment of taxes, federal and State, will ease your burden and you will  not be unnecessary paying the late fee charges and fine and also avoid the correspondence. Mark some time in your calendar for this purpose.

10 Account As You Go : – Keep the details of the account on day-to-day basis so that your money/ finances and related paperwork are in order and are handy, when you need them. This habit would save you a lot of time.

11 Save As You Go : – To make sure you’re living within your means from month-to-month, keep your amount of savings and taxes separately ,although you may be making the payment on quarterly or yearly basis.

12 Don’t Fritter Your Time Away : – This is a very important point in Time Management, when you have a limited time for you various competitive activities.” Don’t do anything during your working day that doesn’t add value to your work”.

 Advantages Of Time Management In Finances : –

Much like money, time is both valuable and limited. It must be protected , used wisely and Budgeted. How you use that time depends on skills learned through self analysis, planning, evaluation and self- control. People who practice good management techniques often find that they : –

  — Are More productive.

  — Have More Energy for things they need to accomplish.

  — Feel Less Stressed.

  — Are able to Do Things they want.

  — Get More things Done.

  — Relate More positively to others and

  — Feel Better about themselves

   CONCLUSION : —

Prioritizing helps stretch it further. Prioritizing both your tasks and your spending allows you to accomplish more with what you have. Instead of just doing or spending without a purpose, prioritize what matters most so you feel better about how you spend both time and money, as the world of finance has evolved into highly competitive workplace. Therefore, effective management  is a competitive advantage for any finance professional. I can say with my own experience that if you inculcate the habit of Time Management throughout your career, the tasks which look insurmountable and stressful can be completed with ease and without stress.

 

  

    Numerous life changes come when we are getting older. Our approach to personal finance management also changes with time when we get experience and maturity.When we are in our fifties, just a decade away from our retirement or we may be retiring  much sooner , one has to be very careful with the finances. The right financial decisions could make or break your future plans, so don’t leave them to chance. You must have the best of information you need to make informed decisions regarding your investments, spending and how to best protect your wealth.

 Personal Finance Management Tips : –

Some of the important points , which the individuals in advanced age, must keep in mind are as under ; 

 First : – A life of constant competition with others like cars, home, holidays, children education/ career etc. should be stopped. Live your own life.

Second : – Stop obsessing about mastering the stock market, if you have not learned the skill of equity investment .

Third : – Make sure you have an investment philosophy. Write it down and make a plan to implement it.  

Fourth : – Do not brood over past mistakes and errors. FOCUS on making corrections. Save atleast 30 percent of your income.

Fifth : – Get some control over expenses. Live within your means and make choices that fit your income. STOP taking personal loans.

Sixth : – Get rid of DEBT. Save sufficient amount for your retirement as well as rainy days.

Seventh : – Get serious about long term goals. Make a detailed financial plan and set specific target.

Eighth : – Ensure that you have conversations about money with your family- spouse and grown up children about savings and wealth.

Finance Tips From Billionaires around the world : –

Many people instinctively look in amazement at the thought of getting personal finance tips from rich people, as they believe that it is more of a sermon. But there are some solid tips from very wealthy people that make sense regardless of your financial situation and age. Mr. Warren Buffet, considered to be the second richest man, has mentioned the following few points regarding Savings and Management of finances : 

1.    1 Our favorite holding period is forever.

   2 Price is what you pay; Value is what you get.

   3 Risk comes from not knowing what you are doing.

   4 I always knew I was going to be rich. I don’t think I     doubted it even for a minute.

   5 Someone’s sitting in the shade today because someone planted a tree a long time ago.

   6 Money is not everything. Make sure you earn a lot before saying such nonsense.

   7 Buy companies with strong history of profitability and with a dominant business franchise.

   8 We simply attempt to be fearful when others are greedy, and to be greedy only when others are fearful.

   9 You don’t need to be rocket scientist . Investing is not a game where the guy with  IQ 160 beats guy with IQ 130

   10 I try to buy stocks in businesses that are so wonderful that an idiot can run them.

   11 I have pledged…to always run Barkshire with more than ample cash.

   Similarly, other billionaires have some Important tips about the management of personal finances that can apply to just about everyone : –

  1 START Early : – Carlos Slim Helu is a Mexican businessman ,was ranked as the richest man in the world for few years. His basic tip is : START EARLY.If you’re 50 and struggling , the advise should be changed slightly to “START NOW”. The sooner, the better

  2 Find Your Passion : – Billionaire Oprah Winfrey said “ you become what you believe.” Change is possible whatever your situation, and the first step is believing in yourself.

    3 You Don’t Have To Game The System : – Warren Buffet says that he made his investment fortune on The FUNDAMENTALS. Whether you have $50 to invest or $5,000, sticking with the fundamentals is smart.

   4 Simplify Your Life : – Carlos Slim has lived in the same house for more than 40 years. Warren Buffet  lives in a house he bought in 1957. Constantly pursuing things you don’t need puts you on a financial treadmill, not an upward escalator.

   5 Cars Are Consumer Goods : – Don’t waste time on the idea that a car is a status symbol. Sure have a car, if you can afford to,. Many billionaires John Caudwell, David Cheriton, Chuck Feeney walk, ride bikes or use public transport for everyday getting around.

  Some Important Tips For Long-Term Money Making

1 “ Only buy something that you’d be perfectly happy to hold, if the market shut down for 10 years”.

2 “ It’s far better to buy a wonderful company at a fair price, than a fair company at a wonderful price.”

3 “ Diversification is protection against ignorance. It makes little sense if you know what you are doing.”

4 “ If past performance was all that is needed to play the game of money, the richest people would be librarians.”

5. “ Rule no. 1 – Never lose money.
6.       Rule no. 2 – Never Forget rule no. 2.”

    CONCLUSION: –

Some very wealthy people started from very humble backgrounds. Whatever your financial situation, you can improve it, and personal finance tips offered by the very wealthy can make sense in just about any situation. Buy low, sell high and don’t waste money. Find your passion and make time for it. These aren’t just tips for financial success, but for making the most of your life, and isn’t that money is supposed to help you do?.

 

   

 

Numerous Americans over 50 haven’t saved for retirement. Quite a few over 50 have little or no retirement savings. Generally , they delay retirement savings in favour of various other actions like pursuing debt reduction first, then children education loan, instead of accomplishing several goals simultaneously. The result, you are having less savings and also pay higher taxes. You pay a lot of money in taxes – probably more than you realize. Few people know just how much they pay in taxes each year. Your purpose/ objective should be – how to reduce your total tax burden. You must understand the tax system, both state and federal taxes. Your tax ignorance can lead to serious mistakes.

       Various Tax Saving Options : –

  Growing older qualifies you for a variety of tax perks that aren’t available to younger individuals. You must understand what is your taxable income as all the income is not taxable. Some deductions are available like mortgage interest and property taxes; contributions to qualified retirement plans etc. Once you turn 50, and especially after the age 65, you can qualify for extra breaks. Older people get a bigger standard deduction and they can earn more before they have to file a tax return at all. Workers over 50 can also defer or avoid taxes on more money using retirement and health savings accounts.

   Some of the Tax perks available to people over 50 are as under : –

      (i) Bigger Standard Deduction : – You can claim a larger standard deduction if you or your spouse is age 65 or older. The standard deduction amount for older taxpayers is $1,250 higher than the deduction for people under age 65. And if, a retiree is unmarried, the standard deduction is $1,550 higher than the younger taxpayers.

      (ii) Higher Tax- Filing Limits : – People age 65 and older can earn a gross income of up to $11,900 ($ 23,200 for couples both age 65 and older) before they are required to file a tax return. That is $1,550 more than the tax- filing limit for younger individuals.

      (iii) Property Tax – breaks ; – The tax rule vary from state to state . However, in some places people who are above a certain age and who earn below a specific income level qualify for property tax rebate.

       (iv) Credit For The Elderly Or Disabled : – If you or your spouse is age 65 or older and you have a low income, you could be eligible to claim a tax credit. Retirees who qualify may be able to reduce their tax bill by taking the credit

        (v) Additional IRA Deduction : – Workers age 50 and older can contribute an additional $ 1,000 to an IRA, or a total of $6,500.and by this way would save $1,625 on his current tax bill (if you are in 25 percent tax bracket).

        (vi) 401(K) Catch-up Contributions : – The tax saving is even bigger for older workers with access to a 401(K) plan. Employees age 50 or older can defer paying income tax on $6,000 more than younger workers, if they contribute that amount to a 401(K) plan, or a total of $24,000. Income tax won’t be due on this money until it is withdrawn from the account (explained in details in my earlier posts on 401(K) ).

         (vii) No More Early Withdrawl Penalty : – Younger workers have to pay 10 percent early withdrawl penalty unless the money is used for a couple of specific purposes. However, once you turn age 59 ½, you can withdraw money from an IRA for any reason without incurring the 10 percent tax. 

          (viii) Avoid Tax On Required Minimum Distributions : – Retirees aged 70 ½ and older who transfer any amount up to $100,000 directly from their IRA to a qualified charity will not owe income tax on the contribution.

         (ix) Higher HSA Contribution Limit : – Workers with high- deductible health plans can claim  tax deduction on contributions to a health savings account. Individuals who are age 55 or older by end of tax year are eligible to contribute up to $4,400 to a health savings account, $1,000 more than their younger counterparts.

         (x) Free Tax Help : – The tax counseling for the Elderly Program provides free tax assistance to those age 60 or older. IRS certified volunteers assist older taxpayers with basic tax return preparation and electronic filing between Jan 1 and April,15 each year.

         Deducting Miscellaneous Expenses : –

  A number of miscellaneous expenses are deductible on Schedule A. Some of these deductible expenses are : –

 (i) Educational Expenses : – Like cost of tuition, books; continuing education classes for professional may also be deductible.

 (ii) Job Searches And Career Counselling : – You can even deduct the cost of courses and trips for new job interview- even if you don’t change jobs.

 (iii) Expenses Related To Your Job That Aren’t Reimbursed : – Like your own subscriptions to trade journals related to your profession, cost of uniform, purchase of a computer for use outside the office at your own expense.

   (iv) Investment And Tax-related Expenses : – Investment and tax- adviser fees are deductible when paid from taxable accounts. Similarly, accounting fees for preparing your tax return or conducting tax planning during the year are deductible. Legal fees related to your taxes are also deductible

         Growing Your Savings : –

   The decade leading up to retirement is your last chance to build a significant nest egg. The decisions you make now will impact the retirement benefits you receive and how much you will be able to safely spend for the rest of your life. For this purpose, become a super saver and try your best to pay off your mortgage, debt and other loans before your retirement. Further, to minimize your tax bills, take advantage of as many tax breaks as possible, including deductions for saving for retirement and health care accounts.

      CONCLUSION : –

  Taxes are probably one of your largest- if not the largest- expenditures. Retirement savings plans are one of the best and simplest ways to reduce your tax burden. Unfortunately, most people can’t take full advantage of these pans because they spend everything they make. So not only they have less savings, but they also pay higher income taxes- a double loss. In order to take advantage of the tax savings that come through retirement savings plans, you must spend less than you earn. Only then can you afford to contribute to these plans. .