Latest news with #retirementplanning
Yahoo
a day ago
- Business
- Yahoo
5 key retirement mistakes to avoid
Listen and subscribe to Decoding Retirement on Apple Podcasts, Spotify, or wherever you find your favorite podcasts. Those nearing or in retirement face a number of considerations in planning for their future: When should I take Social Security? Should I relocate? How do I maximize tax savings? While each retirement should be looked at on an individualized basis, some strategies can help retirees avoid common pitfalls when making these decisions. On a recent episode of Decoding Retirement, Jeffrey Levine, chief planning officer at Focus Partners Wealth, broke down some of the mistakes he sees people make in retirement and how to avoid them. Many retirees tend to underspend during the early, active phase of retirement — the go-go years — and possibly miss out on experiences they can most enjoy while they're healthiest. "It's actually one of the biggest mistakes I think a lot of fortunate retirees make," Levine said. There are certainly people who, for various reasons, haven't been able to save enough over their working years. Their retirement will be financially tight, and they'll need to be especially cautious. But many others have worked hard and also benefited from some good fortune, providing them with enough or more than enough. According to Levine, many retirees underspend because they strictly follow rules of thumb, such as the 4% withdrawal rule, which are often too conservative. In reality, most retirees could safely withdraw more, and those who don't may be limiting their lifestyle unnecessarily. From Levine's perspective, retirees generally fall into two camps: those who want to leave as large a legacy as possible for their heirs and those who see inheritance as a nice bonus but also want to prioritize their own enjoyment in retirement. The problem, he said, is when retirees hit their legacy target but still die with far more than they intended to keep. If they don't spend it and die with $10 million, "it's a failure of [their] plan," Levine said. "It's now a failure to the upside, which is certainly a lot better than running out of money." Many retirees and those nearing retirement are drawn to the idea of relocating to a tax-friendly state — one with no personal income tax or one that doesn't tax pension income, retirement account distributions, capital gains, interest, or dividends. To be sure, taxes should be considered when thinking about where to live in retirement, Levine said. But when it comes to retirement, it's a matter of balancing how much you have versus what your expenses are. Some expenses are the enjoyable kind, such as gifts for the grandkids, travel, or a comfortable home. But others are "those that we don't love but we have to pay anyway," such as income taxes and property taxes, he said. Read more: 4 ways to save on taxes in retirement In his experience, Levine said one of the more unfortunate missteps retirees make is basing their relocation decisions solely on where they'll pay the least in income taxes. "At the end of the day, when you get to retirement, you've done all the hard work to get there, right?" Levine said. "You've worked for the last 20, 30, 40 years, in many cases, even longer than that. ... The last thing you want is to go somewhere purely because it's going to save you a little bit in the way of taxes, but you're just not happy there." He advised balancing tax considerations with moving close to friends, family, or other individuals so you can develop a community and enjoy retirement. Most people equate risk with market volatility and whether their account balance rises or falls. But according to Levine, that's only part of the picture. Many near-retirees, especially those relying on Social Security, a pension, or retirement savings for income, become too conservative with their portfolios. While that may reduce market risk, it often increases exposure to other threats, notably inflation. "Even if inflation is just 2% or 2.5%," Levine said, "when you compound that over a 20, 30, or potentially even 40-year retirement ... that really eats away at the value that you have, your ability to spend." But market and inflation risk are just two of several risks retirees must manage. Others include interest rate risk, which affects reinvestment opportunities, borrowing costs, and asset values; tax risk, where rising tax rates can reduce after-tax income; and longevity risk, or the possibility of outliving your savings. Another common mistake retirees make, according to Levine, is focusing too much on their annual tax bill and not enough on their lifetime tax bill. "When it comes to good tax planning, it's not about giving anybody the lowest tax bill in any one year," he said. "It's looking at their lifetime and trying to figure out how to pay taxes over that extended period of time, such that the total of those taxes over your life is as low as possible." This is where tax bracket management comes into play. Many retirees experience "gap years," when they have unusually low taxable income because they're in between retiring and collecting Social Security or taking required minimum distributions. "On the surface, that might feel great like, 'Hey, I paid no taxes this year, that was awesome,'" Levine said. But for those with significant savings, low-income years present a missed opportunity if not used wisely, he added. "A low-income year is a terrible thing to waste as a tax planner," he said, noting that those years can be ideal for pulling money out of retirement accounts at lower tax rates. Levine suggested that gap years or years with large charitable deductions are optimal times to increase income deliberately. For those with traditional retirement accounts, Roth conversions are a key strategy. "It is the tax equivalent of waving your wand and creating income in exactly the year when you want to pay that income," he said. One of the most common — and costly — mistakes retirees make is claiming Social Security too soon. Statistics show that many Americans begin receiving benefits before full retirement age, missing out on delayed retirement credits that can significantly boost lifetime income. For each year you delay past full retirement age until age 70, your monthly benefit increases by about 8% — a guaranteed return that's tough to match elsewhere. "Far too few people wait until 70 or closer to 70 to take their income," Levine said. "It's pretty clear that a lot of people make decisions that are not in their best interest." Read more: What is the retirement age for Social Security, 401(k), and IRA withdrawals? For married couples, the strategy becomes more nuanced. The higher-earning spouse should often delay until 70, since their benefit typically becomes the survivor benefit. Even if you're worried about dying at 72, waiting to claim Social Security may still be the right decision "because your higher check will live on with your spouse, who might live another 20 or 30 years," Levine said. The lower-earning spouse, by contrast, may consider claiming earlier to provide some income during the early retirement years, especially if the couple has immediate lifestyle goals, like travel. Each Tuesday, retirement expert and financial educator Robert Powell gives you the tools to plan for your future on Decoding Retirement. You can find more episodes on our video hub or watch on your preferred streaming service. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Forbes
2 days ago
- Business
- Forbes
Retirement Doesn't Always Go As Planned—Here's 4 Ways To Pivot
Plans change. Your retirement date doesn't always arrive when—or how—you expect it. Retirement planning is built on numbers—not just dollars, but dates. When will I retire? At what age can I afford to stop working? Increasingly, longevity risk isn't just about outliving your money. It's also about the risk that the year you planned to retire might not be yours to decide. When I was a young analyst, I worked alongside a senior engineer who embodied every engineer cliché: black glasses, short-sleeve dress shirt with a tie that was too short, and a pocket protector filled with mechanical pencils. He radiated the calm of someone who had everything calculated and figured out. Above his desk, pinned to a bulletin board, was a scrap of graph paper with a number scribbled on it: 11896. After a few weeks, my curiosity got the better of me; I finally asked him what it meant. Looking over his glasses at the graph paper, he said, 'That,' he said with a grin, 'is my retirement date.' Fresh out of grad school, I couldn't imagine retirement, let alone planning for it more than a decade away. But he had it all mapped out—visualized and posted like a mission launch. There's something admirable about that kind of certainty. That kind of certainty makes spreadsheets hum, financial planners smile, and it is a fixed objective that can be quantified with precision. Millions of people have a version of it: a date circled, an age bookmarked, or a vague plan to 'retire at 65.' But for all the timelines, charts, and calculators we throw at retirement, reality often has other plans for our plan. Over the years, I've learned something that every future retiree, adult child, advisor, or employer should remember: Retirement doesn't always arrive when—or how—you expect it. We've been taught to view retirement as a milestone you arrive at right on schedule. A cultural clock chimes at 65, and off you go to travel, golf, or take up pickleball. But in reality, retirement looks a lot more like air travel—subject to delays, getting bumped, reroutes, bad weather, and last-minute changes. According to the Employee Benefit Research Institute (EBRI), nearly half (47.5%) of retirees exit the workforce sooner than planned—a figure that's held remarkably steady for over 15 years. Why? Retirement, it turns out, isn't a clean exit. It's messy, often emotional, and frequently out of your control. Early retirement sounds like a dream come true—until it isn't. Someone who retires at 59 instead of 65 loses six prime years of earning, saving, and compounding. They may be forced to tap assets early, turning a 30-year financial plan into a 40-year cash flow puzzle. But beyond the numbers lies something deeper: the emotional transition from 'I am' to 'I was.' Friday at 4:59 PM, you're a mechanic, a teacher, a lawyer, a CEO. At 5:01 PM, you're retired. And that shift—so simple in language—can shake the core of identity. Too many retirees go from professional purpose to passive drift. One report indicates that 28% of retirees experience depression, often fueled by a loss of structure, social interaction, and relevance. On the flip side, some delay retirement for good reasons: financial necessity, meaning, or social connection. According to Gallup, the average expected retirement age has risen from 60 in 1995 to 66 today. But the actual retirement age still hovers around 62, suggesting that plans and reality remain out of sync. For many, staying in the workforce is the new safety net. However, that strategy comes with its own risks, including health surprises, employer buyouts, family caregiving, or burnout. Not every 'I'll work a few more years' plan ends on your terms. The smartest strategy? Ditch the illusion of precision. Embrace adaptability. Here are four pivots that can make retirement planning more resilient: My engineer friend with '11896' taped to the wall had a plan. But as most of us have learned, life introduces variables that our spreadsheets don't anticipate. That's why modern retirement planning must go beyond projections and drawdowns. It has to account for uncertainty, longer life, changing identities, and the need for flexibility and resilience. Whether you retire earlier, later, or somewhere in between, one truth remains: The plan will change. The question is: Will you be ready for the retirement that shows up?
Yahoo
3 days ago
- Business
- Yahoo
5 lessons for advisors talking retirement with transgender clients
Retirement planning with clients is never simply about the numbers, advisors say. That's equally the case when it comes to advising transgender people for retirement. More than 9% of U.S. adults identified as LGBTQ+ in 2024, up 66% from 2020, according to the most recent Gallup poll. Transgender people make up about 14% of all LGBTQ+ Americans and 1.3% of all U.S. adults. As more people openly identify as trans, financial advisors can help their practices and their clients by better understanding some of the unique considerations that come up when advising trans clients. Financial advisors specializing in LGBTQ+ clients often find that retirement planning for transgender individuals isn't fundamentally different from working with others. But staying attuned to a few essential considerations can make what might otherwise be an overwhelming process much smoother. Advisors say that broaching the retirement conversation can be difficult for trans clients whose attention is on more immediate needs, like obtaining gender-affirming surgery or relocating to more accepting places. "For clients who are pre-transition or in transition, I don't think focusing on retirement makes sense," said Lindsey Young, founder of Quiet Wealth in Baltimore, Maryland. "First of all, most trans people pre-transition, they're constantly thinking about transition, and so they can't think longer term because it's constantly on their mind. And when they're in transition, they're thinking about transition a lot more. When people get through transition and they're a lot happier and they feel a lot more stable, then they're in a place where you can start thinking about long-term planning." READ MORE: LGBTQ retirees face specific challenges. Here's how advisors can help For Landon Tan, founder of Query Capital in Brooklyn, New York, potential relocation costs have become an increasingly common consideration for many of his trans clients. "I think as the climate of transphobia increases, there are more people who are leaving their communities to go find a place where they're going to be kind of legally allowed to exist," Tan said. "I also have a lot of clients who are thinking about leaving the country because of the increasing transphobic climate federally as well." Making that move can be a costly but necessary decision for some clients, Tan said. "The decision to move to another country is not really a financial decision, per se, because it's so deeply personal," Tan said. "It … really kind of defines your day-to-day experience of existing. So I definitely talk it over with clients, if they're thinking about it, and then other clients who really know that that's what they want to do, then I would kind of take their lead, and I would point them in the right direction." Financial planning for trans clients can look very different depending on whether they've already transitioned or not, advisors say. Planning for pre-transition clients can involve a variety of financial considerations including and beyond gender-affirming surgeries, Young said. For married clients, transitioning can often result in divorce. And depending on the types of medical procedures a client would like to have, transitioning can involve job disruptions or even necessitate career changes, Young said. "As a financial planner, what you're trying to do is help a person come up with a game plan for … how to go through this transition, because this is typically a multiyear process," Young said. "And so in that respect, I think that helping someone who is transgender go through that, it's a very specific thing." READ MORE: Addressing post-election fears for LGBTQ clients Because of the unique considerations that come with transitioning, Young said pre-transition clients are generally better served by LGBTQ-supportive advisors who have specific knowledge around the factors involved in transitioning. But for clients who have already transitioned, Young said that advisors generally don't encounter many trans-specific issues. "For people who are through transition, there's really no reason why any LGBTQ-supportive advisor can't work with them. [For] most folks who are through … transition, there's not really a lot of issues specific to trans folks," Young said. "There are LGBTQ-specific issues quite frequently, even after transition. But there really isn't any transgender-specific related thing besides, you know, having an understanding [of] the community and the challenges that the community is facing." Even well-intentioned advisors can make mistakes when it comes to using a trans client's chosen name and preferred pronouns. For advisors who may not interact with many trans or nonbinary people in their daily life, learning to use the singular gender-neutral pronoun "they" can be like learning a second language, Tan said. "I have these conversations all the time with people who are trying to be allies to trans people and really struggling to, you know, address people by their chosen name or use their gender pronouns, and they really want to, but they really struggle with it," Tan said. "And I think those are actually skills that get practiced a lot when you are in the queer community, because you know a lot of your friends … use gender-neutral pronouns, and so you just get a ton of practice, so it's very second nature." READ MORE: For Gen Z, retirement feels out of reach. Can advisors bring it closer? "And I think that people who are allies can absolutely improve in that, and they can just set aside time to practice," Tan added. "They don't have a lot of people in their lives who are kind of forcing them to practice, but it is just going to be more of like learning a language, right?" Along with an advisor improving their own skills, Tan said it's important for a firm to build support for trans clients into their infrastructure. On a basic level, that means creating space for things like chosen names and pronouns on a client's profile and displaying those details prominently to make sure the entire advisory team addresses the client in a respectful way. Well-intentioned allyship can also go too far if an advisor ends up attributing everything about a client to their identity as a transgender person, Tan said. For example, an advisor who is overly focused on their client's trans identity could listen to that client talk about a disagreement with a family member and automatically assume that the conflict has to do with them being trans, even if that's totally irrelevant to the situation. "Sometimes when people are allies they will sort of fixate on certain prominent aspects of being trans, or think that everything kind of goes back to their transness," Tan said. "[It's important] to remind yourself to view the person as a whole person. You don't have to deny that they are trans. But … allyship is about showing up and treating someone as a person, and making sure that you're creating an environment where they can feel at home." Planning for retirement with trans clients is often more of an imagination issue than a financial one, advisors say. For pre-transition clients, thinking about retirement can be especially difficult, Young said. But even for clients who have already transitioned, it can be difficult for them to see themselves growing old and needing retirement funds. "I think with all of the anti-trans legislation, it's easy to think … that we don't have a future," Tan said. "And so I think that that is really common, that people are not thinking about the future. And I think it's also a legacy of the AIDS epidemic that it really knocked out an entire generation of elders. I mean, obviously not an entire generation, but there are a lot of voices missing. And I think that can be hard to see your future." READ MORE: LGBTQ Americans are less prepared for and confident about retirement That's especially true for younger trans people, Tan said. Many Generation Z investors broadly are struggling to plan for retirement, disillusioned with the idea that they'll ever be able to quit working. Tan said even his young, trans clients in high-paying jobs are often "shocked" when he tells them that they will be able to retire at 65 after completing a financial plan for them. "It doesn't take nearly as much as people imagine, just because they're so used to thinking that it's not possible, even though they've never really tried to calculate it before," Tan said. "It's just like a fruit dangling from a branch right in front of their face, and they just don't believe that it might exist, and so they don't think that they should reach for it. I really want people to dream of their futures and believe that aging as a queer, trans person is possible."
Yahoo
3 days ago
- Business
- Yahoo
Suze Orman: My Top Tip for Building Wealth Is a ‘Very Easy One'
Building wealth might seem challenging, but it could be easier than you think. Suze Orman, famed bestselling author and personal finance expert, shared her No. 1 tip for building wealth with Jaime Catmull on 'The Richer Way,' a GOBankingRates podcast. Be Aware: For You: Keep reading to learn Orman's No. 1 tip for building wealth and the strategies she recommends. According to Orman, her top tip for building wealth is simple. 'It's a very easy one, which is to spend less and earn more,' she said. 'To really, really look at what you have coming in versus what you have going out.' She said you should absolutely be saving at least a little bit of money each month, especially if you're younger, as this offers a variety of benefits and helps build wealth. Find Out: As part of her top tip for building wealth, Orman advised thinking about where your money is being held. 'Take advantage of compounding … take advantage of a Roth retirement account over a traditional retirement account, no matter what tax bracket you happen to be in,' she said. She emphasized the importance of choosing a Roth retirement account. 'If you really want to not just build wealth, not just build wealth, but keep the wealth that you build, one of the biggest mistakes you will make is if you opt for a retirement account that gives you a tax write-off versus a retirement account such as a Roth that allows you to invest with after-tax dollars,' she said. She explained it's important to really think about the amount of money you'll gain by opting for a Roth account. 'If you can't understand that and you don't believe what I'm saying to you, go to the 'Women & Money' podcast, my podcast, listen to the April 21st podcast,' she said. 'And I'm here to tell you, after you listen to that podcast, you will never put money in a pretax retirement account again, no matter how wealthy you are, the tax bracket you're in, no matter anything, you're not going to do it.' If you're new to retirement savings, you might not understand the difference between a Roth IRA and a traditional IRA — and that's okay. A Roth IRA allows you to contribute after-tax dollars. There are no current-year tax benefits, but you're able to withdraw the funds after age 59 1/2 without penalties or taxes, as long as the account has been open for at least five years. On the other hand, a traditional IRA allows you to make pretax contributions, which can offer immediate tax benefits. However, you'll have to pay taxes on the funds as you withdraw them in retirement. A Roth IRA can be a wise choice if you plan to be in a higher tax bracket when you retire. You'll pay the taxes now, at your current rate, so you won't have to do so when it's time to take withdrawals. Do note that there are income limits for Roth IRAs. For example, in 2024, married couples filing jointly must have a modified adjusted gross income of $230,000 or less to contribute the full amount. Conversely, anyone with earned income can open a traditional IRA, effectively making it the only option — of the two — for some people. More From GOBankingRates Mark Cuban Warns of 'Red Rural Recession' -- 4 States That Could Get Hit Hard 10 Used Cars That Will Last Longer Than an Average New Vehicle Clever Ways To Save Money That Actually Work in 2025 This article originally appeared on Suze Orman: My Top Tip for Building Wealth Is a 'Very Easy One'
Yahoo
3 days ago
- Business
- Yahoo
Tariffs and U.S.-Canada relations are the top financial concern for seniors: new research from HOOPP and Abacus Data
TORONTO, June 17, 2025 (GLOBE NEWSWIRE) -- Geopolitical instability and the ongoing trade dispute with the United States have emerged as a major financial concern for Canadians and is having an impact on people's retirement planning, according to the results of the 2025 Canadian Retirement Survey from the Healthcare of Ontario Pension Plan (HOOPP) and Abacus Data. The survey shows more than two-in-three (67%) Canadians are very concerned about Canada-U.S. relations, along with the cost of living (67%) and general economic uncertainty (65%). Concern over the potential impact of Canada-U.S. trade is highest among seniors (79% very concerned). The issue was also one of the top economic worries (71%) for Canadians approaching retirement – people aged 55 to 64. Uncertainty about the future implications of tariffs on the Canadian economy is adding complexity to an already difficult climate for people trying to manage their finances and retirement planning: 22 per cent said they are putting more money aside in savings as a result of the geopolitical instability, while 18 per cent said they've stopped contributing to their savings. The survey of 2,000 Canadians asked about their willingness to contribute a certain percentage of their wages to join a defined benefit pension plan where their employer matched their contributions. A total of 88 per cent agreed they would contribute nine per cent of their salary to be part of a defined benefit pension, which offers guaranteed benefits for life. "When Canadians are feeling even more uncertain about the future as they are now, pensions can offer more certainty about the future,' said David Coletto, CEO of Abacus Data. 'Policy makers and employers should be taking a closer look at this now, more than ever." This is the seventh year that HOOPP and Abacus Data have conducted the Canadian Retirement Survey, a comprehensive research project that sheds light on the personal, societal and economic issues that are impacting Canadians' retirement security. The 2025 survey paints a grim picture of how many Canadians are unprepared for retirement: Two-thirds of unretired Canadians (66%) said they will need to continue working in their retirement to support themselves financially. Even though 47 per cent say saving for retirement is one of their top financial priorities, 15 per cent of retired people had no savings at all when they left the workforce. More than one-third of all Canadians have less than $5,000 in total savings. Over half (55%) of Canadians are unable to save for retirement because they are living paycheque to paycheque. In addition, 50 per cent are concerned that any current or future savings won't last long enough in their retirement. 'Despite the fact that many Canadians are living from paycheque to paycheque and unable to put aside any savings, these difficulties have not diminished Canadians' desire to contribute to a defined benefit pension plan in order to receive a secure, lifetime income in retirement,' said Jennifer Rook, Vice President of Strategy, Global Intelligence and Advocacy at HOOPP. This year's survey gives insight into how homeownership is a key part of retirement planning for many Canadians: 44 per cent of homeowners said they were going to rely on the sale of their homes to set themselves up for retirement. A further one-third of homeowners said they would remortgage their homes and use the funds for retirement. But the survey also suggests that relying on the sale of a house as part of retirement planning poses some risks. Sixty-five per cent of Canadians who are unretired homeowners are worried they won't be able to pay off their mortgage in time to retire when they want to and 62 per cent who don't yet own a home are worried that current interest rates will hinder their ability to ever become homeowners. Other key findings of the 2025 Canadian Retirement Survey: 41 per cent of people who don't have a defined benefit or defined contribution pension say it's unlikely they will ever have a workplace pension plan. 73 per cent agree that, regardless of economic conditions, companies could afford to offer workers good pensions if they wanted to. 38 per cent of homeowners would downsize, and 14 per cent would use a reverse mortgage if they needed extra income in retirement. 46 per cent of Canadians believe their quality of life will decrease in retirement. These findings are based on an online survey of 2,000 Canadians aged 18 and older from April 11 to 16, 2025. A random sample of panelists was invited to complete the survey from a set of partner panels based on the Lucid exchange platform. These partners typically use double opt-in survey panels, blended to reduce potential skews in the data from a single source. The margin of error for a comparable probability-based random sample of the same size is +/- 2.19%, 19 times out of 20. The margin of error will be larger for data that is based on sub-groups of the total sample. The data were weighted according to census data to ensure the sample matched Canada's population according to age, gender, educational attainment and region. Totals may not add up to 100 due to rounding. About the Healthcare of Ontario Pension Plan HOOPP serves Ontario's hospital and community-based healthcare sector, with more than 700 participating employers. Its membership includes nurses, medical technicians, food services staff, housekeeping staff, physicians and many others who provide valued healthcare services. In total, HOOPP has more than 478,000 active, deferred and retired members. HOOPP is fully funded and manages a highly diversified portfolio of more than $123 billion in assets that span multiple geographies and asset classes. HOOPP is also a major contributor to the Canadian economy, paying more than $3 billion in pension benefits to retired Ontario healthcare workers annually. HOOPP operates as a private independent trust, and its Board of Trustees governs the Plan and Fund, focusing on HOOPP's mission to deliver on our pension promise. The Board is made up of appointees from the Ontario Hospital Association (OHA) and four unions: the Ontario Nurses' Association (ONA), the Canadian Union of Public Employees (CUPE), the Ontario Public Service Employees' Union (OPSEU), and the Service Employees International Union (SEIU). This governance model provides representation from both employers and members in support of the long-term interests of the Plan. Contact:Scott White, Senior Director, Media Relations and External Communications, swhite2@
