Archive for the ‘Retirement’ Category

Don’t Let Future Market Bubbles Ruin Your Retirement

by Rebecca in Retirement with Comments Off on Don’t Let Future Market Bubbles Ruin Your Retirement

If you have a gold IRA in your retirement portfolio you are probably more aware of economic trends than most people. Your gold investment—whether it’s gold bullion, gold coins, or gold stocks—will protect you from the ravages of a bad economy. Still, you know it’s better to be prepared with an eye on the economic forecast.

There are a couple of disturbing trends right now that might or might not affect your gold investment planning. You may want to add to your gold IRA or just sit tight and see what happens. Either way, you’ll have the knowledge to make the right decision for your retirement portfolio.

Is a Housing Bubble Forming Again?

We all remember the chaos of 2007-2008 when the housing bubble burst. No one emerged unscathed except those few who saw it coming and compensated for it. There were a lot of warnings but few people were paying attention. Now it looks as if there might be another housing bubble forming.

A housing bubble happens when there is a precipitous increase in the price of housing. Investors think the prices of their properties will increase so demand for housing increases as more people look for good investments. This continues until eventually they price themselves out of the reach of most consumers. The bubble pops, prices plummet, and property becomes worth less than what the investor owes on it. Equity in one’s house becomes more valuable as the prices rise but when the bubble bursts the owners are often “upside down”, owing more than the house is worth.

What Precedes a Housing Bubble?

The housing bubble of 2007-2008 contributed significantly to the financial crises of that time and indeed, decreased consumer wealth by an astounding $7 trillion. This type of bubble generally happens every 13-15 years. Rental prices are one indicator that a bubble is expanding; houses and apartments get more costly to rent and the cost to income ratio increases until people begin relocating or downscaling drastically. The price of housing right now is 25%-60% higher than the economy can reasonably justify. Prices in many major cities are so high that over half the renting population can’t afford a basic 2-bedroom apartment.

What about the Mortgage Market?

In 2015-2016 saw more and more mortgages offered to people who may not be able to afford them. One company advertises that you can “blast off” with a mortgage with just the push of a button, presumably on the keypad of your phone as you negotiate with an automated mortgage line. Lending standards aren’t as low as they were prior to 2008 but they are more lax than they should be in order to maintain a healthy economy.

Buying a house should result in a debt to income ratio of no more than 43% but most mortgages being underwritten today result in a much higher and unhealthy ratio. For instance, if a person makes and annual income of $90,000 they can reasonably afford a house priced at around $300,000. In states like Florida, California, Arizona, and even Tennessee, the average mid-level house is priced at nearly twice that much. The middle class consumer is being priced out of the market in many areas. Not to mention the current U-6 unemployment rate of 9.2% that economists say is much more realistic than the reported rate of 4.7%. Circumstances just like these forewarned savvy investors of the inevitability of the last housing bubble bursting.

On the other hand some market watchers theorize that builders are simply facing challenging conditions such as lack of skilled labor and affordable land on which to build. Thus, demand for housing exceeds supply which drives up prices for new homes and supports higher prices for existing properties.

Whether or not a housing bubble is forming, now is a good time to focus investment strategy on tangible, solid assets like gold. Investing in gold in doubtful financial circumstances like the present is always a good plan. Many investors are backing off the real estate market and are buying more gold instead. Gold never loses value and is always a wise investment.

Then there’s the Auto Bubble…

Right now a housing bubble isn’t all we have to worry about. There is a new economic threat sometimes referred to as the “underwater car”. Just like the subprime mortgage debacle, there is now an overabundance of auto loans given to consumers with bad or shaky credit. You have probably heard the commercials—bad credit, no credit, just go to this dealer and drive off in the car of your choice. We’ll make you a deal even we can’t refuse!

The average car loan in 2016 is 68 months and subprime loans are as long as 8 years. 1/3 of all vehicles under lien have negative equity. While this is not unusual in the auto industry—a vehicle depreciates the moment it’s driven off the lot—the vehicle is as good as worthless halfway through the life of the loan. Borrowers are trading in their cars and trucks before they pay them off, rolling over the loan balance into the new vehicle’s financing. This is an endless cycle of debt that keeps growing.

One in five borrowers in the auto loan market are now 60 days or more behind on their payments. Delinquency rates are higher than they were in 2010.

What Happens if the Auto Bubble Pops?

While an auto bubble is a problem, it’s thankfully not enough to drastically affect the economy as much as the housing bubble in 2008. It’s still a sign of an economy headed for trouble, much like the tickle in your throat signals the onset of bronchitis or another illness. The lenders affected by this subprime loan bubble are going to be hurt and the fallout will not be pretty. Many financing establishments will fail as they’ll certainly deserve to. If there are any repercussions because of this particular bubble bursting, you’ll be happy that you have gold in your retirement portfolio.

Take Precautions Now

In both these economic bubbles the value of property goes down while the level debt stays the same. That is not good news for the economy but you can minimize its effect on your own finances and retirement plans. Your gold IRA will have just as much value as it had last year and the year before even if you don’t decide more gold investment is called for. Gold bullion and gold coins in your retirement portfolio will always keep their value no matter what the economy does.

Here is the #1 Rated Gold IRA Company

regal assets

How to do – Pension Rollover to IRA

by IRA Rollover in Gold IRA, Retirement with Comments Off on How to do – Pension Rollover to IRA

It’s not hard to do a pension rollover to IRA and there are many reasons why you should do so.

One of the most important reasons for pension rollover to IRA is the instability of the economy.  Pension are paid by the company you work for and with the volatility of the economic climate combined with a low GDP and consumer fears, many companies are suffering financially.  Your pension is a promise from the people you work for that they will pay you a monthly stipend after you retire but how do you know they will be able to keep that promise?  If a mega-monster corporation like GM can fail so can your company and it can take your hard-earned pension with it.

Retirement pension

One advantage of a pension rollover to IRA is that you are in control of the money and how it grows.  You can invest it any way you wish.  Remember how many employees of Enron lost their entire pensions when their fund administrators invested their money in company stocks?  You’ll be in control of your retirement funds and can leave it up to your broker or take a hand in some or all of the decisions.  You can even invest in precious metals if you like in order to have more stability.

There are two things you can do with your pension—roll it over to a traditional IRA or a Roth.  If you want to pay taxes now and avoid possibly higher taxes later you can choose a Roth.  A traditional IRA will give you tax deductions now and you’ll pay taxes as you withdraw the money.

You must ask for a transfer from the pension plan’s administrator then fill it out and wait for it to be processed.  Start the process of opening your choice of IRA while you’re waiting.  After your pension is cashed out the administrator will send it to you minus about 20% for taxes then you have 60 days in which to deposit it into your new IRA account.  Be sure that your administrator has your pension set up so that as it accrues in the future, it is deposited into your IRA.

It is very important to deposit your pension in your new IRA within the 60 day window.  If not, you’ll have to pay income tax on it even if you deposit it on the 61st day.

It’s not a complicated process to convert your pension to an IRA and can make a huge difference in the kind of lifestyle you have to look forward to in retirement.  Doing a pension rollover to IRA can help make your golden years stress free and financially stable.

How Do I Open an IRA?

by IRA Rollover in Retirement, Roth IRA, Traditional IRA with Comments Off on How Do I Open an IRA?

You’ve studied all the information about planning your retirement so now you’re probably wondering:  how do I open an IRAWhat is an IRA account, anyway?  An IRA (individual retirement account) is like a savings account only better.  The money is invested over the years and grows into a fund that will, ideally, support you in your retirement.  A total investment of $50,000 over a period of 25 years might yield several hundred thousand dollars if it is invested wisely!

First, decide whether you want a traditional or Roth IRA.  If you open Roth IRA it means you must pay taxes on it now but the money you withdraw in retirement is tax free.  If you open traditional IRA it offers you a tax deduction each year but when you withdraw the money you’ll pay taxes on it—and taxes may be even steeper in the future than they are now.

Since an IRA is all about making your money grow enough to support your retirement, the first thing you need to do is to find a Retirementdiscount broker that you trust.

Discount brokers offer lower expenses than other types of brokers and since you want to get the most from your money, a discount broker will give you more money to work with.  Fees can drain your IRA and the less money that’s there to work for you, the less you’ll have when you retire.  An IRA trustee (brokers included) is legally allowed to charge annual fees in return for maintaining your IRA.  Some discount brokers charge nothing beyond their small commissions on trades.  If you are paying $100 a year in transaction fees it can actually cost you tens of thousands of dollars over the long run—money you won’t have to live on when you finally retire.  It pays to shop around!

Once you find a broker whose expertise, experience, and fees you’re comfortable with you’ll fill out an application.  Although you may be able to complete it online, you usually have to print it and mail it with a check to the broker.  The check will be the funds you want to use to open the account and it can be the maximum yearly contribution or a lesser amount.  You can also transfer funds from an existing IRA to a new IRA.  Check the IRA rollover rules imposed by the government or ask your broker or financial advisor to insure that everything is done properly.

Now you’ve opened an IRA!  It wasn’t difficult and only took a short time once you decided on a broker.  Now you can start trading to make your IRA grow.  If you do not feel comfortable in your knowledge of the stock market you may want to buy mutual funds.  Many people use full service brokers who are more costly but invest their funds without their having to deal with making decisions.  Be sure that if you use a full service broker the firm is a fiduciary—that is, they have a legal obligation to make investment choices that are in your best interest instead of their own.

Many people who ask how do I open an IRA have no idea how easy it is!

Things to Consider Before Withdrawing Money From Your Retirement Account

by IRA Rollover in Retirement with Comments Off on Things to Consider Before Withdrawing Money From Your Retirement Account

At one time or another, we’ve all been in the situation where we are tempted to take money from our 401k or IRA retirement accounts. Whether the money is needed to pay a bill or plan a much needed family vacation, dipping into the account is tempting because it is readily available. What could it hurt since retirement is years away? With all that time on your hands, you can surely invest enough to build the account up back up. This is not always the case.

Withdrawing money from your retirement account has costly, long term effects. If you have a clear understanding of how withdrawing money from your IRA or 401k account too early can affect the value of your account, would you think twice about borrowing money from it?

Keep in mind that money withdrawn from your retirement account takes away from your investment funds, which ultimately reduces Retirement accountthe amount of money available to work on your behalf. Why risk missing out on dividend income? Also, early withdrawals add to your taxable income for that year, as well as fees and penalties.

If you have a choice between borrowing money from an employer issued 401k retirement plan or your personal IRA, go with an employer-based 401k. Typically, companies offer many convenient short term loan options. However, there are terms associated with these loans that need consideration before signing off on paperwork. There are often:

  • Fees charged by the employer
  • Repayment terms that could range from 30 to 60 days
  • 10 percent penalty and other tax consequences if you don’t pay the loan back before you leave the company

There are guidelines set in place by the IRS regarding borrowing money from your IRA. For example, you can borrow from your IRA once a year without facing any penalties if the money withdrawn is paid back into your retirement account within 60 days. Missing the 60-day time limit puts you at risk of a 10 percent penalty, state and federal income taxes if you are under 59.5 years of age.

There are special circumstances that allow investors to borrow money from their IRA and not face any penalties. Using the money to pay for higher education expenses and buying a new home qualifies for this penalty-free break. Outside of life changing circumstances such as this, it is never a good idea to  borrow money from your 401k or IRA unless you have no other choice.

Are You At The Right Age To Consider Retirement?

by IRA Rollover in Gold IRA, Retirement with Comments Off on Are You At The Right Age To Consider Retirement?

When most people think about the word ‘retirement’ they picture a day when they will no longer have to punch a time clock. Their days will be filled enjoying the freedom they believe they have earned after working the majority of their lives. It was not that long ago that the common age to retire was 65, but many Americans have to work longer than this so they are able to place more money aside for retirement.  Everyone needs to take some time to consider when they will be ready to retire and there are several factors that will help make the decision easier.

When Will You Be Able To Receive Healthcare Benefits?

If you are currently insured through an employer’s benefit plan or other type of private health insurance you may be paying a lot for annual premiums. Medicare benefits begin for many Americans when they reach 65 years old. People who choose to retire before they are eligible for Medicare will have to pay for coverage out of their pockets. This added expense can significantly decrease the amount of money that is available in their savings account.

Are You Eligible For Social Security?best age to get retired

Many people choose to retire when they qualify to receive social security reimbursement. Some people qualify at different ages, ranging from 62 to 65. The one thing that you should take into consideration is that the earlier you decide to receive payments the smaller the monthly payouts will be. For example, someone who begins to receive Social Security at the age of 62 will not get as much as someone who waits until they are 65 or 70 to start receiving their Social Security benefits.

What Other Things Do You Need To Consider?

Although Social Security eligibility and healthcare are the main factors that people think about when they are considering retiring from their job, there are several other factors that are also important. These factors are:

  • What are the current balances in your checking and/or savings account?
  • What are the current balances in your retirement accounts (401K, IRA’s)?
  • Would you be able to comfortably meet your regular monthly budget if you retired now?

It is important that you do not only consider the benefits of retiring, you also need to make sure that your financial future will be secured if you decided to start living the retirement lifestyle sooner rather than later.

When Should You Start Planning Your Retirement?

Depending on what age you are now you may be able to postpone retirement planning. Younger workers who have not yet reached the age of 50 may not be in a position to decide at what age they should retire. The global economic climate is constantly changing and personal situations may also affect when a younger worker would be able to retire.

An older worker is in a better position to think about retirement especially if they have been planning for their retirement for a number of years.

It is more common today to find those who are choosing to work past the ‘standard’ retirement age of 65. They realize that the longer they work the larger the Social Security payouts will be and the more secure their life will be after retirement. You can decide what is best for you and retire at the age that you feel you will be the most comfortable financially.

How To Plan For Your Future Retirement With A Small Salary

by IRA Rollover in Retirement with Comments Off on How To Plan For Your Future Retirement With A Small Salary

If you have been working for any length of time you are probably fully aware that pay raises are not as popular or frequent as they once were. In many instances people are not making as much money as they did 20 years ago. With people learning to live and get by on less available money it can be very difficult to think about putting any amount of money in a bank or other financial center for your retirement. There are several things that you can begin to do now so you can have a more secure future after retirement.

Are You Planning Career Advancement?

A worker that is currently in an entry level position but plans to further their career through schooling and/or promotion should place their money into a Roth IRA. When you place your money into one of these accounts you will have the opportunity to withdraw off of your Roth account if you need some emergency cash. This withdrawal will be taken from your contributions and not from the amount that you have earned.

There is also another advantage to investing your money into a Roth account for retirement. Any withdrawals that are made on the account after you have retired will not be subjected to being taxed. This means that you do not have to report the withdrawals as earnings to the IRS.

You can choose to start with a monthly investment that is as small as $20. Over time this investment will grow and will provide you with a nice financial cushion when you are ready to retire.

rollover your ira or 401k

Does Your Current Employer Offer A Retirement Package?

Many companies offer retirement benefits and packages to their employees. If your job does not offer this type of benefit you should consider applying to a company in your field that does offer this benefit. When you have a retirement package included with your employee benefits you will have the opportunity to have a portion of your salary added into your retirement fund. The money that you add will not be taxed.

There are many employers who will match all or a portion of your contribution to your retirement fund. This is another great advantage of working for an employer that offers a retirement package.

Have Money Deducted From Your Bank Account And Placed Into Your Retirement Account

It is very easy to forget to make a deposit or two into your retirement account and suddenly realize that six months or more have gone by without a deposit being made. You can prevent this from occurring by having a certain amount of money deducted from your regular banking account each month and placed in your retirement account.

You should also be mindful of the type of accounts you have for your retirement. Some of these accounts are not cost effective and you could be paying high fees just so the account can be managed.

Work On Side Projects

Do you have a hobby that will allow you to make some extra money? Many people choose to start hobbies or freelance projects that will allow them to earn cash. This month can be placed in a retirement fund and can help you become more prepared for your future retirement.

When people are facing difficult financial times it can seem foolish to place money aside for retirement. If you start saving $15 or $20 a month you can start building a nice cushion and have a plan for your retirement. The hard work and sacrifice that you go through now will pay off later.