Category Archives: Retirement

Rising cost of living starts to hit pensioners’ pockets

Over-55s have been told to watch their outgoings in light of a rising cost of living, which is affecting savings totals across the UK. The warning comes from Aviva, following the publication of its Real Retirement Report.

The survey discovered that those approaching pensionable age are having to deal with mounting debts and lower savings because of the raised cost of housing, public transport and food. While more products are coming to the market to boost the savings of those at an ever-younger age – such as those with Family Investments, experts in Junior ISAs – there are still real concerns for those who came much later to the savings market.

The report, released on May 29th, claimed that in the last 12 months the over-55s bracket had to make more sacrifices to respond to the rising cost of essentials, meaning many other “luxury” items had to take a back seat – from clothing and leisure goods to furniture and pet care.

Worse still is the fact that those over the age of 55 are struggling to pay off monthly debt costs. Unsecured debt has risen by 36pc in just two years, at a typical cost of £23,188 in personal loans and credit cards.

As discussed, it is savings that take the brunt of this rise in debt. The average savings pot for the 55 to 64 age group now stands at £11,763 – a massive fall of 36 per cent from a peak of £18,364 in September 2012, just nine months ago.

 

However, things aren’t all bad; experts are now making more concerted efforts to encourage workers to start proper retirement planning. What’s more, incomes have typically increased by £166 a month. Wages for those who choose to work past retirement age are quite reasonable, too -among the over-75s, incomes have indeed risen.

 

Speaking to the Daily Telegraph following the release of the figures, Angela Seymour-Jackson of Aegon said pensioner poverty could only be averted by acting quickly. She said: “Younger respondents are more at risk of a retirement crisis than any generation that has gone before. They are increasingly becoming aware that they will have to start planning for the possibility that they will need to support ageing parents, themselves and their children in later life.

 

“This ‘squeezed generation’ is most at risk of stumbling into an impoverished retirement if they don’t act soon. Longer life expectancy, lower pension contributions, reducing state support and increasing financial dependency from family members makes planning for retirement all the more important.”

 

 

Why the Purchase of a Structured Settlement or Annuity Is a Good Investment

Learn why purchasing a structured settlement may be a good financial investment.

The purchaser of a structured settlement payment plan is an investor that uses the opportunity as a lucrative deal for making profits. The traditional chain of the sale starts when a seller is willing to offer their annuity or structured settlement at a favorable price. Every party involved has the same objective to increase the return of profit on their assets, which will help in the willingness of both the seller and the buyer to make the deal. Many times, the recipients who own the structured settlement are eager to obtain as much cash and benefits as quickly as possible. However, to obtain a quick sale it must also be to the great benefit of the buyer.

Satisfying All of the Parties

Before the seller can feel confident in receiving his or her compensation, they need to understand the historical financial stability of the company or individual that will be providing the lump sum of cash. Likewise, the buyer wants to understand that the history of the annuity or structured settlement plan has been well seasoned, with a history of timely payments being made for months, or years. Only when both parties are satisfied will they be ready to proceed with the conversion of the settlement into cash.

Competitive Purchasing Price and Returns

Large companies that specialize in purchasing annuities and structured settlement plans are usually in the business to generate profits for themselves and their investors. Through the process of purchasing well-seasoned annuities and structured settlement plans, they can ensure that their investors will be greatly benefited by the profits that are generated. Likewise, they can ensure to the seller that a lump sum will be at a competitive price and handled professionally to the court system.

Reasons for Selling

Usually, the buyer wants to know the reasons that the seller is interested in converting their settlement or annuity into cash. Additionally, the court system will have to know this information too. Only if the seller has passed the predetermined threshold set by the courts, will the judge approve the transfer.

Other reasons the seller is interested in converting their annuity to cash is to pay off medical debts, purchase a new car, pay off a mortgage, invest in a college education or a host of other reasons.

Reasons for Buying

As the overall interest rates across the country continue to remain low, many older investors now struggle to find the yields they need to generate the payments they require. As a way to guarantee high yields, many individuals are turning to annuities and structural settlement investing to gain the higher returns on instruments that have low risk. The appealing returns received every month offer greater profits without involving traditional risk. Additionally, the purchase of a structured settlement annuity that has a great payment history offers an almost sure high yield return on the deal.

Why the Rate of Returns Are High

Unlike other investments in the industry, the rate of returns are high on the purchase of structured settlements and annuities because they are backed by high rated insurance companies that are paying off the annuity or settlement. Typically, these companies are not anticipated to have any type of risk. What makes the investment stronger is that the entire process of paying the annuity or settlement through the court system is that it was originally approved by a judge. The payments are typically guaranteed and have been scheduled to fix dates. These kinds of structured settlements are not typically “life contingent”, meaning the original amount will be settled until it is fully paid off.

For any financial planner interested in gaining a high rate of return, structured settlement payments are extremely appealing, especially in today’s economic marketplace.

Surviving the Recession with Your Investments Intact – Best Moves to Make

The Great Recession may be on a downhill slide, but we’re nowhere near the end. Everyone has heard horror stories of people nearing retirement who were forced to helplessly stand by and watch their 401k accounts plummet in a matter of months. Others saw mutual funds and other investment accounts bottom out as well.

These are scary times, and emerging from the recession with your investments intact is one of the highest financial priorities for American families today. Here are some ways to survive the recession without losing your shirt.

Diversify, Diversify, Diversify

Can’t say it enough. You’ve likely heard the expression “don’t put all your eggs in one basket” many times in the past, I’m sure. Financial advisors spout the old adage in droves, and for good reason. Diversifying your investments has always been sound financial advice, but the recession has transformed the idea from a recommendation to a necessity.

To come out of the most historic economic downturn since the Great Depression with your money intact, it’s imperative to mix up your investment vehicles. Think real estate, savings, CDs, bonds, mutual funds, and retirement accounts. Spread the love and you’ll weather the storm far more effectively than your “sink everything into the old IRA” counterparts.

Stick to the Right Stocks

If you’re still investing in the stock market during these trying times, that’s okay. Many people are avoiding investing in stocks altogether, and this strategy isn’t necessarily a great one. You can still invest in stocks during a recession; you simply need to ensure you’re picking the right companies.

Although no stock is 100% safe, there are some companies in which it’s just safer to invest your money in during a recessionary period. Stick to massive, established companies that have lengthy business histories. When you adopt this strategy, you’re essentially picking brands that have the goods to withstand long stints of market weakness.

Some characteristics to look for in the companies you’re considering include those that have strong balance sheets, strong cash flow, and only a small amount of debt. Established companies with strong cash flows are the safest stock picks during a downturn because they have a greater chance of riding out the storm until it passes and emerge stronger than ever.

Protect Your 401k

Taking some smart, defensive action is a great way to protect your retirement account from getting whacked when another recession rolls around. One personal finance blogger over at Money Green Life saw his 401k suffer a 50% loss in 2008, when the market took a 45% nosedive. He was determined not to make the same mistake twice, and in 2011, when the S&P 500 was down 8%, his 401k was enjoying a 0.1% gain for the year.

How did he do it?

First, he taught himself more about his 401k and the investments that comprised it. He shifted all his money into the money market fund, which, as he points out, is essentially 100% cash. His plan was to ride out the recession by sitting on the sidelines until the storm passed and reinvest his funds accordingly when things were stable once again. While this strategy may not work for everyone, it’s a testament to educating yourself, even just a little, about your investments. That, in itself, is the single best way to protect them from a recession.

Filing For Bankruptcy in Retirement – What You Should Know

Filing for bankruptcy is one of the worst financial hits you can take in your life. It will follow you everywhere you go. Recovering from the blow is hard, and it can take up to a decade for the ding to fall off of your credit report completely. If you are in the middle of your retirement, however, things are a little different. You’re already on a fixed income, and your working years have long since passed.

A recent study done by the University of Michigan Law School found that since the recession began, people ages 65 and older have become the most rapidly growing portion of the population filing for bankruptcy protection. If you suffer a financial meltdown during your golden years, how will it affect you and those you love?

Bankruptcy during Retirement: Could it Be a Good Thing?

Unbelievably, older Americans carry an average of 50% more credit card debt than the generations that came after them. Senior citizens are losing their income from work, and the fixed income they’re left with is not enough to pay their medical bills – even after Medicare pays. That’s the most common misconception that gets this group on trouble. Medicare pays, but there are still quite a few out-of-pocket expenses that seniors must cough up the money for, and longer life spans mean that they’ll be ponying up this money for a much greater period of time than they may have originally thought.

This problem is compounded by the fact that many senior citizens are too proud to ask for assistance from their children or grandchildren, so they hide the debt in an attempt to manage the problem on their own by paying the minimums on credit cards and consumer lines of credit. Eventually, the debt repayments catch up to them and they can no longer stay afloat. That’s when bankruptcy protection may just be exactly what the doctor ordered. For an older filer, bankruptcy will carry the one-two punch of stopping the collection calls and reducing monthly out of pocket expenses back to the realm of affordability. This is a great way for seniors to be able to enjoy their golden years again.

The fixed income that senior citizens live on is one amount for the rest of their lives. Many seniors get minimum wage jobs to help with bills when they should not be working. Bankruptcy is the best way to avoid this last resort and spend the money on everyday expenses instead of credit card interest.

Aspects of Retirement Planning – Estates

One of the most important aspects of retirement planning is estates, and it’s never too early to get your financial house in order. This will save your loved ones the added time and grief of scrambling around trying to piece together your finances, debts, and wishes after you have passed away. Essentially, estate planning means defining the way in which your assets will be divided up to your survivors upon your death. Once you have completed your estate planning, the choices you’ve made will become legally binding, so you can rest easy knowing that everything will be handled according to your direction after your death. There are three key areas that you must consider when you are planning your estate.

Your Healthcare Proxy

A healthcare proxy is a person that you select to become your “agent” for all healthcare decisions that you cannot make yourself. If you are incapacitated, in a coma, or otherwise unable to speak for yourself, your healthcare proxy has the authority to make the final call in your best interest. This includes decisions regarding whether to use life-sustaining treatments.

Your Power of Attorney

Your Power of Attorney is also known as Durable Power of Attorney (DPOA), and the title authorizes a person to which you grant power to handle all your financial affairs. This means that if you suffer a brain injury, contract a disease like Alzheimer’s, or become incapacitated in some other way, the DPOA that you select has the final say in all your money matters. This includes all real estate you have an interest in, your bank accounts, and all your other assets as well.

Your Will

Your will controls the distribution of your property upon your death. When you make out a will, you must name important people within it. This includes your Executor, the person you designate to control your estate and divide up your assets. An Executor also has the ability to hire an estate attorney to help with any legal work that may ensue if there are any disputes while settling your estate.

You must also name Devisees in your will. These people will assume ownership of the assets you allocate therein. Oftentimes, these people are not your closest relatives. Your state governs the division of assets in the absence of a will, so make sure to name your Devisees specifically to ensure that your assets will go where you wish after you pass away instead of where the state decides they should go.