Can You Live 2+ Years Longer?

When I run long-term projections for folks, I regularly assume 95 years will be their life expectancy.  You should see some of the looks I get!  Almost everyone laughs and says there is no way they will make it to age 95.  However, statistics show that a 65-year-old couple has a 90% chance that one of them will be alive at age 80 and nearly 50% chance that one of them will still be alive at age 90!  How is this percentage going to change over the next 20 years until I reach retirement?

JPM Life Expectancy

Also, keep in mind that data on the left is put together by the Social Security Administration, so it is a sample set of the entire population!

Do you go to the dentist regularly?  Dr. David Cleveland at Darby Creek Dental shared that more than 1 in 5 Americans hasn’t seen a dentist in more than 3 years!  Do you wear your seatbelt?  According to the National Highway Traffic Safety Administration, 27 million Americans still do not?  Do you have access to quality healthcare?  What about the ability to buy quality fresh foods?  If you answered yes to any of the above, you are likely to have a longer expectancy than the average American.

So again, I ask…is 95 absurd?

So how long of a retirement should you plan for?  Can you change your life expectancy?

The obvious answer is to look at longevity in your family history.  If both of your parents lived into their 90s and were physically and mentally healthy, you have a pretty good chance to be looking towards that centenarian mark.  Want some tips directly from the Centenarian’s themselves, then read this article from PBS or watch this video from Sharp Health.

Ok, so what about you?!?  Try taking the test at that will ask some specific health questions and compare your estimated life expectancy to the average.  It will also recommend life changes and will show how those changes can impact your longevity.

So what age did you get?

If you need help planning for all those wonderful years of retirement, please feel free to reach out to me!

The Biggest Money Mistakes We Make -Decade by Decade

No matter your age, everyone has made mistakes with money.  But what are the biggest money mistakes that others in your generation face?  This article from today’s Wall Street Journal does a good job outlining some of the common pitfalls!

  • 20s: Playing it too safe
  • 30s: Overwhelmed by Complexity
  • 40s: Misjudging big expenses
  • 50s: The difficulty of catching up
  • 60s and beyond: Not delegating

401k Limits – Inflation Adjustment

2013 must be the year of raises…

RP-2012-41 will be published on November 5, 2012, and will contain the full details of the announced changes, but some of the changes are outlined below:

This week the Social Security Administration announced that recipients will receive a 1.7% increase…

And the IRS announced an increase in both the 401k contribution limits and gifting limits.  Starting in 2013, you can now add $17,500 to your 401k (plus and extra $5,500 if you are over 50).  This is a $500 increase in the contribution limit.  In 2013 you will also be able to gift up to $14,000 per year to another individual without having to file a special tax return.  You can read about these increases here…

401k Loan – Friend or Foe?

I found the following link to be an interesting read.  With so many people hard up for money right now, a 401k loan can be a life saver.  But if not careful, you could end up paying a lot more in taxes (and perhaps even penalties) than you expected.

Yahoo! Article about 401k loans

Readers Digest Version:  Many people take loans from their 401k plans.  You are borrowing your own money and interest rates are usually lower than a credit card or other type of personal loan.  However, two major considerations should be given to the 410k loan…

  • Double Taxation – If you take a loan from your 401k plan you must pay that loan back with after-tax dollars (dollars right out of your pocket).  So as you pay that money back, you are putting it into an account that the IRS is going to charge you taxes on when you pull the money out in retirement.  So not only are you paying the loan back with money that taxes have already been paid on, you are going to have to pay taxes again when the money comes out.
  • Taxes (and Penalties?) – If you leave your job (or are forced out) prior to paying back the 410k loan, the loan must be paid back right away!  So what happens if you don’t have the money to pay back the loan?  Then you must pay taxes on the remaining loan balance as if it were a withdraw from the account.  Also, if you are under age 591/2 you will be hit with a 10% penalty for pulling money out prior to retirement age.

70 year old with no savings…

When I woke up this morning, and I thought this was going to be a good day.  Watch a little basketball and get ready to play hockey tonight.  BUT, while checking my email, I saw this article on yahoo about a 70 year old woman with no savings.  I don’t mean a small side account…NO SAVINGS.  Her story is not a sad one.  She doesn’t have cancer or donate all of her money to charity.  No, she just didn’t save.  Seriously?!?!  As a society, we are putting her story in the paper with no mention of “hey kids…don’t live your life like this…”  The best quote: “Ms. Wilson would probably manage on her current income, though not without sacrifice…”  She never sacrificed any other time of her life, so we are now supposed to feel sorry for her now?  Wake up people!  Save some money while you are working!

401(k) Limits Slowing You Down?

Many wealthy American’s are saving money in their 401(k)’s just to have it returned to them because they make to much money.  Here is a nice article that was in the Wall Street Journal on such a topic.  Remember, if your 401(k) contribution is returned to you, it doesn’t mean you should spend it!  I like Tom’s advice, in this article, to set it aside in a tax efficient investment in your brokerage account.  Need help pick a tax efficient investment?  Send me an email.