Money & Career
Special Section: Retirement Roundup
8/31/2017 3:16:30 PM

Is Your Road to Retirement Mapped Out?
by Victoria Hartley-Ellender

It is a journey that crosses over many landscapes. From childbirths, job transitions, high school and college graduations, weddings, and beyond, planning for retirement can have many roadblocks, detours, and stops along the way. With good planning and tools in place, retirement planning can lead to great destinations. And, while starting early is recommended, people of all ages can benefit from planning for retirement, even if it is only a few years away. 

Alice LeBlanc, VP Senior Trust Advisor at JD Bank, provides local and personalized support to customers as they plan for retirement. She advises people to start wherever they are, and let experts guide you through the process of designing a custom plan to fit each unique situation. 

"Start now – whether you’re in your twenties or your fifties,” LeBlanc said. "It is never too late to get started. Utilize every tool you have available, including 401K savings plans through your employer. At JD Bank, we’re local and we help our customers with personalized support throughout their lives as they plan for retirement.”

A plan for each family should be customized, depending on several variables. Marty DeRouen, board certified financial planner at Northwestern Mutual, starts each consultation with a thorough assessment for each person. "Our one and only first step is a complete assessment of a family’s current picture – not only retirement but liquidity, debt, estate planning, death and disability plans, college funding, etc.,” DeRouen said. 

A big determining factor when considering what type of financial plan fits each person is their current age and when they plan to retire. Here are few guidelines for determining your route, depending on your starting place. 

Start now. Matthew Shaheen, financial advisor at Terrell and Associates, said people should begin forming their long-term retirement plan and goals early. "No matter what age you are, it is never too early or too late to begin investing for your future.” In a person’s twenties, it is important to avoid bad debt by establishing an emergency fund to protect yourself from the unexpected. Other important steps are to sign up for your employer-sponsored retirement plan and develop a relationship with a professional advisor who will help you get started on the right path.  

When a person reaches their thirties, it is time to get a bit more targeted in their approach to saving.  Take advantage of employer’s benefit packages. And continue to control your debt and maximize contributions.

At this stage in life, many people begin earning more money than they had in the past. "Controlling expenses is paramount. Don’t blow the plan up because you have kids you want to spoil,” Shaheen said. "Review your debts as often as you review your investments. Debts are as much a part of the plan as your investments. So, don’t ignore them.”

Another potential roadblock to anticipate in this age range are unexpected expenses. Do not to let these detours derail your overall vision. "Life tends to throw curve balls. Developing a plan to handle the unexpected will prepare you to roll with the punches,” Shaheen said. 

For those in their fifties, "the most important task is to measure their progress toward their retirement goal – the date and lifestyle desired – then adjust and keep rechecking that over time,” DeRouen said. The ten years prior to retiring are the most important time to meet with an advisor and iron out the details. "Sitting with your financial professional to develop an income strategy is key to managing your retirement,” Shaheen said. 

Sixties and beyond 
The time for retirement is drawing near. Making the right choices when transitioning into retirement is key during a person’s sixties. Having an expert on board to walk with you through your final stretch toward retirement is crucial to successfully executing your mission and plan. 

Regardless of where you are in your journey toward retirement, it is never too late to start mapping out a plan. Having a tour guide and a map in hand can help make the journey easier and smoother, even with inevitable bumps along the way. 

When you Can’t Bank on Retirement Funds
Tips for Retirees with Little or No Savings
by Angie Kay Dilmore

Retirement could be considered one of life’s greatest adventures. Yet fewer than half of all Americans have a formal financial plan. A study by the U.S. Government Accountability Office found that about half of households age 55 and older have no retirement savings at all.

Ideally, the time to start saving for retirement is in your early 20s. But it is never too late to start saving. Even if you are already in retirement, consider these tips for your best retirement adventure.

Know and understand your financial resources. Income is key when it comes to retirement planning. A file cabinet crammed with paper is not a plan. Good financial advisors can help you maximize your Social Security benefits, deal with tax issues, and understand other income options. Chris Craven, with New York Life in Lake Charles, says many retirees purchase Income Annuities that guarantee monthly income they cannot outlive. "The income is based on age and mortality, so the older one is when they purchase an Income Annuity, the higher the payout rate.”

Determine how much money you have for investing and saving, and also how much you’ll receive in Social Security. If you have a pension, include that, too. The goal is to get an idea of where you are financially.

Mutual goals. If you are married, talk to your spouse about goals – and the financial decisions that will get you there. What are your priorities? Will you relocate? Stay close to the grandkids? After you have good grasp of your money situation . . . .

Make a budget and live within your means. Most people assume their expenses will decrease after retirement, but that’s often not true. You may buy less clothing when you aren’t working, but other expenses may increase such as travel, new hobbies, dining out and entertainment. Strive to live within your means and learn to say no to requests for handouts. "I have seen too many times where retirees will run out of money trying to help their children or grand children,” says Craven. 

Eliminate and avoid debt. Carrying excessive debt makes saving and managing your money even more difficult. Craven suggests continuing employment until your debt is paid off. The sooner you’re out of debt, the better.

Know your retirement timeline and reevaluate your risk tolerance. The plan when you are retired on a fixed income should look vastly different than when you were a working 30-something. Older investors need a more diversified approach, with fewer risks and more protection for that all-important income.

If managing your finances in retirement with little savings seems, well, unmanageable, you may want to consider downsizing your home or working during retirement. The most important thing to remember is that is it’s never too late to start saving.

To Work or Not to Work in Retirement?
by Angie Kay Dilmore

That’s a good question! For many retirees, the notion of sleeping in every day and lounging around the house has been replaced with an alarm clock and time for work. U.S. seniors are employed at the highest rate in 55 years. According to a July U.S. jobs report, 32% of Americans age 65 to 69 were employed; 19% of people 70-74 worked. 

Why this growing elderly employment trend? Many older Americans are healthier and living longer than previous generations. They enjoy their work and want to remain active. Others need the money. Considering stagnant wages and declining pensions, retirement is more expensive these days.

In either case, working in retirement can have several advantages.

A sense of purpose and accomplishment. Barbara Dubose, age 76, owns an upscale dress shop and alterations service called The Perfect Fit on Pujo St., Lake Charles. She finds joy in her work and says it gives her a sense of purpose. "God has blessed me with good health and I don’t want to let that go to waste. I’m still useful to a lot of people. My clients depend on me for things and I want to be there to help them.”

Relief from financial stress. With longer life expectancies (near age 77 for males, 81.5 for females) some retirees fear running out of money. It’s a genuine concern. Even a part-time job that brings in a little extra cash can help reduce some of the stress.

Employee benefits. Working retirees can benefit from employer-paid life insurance and the employer contributions to a 401(k). Another biggie is health insurance, which can be less expensive than Medicare and provide more comprehensive coverage. Employer coverage is especially valuable if your spouse is younger than 65 and covered by your plan.

A larger pension. If you’re fortunate enough to have a pension, you may get a bigger payout by working a few more years. Pensions are calculated based on pay and years of service. Some plans base the benefit on your average earnings over the last three or five years of employment, others on your average earnings over all the years in which you’ve participated in the plan.

Greater Social Security Benefits. For every year you delay taking the benefit past full retirement age (66 for people born in 1943 to 1954 – it will gradually rise to 67 for people born in 1960 or later), you get a bump of 8% in your benefit, until age 70.

Physical fitness. As people age, they tend to suffer more physical health problems. A job can keep them active and moving, making for better health.

Mental fitness. Numerous studies have found that brain-challenging activities may help delay symptoms of dementia. Working also helps keep minds active. "It gets your mind going and gives you something to get up in the morning for,” says Dubose. She also cites the benefit of social interaction. "Working gets you out and about, especially if you are a widow and you don’t often see your children. You have to make your own life.”

Only you can decide if working in retirement is right for you. The relationships, recognition, financial benefits, and sense of purpose that come with a job can add fulfillment to life. But retirement can also be well spent devoting time to leisure activities, traveling, and volunteer work. The choice is yours.

Retired, but Not Tired
Tips to Stay Young in the Golden Years
by Austin Price

Planning for retirement isn’t the same as gearing up for a long vacation. Spending day after day in front of the TV may sound great after forty years of hard work, but your body and brain need more than a recliner and mindless entertainment if they’re to stay healthy. You may end up bored with all that freedom if you don’t have a plan for what you want to do with it; and boredom often leads to unwanted outcomes. According to the Mental Health Foundation, one in five retirees will experience depression, a condition they’re at increased risk for if they remain inactive. A sedentary retiree likewise risks a number of physical maladies. So instead of resigning yourself to twenty or thirty years of couch surfing, challenge yourself to remain physically healthy and mentally sharp.

Stay Interested
If you had a leisure activity you enjoyed throughout your career, consider dedicating even more time to this hobby. Maybe your love of cooking hinted at a deeper culinary talent you never had the chance to cultivate. Did you take pleasure from tinkering in your workshop and building things? If you pursue these pastimes, you could potentially turn your passion into a part-time source of extra income. And if you never had time for hobbies, now is the time to find something that interests you. Learn a second language, how to play an instrument you love, or any new craft or skill that strikes your fancy. One key to staying youthful is to never stop learning.

Stay Social
According to a study conducted by Dr. George E. Vaillant of Harvard Medical School, the beginning of retirement also brings with it a change in your social sphere and too often the loss of contact with many old friends and co-workers who were once part of your life. This can be a dangerous situation. Isolated individuals are more vulnerable to mental health problems such as depression and Alzheimer’s disease. Avoid isolation by being active in your community. Find ways to maintain your established relationships, such planning a weekly lunch meet-up group or get together over coffee. Seek out ways to make new friends, too. Volunteer your time with a non-profit organization or church group. Homeless shelters, soup kitchens, and animal shelters always need assistance. 

Stay Moving
Physical activities such as swimming, walking, joining a local gym or sports league are also great ways to meet people and have the added benefit of keeping you fit, which is essential for retirees. According to a U.S. Health and Retirement Study, inactive seniors are 40 percent more likely to suffer strokes and heart-attacks than peers who maintained even a modest exercise regime. Find physical activities you enjoy and participate in them several times a week.

Stay Young
Remember, while you may be past what conventional wisdom calls your "prime,”  there’s no reason you have to accept that label. Be your best you! Retirement is not merely a time to rest after years of labor, but a chance to explore yourself in your world in ways you couldn’t when you were previously busy with other life obligations.

Taxes in Retirement
You can Count on It

Baby Boomers have been on the leading edge of nearly everything since the first of them were born in mid-1946. Now early boomers near another big milestone – and it’s one that many may prefer to avoid. They’ve begun turning 70½, which means by law they’re required to start making withdrawals from their 401(k) and IRA accounts. If they fail to withdraw the money – or withdraw too little – and they face a hefty penalty. Today, there are roughly 75 million baby boomers in the U.S., which means plenty of people will be reaching the age 70½ over the next couple of decades.

Those with 401(k) or IRA accounts need to know the rules and what they will be facing. Kelly Love, CPA and Manager of Accounting and Assurance with J.Walker and Co., Lake Charles, advises seniors talk to a financial professional about their tax options.

Read on to see if any of these tax breaks may apply to you:

The age advantage. When you turn 65, the IRS offers a bigger standard deduction. For 2017 returns, for example, a single 64-year-old gets a standard deduction of $6,350. A 65-year-old gets $7,900. Note: These values could change, depending on changes in federal tax laws.

Deduct Medicare premiums: If you become self-employed -- say, as a consultant -- after you leave your job, you can deduct the premiums you pay for Medicare Part B and Part D, plus the cost of supplemental Medicare (medigap) policies or the cost of a Medicare Advantage plan. You can only claim this deduction if you are not eligible to be covered under an employer-subsidized health plan offered by either your employer (if you have retiree medical coverage, for example) or your spouse’s employer (if he or she has a job that offers family medical coverage).

Spousal IRA Contribution: Retiring doesn’t necessarily mean an end to IRA contributions. If you’re married and your spouse still works, he or she can contribute up to $6,500 a year to an IRA that you own. If you use a traditional IRA, spousal contributions are allowed up to the year you reach age 70 ½. If you use a Roth IRA, there is no age limit.

Move the money to an asset-based long-term healthcare program. There is no tax penalty to move the money from the retirement account to an asset-based long-term healthcare account. The program is an interest-bearing account that provides income if needed, liquidity if needed, and covers long-term healthcare if needed. With traditional long-term healthcare insurance, any unused money goes to the insurance company when the person dies. There is no benefit for beneficiaries. With asset-based long-term healthcare, any excess money goes to the beneficiaries.

Reduced Capital Gains Tax: For 2017, the long-term capital gains tax rate is 15% for those in the 25% to 35% tax brackets, and 20% for those in the 39.6% tax bracket. If you are in the 10% or 15% income tax bracket, your long-term capital gains tax is zero. (Again, figures may be subject to change.)

Direct transfers from your IRA to a qualified charity can help avoid income tax on the IRA distribution – and the withdrawal counts toward satisfying your Required Minimum Distribution. (Being generous has never been more (financially) rewarding!

These are but a few of many considerations when understanding taxes. Filing taxes at any age is complicated at best, but especially during retirement age. So many questions, ie should I itemize or take the standard deduction? Love recommends you visit a CPA early in the year, rather than at the end of the year to do taxes when it is too late to make changes. "We can discuss plans for the up-coming year, any major purchases, expenditures, taxation of Social Security benefits . . . let your tax professional know your concerns and goals so he or she can work with you.”

Social Security and You
by Kristy Armand

Whether retirement is 30 years away or 10, at some point you’ll wonder if you have enough money to cover your daily living expenses. Hopefully the question comes sooner than later, says Certified Financial Planner Denise Rau, President of Rau Financial Group. Maybe it’s already been asked and answered. Or maybe you’re not giving it much consideration because you know Social Security will be there to cushion the fall. If that’s the case, you have some more mulling-over to do, Rau says.

"It’s certainly nice to know that Social Security is there to help provide for your financial future,” she says. "After all, it’s income for life, and there’s certainly nothing wrong with that, especially when you’re ready to turn in your work badge for a life of well-deserved leisure. But it’s important to appreciate the potential reality of your situation and understand that Social Security was not designed to be enough for you to comfortably retire.”

Most comfortable retirees supplement Social Security with a work pension, IRA, or other savings. Few are able to get by solely with Social Security, Rau explains.

Still, millions of people don’t have anything else tucked away. "It’s crucial for those people to understand the role Social Security will play in their retirement,” says Rau.

According to Union Plus Retirement Planning Center, Social Security, which is more than 70 years old, provides $539 billion in annual benefits to nearly 49 million retired and disabled workers, their dependents and families that have lost their wage earners. Millions of people rely on Social Security as their only source of income.

Every year, the Social Security Administration sends workers a record of their earnings and estimates of benefits. This statement outlines what recipients can expect to receive at the ages of eligibility—62 or 70.  Benefits are based on earnings during the 35 highest-earning wage years.

Unfortunately, Social Security resources are expected to decline after the year 2040. That’s because the Baby Boomer generation will soon reach full retirement age and, for the first time in Social Security’s history, there will be more people taking from the system than contributing to it.

Although Social Security provides a blanket of funds in retirement, other expenses—such as unforeseen medical expenses, increased cost of living, and caregiving expenses, to name a few—can compromise its impact. 

"I suggest that everyone obtain a copy of their benefits statement from the Social Security Administration (available online at to get an idea of where you stand,” Rau says. "If you can start a retirement fund or increase contributions to a work plan, do it. If you have nothing saved and you know you want to retire comfortably—whether it’s a year or 20 years from now—make an appointment with a trusted financial advisor to put a plan in place for the life you want to have after retirement. You don’t want any financial surprises at the time when you should be enjoying a work-free, low-stress lifestyle.”

For more information about retirement planning, call Denise Rau at Rau Financial Group at (337) 480-3835.

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